India-Singapore ties are enduring and bipartisan: Singapore Foreign Minister Vivian Balakrishnan

Mr. Balakrishnan calls Regional Comprehensive Economic Partnership a missed opportunity, hopes for Ministerial Roundtable soon, opportunities to deal with sagging investments

Updated - June 09, 2024 09:16 pm IST

Published - June 09, 2024 09:13 pm IST - SINGAPORE

Singapore Foreign Minister Vivian Balakrishnan. Photo: Ministry of Foreign Affairs, Singapore

Singapore Foreign Minister Vivian Balakrishnan. Photo: Ministry of Foreign Affairs, Singapore

With a new government in place in Delhi, Singapore hopes to schedule the Ministerial Roundtable (ISMR) with India shortly, says Singapore Foreign Minister Vivian Balakrishnan. In an exclusive interview, Mr. Balakrishnan spoke about the impact of the elections on ties, the “missed opportunity” of the Regional Comprehensive Economic Partnership (RCEP), and the new buzz around Andhra Pradesh’s capital Amaravati.

Edited excerpts:

Singapore Prime Minister Wong has tweeted congratulations to Prime Minister Modi. Indian elections have thrown up some surprises. How do you think results will impact India’s Singapore ties?

I don’t think it’s going to affect our relations, which are deep, enduring, and bipartisan. First of all, I would say India is a democracy. And speaking as a practising politician, who has to win votes at every election, you can never be sure until polling is closed, the boxes are sealed and then counted. So all the punditry, all the speculation beforehand is relevant till the moment the votes are counted. In a democracy you prepare to be surprised, that is the first point. Second point is that if you zoom out of this election, look at India’s election outcomes, I think Prime Minister Modi is the only Prime Minister since Prime Minister Nehru to get a third term… in a robust democracy that’s already an incredible achievement.  We can argue about margins, we can argue about surprise, but nothing takes away from that historic achievement . Actually, unless you’re on the ground, you don’t quite know what is the complex compendium of reasons that people ultimately choose one way or the other. So I think we should all be humbled. All politicians should be humble, and that includes the commentariat as well.

To look at the bipartisan element of Singapore-India ties, they have long historical, cultural, linguistic and commercial ties. If you look in terms of the flow of investments over the past two and a half decades, I’m always surprised that this tiny city state like Singapore can account for more than 20%. As India continues its economic opening I would expect, in proportionate terms, our share to be reduced, not because we are less interested, but because the rest of the world has cottoned on to the fact that India is a growth frontier.

Since 2018, Singapore has been the highest FDI source for India. But over the last year, investment levels actually dropped more than 30% How do you see the two countries trying to improve that ?

Investments (in India) are going to continue to grow simply because of the prospects. India is now the 5th largest economy and if you believe the trends could well become the third as soon as 2027. At 1.4 billion people, India is now the most populous country in the world. It’s got a demographic dividend. If, and this is a big if, you can match jobs with the skills and education of the young people, then, given what’s happening on the geostrategic stage, the contest between the United States and China, the next five to ten years are an enormous opportunity for India. So I see investments flowing to India. I would expect Singapore to also look at opportunities there.

Also read | Sri Lanka, Bangladesh mull over joining RCEP bloc

And where do you see the bottlenecks, or is India easy to invest in?

I would say India has never been the easiest to invest in. Doing business in India has never been easy for any businessman, Indian businessmen as well as Singaporean businessmen. But take a 10- or 20-year look back and clearly it has opened up. It has become easier and more predictable. In the case of Singapore, we have a free trade agreement.  We still think it was a missed opportunity [for India to withdraw from] the Regional Comprehensive Economic Partnership, which was really between ASEAN and its dialogue partners. But I understand the political and the strategic reasons, that it was really India’s anxiety about China, rather than India’s aversion to Southeast Asia. So be that as it may, I think trade with Southeast Asia will continue to grow, and of course, our trading account between India and Singapore, I think, will also continue.

On digitalisation, digital ID, digital finance, India is way ahead. It’s no accident that our PayNow system is also linked to UPI. And I think this will set a model for future cross border digital payments. The next trend, which I’ve noticed, is infrastructure. And here you know, if you travel to India the railways, aviation, roads… there’s no doubt that has improved significantly. The third dimension is manufacturing. Let’s say, you go back to 40 years ago, India was diffident about manufacturing. And the fourth change I’ve noticed is on governance and policy frameworks, making processes more transparent, a level playing field, even tax reform which also facilitates cross border trade and movement of goods and services and allows the Indian economy to function as a continental-size whole, which is what China has been doing for decades. I would expect these things to continue, almost regardless of which party or which coalition happens to be in power.

