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The diplomacy of Singapore, India and Sri Lanka: Bringing ASEAN and SAARC closer

By Srimal Fernando Global Editor of The Diplomatic Society and Megha Gupta

Singapore is powerfully positioned among the Southeast Asian countries. The founding father of Singapore, Lee Kuan Yew, had set the core foreign policies for the nation which had been taken forward by Singapore’s first foreign minister S. Rajaratnam.

The first foreign minister had believed that Singapore must always maintain good and friendly relations with its neighbors, especially the ones in the Asia Pacific region. India with its current foreign policy of Act East, coincides with the goal of Singapore’s Asia Pacific policy. India’s southern neighbor Sri Lanka has also strengthened its foreign policy with Singapore by improving its political and economic ties with Singapore. The historical links between Singapore, India and Sri Lanka can be drawn from their principles of Non-Alignment and Commonwealth of Nations.

In this year’s 69th Republic Day Parade, India had hosted the ten leaders of the Association of Southeast Asian Nations (ASEAN) which displays India’s rising relationship with the Southeast Asian countries, where Singapore forms a major link for India to gain greater access to the other nine ASEAN countries.

In recent days, India has further strengthened its Act East Policy with Prime Minister Modi’s visit to the three Southeast Asian nations namely Indonesia, Singapore and Malaysia. With regard to Singapore, the economic interactions between the two countries has taken a huge leap as they have successfully concluded the second review of Comprehensive Economic Cooperation Agreement (CECA). In the year 2005, to reduce tariff and increase business in both the countries India-Singapore Comprehensive Economic Agreement was formulated. Following this in 2009, India had signed free trade agreements with the ASEAN countries named the ASEAN-India Free Trade Area (AIFTA). Therefore, India’s agreement with Singapore acted as one of the major factors for India to sign the AIFTA. Since the CECA has come about the bilateral trade between India and Singapore has doubled from USD 8 billion to around USD 18 billion. The main areas where they are cooperating are manufacturing, digital, urban solutions, consumer and navigation.

Furthering down the path of marine logistics the globally recognized Singaporean ports annually handles over hundred thousand ships, and this acts as an important gateway for India to access the other ASEAN and Pacific markets. Also, Singapore’s growing manufacturing sector is leading to the creation of jobs for the Indian diaspora as they comprise around 10 percent of the total population of Singapore. At present, the Indian community in Singapore are among the 40 largest private individuals and family fortunes in the country.
Another reason for Singapore to be closer to India is for its maritime security. This year also marks the 25th Anniversary of annual Singapore-India Maritime Bilateral Exercise (SIMBEX). This defense relationship has been maintained to keep an open, friendly and peaceful environment in the Indo-pacific region.

 

 

This increase in trade and defense cooperation between Singapore and India has had an impact on its immediate neighbors too. For instance, Sri Lanka following India in 2018 has entered into a free trade agreement with Singapore known as the Singapore-Sri Lanka Free Trade Agreement (SLSFTA) which covers foreign direct investment, intellectual property, telecommunication, goods and services. Now the bilateral trade between Sri Lanka and Singapore is around USD 2.7 billion.

Furthermore, over the years various Singapore missions have visited Sri Lanka. In January 2018, after 13 years, a head of state from Singapore visited Sri Lanka. Prime Minister of Singapore, Lee Hsien Loong, cemented the bilateral relationship by signing the free trade agreement with Sri Lanka thereby allowing both the countries to reduce tariffs up to 80 percent. Prior to this FTA, in 1980 both countries had signed the twenty-five year “build-operator-transfer” concession agreement to liberalize the wheat and flour trade through establishing a flour mill processing plant near the Trincomalee port. This agreement was renewed in 2005 which had a direct impact on Sri Lanka’s bakery industry. Currently Singapore is the third largest investor in Sri Lanka according to the Board of Investment sources. Additionally, one of the key diplomatic achievements in the past three decades for both the countries has been the on arrival visa for thirty days available on either side.  

South Asia and East Asia are some of the world’s fastest growing regions and for Singapore, India accounts to be one of the largest consumer markets with a 1.3 billion population. For small island states like Sri Lanka gaining access to the ASEAN single market through Singapore is a huge advantage economically. With Singaporean foreign policy playing an increasingly important role in the world the ongoing collaboration and close cooperation between these three countries will further intensify the economic and diplomatic opportunities for India and Sri Lanka beyond the Asia Pacific realm. All these mutually beneficial agreements are bringing South Asian Association of Regional Cooperation (SAARC) and ASEAN closer as these agreements are increasing the volume of trade between these regions by including inter and intra trade. This three-way relationship is further strengthening the Singaporean foreign policy agenda as now Singapore is not only bilaterally engaging with the other two South Asian countries but also multilaterally involving itself by getting access to the larger consumer market of SAARC.

Srimal Fernando is a research scholar at Jindal School of International Affairs, India and the Global editor of The Diplomatic Society for South Africa and Megha Gupta is a scholar of Masters in Diplomacy, Law, Business at Jindal School of International Affairs, India.

 


 
 
 
 
 
 
 
 
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August 2018

 
 
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