Transcript of Prime Minister Lee Hsien Loong’s Keynote Address at the Business Summit hosted by the Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India at Taj Palace Hotel, India, on 11 July 2012 at 1245 hrs

Mr E Ahamed
The Union Minister of State for External Affairs and Human Resource Development

Mr Dilip Modi
Immediate Past President of ASSOCHAM

Mr Adi Godrej
President of CII

Mr R V Kanoria
President of FICCI

Distinguished guests, ladies and gentlemen

I am delighted to be back again in New Delhi after seven years and to have the chance to address such a distinguished business delegation.

India is a very old friend of Singapore and not just of Singapore, but of Southeast Asia. The relationship goes back to historical times when the early Indian traders established trade links with the region. And they introduced into the region Indian religions, Indian ideas of governance which led to the establishment of Hindu and Buddhist kingdoms, Indianized kingdoms all over the region. In Indochina, there is Funan, there is Chenla, Champa, the Khmer kingdom. In what is now Indonesia, there was Majapahit, in the Java island and Sriwijaya in the Western Sumatra. Singapore is part of this history – even our name “Singapura” has Sanskrit roots.

The ties through all these years have been boosted in recent decades particularly by India’s Look East policy. In 1991, Prime Minister Narasimha Rao decided that it was in India’s best interests to make a strategic shift towards Asia. And he worked systematically to strengthen ties with ASEAN. ASEAN and India became dialogue partners 20 years ago and since then trade and investment between ASEAN and India prospered and increased about 20 times. And we have got an ASEAN-India free trade agreement on goods which came into force last year.

Relations specifically between India and Singapore have also thrived. Last time I was here, it was to sign the Comprehensive Economic Cooperation Agreement with your Prime Minister Mr Manmohan Singh. It was India’s first such free trade agreement with a foreign country and it was a strategic agreement which showed the direction which India was going and which signalled Singapore’s commitment to developing our ties with India. Since then our ties have also grown rapidly as you have heard just now from Mr Godrej. Our bilateral trade has tripled and now we have become the second largest cumulative investor in India. The first largest of course is Mauritius. We are not quite in that class but we are not doing badly for a small country and with different rules. Indian companies more than 4000, maybe more than 5000, form the largest foreign corporate contingent in Singapore and many Indians from the sub-continent or from around the world live and work in Singapore. In fact, there are large numbers of IIT and IIM alumni in Singapore, perhaps one of the densest concentrations in the world.

So the Look East policy which India has pursued and India’s policy of reform and liberalization has been a success for India and for the entire region and a boon for Singapore too. This policy remains just as relevant today. The global economy is under stress, the Western developed economies especially. The Eurozone and the US both face long-term challenges with budget deficits, political gridlock and structural issues. Asia cannot escape the consequence of these problems elsewhere but nevertheless, the outlook in Asia remains bright. We are still the fastest growing region in the world and with a large and growing middle class. In fact, the OECD estimates that Asia will account for 85 per cent of the growth in the global middle class over the next 20 years. The key drivers in Asia are the two biggest economies, India and China. Your growth over the last 20 years, 30 years, has changed the world, economically and strategically.

Both India and China currently face significant challenges because as you grow, new issues arise, new problems need to be solved but overall I would say the outlook is still optimistic and in India, certainly in the last 20 years, you have become totally transformed. Your cities, whether it is Mumbai, whether it is Bangalore, whether it is Chennai, whether it is Hyderabad, or Ahmedabad, they are bustling centres of economic dynamism. Your companies, like Tata or Infosys, have become global brands, your business captains have become international superstars. Your soft power is not negligible. Bollywood movies are watched every year by 3.6 billion people, that means on average every human being watches one every two years. And last month, the International Indian Film Academy Awards were held in Singapore, this is not the first time but there are many fans in Singapore too and they turned up in huge numbers to meet and greet and cheer their favourite Bollywood stars, far more than turned up to watch politicians make speeches. And yet there is still vast potential which remains to be tapped.

India can prosper by forging closer links with Southeast Asia and the rest of the region. Southeast Asia is not standing still. ASEAN, the Southeast Asian nations, are building a dynamic, peaceful and prosperous grouping. We are working towards an ASEAN community by 2015, three years from now. Our population is the same size as the EU – 600 million; our GDP is the same size as India – US$1.8 trillion. And there are deepening economic cooperation amongst ourselves but also with our partners in Asia outside of Southeast Asia. We are setting up the Regional Comprehensive Economic Partnership (RCEP) building links with countries whom we have had several links individually. ASEAN Plus India, ASEAN Plus Korea, ASEAN Plus Australia, ASEAN Plus China, we are trying to bring them together into one group, the Regional Comprehensive Economic Partnership and link it all in a more coherent and deeper and more beneficial framework.

