Ambassador Gopinath Pillai, Chairman, Institute of South Asian Studies
Mr Syed Raza Ali Gillani, Minister for Higher Education, Punjab, Pakistan
Mr Amitabh Kant, Chief Executive Officer, National Institution for Transforming India
Professor Tan Eng Chye, President, NUS
Distinguished guests, ladies and gentlemen,
1. Thank you for inviting me to the opening of the 12th ISAS International Conference on South Asia. I just came back this morning from the 7th Moscow Conference on International Security. From Russia to South Asia, security to economics, the contrast cannot be greater. But such is the interesting thing about Singapore – we try to play a role in as many regions as we can, across different domains.
A Quick Outlook of South Asia
2. To talk about South Asia is very challenging, because it is such a vast and diverse region. It’s like trying to tell you about Singapore food in 15 minutes. Ambassador Gopinath Pillai has given you a useful overview of the key developments in South Asia. But let me add a few more points:
3. We all agree that South Asia has emerged as an important region of growth and things are looking up for the region.
4. Let me start with Bangladesh. Bangladesh is expected to be one of the fastest growing developing countries in the next few years. Prime Minister Sheik Hasina just visited Singapore last month, at the invitation of Prime Minister Lee Hsien Loong. Singapore’s bilateral trade with Bangladesh has grown almost 30% over the last five years from $3.4 billion to $4.3 billion. We have recently updated our Agreement on Air Services, and our companies are exploring investment opportunities in Bangladesh.
5. Sri Lanka is another promising story. With the end of its civil conflict, she has embarked on a transition from a predominantly rural-based economy to one that is more competitive, inclusive and resilient. New major developmental projects are underway not only in Colombo, but also cities like Kandy, Trincomalee and Hambantota. Many Singaporean Indians trace their roots back to Sri Lanka, and we share a precious cultural linkage. Earlier this year, Prime Minister Lee visited Sri Lanka and witnessed the signing of a bilateral Free Trade Agreement between our two countries. This promises to bring our economic co-operation to a new level.
6. Growth in Pakistan is expected to enjoy an uptick in the next couple of years. Like other South Asian countries, Pakistan is seeking to improve its infrastructure, through initiatives such as the China-Pakistan Economic Corridor. It has important advantages, including a young, rapidly urbanising population, and is a strategic outlet to the Arabian Sea for many landlocked Central Asian states.
7. The largest South Asian country is India. Its economic growth surged to 7.2 per cent year-on-year in the final quarter of 2017, making her the world’s fastest growing major economy. This momentum is likely to continue and there is vast potential to be tapped.
8. Our economic relationship with India is healthy and growing. We signed an FTA with India many years ago, which is now also part of the negotiations for the Regional Comprehensive Economic Partnership Agreement (RCEP), together with ASEAN, China, Japan, South Korea, Australia and New Zealand.
9. Singapore is watching the significant developments in India closely. India has undertaken a number of reforms and national initiatives in recent years, which have contributed to its remarkable growth and its transformation. These include:
- Passing of the Goods and Services Tax legislation, the biggest tax reform India has ever undertaken. Finally, India is one single market;
- Implementation of Aadhaar, the world’s largest digital and biometric identification programme. This is a huge step for financial inclusion;
- Demonetisation of the 500 rupee and 1,000 rupee currency notes, to weed out black money and counterfeit notes. This has the other effect of boosting digital payments in India;
- A slew of government initiatives such as ‘Make in India’, ‘Skill India’, and ‘Start-up India’, aimed at facilitating job creation and inclusive growth.
10. Based on the report ‘The World in 2050” by PricewaterhouseCoopers, India and China could emerge as the world’s two largest economies by 2050, surpassing the United States. Both have pursued different models to drive growth. China, being more centrally governed, has promoted investments, exports and economic restructuring through systemic and nation-wide economic plans. India, a federated democracy, is far more lassez faire when it comes to economic strategy. It also focused more on services. But there is no doubt that the rise of China and India is shifting the centre of gravity of the global economy eastwards towards Asia. This is a major geopolitical shift that will change the world. It will also have significant implications for Southeast Asia and Singapore.
