Singapore PM comes to India bearing a warning

As per Lee Hsien Loong, the prime minister of Singapore, India is not as open for business as investors hope and think.

The whole host of problems according to him includes land acquisition, over regulation and legal hassles which are biggest among the bottlenecks.

For trade to grow, India should make a strategic decision to encourage independence, much more openness and try to emulate a more trade-based economy like Singapore.

India’s growth rate increased mainly because it was prepared to open up the economy for free trade and loosened government control, enabling investments and freeing up entrepreneurship.

This made the big fives like Tata, Mahindra, L&T, Infosys go all over the world to expand their business presence. But India has to reciprocally allow other countries to operate in India too.

It cannot be a one way arrangement, said Lee in a sharp critique of the operating difficulties that keep businessmen from other countries off from doing business in India.

Despite stepping up trade ties as part of Modi’s Look East initiative, bilateral trade between India and Singapore is not phenomenally good. Trade between the two countries declined year after year, and was down to 11.2 per cent in 2015-16 to US $15.02 billion, compared to US $16.93 billion in 2014-15, with Indian exports to Singapore further dropping to 21.2 per cent in a single year.

However, Singapore is the second largest source of foreign direct investment (FDI) in India. The total FDI for Singapore in India has totaled USD 45.88 billion (April 2000 to March 2016). In the last financial year, the FDI inflows stood at $13.69 billion.

Asked about cross-border terror, Lee commented that it is quite possible for an attack to be mounted on Singapore from beyond its shores any time, it being a very small island nation.

Lee said it is important for India to have a tactical response to terror attacks from neighbouring countries. At the same time, it is necessary to develop a relationship that is stable and constructive with Pakistan, which of course is proves to be quite difficult.

It is certainly difficult and not easy to do but it is something India and Pakistan have to work at, Lee said.

Coming back to doing business in India, he said any foreign investor must understand the geopolitical environment that they have to live in and things like terror attacks will happen every so often and one has to look long-term without getting excited every time something happens. “Then it will be difficult to sustain your business in India or any country for that matter”, said Lee.

Lee said India is an important ASEAN dialogue partner at the East Asia summit. He hoped that India will take a more liberal approach in Regional Comprehensive Economic Partnership (RCEP) negotiations and free up trade and promote regional integration. you need to promote “Make in India” and to make exports grow for which there is need for foreign trade, not more protective trade.

The RCEP negotiations need to be wrapped up this year by India. But then there is logjam of free trade agreements on all regions of the world which makes it difficult for India to keep the timeline in concluding RCEP negotiations.

After comprehensive talks with his Indian counterpart Narendra Modi, Lee Hsien Loong said the two sides discussed furthering Singapore and India’s economic ties, for instance by setting up a finance dialogue between the Finance Ministers of the two countries – on the Singapore side Shanmugaratnam and on the Indian side Jaitley to find win-win outcomes for both countries, Lee added.

Singapore is happy to support India’s efforts to transform its economy and give India’s youth the skills they need by offering them a wide range of higher educational opportunity in Singapore. Lee said his country is the largest source of FDI in 2015 and more than 8,000 Indian companies are present in Singapore.

On his part Lee said, Singapore remains a foreign investor in India and will continue to contribute, wherever possible, to India’s remarkable development story.