Do you hope that the new government would reconsider what you call a “missed opportunity” with RCEP- especially as India’s neighbours like Sri Lanka and Bangladesh are now applying to join?

No, that’s a decision for India….and the [Indian] government knows my views on RCEP.

The U.S. also missed an opportunity on TPP.  But actually, to be fair, the story on free trade economic liberalisation is actually one in which politicians have failed to make the case to the people. And I think as long as people do not feel sufficiently secure, some businesses and some people may feel unable or less able to compete. And it is important for domestic, social and economic policies to put in place either the compensatory mechanisms or to help people make that transition so that the activities that they are engaged in domestically are competitive globally. And by that I mean education, investment in infrastructure. If you don’t do that domestic homework, you’ll get a political pushback. I do not expect to see a sudden change in the attitude to trade policies, because of domestic politics. And secondly, the pushing and shoving that’s going on at the superpower level, and also the bitter lessons that COVID-19 inflicted on our people, that you can’t just base your supply chains on just in time or just cost. You also need to have assurance, resilience and reliability.

In this election, Andhra Pradesh has re-elected Chief Minister Chandra Babu Naidu, who was responsible for the Amaravati capital city project involving Singapore. How badly did shelving that project in 2019 affect India-Singapore ties and do you see the possibility of a review given the change in government.

I don’t want to get into specific projects or specific personalities, although I do know Mr. Naidu well. The larger point is that it is important for long term projects and collaborations to have bipartisan support, to have demonstrable benefits to locals and to have to give investors an assurance that the rules are predictable. Do sudden, abrupt reversals, especially reversals due to change of political cast erode confidence for investors? Yes, they do. The solution is to do more homework, make sure that the projects that we start stand the test of time, and it just means we all have to be careful. On the review, let’s just put it this way, even if there is to be new developments in that area [Amaravati], I think we will look at it with fresh pairs of eyes. We are living in the digital age, and five years is another age.

To turn to geopolitical issues, at the Shangri-La Dialogue in Singapore last week both the U.S. and the Chinese Defence Ministers gave some tough statements particularly with regard to Taiwan. How concerned are you about a larger conflagration in the South China Sea affecting Singapore?

We are concerned, although, I would add that I think a United States- China clash is not imminent or inevitable. But we are concerned, because even if it is a low probability, it is a very high impact event for Singapore, which is literally at the junction between the Indian Ocean and the Pacific Ocean, a city state whose trade volume is three times our GDP. You don’t even need outright hot war in the Pacific to raise the cost. Just elevating tensions immediately raises insurance premiums immediately which is inflationary in its own right. So yes, we are concerned.

Second point, I would rather the exchange of tough words than the exchange of bullets. And to the extent that we can serve as a platform for honest conversation, sometimes public, but I hope even more private communications will occur that can promote a greater appreciation of each other’s respective positions. I think that agreement is something which comes about later, but just a better appreciation for each other’s assessments, anxieties, hopes. I think that’s positive.

WATCH | Trade diplomacy: What’s the status of India’s Free Trade Agreements?

I ask because just two months ago, when the Philippines faced a conflagration with the PLA-Navy, the sense was that ASEAN countries, including Singapore, did not push in with the support they needed…

No. If you look at what ASEAN has been doing internally, our own conversations and our own consensus is that we want to maintain ASEAN centrality. We want to maintain peace and stability. We want to ensure that that there is a peaceful resolution of disputes. We want to maintain the primacy of UNCLOS, the United Nations Convention on the Law of the Sea. If you look in terms of activity, the ongoing negotiations for the code of conduct for this is very difficult, you know, almost tortuous, but very necessary, that’s still going on. The flip side of your question is, would public pronouncements be helpful? My own view is that it would not be helpful. Far better that internally we have a consensus. Externally, we are engaged in negotiations with China, and nothing we say or do should aggravate the situation or escalate tension. So this is not the ideal circumstance, I mean, certainly for ships to be in the South China Sea in close proximity, collisions, or based on the reports, lasers and water cannons being used…. So I hope they’ll find a way, because it is really unnecessary and it is provocative.

China has rejected UNCLOS judgements, and appears to be changing the cartography in the region…

I’m not sure China has rejected UNCLOS. I think what they have said is they do not accept the arbitral ruling of 2016 ( in favour of the Philippines). I don’t want to mischaracterize that position.

Point Taken, but this is now becoming a region wide phenomenon. We have already seen Indonesia and Vietnam and other countries protest against Chinese military movement in the sea. Last month saw India-Singapore military exercises. Do India and Singapore plan to strengthen cooperation to safeguard the Malacca Straits?

