The city-state of Singapore, in spite of its size, has emerged not merely as a model of efficient governance, but has also been successful in expanding its geo-political and economic interests. Apart from its strong location, a number of other factors have contributed to its success, including its ability to get the best of both East and West. Ian Bremmer has rightly argued:
“Singapore’s planners have worked hard to marry Eastern culture and Western business practices, and it’s now the world’s third-biggest financial center, behind London and New York … Foreign companies looking to set up shop in Asia want a base that provides access to all of Asia’s power economies without over-reliance on any of them, and Singapore has done well by offering many of these companies a home … This island remains open for business.”
Realizing the fact that it will benefit from greater trade integration, Singapore has ardently batted for trade agreements, and is part of over 20 trade agreements, the latest being the Trans-Pacific Partnership (TPP) from which the US has pulled out from. The agreement will be signed by 11 countries, including Singapore, in March 2018 (the others being Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru and Vietnam). The agreement will give Singapore access to a market of well over 500 million people. When the US pulled out of the agreement, Singapore was critical of the decision. Before his visit to the US in October 2017, Singapore Prime Minister Lee Hsien Loong in an interview with CNBC made it amply clear that an isolationist US approach towards Asia was not beneficial for either side.
It would be pertinent to point out that Singapore has also played an important role in connecting South Asia with East Asia. It would be fair to say, that in addition to the economic reforms of 1991, and the efforts of successive governments, Singapore deserves credit for helping India strengthen ties with ASEAN. Recently, the Modi Government invited 10 ASEAN Heads of State as Chief Guests to attend India’s Republic Day Parade commemorating the 25 years of India-ASEAN ties. A two-day India-ASEAN Commemorative Summit was also held.
Then-Prime Minister Goh Chok Tong of Singapore who was invited as a Chief Guest to the Republic Day Parade of 1994 had spoken about creating a “mild India fever.” Then Indian Prime Minister Narasimha Rao visited Singapore that same year and outlined India’s vision for ties with ASEAN which was later dubbed as its “Look East Policy.” Even when other countries were pessimistic about India’s discontinuation of economic reforms, and after the fall of Narasimha Rao’s government, Singapore’s then-Prime Minister Goh remained optimistic, and while establishing a rapport with Rao’s successor Deve Gowda, he urged him to not just broaden ties with Singapore, but also grant a larger role to India’s state governments.
Today, ties between India and Singapore have burgeoned both in the strategic and economic spheres. In terms of foreign direct investment (FDI), India received USD 8.71 billion from Singapore for the period 2016-17. Both countries signed the Comprehensive Economic Cooperation Agreement (CECA) in 2005, and bilateral trade is estimated at USD 16.7 billion as of 2016-17. This is way below their actual potential, and both countries have set an ambitious target of USD 25 billion for 2019-20.
Over a period of 15 years under SLSFTA, Sri Lanka will eliminate tariffs on 80 percent of Singapore’s exports. This means a potential tariff savings of about SGD 10 million each year.
India has also been reluctant to join the Regional Comprehensive Economic Partnership (RCEP), which consists of the 10 ASEAN member states along with their 6 partners; India, China, Japan, South Korea, Australia, and New Zealand. However, Indian Commerce Minister Suresh Prabhu, in his address to the ASEAN India Business and Investment Meeting and Expo in New Delhi, stated: “We will work closely and constructively with all RCEP member countries, particularly with ASEAN towards early conclusion of the negotiations.” Minister Prabhu reiterated that the concerns of all members, including India, need to be addressed. India is seeking greater liberalization of the service sector, especially in the context of easier movement of its professionals towards RCEP countries.
Economic linkages have been accompanied with a deepening in strategic ties. In 1994, the two countries started the Singapore-India Maritime Bilateral Exercise (SIMBEX). During Indian Prime Minister Narendra Modi’s visit to Singapore, the bilateral relationship was elevated to that of a Strategic Partnership. In 2017, during the visit to India of Singapore Defence Minister Ng Eng Hen, an agreement was signed between both sides to deepen maritime cooperation. According to the Indian Defence Ministry, “the India-Singapore Bilateral Agreement for Navy Cooperation … will lead to increased cooperation in maritime security, joint exercises, temporary deployments from each other’s naval facilities and mutual logistics support.”
Around the same time as the commemoration of India-ASEAN ties took place, Singapore and Sri Lanka signed the Sri Lanka-Singapore Free Trade Agreement (SLSFTA). Sri Lanka is emerging as an important success story, especially with its geographical location as well as immense potential in South Asia. Over a period of 15 years under SLSFTA, Sri Lanka will eliminate tariffs on 80 percent of Singapore’s exports. This means a potential tariff savings of about SGD 10 million each year. SLSFTA was signed by Singapore’s Minister for Trade and Industry S. Iswaran and Sri Lanka’s Minister for Development Strategies and International Trade Malik Samarawickrama, and the signing was witnessed by Singapore Prime Minister Lee Hsien Loong and Sri Lankan President Maithripala Sirisena.
Singapore’s Ministry of Trade and Industry stated that SLSFTA will “position Singapore as an early and supportive partner of Sri Lanka’s economic liberalisation plans and development.” Minister Iswaran highlighted the benefits for Singapore and Sri Lanka of the agreement, especially access to the ASEAN market: “For Sri Lanka the opportunity to access the ASEAN market is important. Their businesses are keen on that, working with Singapore partners. And likewise for our companies, accessing Sri Lanka — but through Sri Lanka, accessing the South Asia market.”
While Singapore has been supportive of trade agreements, given its own interests, it also needs to be lauded for its ability to spot opportunities in South Asia, and for emerging as an important bridge between South Asia and Southeast Asia. While other parts of the world are becoming insular, South Asia led by India is likely to remain open, and Singapore is likely to benefit from the same. PM Modi in his speech at Davos pitched fervently for globalization and other countries in South Asia are following suit.