SPEECH BY MR THARMAN SHANMUGARATNAM, ACTING MINISTER FOR EDUCATION, AT THE GALA DINNER FOR THE INDIA CALLING 2004 ASIA PACIFIC BUSINESS SUMMIT ON FRIDAY, 9 JULY 2004, AT 7.45 PM AT THE GRAND HYATT HOTEL

Mr M Rajaram,
Chairman, Singapore Indian Chamber of Commerce and Industry

Mr Nanik Rupani,
President, Indian Merchants’ Chamber

Members of SICCI & IMC

Distinguished Guests

Ladies & gentlemen

Good evening.

1       It is not so long ago that serious economists, both Indian and foreign, when comparing India to East Asia, would refer mockingly to the permanence of a “Hindu rate of growth”.  The last decade has rewritten the rules of analysis.  It tells a story of the impermanence of much of what we have known.

2      India has been the second fastest growing economy after China in the last ten years.  Its own MNCs are confidently expanding and investing overseas, starting with the IT majors like TCS, HCL, Infosys and Satyam followed soon after by the pharmaceutical players like Dr Reddys and Ranbaxy.  And the large foreign MNCs are now investing seriously in India, in services as well as manufacturing.  Trade with India, which was an oddity for many countries for several decades, is now booming.  However, India still accounts for less than 1% of global trade.  There is immense room for further growth.

3      India’s advantages are now well recognised.  It has a resilient economy, with a well-diversified industrial base, with reasonably low inflation and a vast domestic market.  Competition between states, which was once a Chinese phenomenon, now spurs the fastest growing parts of the Indian economy.  Educational standards are uneven  -  the divergence between the top and the bottom is far wider than anywhere in East Asia  -  but still, the supply of highly skilled, tech-savvy and English-speaking talent is enormous.  India’s financial system is vibrant, and even if not scandal proof is more transparent than most in East Asia.  And it has a strong entrepreneurial class and a deep-rooted culture of enterprise.  The leading business players, and most Indian start ups, now see their future in India’s internationalisation, not in protection of domestic markets.

Economic Relations Between Singapore and India
4      Singapore’s relationship with India has never been warmer.  Prime Minister Goh Chok Tong’s current visit, the first by a foreign leader following the change of government in Delhi, speaks of the deep and forward looking relationship that we have, in trade, in investments, in services and tourism, in the development of intellectual capital, and in culture.

5      Already, about 1,500 Indian companies are in Singapore, more than 40% of which are technology enterprises, including nearly all of India’s top 20 IT companies.  We will continue to reach out to Indian companies and position Singapore as a natural conduit between India and the world.

6      The Comprehensive Economic Cooperation Agreement (CECA) will be a major leap forward in our bilateral relationship.  It will strengthen both Singapore and India’s competiveness.  India will be advantaged by its extension into Singapore.  And Singapore will be buoyed by its Indian wing.

7      ASEAN and India have also committed to a Free Trade Agreement, like ASEAN is working towards with China.  When these are done, they will open up a whole new phase in the growth of the Asian economy.

8      We are in many ways seeing the recreation of the old Asian trading network.  The old Asian network flourished for many centuries.  Trade between India and China was the largest between any two countries in the world until around the 12th century.  Southeast Asia was at the nexus of this trade.  It benefited both from direct trade with these two major Asian civilisations, as well as from being the middleman.  Southeast Asia was moulded, not just economically but culturally, by the movement of merchandise, people and beliefs between India and China.  The influence was profound.

9      Today, the greatest opportunities for economic growth lie once again within Asia itself, following the interregnum of the first 50 years of the post-war world.  China, India and ASEAN are the new poles of growth.  They are each opening up and growing faster than any other market in the world.  We are therefore seeing the emergence of a new Asian economy, driven initially by a manufacturing supply chain between ASEAN and China and a services supply chain between East Asia and India.  But the chains and networks are today becoming more complex, with movements of goods, data, finance and people taking place in all directions.  It is a new, vibrant Asia.

10     Singapore will stay plugged into these changing Asian networks and into the new knowledge-based Asian diaspora.  Our position as trade, logistics and finance intermediaries for China, India and ASEAN will give us relevance.  But it is our cultural proximity to these three growth poles of the new Asia that will be a major advantage.  Knowledge-based economic and business corridors will involve more contacts, interaction, openness and understanding between peoples.  They are, intrinsically, human corridors - of students, scientists and technologists, entrepreneurs and financiers.  Singapore will keep its corridors open to human capital, keep itself open to other cultures, keep its value as a cipher for these great, living Asian civilisations, and keep multiplying their ideas.

Facilitating Networks – SICCI and IMC
11     I strongly urge SICCI and IMC to continue with their good work of fostering business networks  -  networks which will shape the economic development of the region.  I would like to congratulate the management and members of the two chambers for successfully hosting this Summit.

__________________