Speech by Mr Heng Swee Keat, Minister for Finance at the Singapore Symposium 2018, 28 June 2018, 6:30 pm at the Taj Diplomatic Enclave Hotel, New Delhi, India29 Jun 2018
Ambassador Gopinath Pillai
First let me thank Ambassador Gopinath Pillai, Mr Tarun Das and Mr Banerjee for organising this event and bringing us together. The inaugural Singapore Symposium was held here almost a decade ago, attended by MM Lee Kuan Yew.
India and Singapore share a long-standing and deep relationship.
2015 marked the 50th anniversary of diplomatic relations between India and Singapore. PM Modi and PM Lee signed the India-Singapore Strategic Partnership during PM Modi’s Official Visit to Singapore in November this year.
- During PM Modi’s most recent Official Visit to Singapore just a month ago, both PMs welcomed the progress in bilateral cooperation and spoke warmly of the growing strategic, economic and cultural ties between both countries.
I particularly liked PM Modi’s characterisation of the relationship between India and Singapore as “the grace and majesty, and the roar, of the two lions”.
Our historical and cultural links are strong.
During PM Modi’s visit, he inaugurated a plaque on our waterfront marking where Mahatma Gandhi’s ashes were scattered off Clifford Pier in 1948.
PM Modi also visited the Sri Mariamman Temple on South Bridge Road, the Jamae Chulia Mosque, and the Buddha Tooth Relic Temple.
This year, we also commemorated 25 years of ASEAN-India relations.
In fact, India’s ties with Southeast Asia go back even longer, more than a thousand years ago.
Written records of maritime links, in Sanskrit and Tamil, can be found from as early as the third and fourth century.
The wave of migration during the colonial period also resulted in the growth of Indian diasporas across Southeast Asia.
Today, about 20% of overseas Indians reside in Southeast Asia.
In January this year, we celebrated the Pravasi Bharatiya Divas in Singapore, which showcased the ancient links between India and Southeast Asia, as well as the strong ties that we have forged over the years.
Today, we build on these longstanding links to enhance our regional cooperation even further.
Singapore, as ASEAN’s Chair this year, remains committed to advancing this partnership.
Re-Emergence of India and China
- 2015 marked the 50th anniversary of diplomatic relations between India and Singapore. PM Modi and PM Lee signed the India-Singapore Strategic Partnership during PM Modi’s Official Visit to Singapore in November this year.
The economic centre of gravity is moving back towards Asia. The re-emergence of India and China plays a key role in this.
During his Official Visit to Singapore, PM Modi delivered the keynote address at the Shangri-La Dialogue - the first Indian leader to do so.
- During his Official Visit to Singapore, PM Modi delivered the keynote address at the Shangri-La Dialogue - the first Indian leader to do so.
India and China both made their marks as great civilisations and are now redeeming their pre-eminence, including as twin engines of the Asian growth story.
India and China were great powers. Both experienced golden ages – the Gupta empire in India and the Tang Dynasty in China – which produced scientific and cultural advances, as well as prosperity for their people.
I am told that Chess was invented in India during that time – this might explain your expertise in strategising and negotiations!
While India and China might have enjoyed limited benefits in the earlier waves of industrialisation and were left behind, we see significant changes today.
Today, both countries are preparing to harness the full benefits of globalisation and of the Fourth Industrial Revolution.
For India, you have one of the youngest workforce among Asian countries.
With the right training and economic environment, this will provide a skilled workforce that can power the Indian economy.
India is working on reforms to reduce poverty and achieve a higher standard of living for the people.
China too celebrates its 40th anniversary of reform and opening up this year.
- India and China were great powers. Both experienced golden ages – the Gupta empire in India and the Tang Dynasty in China – which produced scientific and cultural advances, as well as prosperity for their people.
As India and China re-emerge as regional powerhouses, the rest of the world will be observing with great interest.