Beyond economics, we are also working on the security architecture. The East Asia Summit has brought in the US and Russia. ASEAN defence ministers have regular meetings which they call ADMM and they meet defence ministers of other countries, so it has become the ADMM Plus. And we have not just meetings but joint exercises, seminars and we hope cooperation and building of trust. So Southeast Asia is a place where many things are happening and it is a place which is natural for India to deepen its engagement, expand its influence as India’s global stature grows. So I encourage Indian companies to participate in ASEAN integration efforts. For example the ICT companies can help ASEAN to enhance its ICT connectivity under the Connectivity Masterplan. We want to link our countries together. India has the capability, can help us to do it. We are building road links for example between India, Myanmar, Laos, Vietnam, Cambodia, and Indian companies can participate in those projects as well. ASEAN welcomes India, not just economically but across many areas - security, arts and culture, education, people to people ties.

One priority amongst all these strategic things is to conclude the investment and services agreement of the India-ASEAN FTA because the goods agreement is completed, the services and investment agreement is still being negotiated. It has been a long process, and we hope it can be settled and settled before long. Also we hope the air transport agreement can be settled quickly, ideally in time for the ceremonial ASEAN-India Summit in December, marking our 20th anniversary of dialogue partnership together. Because if we get these agreements done, then we can open up our services industries like tourism and we can boost investment and people flows and pave the way for closer integration in many other areas. Beyond that, beyond just bilaterally between ASEAN and India, I would encourage India to participate actively in the RCEP. It is a strategic partnership, it will enhance market access to the region, it is open, it is voluntary, we hope countries would come and participate. Quite a number of our FTA partners have expressed interest in this and I think it is strategically important for India that it joins the grouping as it is strategically important for ASEAN that we persuade India to join. It is not just for economic gain but it is for India to be part of the emerging architecture of regional cooperation so that when countries work together, whatever the field, over a broad range of areas, India is there at the table contributing and helping and benefiting. So I hope India will make the effort and participate fully in all these initiatives.

I understand that it is not always as simple to do as it is to say. It is politically complex, sometimes difficult to pursue active regional engagement especially as it involves economic liberalization. India has many priorities domestically in the sub-continent, there are many issues to focus on, many different views to reconcile and even as it opens up its own economy and liberalizes its own economy, there are different perspectives on how this should be done, how fast and where. So when you are talking about something further afield, broader region in Asia, Southeast Asia, away from India, and talking about liberalization, that needs focus and concentration and a political consensus to be developed. And we know how difficult it is for India as it is for many other countries to muster the political consensus to make these moves. Many other countries are facing similar pressures especially during the current economic climate. But India’s own experience since 1991 over the last 20 years shows that in fact India can do it and that liberalization does benefit India’s businesses and its people and can transform the way India progresses into the 21st century.

So I hope India will continue to make progress internally and at the same time will continue to engage ASEAN strategically because the more India does so, the more Indian businesses and people will benefit and the more the region will benefit. And the chambers of commerce which represent a great number of companies big and small can help by championing the merits of liberalization and by encouraging India’s business community and India’s government to remain open and to brace and prepare themselves for a competitive and prosperous world.

Between Singapore and India, we should also strengthen our ties. We offer many opportunities for Indian companies. Ours is a globalized economy with an international workforce. It is a good base for Indian companies to work from in order to expand internationally. Many Indian companies have their global headquarters in Singapore; global headquarters covering the whole world, sometimes covering even India. Tata Comms International is in Singapore, just as one example. HCL Technologies service their global enterprise clients from Singapore. And we can be a test-bed for innovative technologies, interesting things which you might not think of, there is one Indian company called Gemesis, and it has a lab in Singapore and the lab is growing diamonds. So Singapore can become a diamond exporter courtesy of our cooperation.

But for Singapore companies too, India is an attractive partner, because perhaps although we are small, there are some of our experiences which you will find interesting and relevant. Just now Mr Godrej mentioned a few of them, and Mr Tarun Das who has spent many years in the CII, and is a very good friend of Singapore, wrote a very thoughtful op-ed published in The Straits Times this week which explained how Singapore had developed niche capabilities in certain areas which complement India’s development agenda, whether it is urban planning, water treatment, infrastructure, education and so forth. He listed ten of them. We felt flattered, I am not sure we can take credit for all of them but we hope we can make contributions in some. And we can see this synergy at work in some of your projects for example the Delhi-Mumbai Industrial Corridor. Singapore companies are participating in this, there is Jurong Consultants which has completed a feasibility study on the Manesar-Bawal investment region which is in Haryana; Hyflux which is a water treatment company is co-developing a seawater desalination plant in Gujarat, in the Dahej special economic zone. Many more companies are interested in this DMIC. Ascendas is interested in developing integrated townships, airports, seaports and utilities. India is growing rapidly; infrastructure is one of your constraints. I think Singapore companies can make a modest contribution participating in helping to develop this infrastructure.

