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"We are seeing the renaissance of Asia led by China and by India"

P.S. Suryanarayana

Singapore remains committed to its Comprehensive Economic Cooperation Agreement with India, says Senior Minister and former Prime MinisterGoh Chok Tong.In an interview in Singapore before his departure for India to attend the Partnership Summit being organised by the Confederation of Indian Industry, Mr. Goh takes stock of the bilateral relations. Excerpts:

— Photo: Rajeev Bhatt.

Goh Chok Tong: "India is moving, reforming, and performing."

For Singapore investors, India continues to be an optional destination rather than a preferred destination as was expected under the Comprehensive Economic Cooperation Agreement (CECA), which the two countries signed in June 2005.

Mr. Goh: China has always been a major destination for Singapore investors. China opened up much earlier than India. Secondly, most of our business people are of Chinese origin. There are [ethnic] Indian businessmen, much fewer than the Chinese. The Chinese businessmen have advantage, compared to India, when they go to China.

When I was Prime Minister, I saw the potential of India. Why? India has talent, both inside and outside India. Secondly, India has a big population, which means it has a huge market. India also has abundant labour. I, therefore, encouraged Singapore businessmen to go to India.

Now that India has proven that it is [staying] on track in its reforms, there will be increased interest in India. But compared to China, it will remain small, for the time being.

I see it as my job, when I go to India, to tell people that the potential is not quite realised by Singapore businesspeople: Look at India, not as an alternative to China, [but] as a new area which we have not been tapping.

Will CECA be a stimulant?

CECA document is 700-page thick. And, it is only half-a-year old. We have to do a lot of [selling of] what CECA means for businesspeople, not just India, not just Singapore business people but also for multinational companies based in Singapore or who would base their operations out of Singapore.

There will be stronger protection for our [Singaporean] investments under CECA. And, there could be some capital gains advantage. Services would also benefit. We are exploring mutual recognition agreements [whereby] India will benefit more than Singapore. I would expect Indian professionals to come to Singapore in larger numbers than they are able to come now. This needs to be given a push, which we are trying to do.

That particular dialogue also seems to have hit the slow track.

It is unfortunate. When you leave the matter to the professional organisations, they want to protect their own professions. From the government side, we are going to push and make sure that they are on track.

For the banking side, we have admitted two [Indian] banks into Singapore: Baroda, which is an offshore bank, and UTI, a merchant bank. There is definite interest by our local banks to set up branches in India. We are committed to CECA.

Your sense about how committed India is to CECA.

They are committed. We should not raise expectations, CECA is a free-trade agreement, Singapore is a fairly free economy. There are other factors [which] will include alternative destinations for investments, alternative markets.

The other factor, China, has always been a fact of life in India-Singapore interactions. In that sense, one expected CECA to act as a stimulant or a catalyst ...

How big a stimulant, I don't know. Because of our resources being committed to China and now [because] Singapore is looking at Middle East, I would not expect a sudden flourishing of trade and investments between both countries [India and Singapore]. It will be a stimulant, but the dosage, I am unable to assess at this moment.

Are you sure there will be no slide-back?

As far as the [Singapore] Government is concerned, I am sure there will be no slide-back.

But the [ethnic] Chinese businessmen feel that they are more comfortable in China.

Are you looking at any time-frame for CECA success?

Give it two years. There is some disappointment [now] just because we were raising expectations. We have done free trade agreements with other people.

We know that it helps, but you would not see a sudden transformation of relationship.

Do you at least see CECA as a new dynamic?

Yes, of course. Implementation is slower than what you want. I will be assuring my Indian counterparts [and] businesspeople that Singapore remains committed to CECA. We never believe in paper agreements.

As the original architect of CECA in relation to India, what is your summing up at the present moment?

This is like a marathon. It is not a 100-metre dash.

Most of Singapore's investments in India are equity-oriented rather than direct, participative ...

That is probably true. We are a capital-exporting country. Bear in mind that these are not short-term investments [in India]. Direct investments mainly have gone into property, because Singapore's expertise is in property development, industrial estate. You are sinking money into the ground. If the Indian economy doesn't take off, your money is stuck in the ground.

Singapore's strength in manufacturing is in sub-contracting for MNCs (multinational companies). If you are looking for a burst of investments from Singapore in the manufacturing sector in India, it is not there. It is also not there in China.

In the infrastructure sector, the Changi Airport episode (pullout from an Indian airport project bid) ...

Optimistic assessment is we are still with the learning phase. When they [Changi Airport] discovered that there were certain things which they could not quite deliver, they pulled out. The returns were not what they expected.

Can this shock be absorbed?

It is possible. Port of Singapore Authority [too] would want [only] ports which can be linked to Singapore. We have no direct influence [over government-linked companies], we do not interfere.

No alarm bells on the Singapore-India economic front? Wake-up calls?

There are wake-up calls. I am not alarmed. But I am, in a sense, disturbed that it could have repercussions beyond the failed joint venture projects.

Your famous statement about India and China being the two wings of the ASEAN (Association of South East Asian Nations) jumbo jet. Is it (true) after the recent East Asia Summit?

Yes. I am quite struck by Prime Minister Manmohan Singh's vision of East Asia community and pan-East Asia free trade area. I continue to believe that we are seeing the renaissance of Asia led by China and by India. Both are stirring.

At this stage, China is faster than India, but India is also moving, reforming, and performing.

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