- The rise of India and China in a stable and peaceful manner, working in partnership with ASEAN, Japan and South Korea, and the rest of the region, will form the backdrop of the Asian growth story.
- >As PM Modi said at the Shangri-La Dialogue, “Asia of rivalry will hold us all back.
Asia of cooperation will shape this century.” I am very much heartened by PM Modi’s stance.
We must strengthen our collaboration, under an open, balanced and inclusive regional architecture, so that we can complement one another and progress together.
- We also support PM Modi’s commitment towards:
A common rules-based order for the region that believes in the sovereignty and equality of all nations, large or small;
- The central role of ASEAN in the region and its future;
Open and rules-based trade including through the Regional Comprehensive Economic Partnership (or RCEP); and
- Strengthening regional connectivity and ensuring freedom of navigation and unimpeded commerce.
- As a close friend, as well as the Chair of ASEAN this year, Singapore will work with India and the rest of the region to realise the full potential of Asia.
Economic Opportunities and Linkages
Asia is a bright spot in the global economy today.
- Against a backdrop of slower growth in the developed economies, India is expected to grow by 7.8% in 2019; while ASEAN is projected to grow by 5.3%.
India offers significant opportunities -
In trade, infrastructure, smart cities and digitalisation.
- PM Modi’s policies such as “Make in India” and “Digital India” actively capitalises these opportunities.
- India’s potential talent pool of 800 million youth holds much promise in benefitting both India and the larger Asian region.
- In trade, infrastructure, smart cities and digitalisation.
Throughout the region, countries are committed to implementing structural reforms.
Globalisation has been a key impetus for the region to undertake these reforms, to make our economies more efficient and competitive, and harness the benefits of our comparative advantages.
- India too has stepped up its reforms to enhance the business environment.
PM Modi highlighted that over 10,000 measures had been introduced over the last two years to improve the ease of doing business in India. So India has moved up 30 spots in the World Bank’s Ease of Doing Business Index.
I also commend the landmark achievement by the Indian government in implementing the new broad-based Goods and Services Tax last year.
This replaces the previous cumbersome system of national, state and local levies, with a unified value-added tax system.
Over the longer run, the GST is expected to enhance growth through efficiency gains associated with a common market, improved tax compliance, and higher government revenues.
- This replaces the previous cumbersome system of national, state and local levies, with a unified value-added tax system.
- India needs to continue implementing such reforms to boost overall competitiveness and growth prospects.
- Globalisation has been a key impetus for the region to undertake these reforms, to make our economies more efficient and competitive, and harness the benefits of our comparative advantages.
ASEAN too is a region of opportunities -
ASEAN celebrated its 50th anniversary last year.
- Over the last 50 years, ASEAN’s GDP per capita rose 32-fold, from US$122 in 1967 to US$4,021 in 2016.
Economic liberalisation and integration, in particular through the ASEAN Economic Community, has been a key driver for this growth.
Intra-regional trade in goods today is largely tariff-free and non-tariff barriers have been reduced.
Services regulations have been made less stringent and more transparent.
- Investment rules are more pro-business now.
- Intra-regional trade in goods today is largely tariff-free and non-tariff barriers have been reduced.
>With a relatively young population, growing middle class and rapid urbanisation, ASEAN’s full potential has yet to be realised.
- According to a McKinsey study, ASEAN’s “consuming class” will double to 163 million households by 2030, driving demand for a wide range of goods and services.
Many ASEAN countries also plan to increase spending, especially on infrastructure; and this will enhance growth, productivity and competitiveness.
- Growth prospects in the region continue to look positive.
- ASEAN celebrated its 50th anniversary last year.
Against the current protectionist sentiments in other parts of the world, I am very heartened to see the deepening linkages within the region, as well as our continued collective commitment to open markets and regional integration.
China continues to be ASEAN’s largest trading partner today. In 2016, China and ASEAN trade reached US$368 billion. In terms of FDI, China is ASEAN’s fourth largest source with US$9.8 billion of inflows in 2016.