Old Trade Routes
11. Now that I have given a broad whirlwind tour of South Asia, let me now talk about a different part of the world - Finland. I assure you - it is relevant to our topic and this conference.
12. I was in Finland a few months ago and visited the International Chamber of Commerce in Helsinki. I was briefed on how the melting of the polar ice caps is opening up a new trade route across the Arctic.
13. The Arctic route shortens the distance between Northern Europe and Northeast Asia – where Japan, Korea and the northern part of China is. My briefing was accompanied by a video – and you can see this on YouTube – depicting a race between two container ships. Both ships started from Japan, with a common destination in Scandinavia. One took the Arctic route, the other the traditional Maritime route – South China Sea, Straits of Malacca, Indian Ocean, Suez Canal and around continental Europe. By the time the first container ship which took the Arctic route arrived at its destination, the second ship had only reached the Gulf of Aden.
14. The Arctic route is now accessible only in the summer months, from May to November. But as ice caps continue to melt, at some point the Artic Route will be accessible all year round. By then, it will be One Belt, One Road, and One Circle. Will this undermine Singapore’s position as a maritime hub? Is it time to feel worried?
15. This narrative forgets one important fact that undergirds Singapore’s maritime status – which is that we have always been the node of many trade routes since 700 years ago. In particular, we served China-India trade. Today, that has expanded to the East Asia – South Asia trade. That is not replaceable, whether by the overland belt across continental Asia and Europe, or the Arctic route. So long as international trade continues to grow and the world stays integrated, we will need all routes to serve the growing movement of people and goods.
16. Further, building upon our maritime status, Singapore was able to develop its logistics, manufacturing and financial services over time, serving all our economic partners around the world. Our vitality as an economy no longer just rests on being a maritime hub. Various services and industries come together, layer upon layer, to make us a global commercial hub.
17. I therefore look at the future with much more optimism. So long as China and India, East Asia and South Asia remain stable and continue to grow, the entire thoroughfare of Southeast Asia, including Singapore, will stand to benefit. But we need to work hard, be of service to others, be innovative, and add value wherever we can.
18. So for the rest of today’s speech, let me outline four golden opportunities where Singapore can add value to South Asian countries. They are not exhaustive, but I think nevertheless golden opportunities that should not be missed and should involve some rethinking of the way we do things now.
Strengthening Singapore-South Asia Cooperation
19. These opportunities relate to certain expertise that Singapore has developed, and which is relevant to South Asian countries. They are: First, infrastructure development. Second, bridging the skills development gap. Third, co-operation in technology, innovation and entrepreneurship. And fourth, collaboration in the building of smart cities.
Infrastructure Development
20. First, infrastructure development. This is one of the most urgent tasks in South Asia. Public investment in energy, transport, healthcare and education can lead to tangible improvements in people’s lives, and provide the foundation for further economic development.
21. The Belt and Road Initiative (BRI), led by China, promises to boost infrastructure development throughout Asia. Singapore can be an effective enabler for infrastructure investments. Today, 33% of all outward investments from China related to the BRI flows through Singapore, while 85% of inbound investments from BRI countries into China for the initiative comes through Singapore, and we can play a similar role for South Asia.
22. We are serving this need in a way disproportionate to our size, because of our deep capital markets and financing eco-system. The capital required for infrastructure development far exceeds what the domestic banking sectors of the investment recipient countries can provide, and Singapore offers further options in global infrastructure financing. A number of South Asian companies are already raising funds in Singapore through bond listings, tapping on long-term institutional funds.
23. Singapore companies have also made inroads into South Asia’s infrastructure market. Sembcorp, for example, is one of the largest investors in the energy sector in Bangladesh, with over US$1.1 billion invested in power plants. PSA is exploring opportunities in the Chittagong Port. Singapore companies have also embarked on tourism and commercial development projects in Sri Lanka. Other projects are being planned across the region.