But there is one issue which concerns many companies. It is not just Singaporean ones, but also other countries whose companies think about a lot and I hope that on the Indian side will also be given some thought. What I am referring to is that the investors into India rely on good governance, predictable regulatory regime, and a hassle-free rules-based business environment because they are making major long-term commitments, large sums of money, long gestation, long operating periods, and needing as much predictability and consistency as possible, not just over two or three years, but over 10, 15, 20 or 30 years and the more this can be assured, the lesser the risk, the more easy and attractive it will be for companies to come in and participate.

We have a dialogue going on between our economic agencies in Singapore and India’s Department of Industrial Policy and Promotion which is ongoing to discuss the common challenges which are faced by Singapore companies in India. It is being discussed, I think the companies have given their feedback candidly but with good intentions and we hope out of this dialogue will come a mutually beneficial outcome and improvement in India’s investment climate for all companies and for all investors not just in Singapore and more opportunities where Singapore companies will be able to participate.

We must do more to encourage this bilateral cooperation. As you heard, we are currently conducting the second review of the CECA, the FTA between Singapore and India, in order to keep it relevant to business. It was the first FTA India completed but in seven years, India has made many other agreements and I think it is time to bring the Singapore-India CECA up to date and up to scratch. It has taken longer than expected but we hope to conclude it quickly with meaningful improvements for both sides. And I encourage more interactions between our businessmen on both sides and I am glad that the Singapore Business Federation is co-organizing the Singapore-India Business Forum with FICCI to explore opportunities in India and Singapore in conjunction with my visit. One quick win for both sides is to improve air connectivity between India and Singapore. It was a constraint when we started off, it has been gradually relaxed, more flights have been approved, more services have been launched, more passengers have flown. But as the passenger movements have grown, the demand continues to increase and even despite the downturn, the passenger movements continue to grow. But I think there is still further potential. Every week there are 190 services between India and Singapore but if you compare that with the services between Singapore and China, every week we have 260 services between Singapore and China. And whereas between Singapore and China we have unlimited third and fourth freedoms, which means basically open skies between the two countries, with India every new route, every new commission has to be discussed and negotiated. So that I think is preventing us from fulfilling the full potential. There is really no reason to continue this. Both countries are equidistant from Singapore, in fact India is closer, it is five hours from Singapore to New Delhi, it is about seven hours between Singapore and Beijing. So we can liberalize aviation, it will promote the exchange of businessmen, talent, ideas and knowledge and it will provide the pre-conditions for growth and for prosperity.

But it is important that Singapore and India go beyond economic and financial issues and strengthen ties across a broad range of areas – arts, culture, education, security, defence, and so on. So I welcome the new bilateral initiatives which have been launched on this visit.

For example, Prime Minister Manmohan Singh and I will be witnessing the signing of an MOU on Cooperation in Vocational Education and Skills Development. And it is an MOU between our Ministry of Education and India’s Ministry of Labour and Employment and what it will set the framework for will be for our Institute of Technical Education and the Delhi State Government as its partner, its Department of Training and Technical Education, to establish a World Class Skills Centre in New Delhi to train 15,000 students in electronics, hospitality, finance and other fields. It is an area on which we have put a lot of emphasis in Singapore to make sure that all our students get good post-secondary education, education which is practical, which is technical, which is valuable, which will equip them for jobs when they go out into the workforce which will equip them to continue learning and educating themselves throughout their working lives and we have built up some experience and we are happy that we are going to cooperate with the Delhi State Government and start a centre in Delhi and try to do something adapted to India’s circumstances.

Secondly, our two Speakers of Parliament will launch the India-Singapore Parliamentary Friendship Group. It is one more platform for bilateral exchanges, this one between our parliamentarians, we can gain much by rubbing shoulders with your MPs and their experience operating in the world’s largest democracy and I think the most vibrant Lok Sabha and I hope our experience will be of interest to Indian lawmakers too. So I look forward to exploring and developing even more areas of cooperation in the future.

Pandit Nehru once said “India is so situated as to be the meeting point of Western and Northern, Eastern and Southeastern Asia” and he visited Singapore three times and therefore, today in Singapore, by the Singapore River, we have installed a bust of Pandit Nehru, a memorial to mark this historic relationship between Singapore and India and his personal involvement in that. There are still many opportunities to be reaped by integrating ourselves more closely with one another, and with the region, and I look forward to working with India to build a vibrant and dynamic future for Asia, thank you very much.

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