- India is ASEAN’s sixth largest trading partner with US$58.4 billion in trade. India was also ASEAN’s seventh largest source of FDI in 2016, at US$1 billion.
- So I believe that there is potential to do much more between India and ASEAN.
- Given our close linkages with India, Singapore serves as a good gateway for Indian companies to access the ASEAN market and many companies continue to do so. There are now about 8,000 Indian companies in Singapore and more than 440 companies from Singapore in India.
- China continues to be ASEAN’s largest trading partner today. In 2016, China and ASEAN trade reached US$368 billion. In terms of FDI, China is ASEAN’s fourth largest source with US$9.8 billion of inflows in 2016.
Let me now offer some ideas on how we can do more together.
At the Shangri La Dialogue, PM Modi spoke of about how connectivity can unite a region and enhance trade and prosperity.
On that note, I would like to elaborate on “Four Connectivities” that we can work together on.
First, trade connectivity.
The Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore remains a cornerstone of our growing economic partnership.
I remember fondly my days as Chief Negotiator of CECA and am pleased that it has brought about strong economic benefits to both sides.
- The CECA, together with the Avoidance of Double Taxation Agreement (DTA) and the Enhanced Air Services Agreement provided new opportunities for our people and businesses.
I am pleased that the CECA has recently been enhanced through a second review.
- The enhanced agreement will see more Indian and Singaporean companies lower their cost of doing business and thus improve their competitiveness.
Total bilateral trade grew from S$16.6 billion in 2005, the year that these agreements were signed, to S$25.2 billion in 2017.
CECA also promoted greater trade in services, which more than tripled from S$3 billion in 2005 to S$10 billion in 2016.
Under CECA, Indian banks like the State Bank of India and ICICI, and Singapore banks such as DBS and UOB have been able to enter one another’s economy and help to support growth.
- Consumers will also benefit from lower prices for higher quality products.
- The Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore remains a cornerstone of our growing economic partnership.
But beyond bilateral relations, I am glad that CECA paved the way for the wider ASEAN-India FTA in 2009 as well as the bilateral FTAs between India and other ASEAN members, and with South Korea and Japan.
- Enhanced market access creates new opportunities, for Indian exporters and for the region as a whole, as our collective growth potential expands when business and economic linkages are enlarged.
- So we must continue advancing the Regional Comprehensive Economic Partnership or “RCEP” and work towards its early conclusion.
The RCEP will be a game-changer.
- For the first time, the key players of our region – ASEAN, India, China, Japan, South Korea, Australia and New Zealand – will be part of a single economic agreement.
Together, we account for almost half of the world’s population, approximately 30% of global output and global trade, and a fifth of global foreign direct investment inflows based on 2016 figures.
- The conclusion of RCEP will be a concrete show of our commitment to open trade and investment, and to the continued growth and development of our economies and provide more opportunities for our people.
For India, RCEP creates a pathway for “Make in India” products to the regional market and beyond.
And this will create much needed jobs for India’s youths.
So I am glad that PM Modi committed to “reach an early conclusion” for the RCEP.
We look forward to working closely with India to conclude the Agreement, hopefully by the end of this year.>
Let me now move on to talk about the second connectivity - infrastructure connectivity.
Infrastructure needs across Asia are large.
- PM Modi mentioned in Singapore that “the biggest infrastructure story of the world is unfolding in India”; and that last year, India built nearly 10,000 kilometres of national highways – that is over 27 kilometres daily!
- Done well, investments in infrastructure can help boost productivity and economic competitiveness, and lift the long-term potential of India and the region.
- The Indian Government recognises this and has embarked on its ambition to build “100 Smart Cities”.
- Under Singapore’s chairmanship this year, ASEAN too has embarked on the “ASEAN Smart Cities Network” initiative.
- Infrastructure needs across Asia are large.