24. To forge stronger partnerships in infrastructure development and help more companies tap infrastructure opportunities in Asia, including South Asia, we will be setting up an Infrastructure Office this year. The office will bring together local and international firms across the value chain – from developers and institutional investors, to legal, accounting and financial services providers – to develop, finance and execute the projects.
Skills Development
25. Second, skills development. South Asia as a whole is endowed with a large and young workforce, and against the backdrop of growth and development, there is a great demand for skills training. Having a skilled and educated population does not just contribute to economic growth, it also creates positive political and social outcomes.
26. Singapore plays a modest but active role in working with South Asian countries to bridge the skills development gap. For example, Nanyang Polytechnic International is involved in a World Bank project to support Bangladesh to train about 1,200 leaders and specialists from polytechnics and vocational institutions. ITE Education Services (ITEES) worked with the Bangladesh Ministry of Finance to strengthen the pedagogical competencies of 80 technical and vocational trainers. We hope these efforts will help support growth in Bangladesh’s priority sectors.
27. We also have similar projects in Sri Lanka. Last year, Temasek Polytechnic conducted a course in digital and social media marketing for government agencies. ITEES also conducted a leadership development programme aimed at enhancing the skills of 60 leaders in the Technical and Vocational Education and Training (TVET) sector. These 60 leaders have in turn transferred their knowledge to another 290 leaders, and that is the cascading effect that we want to see.
28. As for India, she is the world’s second most populous nation, but faces significant challenges in delivering education to her population, especially for those in the vast rural areas. The Indian Government has set as a priority to raise literacy rates and equip its youths with the right skills.
29. As a start, India established the Ministry of Skill Development and Entrepreneurship in 2014 to coordinate all skills development efforts in the country. In 2015, ‘Skill India’ was launched to drive industry-relevant training to Indian youths. The Indian government has also implemented a National Skills Qualifications Framework to develop a common currency in formal and informal skills recognition throughout the country.
30. When Prime Minister Modi visited Singapore in 2015 – I was his Minister-in attendance, and toured the ITE College Central, he asked if Singapore could help set up more training centres in India, and we responded. Today, Singapore has helped set up the World Class Skill Centre in New Delhi and the Centre of Excellence for Tourism Training in Udaipur, Rajasthan. Several other projects are underway, including a third skills centre in Assam to train workers in beauty, retail, hospitality and F&B services. Prime Minister Modi is visiting Singapore again in June. It would be a good opportunity for both sides to take stock of the progress that we have made in different pillars of our Strategic Partnership, and explore areas for further co-operation.
31. Singapore students also have much to learn from India. On-going student exchange programmes and learning visits open our students’ minds to the rich history and culture of South Asia. For example, student leaders from the Singapore National Cadet Corps take part in a desert trekking programme in India every year - a most memorable experience I am sure. Research collaborations bring our educational institutions and organisations together to prod the knowledge frontier.
Technology, Innovation and Entrepreneurship
32. Third, we can collaborate to develop our technology and innovation ecosystem. Technology is changing the way we work, and how services are delivered and consumed. India has embraced this wave of change.
33. Prime Minister Modi’s Jan Dhan Yojana programme is providing universal access to basic banking services for India’s population of over a billion people. India also implemented Aadhaar, its national digital identification system. The IndiaStack, a set of APIs (Application Programme Interface) that is built around Aadhaar, would allow government agencies and private companies to deploy paperless and cashless services. As I mentioned earlier, India’s Fintech ambitions also received a boost from the demonetisation of certain currency notes which has accelerated the digitisation of financial services in India.
34. So in India, we found a kindred spirit in Fintech, because it is also a key activity for Singapore. India has a vast market, and in Singapore, we have almost every global financial institution operating here, and they are interested in to invest in and serve the Indian market. So there is clear synergy between us.
