Island city-State Singapore has become a favourite hunting ground for Indian companies going global. This is in order to access finance and global consultancy services.
Some of the best-known Indian companies have used Singapore as a regional hub. These include GVK, Lanco Infratech, GMR, to launch their global businesses and make cross-border buyouts.
Interacting with
Many Indian companies are venturing overseas to backward-integrate their operations by securing upstream resources such as coal mines as well as plantations.
Singapore is currently the number two destination for India’s outbound investments. There are currently more than 4,400 Indian companies in Singapore, many of which carry out regional responsibilities. Excerpts from a recent interaction with Lee.
What are the prospects of expanding trade? How big is the volume in dollar terms?
Bilateral relations between India and Singapore have been traditionally strong. In recent years, India and Singapore have signed the Comprehensive Economic Cooperation Agreement (CECA) to increase trade, investments and economic cooperation between the two nations.
The amount of trade was around SGD 30 billion, which indicated a 19 per cent growth in the year 2010. In 2011, there continued to be a growth of 9 per cent and the total amount of trade was about SGD 32.9 billion.
Trade continues to grow due to supportive tariff and taxation policies.
Singapore has been a gateway for several other markets. Will this continue with competition within the region?
The Singapore Economic Development Board works closely with the other government agencies to ensure that we offer the right environment to Singapore-based companies competing globally.
Singapore is known for integrity, rule of law and enforcement of intellectual property rights. These assets are essential in the knowledge economy.
Singapore’s comprehensive trade and transportation networks offer better market access and trade flow. It has built on its advantageous geographical location to become one of the world’s top transportation hubs for sea and air cargo.
Singapore’s container ports are the busiest in the world. They offer a choice of 200 shipping lines with links to some 600 ports in 123 countries.
Extensive trade links provide companies with greater market connectivity through the reduction of tariff and non-tariff barriers.
The Republic currently has the most extensive network of free trade agreements (FTAs) in Asia. Agreements have been signed with key economies such as US, Japan, Australia, New Zealand, members of the European Free Trade Association, Jordan, China, Chile, South Korea, India and Panama.
There have been several major investments made by Government arms of Singapore in Indian companies, be it Bharti or power projects. What is the current level of investment from India in Singapore from various sectors?
With the conclusion of CECA in 2005, Singapore has grown in prominence as a source of investments into India.
In the year 2000, prior to the signing of CECA, Singapore was the sixth top investor into India. Since then, Singapore has steadily risen through the ranks and today is the second highest source of investments into India.
Awareness is increasing around Singapore being a location with strong governance and the supporting infrastructure to enable companies to raise financing for their international growth.
Asia and Australia gain significance as a market and supplier of resources, such as coal and agricultural products.
For instance, Punj Lloyd is leveraging Singapore as its Asia-Pacific hub. Others with operations in Singapore are Fortis Healthcare with its overseas headquarters, Tata Communications’ international headquarters, Larsen & Toubro Infotech’s Centre of Excellence for wealth management, Lanco Infratech’s regional management team in Singapore, and Tata Consultancy Services’ Banking Centre of Excellence.
In 2011, TCS and the Singapore Management University created the TCS-SMU iCity lab, a new research facility to develop industry standards and IT frameworks for the emerging intelligent city model of urban development
Is there any move for special India-focused investment? How is Singapore viewing investments from India?
EDB is interested in engaging Indian companies that have international growth as part of their strategic plans, be it to address new markets, source for natural resources, source and develop new technology, or tap international financing opportunities.
We are in discussion with many of the Indian business houses and industry leaders on their internationalisation needs and plans.
Which sectors are likely to see new investments? Power seems to be one area. Are transportation and airports among others?
Indian companies from several sectors have shown interest in exploring/using Singapore as a base to drive their international growth.
Indian global companies such as Tata Communications, TCS, Infosys and Wipro have established significant presences in Singapore.
P&G and Unilever have built presence in Singapore to access the Asian markets. Companies such as Punj Lloyd and Lanco have set up their regional operations in Singapore to tap on the growth potential in Asia and undertake a variety of activities here including the engineering, project management and supply chain management.
Given Singapore’s Double Taxation Avoidance Agreements with a number of resource-rich countries in Asia, many use Singapore as a base to invest and manage these upstream resources.
These companies are also tapping Singapore’s financial infrastructure to facilitate their international trade and project financing requirements.