But what is a Smart City? Ultimately, it is not about using technology, but using technology to improve the lives of our people.
For instance, a Smart City is not just technologically advanced, but also environmentally sustainable.
This is in line with PM Modi’s vision of a “Clean India” - clean rivers, clean air and clean cities.
India is making good strides in this area.
I learnt that it is already the sixth largest producer of renewable energy in the world!
A Smart City also uses technology to address social needs.
I recently visited Japan and learnt about how they are leveraging on Industry 4.0 to work towards Society 5.0.
Society 5.0 is a vision of a smart city, where innovations like the Internet of Things, big data, artificial intelligence and robotics are used to develop solutions for better human life.
- For instance, a Smart City is not just technologically advanced, but also environmentally sustainable.
So I hope that our network of smart cities – across ASEAN, across India, across the region - will become nodes of excellence that can drive sustainable development.
Now to develop this connectivity for the Asian region,
- Singapore recently set up the Infrastructure Asia office, which seeks to harness the collective network and capabilities of public sector agencies and private sector firms, and partner key stakeholders across the region to catalyse more project opportunities to meet Asia’s infrastructure needs.
- The Infrastructure Asia office will bring together the demand or project side, as well as the supply or financing side, of infrastructure projects and facilitate the matching of this demand and supply.
- One platform to do this is the Asia-Singapore Infrastructure Roundtable, which will be held in October this year.
So I hope that Indian companies can join us for this Roundtable and look forward to additional ways to partner the Infrastructure Asia office.
- I hope that the Infrastructure Asia office can pave the way for more investment in Indian infrastructure, joining Singapore entities like PSA, Changi Airport International, Ascendas-Singbridge, Sembawang and Sunseap Solar who have already invested in ports, IT parks, power plants and other services and facilities in India.
India and Singapore can also jointly collaborate with other countries on infrastructure development.
- For example, I am told that Japanese companies are well-received in India, investing in projects such as the Delhi Metro project. South Korean companies are likewise investing in India, and the Asian Infrastructure Investment Bank, which is headquartered in Beijing, has just had its third Annual Meeting in Mumbai to discuss what the AIIB can do, together with World Bank and the ADB, to finance infrastructure for the region.
One model of collaboration that has been quite successful is the joint development of industrial parks by Singapore and other countries,
- For example, the China-Singapore Suzhou Industrial Park.
- With Viet Nam, we have now set up seven Viet Nam-Singapore Industrial Parks.
The third area is improving air connectivity.
With the growing linkages within the region, good air connectivity is essential to support greater trade, investment and tourism flows. It is a critical factor in unlocking India’s, as well as Asia’s, growth potential.
A study by the International Air Transport Association (IATA) estimates that a 10% improvement in Indian air connectivity could potentially lead to an increase in GDP of US$604 million for the Indian economy.
- As seen in many countries, the availability of air services to many destinations is a key driver of foreign investment.
This is certainly the case for Singapore.
India’s Ude Desh ka Aam Naagrik (UDAN) Regional Connectivity Scheme was a good step in improving internal air connectivity within India.
There is scope to further develop India’s external connectivity as well, to realise India’s vision of being a global manufacturing hub and an attractive destination for investment and tourism.
- A study by the International Air Transport Association (IATA) estimates that a 10% improvement in Indian air connectivity could potentially lead to an increase in GDP of US$604 million for the Indian economy.
Air connectivity is critical in facilitating the movement of people and talent in the region. Indian tourists are now the third largest source of tourists to Singapore. We had over 1.3 million visitors from India last year. As I said before, this is a very impressive number. But against India’s population of almost 1.3 billion people, I think there is still a lot more it could grow.
I’m also happy that air services also facilitated the movement of talent, and even for our institutions of higher learning to collaborate more closely with one another.
