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Singapore, India seek new
era
By A Ganguly
BANGALORE -
Indian service professionals such as engineers,
accountants and high-tech specialists are poised to
emerge as immediate gainers as Singapore and India begin
to work on a free-trade agreement.
The Closer
Economic Cooperation Agreement that will be a goal of
Singaporean Prime Minister Goh Chok Tong's three-day
trip to India that ends on Thursday will go beyond
tariff cuts on S$6.8 billion (US$3.8 billion) of two-way
trade. New Delhi is likely to press Singapore to let
more of its white-collar talent participate in the
island's affluence.
Singaporean Trade and
Industry Minister George Yeo has said that his
government is prepared to recognize and offer employment
to Indian professionals if New Delhi pushes such a
proposal. He went to the extent of inviting Indians to
make Singapore India's extension to Southeast Asia and
East Asia - a clear indication for a red-carpet roll-out
for overseas professionals to help boost the slowing
economy of the island nation.
Singapore has
already concluded free-trade negotiations with the
United States, Japan, Australia and New Zealand. It's
now discussing similar accords with South Korea, Mexico
and Canada. Yeo is opening the city-state to more of
India's 1 billion people even though 89,900 of its own
4.5 million citizens are looking for work because a
slump in global electronics demand and war in Iraq have
weakened the island's economy.
The minister's
gamble that the strategy will pay off in the long run
has as much to do with his assessment of India's
economic prospects as the new role that Singapore seeks
to carve for itself. As companies such as Seiko Epson
Corp leave the island for factories in Malaysia and
China, where labor is cheaper, Singapore is seeking to
develop niches outside the manufacturing sector.
"The thrust would be on high-tech services and
the knowledge economy," a regional economist with
Credit-Suisse First Boston said. "It's a two-way game.
It's part of Singapore's larger defensive strategy to
link up with key economic partners and create a
framework that goes beyond merchandise trade, and India
now wants to integrate with East Asia to a much greater
extent than before," the economist noted.
Singapore wants big companies such as Wipro Ltd,
India's largest software developer by market value that
matches Singapore Airlines Ltd, to have offices on the
island and trade shares on its exchange. It also wants
Indian researchers to patent their products and
inventions with it, and sees opportunities for tourism
from and into the subcontinent.
That plan fits
with a broader goal to move away from contract
manufacturing and transform the island into a hub for
biotechnology and electronics, in which locals and
foreigners will create original designs, such as the
sound cards that Singapore's Creative Technology Ltd
makes for personal computers.
Multiracial, with
a fifth of its population drawn from outside, Singapore
has a vision to become "the London of Asia", Yeo said in
parliament last month. "We'll be a center for talent,
for ideas, for intellectual property management."
Remaking Singapore
It's an ambitious
strategy. Yeo described it as a remaking as dramatic as
that in 1819, when Stamford Raffles, an officer of the
British East India Company, took 150 Malay fishermen and
founded modern-day Singapore.
The plan isn't a
quick fix for Singapore's flagging economy, though,
which last year grew 2.2 percent, less than a third of
the average annual rate between 1985 and 2001. For now,
the city's fortunes are tied to manufacturing of
semiconductors, disk drives and other computer parts.
"Singapore cannot continue to depend on
electronics and shipping for growth," said Sanjeev
Sanyal, a regional economist at Deutsche Bank AG. "This
agreement offers India's economy an urban infrastructure
it doesn't have, while for Singapore the evolving
relationship with India will play a very important role
in shaping its future as a global city-hub."
About 8 percent of Singapore's residents are
ethnic Indians, drawn mostly from the southern parts of
the subcontinent. They are part of the reason New Delhi
is pursuing a free-trade deal with a country that
already has zero tariffs on all goods except alcohol,
cigarettes and automobiles. Indians abroad - so-called
non-resident Indians, or NRIs - are important sources of
investment and dollar funds for India, whose junk-bond
debt rating keeps other investors beyond the
government's reach.
Another reason is India's
concern to ensure freedom of travel for the people
involved in its growing software industry. India's
annual software exports, estimated at US$10 billion by
India's National Association of Software and Service
Companies, or NASSCOM, and projected to grow to $57
billion in five years, are delivered not in boxes but by
computer engineers and programmers who do part of their
work in clients' offices.
Delays by some
countries in granting visas for computer professionals
are creating "a new type of barrier, no different from
raising customs duties," said Kiran Karnik, president of
NASSCOM. As many as 195 Indian programmers were detained
in Malaysia on March 9 in a crackdown aimed at illegal
immigrants. The incident brought a diplomatic protest
from India and an apology from the Malaysian government.
However, Singapore is offering a friendly visa regime.
As a first step, it agreed in February to issue
"smart" cards to Indian software engineers working in
disaster-recovery services, which help companies prevent
or recover from events that threaten the continuity of
their businesses. The issue of such smart cards to more
Indian professionals is in the offing.
(©2003
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