35. To-date, Singapore has signed agreements with the Governments of Andhra Pradesh and Maharashtra to bolster cooperation in promoting Fintech innovation in our respective markets.
36. India and Singapore are also working closely to establish cross-border digital payment linkages. NETS is working with the National Payment Corporation of India (or NPCI) to enable cross-border usage of their payment solutions in India and Singapore. One such collaboration will allow NETS payments at all 2.8 million RuPay point of sale terminals in India, and vice versa - RuPay cards will be accepted for payment at NETS terminals in Singapore. Imagine if one day, this collaboration can be expanded to cover the whole of South Asia and Southeast Asia. The psychological impact of our closeness will be very significant.
37. DBS Bank established India’s first digibank in 2016. This is a Singapore bank which decided to incubate an innovative product not in Singapore, but in India! It is a wise and natural choice, because the demand is in India. The digibank has no physical branches, and customer authentication is done via Aadhaar, to provide a paperless and signatureless banking experience to customers. In less than two years, more than 1.5 million customers have signed up for DBS’ Digibank, and the customer base is expected to grow to five million by 2021.
Building a network of Smart Cities
38. The final golden opportunity for collaboration is in urban planning and the building of Smart Cities. Urbanisation is gathering pace throughout the continent, which presents a dilemma. The migration of a rural to an urban workforce raises productivity, but at the same time places tremendous stress on urban infrastructure and facilities. I talked about infrastructure development earlier, but beyond the hardware, the software matters too, and this is where smart cities come in.
39. Singapore has developed useful experience in urban planning and sustainable development. We are constantly planning ahead for the long term, and because of our small size, we optimise land use wherever we can. Over the decades, we also acquired know-how in managing and operating infrastructural systems, such as water, energy, airport, seaport, land transport, telecommunications, and waste management, not just individually, but as a coordinated whole, to keep our city humming away and functioning efficiently and effectively. All these come together as a smart eco-system.
40. As ASEAN Chair this year, Singapore has made the building of the Smart Cities Network in our region a key priority. Through this platform, cities across ASEAN can work with the private sector and external partners such as India, towards the common goal of smart and sustainable urban development.
41. An example of a smart city is the new capital city of Andhra Pradesh, Amaravati, for which Singapore is honoured to be a development partner. The vision is for Amaravati to be a liveable and sustainable city, which will include an Innovation Corridor where companies will pilot their urban solutions together.
42. We have also embarked on several urban planning projects with Sri Lanka. Surbana Jurong has been playing an active role in master-planning major development projects such as the Megapolis in the Western Province and in Trincomalee. We are also collaborating with Sri Lanka to help clean up the Beira Lake and redevelop the surrounding areas, making it attractive to locals, tourists, and potential investors.
Conclusion
43. Ladies and gentlemen, let me conclude. So much has changed over the last century. The nation state was born, it brought stability to the world order, and today we think in terms of bilateral and multilateral co-operation, and we strive to reduce cross border impediments to trade and investments. At the same time, technology has been advancing at a breakneck and exponential pace, and with digital connectivity, the world has shrunk. While opportunities abound, at the same time we see so much strife, extremism, nationalism and xenophobia, discrimination and degradation that reminds us that the human race still has much to improve on.
44. However, the video I saw in Finland about the melting of ice caps, reminded me that some things do not change. That is, the centuries-old logic that if the civilizations of East Asia and South Asia are prospering and at peace with each other, there will be a constant and free flow of goods, investments, people, ideas, knowledge, and digitalised codes. In the past, traders had to wait a whole year for the monsoon winds to change before they are able to trade and carry their goods and services across the continent. Today, this happens 365 days a year, 24/7. We are only constrained by our willingness to be able to resolve differences and work together.
45. The growth of East and South Asia can bring about an era of unprecedented progress and growth in both regions, and Southeast Asia. I wish you a fruitful and successful conference.