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In full: Ong Ye Kung addresses 'false' statements on FTAs, Singapore-India CECA in Parliament

In full: Ong Ye Kung addresses 'false' statements on FTAs, Singapore-India CECA in Parliament

Health Minister Ong Ye Kung speaking in Parliament on Jul 6, 2021.

SINGAPORE: Health Minister Ong Ye Kung spoke in Parliament on Tuesday (Jul 6) to address "false" statements surrounding free trade agreements (FTA) and the Singapore-India Comprehensive Economic Cooperation Agreement (CECA).

He was speaking on behalf of the Ministry of Manpower (MOM) and the Ministry of Trade and Industry (MTI) to "put into context" the parliamentary questions that have been posed to the ministries concerning foreign professionals, managers, executives and technicians (PMET), FTAs and CECA.

The speech is reproduced here in full:

I am delivering this ministerial statement for two purposes.

First, even before the General Election last July, the PSP (Progress Singapore Party) has repeatedly alleged that the Comprehensive Economic Cooperation Agreement (CECA) between Singapore and India allows professionals from India “a free hand” to come and work in Singapore.

In his social media post on Jun 22 this year, Mr Leong Mun Wai again said that “the most important economic policies that have affected the jobs and livelihoods of Singaporeans relate to foreign PMEs and free trade agreements, in particular CECA”.

Mr Speaker, these statements are false. They have been repeated for too long. I am a former trade negotiator at MTI when I was a civil servant. We worked closely on several FTAs. I worked with a very dedicated team, who has over two decades fought hard for the interest of Singapore, to expand our economic and political space for our small island state. I feel I owe a duty to correct the falsehoods.

Indeed, Singaporean PMEs, like PMEs in other advanced economies, are facing challenges. Many have given us their feedback, and the Government has been taking steps to address their concerns. But our FTAs in general and CECA in particular are not the causes of the challenges our PMEs face; if anything, they are part of the solution.

FTAs and CECA have been made political scapegoats to discredit the policy of the PAP Government.

The second reason to deliver this ministerial statement is to put into context, on behalf of MOM and MTI, the parliamentary questions that have been posed to the ministries concerning foreign PMETs, FTAs and CECA. Dr Tan See Leng will further elaborate on the answers.

Taken together, Dr Tan and I will address Oral Questions 1 to 3 and Written Questions 19 to 24 from yesterday’s Order Paper, and Oral Answers 1 to 6 and Written Questions 40 to 42 from today’s Order Paper - a total of 18 questions.

WATCH: Ministers address 'false allegations' on CECA, FTAs in Parliament

Several of the questions were filed by PSP’s two NCMPs, to gather data for a subsequent debate on a Motion they intend to file. So where we can, we will provide relevant data to equip all parties for that subsequent debate.

HOW WE GOT HERE

So let me first recapitulate how we got here.

First, as I mentioned, for months now, the PSP has alleged that FTAs and CECA have led to the unfettered flow of Indian professionals, displacing Singaporeans from their jobs and bringing about all kinds of social ills.

And this is a seductively simplistic argument that workers facing challenges at their workplaces can identify with and has stirred up a lot of emotions. CECA-themed websites have sprouted, filled with quite disturbing xenophobic views about Indian immigrants.

Words gradually became deeds, toxic views turned into verbal and physical assaults on Indians, including our citizens. It is sad that serious issues concerning the economic well-being of our country and workers have descended to this.

That is why the Minister for Law called out such xenophobic behaviour during the May sitting of this House and challenged the PSP to table a Motion on CECA so that the matter could receive a proper public airing.

The PSP has since made a public statement on the matter, standing by its view on FTA and CECA. It filed various parliamentary questions requesting for more data and information.

So today, I will talk about the following: One, what is fundamental to Singapore’s ability to earn a living and survive; two, why FTAs, including CECA, advance our interest, and are not the cause of the challenges faced by our workers; and three, what then are the causes of Singaporeans’ concerns and how do we address them?

Dr Tan will provide detailed answers to the specific questions, including providing the data which will be useful for our subsequent debate and putting that data in context.

SINGAPORE NEEDS TO EMBRACE GLOBALISATION

Let me start with the first question – what is fundamental to our economic survival. Simply put, we are too small to survive on our own, and we need to tap into global markets to earn a living and be self-reliant.

What do we have to start with? We have no natural resources, but we have one precious natural endowment and that is our geographical location.