There are several questions in there. First, on the naval collaboration India and Singapore have been doing maritime bilateral exercises called SIMBEX uninterrupted since 1994. SIMBEX is an illustration of the close, long-term, bipartisan, strategic relationship between India and Singapore, and it’s not just the Navy. And I don’t think it’s directed at any other  power, and I would not want to characterize it that way. Secondly, for every single Southeast Asian nation, and for the claimant states, the South China Sea is of sovereign importance but it is only one item in a much longer checklist, which overall define the relationship with China. In fact, if you ask the Philippines, I don’t think that even they want their relationship with China to be defined by one issue in the South China Sea. And the third point, therefore, is that yes, issues will come up from time to time, because the last 40 years has seen the centre of gravity of strategic weight change. 40 years ago, China’s share of global GDP would be 2% and now it is 16%. 

Now, as India’s economic heft increases and its supply chains and its trading routes also expand, India will have strategic interest in protecting the waterways and most of India’s interaction with Asia has always been maritime. So for the Indian Navy to grow, for the Indian Navy to be visible in more parts of the world than just Singapore, I take that as a given. So my point is that all these trends should not be viewed as escalatory or threatening. They reflect the reality of a growing China last 40 years, a growing India for the last 30 years, and in fact, for the next two to three decades.

In that context, do you support India’s export of the Brahmos missile to the Philippines, and exporting such defence hardware to other ASEAN nations?

I am not in a position to tell India who or when it can export to, but again, take a step back. Does India have an industrial military capacity? The answer is yes. Will India’s industrial military capacity expand in the future, given both the geo strategic competition between the superpowers and India’s own enhanced manufacturing ability, answer, clearly is yes. So your question is, Will India be selling more, possibly be sending more armaments to other countries in Asia, I would expect that to be the case. It doesn’t necessarily mean to be escalatory or pointed at any other party. I mean, to be fair, if you look at India’s position, since independence, India has been nobody’s lackey and nobody’s proxy. It has always exercised independence. It was a founder of the non-aligned movement. I’m not particularly a fan of the term non-aligned, I much prefer Dr. Jaishankar’s characterization that India won’t take anybody’s side. It takes its own side.

Also read | Indian naval ships complete deployment to South China Sea

India is a member of the Quad. As the US seeks more coalitions in this in the Indo Pacific region, some of them are security architecture, like the AUKUS, would Singapore consider being part of a Quad Plus?

No we’re not into those sort of groupings. Having said that, we do have excellent ties if you look at the individual members of the Quad. We are not a treaty ally of United States, but we’re a major security cooperation partner- a sui generis category with only one member Singapore. With Japan, we don’t have a military relationship, but we’ve got excellent economic relationship. With Australia, it’s very close strategic alignment. And it’s not really a secret, that we train in Australia. In fact, I suspect we may be one of the largest foreign armed forces on Australian soil. With India, as I said, for decades, we’ve also had excellent strategic, economic, military relations. I see no need to package it when you can have a bespoke and great relationship with all the individual members.

To return to bilateral ties.. how soon do we expect high-level meetings to engage with the new government in Delhi? 

The India Singapore Ministerial Roundtable (Foreign-Finance-Commerce Ministers) is overdue, so I hope it will happen in the next couple of months.  I think we will wait for the cabinet in India to be announced and it will be very high on our agenda to schedule the ISMR. 

We’ve deliberately chosen priority areas in terms of the opportunities that are emerging- (food cooperation; digitalisation; energy and green economy projects; skills development; and pharmaceuticals and healthcare). We should focus less on government pronouncements and more on business decisions, where the investments are going, where the trade flows, where what kind of businesses and new businesses are emerging, first within India and within Singapore, and  where it makes sense for us to do things together. India is a source of very talented people that are involved in the delivery of healthcare, because even it is digital age and AI, you’re still not going to remove the need for human touch, human communication. In terms of manufacturing, electrification of transports, and I expect to see a lot of that production occurring in India as well. If you look at Aviation, you just look at the way aviation industry grew in China in the last two decades, and you can transpose that to India in the next two decades…It’s no accident that even Singapore Airlines is now one of the major stakeholders as well (TATA-SIA). And then they look in terms of the opportunities for our companies- industrial parks, real estate, services, cross Border Services, as example, from the financial and FinTech space. Look at what our banks are doing, our financial institutions, and not just India and Singapore, but for us to connect South Asia to Southeast Asia. So I want to end on that note of optimism.

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