- Singapore’s Nanyang Technological University, which is now headed by Professor Subra Suresh, recently signed an MOU with some leading Indian universities to strengthen academic and industry partnerships, including the joint PhD programmes with IIT Madras and IIT Bombay.
- As we enhance our business and people-to-people links, I hope that air connectivity will facilitate that people-to-people link. This is something that we should continue to work together on.
Let me now move on to my last point on digital connectivity and innovation.
The potential for digital connectivity for blockchains and for mobile technology to build a more inclusive society is only just being realised.
India recently made bold moves towards financial inclusion through “Digital India” and the national Aadhar system to streamline the administration of social assistance and government applications.
I understand that over the past three years, over 300 million new bank accounts were opened by those who had never had one.
Now almost every household has a bank account.
I was celebrating DBS’ 50th anniversary in Mumbai just two days ago. DBS itself is now being called the “Digital Bank of Singapore” and I think that is a very good development. CEO Piyush Gupta told me that digital banking has enabled him to realise significant economies of scale and scope.
This is a good way for us to improve financial inclusion.
- India recently made bold moves towards financial inclusion through “Digital India” and the national Aadhar system to streamline the administration of social assistance and government applications.
In the start-up space, India and Singapore share a similar vibrant eco-system with both private-led and Government-supported incubators and tech accelerators.
- The presence of more than 7,000 multinational corporations and large local enterprises in Singapore, makes us a useful hub for both Indian and Singaporean start-ups to co-innovate new, disruptive and scalable solutions.
- As I said in Mumbai yesterday, we will be enhancing partnerships among entrepreneurs through the Singapore-India Incubation Programme to bring Singapore start-ups to India.
In the longer term, such developments will form a network of innovation and collaboration between Singapore and India. We will work very closely with the Confederation of Indian Industries in this effort.
We also envision the building of innovation corridors between Singapore and start-up hotspots across India such as Bangalore, New Delhi and Mumbai, as well as in the south. The first innovation corridor with the state of Andhra Pradesh was just launched in April this year.
Another area for collaboration is Fintech.
A cross-border payments linkage between Singapore’s NETS and India’s RuPay was launched during PM Modi’s visit.
The collaboration will enable Indian travellers to make payments using RuPay at all NETS acceptance points in Singapore, bringing about greater convenience.
- We also have established a Joint Working Group (JWG) led by India’s Department of Financial Services (DFS), the Monetary Authority of Singapore (MAS) and other relevant agencies to promote knowledge and increase cross-border linkages between payment systems in Singapore and India.
- We see much potential for India and Singapore to co-create Fintech and digital payment solutions; as well as in new areas like autonomous vehicles, telemedicine and energy innovation. So I hope that Singapore will serve as a good gateway for Indian Fintech companies to enter the region.
- Singapore is organising the Singapore Week of Innovation & Technology, or SWITCH, from 17 to 20 September this year.
SWITCH is a leading platform in Asia to showcase the best ideas, technology and innovation from around the world, and it will be a great networking opportunity for entrepreneurs, corporates and funds in the region.
You may also be familiar with Singapore’s Fintech Festival, which is taking place from 12 to 16 November this year.
This festival has been very successful and is now the world’s largest platform for the global Fintech community.
- So we welcome Indian start-ups and companies to participate in these events and build their networks for collaboration. I met several Indian start-ups during the last two events in Singapore, and I look forward to seeing more.
- A cross-border payments linkage between Singapore’s NETS and India’s RuPay was launched during PM Modi’s visit.
Let me end with yet another quote from PM Modi during his visit to Singapore earlier this month, “The future is a world of unlimited opportunities.
It belongs to us.
It is up to us to be ambitious and bold to seize it.
This evening tells us that we are on the right path.
The two lions shall step into the future together.”
Together, we can do great things to improve the lives of our people and those in the region.
- I look forward to deeper collaborations in the future. Thank you very much.
- So this is another area that India and Singapore can collaborate, either bilaterally or in partnership with a third country.