It is a lasting advantage, but one which requires us to work very hard to realise and to sustain. And if we succeed, it helps compensate for our lack of size.

And that is what we have done. By capturing the trade flows through the Straits of Malacca and Singapore, PSA became the largest container trans-shipment port in the world. It is a unique interchange in the world, connecting East and West, Europe, Middle East, India, China. The port is central to the growth of the maritime industry, responsible for 160,000 jobs in Singapore today.

In addition to our seaport, we have also grown into an aviation node. Before COVID-19 hit us, Changi was one of the busiest airports in the world - and it shall be so again - though in aviation terms our geographical location is not quite ideal. We made it happen, with a renowned Changi and SIA experience. Before COVID-19 struck, the aviation-related industry were supporting 190,000 jobs.

So with these good global connections, we built up the manufacturing sector, about one-fifth of our GDP today. We obviously don’t manufacture just for Singapore, but we manufacture for the world. And manufacturing supports another 440,000 jobs today.

Our exports also include trade in services. One growing services sector is financial services. And today, almost every major global financial services institution is in Singapore, carrying out a range of activities including new ones such as FinTech and Green Finance. The financial services sector employs over 170,000 people.

We are also becoming a centre for technology, research and development. So many global technology firms – from FAANG to BAT and many more – are in Singapore. And they make Singapore their regional or global innovation centre, or engineering hub.

And today, 50,000 international companies operate out of Singapore. Seven hundred and fifty of them have made Singapore their regional headquarters.

None of these would have happened without a clear strategy, implemented well.

It was a long, painstaking process, part of the story of our island nation. Clean government, rule of law, safety (you can walk on the street any time of the day), political stability, good infrastructure, high standards of education, openness to the world – all this and more come together to make us a good place to invest and created many jobs.

I should emphasise that another big plus point for us is the quality of the Singaporean workforce. Our people are well known to be well-educated, diligent, responsible, trustworthy, and we get things done. We have one problem which is there are too few of us, Singaporeans – a point which I will come back to later.

On top of all these plus points, we have built a network of 26 FTAs including US, China, EU, Japan, ASEAN, India, South Korea, Australia and New Zealand – all our major markets and they are all our FTA partners.

And this brings me to the next topic, why FTAs, including CECA, are important to Singapore.

IT IS IN SINGAPORE'S INTEREST TO PURSUE FTAs

We started our FTA strategy in the late 1990s. We thought through it carefully and executed before other countries did. So it gave us a very precious early mover advantage, and greatly boosted our efforts to export, attract investments, venture overseas, and created good jobs for Singaporeans.

Our total trade is three times our GDP. Since 2005, our total trade has nearly doubled from around S$890 billion to S$1.5 trillion.

And today, when EDB goes out and persuades investors to come to Singapore, our network of FTAs is always a major selling point.

FTAs are especially important to our SMEs. They free them from being constrained by our small domestic market and give them access to global markets. So our SMEs are sending all kinds of Singapore-made products overseas, from canned food, barbecued pork, frozen roti prata - I heard some are exported to India - to medical devices, machines, components and chemicals.

FTAs are also spurring our companies to venture abroad. Our investments overseas increased nearly five times, from S$200 billion in 2005 to over S$930 billion in 2019. So when our companies grow overseas, they become stronger and they also employ more Singaporeans here.

If we accept this basic reality that Singapore needs the world to earn a living, then we would realise the fundamental importance of all our FTAs. They are a keystone of the economic super-structure that we have built. We could not have advanced the welfare of Singaporeans to the degree we have without FTAs.

We cannot take all these for granted. Recently, we fell in the 2021 IMD world competitiveness ranking from 1st place to the 5th place. Among the components evaluated, we continue to do well in terms of government efficiency and economic competitiveness. However, we lost ground in terms of openness towards global talent and trade.

But I hope this is temporary and due to the effects of COVID-19. Overall, we are still holding our own in terms of foreign investments. In 2020, even as 45 companies ceased operating their regional or global headquarters in Singapore, over 130 companies set up such headquarters here.

So when you attack FTAs and worse, if your attack succeeds, you are undermining the fundamentals of our existence, of the way we earn a living, of all the sectors FTAs support and the hundreds and thousands of Singaporean jobs created in these sectors.

As the attacks on FTAs, especially CECA, have been very specific, let me explain how FTA works. And to prepare for this statement, I had to dig up my old negotiating notes and do quite a bit of revision and homework. Here it goes.

