India Singapore "CECA" FTA, a catalyst to the regional enterprise activity

PR Log (Press Release) – Jun 23, 2007 – The Comprehensive Economic Cooperation Agreement (CECA) between Singapore and India which came into effect in August 1 2005 has been identified to command the highest utilization rate of 68 per cent last year, up from 61 per cent in 2005. Out of 11 free trade agreements Singapore concluded with different countries and regions, CECA posted the highest utilization rate in 2006.  Another key indicator was the 40% growth in bilateral trade last year.  India has already become Singapore’s fastest growing trading partner amongst major economies.

Being at the threshold of an Asian economic renaissance, the entire region is growing and modernizing rapidly. Together, South Asia, Northeast Asia and Southeast Asia account for nearly half of the world's total population, with a growing middle class to drive consumption and market demand for products and services. In order to tap the huge potential it is essential to establish an intra-regional economic and commercial tie to evolve an open and stable architecture. The CECA is a fine example of such a consensus to pave the way for economic reform in the region.

The India-Singapore CECA has four key components: a free trade agreement (FTA) in goods; an arrangement for boosting trade in services, including financial services; a package to promote investment flows and provide mutual investment protection; and a new agreement for avoiding double taxation.

Business organizations as well as small enterprises that are keen to capitalize on the provisions of CECA are quickly establishing branches or startups in either of the two countries, in tandem with their operations. There are around 1500 Indian companies in Singapore, out of which around 400 are software companies and remaining are trading companies. Singapore has given lots of importance to Science, Technology and Research right from infocomm, nano-technology to manufacturing technology. Singapore is also the 13th largest trading partner of India and third largest investor.  Many Singapore based companies are actively leveraging the infrastructure development drive of India and the financial institutions are financing these developments, through FDIs. Like CECA Singapore’s FTAs with other countries, along with its inimitable infrastructure and resources, adds to its attractiveness to foreign enterprises in commencing, or distributing their operations with the city state as their locus.

Ms. Ragini Dhanvantray CEO of Rikvin consultancy commenting on the FTAs said “They are fine lines forming an economic superhighway connecting markets across the region, enabling greater mileage for the capital invested and faster access to the targeted growth markets, assuring a seamless tariff free business”. She also added that foreign companies stand to benefit from using Singapore as a gateway to explore opportunities in Singapore's FTA partner countries in the region and beyond. They can form partnerships with Singapore companies to enter third countries, or set up operations here to enjoy similar tariffs savings. This will contribute to our economy and act as a catalyst to the regional enterprise activity.

Singapore is ranked 1st for the ease of doing business in Asia (World Bank report: "Doing Business 2007: How to Reform") and 1st for being the least bureaucratic place for doing business in Asia (Political and Economic Risk Consultancy, June 2006). These are remarkable testimonial to Singapore’s reputation as the ideal location for any business.

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