Special access for Indian businesses under CECA

Mr Gerald Giam Yean Song asked the Minister for Trade and Industry if he will provide an update on the Comprehensive Economic Co-operation Agreement (CECA) negotiations and, specifically, whether India is entitled to special access to Singapore’s labour market or banking licences under the terms of CECA.

Parliamentary Question on 8 October 2014

UPDATE ON SPECIAL ACCESS FOR INDIAN BUSINESSES UNDER BILATERAL FREE TRADE AGREEMENT

Mr Gerald Giam Yean Song asked the Minister for Trade and Industry if he will provide an update on the Comprehensive Economic Co-operation Agreement (CECA) negotiations and, specifically, whether India is entitled to special access to Singapore’s labour market or banking licences under the terms of CECA.

The Minister for Trade and Industry (Mr Lim Hng Kiang): Mdm Speaker, the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) entered into force on 1 August 2005. CECA provides for reviews to examine issues related to the Agreement. The first review was completed in 2007 and the second review is on-going.

CECA has increased trade and investment flows between India and Singapore. Bilateral trade grew from S$16.6 billion in 2005 to S$25.5 billion in 2013. Foreign Direct Investment (FDI) from India into Singapore grew from S$1.3 billion in 2005 to S$20 billion in 2012. This has helped to create good jobs for Singaporeans.

CECA serves to bring conveniences to businesses by allowing temporary entry on both sides for certain categories of persons, including business visitors, professionals, and Intra-Corporate Transferees.

Under CECA, Singapore agreed to grant three bank licences with Qualifying Full Bank (QFB) privileges to Indian banks, subject to the prudential requirements of the Monetary Authority of Singapore (MAS). Two Indian QFBs, namely State Bank of India and ICICI Bank, have been approved to date. At the same time, India agreed to allow the three Singapore banks to open a total of 15 bank branches in India and 11 branches have been approved so far.

Mr Gerald Giam Yean Song (Non-Constituency Member): I have two supplementary questions, Madam. I understand that India is claiming that our Work Pass framework, which has been tightened in recent years, somehow violates CECA, or they are saying that they are entitled to allow more workers to come in here. So, can the Minister share with us his interpretation of what India’s claims are?

Secondly, can the Minister also share Ministry of Trade and Industry (MTI)’s position on this, and also give us an assurance that the Government will stand up to pressure from the Indians to allow more of their nationals to work here?

Mr Lim Hng Kiang: Under the Free Trade Agreements (FTAs) that we negotiated, there is an exchange of preferential treatment. In India’s case, in CECA’s case, one of the privileges we extend to India was to create greater conveniences for business people to move between the two countries, Singaporean businessmen to India, and vice versa.

One category is Intra-Corporate Transferees. That means if you got employees that you have employed and you are setting up a business in Singapore, we facilitate the transfer of your corporate employees to help you set up and run the business.

Under the General Agreement on Trade in Services (GATS) in World Trade Organization (WTO), we grant such Intra-Corporate Transferees, say five years. In India’s case, we allow them to do so for eight years. These are the kind of privileges.

All these privileges do not deviate from our right to apply measures to regulate the entry as well as a temporary stay. So, the overall immigration and employment rules that we regulate have to be maintained. But where the special privileges are negotiated in the FTA, then, of course, the counter-party will enjoy those privileges. And we will follow these rules strictly.

Mr Gerald Giam Yean Song: Madam, I understand the point about the privileges. My question is, are we granting them all the privileges that they are entitled to under the CECA, or are they saying that we are not granting them enough? If it is the latter, would that mean that, effectively, the Indians are asking for more Work Passes for themselves?

Mr Lim Hng Kiang: The privileges are clearly delineated in the FTAs and in CECA. As I had explained just now, say, for example, Intra-Corporate Transferees, if the Indians dispute that we are not giving them eight years as we agreed, then they can refer the case to us and, ultimately, there is a dispute settlement process.

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Source: Singapore Parliament Reports

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.