The key disciplines of an FTA are as follows:

It requires a country to remove or lower tariffs on substantially all trade between the FTA partners. This is of tremendous benefit to Singapore, very good deal. Why? Because other countries customarily impose tariffs on thousands of items. We are already very open, we impose duties on only three alcohol products – beer, stout and samsu. All my years of negotiating FTA, I don't know what samsu is, neither have I drunk it before. But these are our three tarriffed items. Hence, any FTA that substantially removes tariffs imposed by both parties is inherently beneficial to Singapore.

FTAs also require governments to accord protection to foreign investments and ensure that regulations are imposed fairly and equally on both local and foreign firms. They also set standards on protection of intellectual property.

Singapore always protects foreign investments and applies our regulations fairly. This makes us attractive to foreign investors, so it has always been our interest to do that. So abiding to these principles and disciplines is not a problem to us at all.

In fact, as more of our companies expand overseas and they create their own products, they too hope that Singapore can negotiate similar protection for them when they go overseas. So the investment and intellectual property protection disciplines in FTAs are therefore important assurances for our companies.

Newer FTAs also set certain environmental and labour standards. Not every country supports them, but Singapore believes that they reflect contemporary concerns relating to free trade and investments.

And specifically on CECA, this FTA with India benefits Singapore in many ways. Signed in 2005, it was India’s first comprehensive bilateral FTA with any country. And CECA gave Singapore a strategic first-mover advantage in India, just when the continental country was taking off to be an economic powerhouse.

CECA reduces tariff barriers, which made Singapore goods more competitive in the Indian market. And partly because of that, bilateral trade between Singapore and India has grown by over 80 per cent, from S$20 billion when CECA came into force in 2005 to S$38 billion in 2019.

And similarly, Singapore’s direct investment abroad in India grew by 50 times, from S$1.3 billion to S$61 billion during the same period. In 2019, 660 companies from Singapore have investments in India, almost double the number a decade ago.

As these companies grow regionally, they hire more people back home. And in 2019, they employed 97,000 locals.

Despite these significant benefits, FTAs are controversial in many countries. As a trade negotiator, I have listened to the problems and sensitivities of many of our FTA partners.

What are these sensitivities? Some countries wished to protect certain sectors, such as agriculture - that is a very common one - which Singapore does not do. We have some eggs, we have some fish, but more for a bit of source diversification. We never seek to conquer the world with our eggs and our seabass. Others could not live up to, say, the transparency standards of, say, government procurement or intellectual property protection. Still others are concerned about the influences of foreign culture through industries such as arts and entertainment. Canada, for example, is very sensitive about this area.

So the toughest job and the most time-consuming job of a negotiator is to identify and understand the sensitivities of your country and then find ways to protect or to address them. How do we do so? We find words that give you comfort that address the sensitivity.

And we call these words in our jargon "exceptions" or "carve-outs". When we have a big carve-out, with strong protection in sensitive areas, we will say “this carve out is strong and big enough for a jumbo jet to fly through”.

In some sensitive areas, it is easy to negotiate exceptions or carve-outs because everyone agrees. One example is right of taxation by governments. Another one is national security. The third one is immigration.

Every country holds the view that there cannot be unfettered movement of people across borders. Every FTA partner believes that. That would create social unrest and a big public uproar. Governments must retain the ability to impose immigration and border controls, and FTAs cannot undermine that.

Hence, in all FTAs and also WTO agreements, you will find that immigration powers are strongly and prominently preserved and protected. You can find such standard clauses in the WTO Agreement as well as in all our FTAs, including CECA.

As so many falsehoods have been said about the immigration-related parts of CECA, let me set out in some detail what is really in the agreement.

Immigration matters are set out in Chapter 9 of CECA – Movement of Natural Persons. The legal text is available online, so I will only detail the salient points:

One, the chapter makes it clear the Government’s ability to regulate immigration and foreign manpower is not affected by the agreement. The Government retains full rights to decide who can enter the country to live, to work, become PRs or become citizens.

This is clearly set out in two clauses. They are standard clauses commonly found in all FTAs, and they are also the second and third paragraphs of the chapter of CECA, so it is hard to miss them, as you can see them on the first page:

Clause 9.1.2: "This chapter shall not apply to measures pertaining to citizenship, permanent residence, or employment on a permanent basis."

Clause 9.1.3: "Nothing contained in this chapter shall prevent a party from applying measures to regulate the entry or temporary stay of natural persons of the other party in its territory, including measures necessary to protect the integrity of its territory and to ensure the orderly movement of natural persons across its borders …"

That's the first point.

Second point, the obligations relating to Movement of Natural Persons in CECA, as in all FTAs, are not broad principles with wide applications, but actually highly specific.

What are these broad principles that you can find in FTA? One broad principle is that of National Treatment. It is found in some chapters of FTA, such as Trade in Services and Investments. This means - I mentioned this just now - you cannot discriminate against foreign service providers and investors. Whether they are local investors or foreign investors, you treat them the same. Regulations and benefits that apply to local firms must apply evenly to foreign-owned ones.

So if immigration had not been carved out, and National Treatment principle had been incorporated into Chapter 9 of CECA, then indeed, Indian workers would have to be treated like Singaporeans and would have had free rein to come to live and work in Singapore.

This is what the PSP claims. Except that there is a strong immigration carve-out and National Treatment is not found in Chapter 9 of CECA, nor any other corresponding chapter in the FTAs that Singapore has entered into.

Mr Speaker Sir, I emphasise and underline and highlight and bold, bigger fonts, colour red that nothing in this agreement implies Singapore must unconditionally let in PMEs from India. Contrary to PSP’s claim, our ability to impose requirements for immigration and work pass has never been in question in CECA or any other FTAs that we have signed.

Instead, then what are the obligations of Chapter 9 of CECA? They are highly specific, such as require the parties to process applications for temporary entry with some expedition and with certain transparency, such as informing the applicants of the outcome of their applications and not leaving them in suspense - a very reasonable thing to do and to agree to adhere to.

We also have to accord a certain duration for the validity of the permits. Should we approve, an approval must be based on them meeting our prevailing work pass conditions - also very reasonable.

Such a commitment on duration is not something unique to CECA because similar commitments exist in other FTAs and are also found in the WTO Agreement signed by 164 members including Singapore.

Many parties to FTAs also commit not to impose labour market tests. This is a common clause in our FTAs, including with India, Australia, China and the US.

It means we do not insist that companies go through onerous processes and documentation to prove that no suitable locals will take a job, before they can hire a foreigner. Companies in Singapore or any other places do not hire this way. What they do - the common and best practice - is to interview the suitable candidates, consider them all fairly and then make a judgement on the best person.

These are all market-friendly, widely adopted, reasonable obligations.

Let me also specifically address two aspects of the chapter on Movement of Natural Persons in CECA that has been singled out for criticism.

First, the PSP pointed out that CECA listed 127 categories of professionals and hence claimed that Indian nationals in these professions can all freely come here to work for a year. This is false, because as I explained earlier, all foreign PMEs have to meet our work pass conditions in order to come and work here.

What does the listing then show? The listing shows the types of Indian professionals who may apply to work in Singapore. It does not mean that we must approve their application. It's just that you can apply. India for its own reasons requested for such a list, similar to what they have in their FTAs with Korea and Japan. In fact, even if they had not listed the professions, their PMEs could still submit work pass applications to work here. The list probably meant something to India because there may be countries that would not even let you apply. That's how protectionist some countries may become and India is trying to secure their interest there.

This is in fact how other FTAs work: With or without listing of professions, nationals from our FTA partners are not precluded from submitting work pass applications, which will be evaluated based on our prevailing criteria and work pass conditions.

Thus, the point being made by PSP on the list of the 127 professions is a red herring – the list does not confer any free pass to any Indian nationals.

The second common criticism is that intra-corporate transferees from India can also freely enter Singapore to work.

Based on my explanation on how the chapter works, this is again not true. Intra-corporate transferees also have to meet our work pass qualifying criteria.

In any case, the total number of intra-corporate transferees, from all over the world and not just India, that have come to Singapore to work is very small. In 2020, there were only about 500 intra-corporate transferees from India in Singapore – less than 0.3 per cent of all EP holders.

So, Mr Speaker Sir, I hope we can put a stop to all this misinformation about our FTAs in general and CECA in particular.

THE REAL CHALLENGES

Nevertheless, it is important that we need to recognise that PMEs in Singapore do face challenges.

And I see at least three challenges that they are facing.

First, there is more competition from foreign PMEs. Indeed, the number of EP holders has increased, from 65,000 in 2005 to 177,000 in 2020 – so an increase over 15 years of 112,000 or an annual growth rate of just under 7 per cent.

Over this period, however, the increase in number of local PMEs is much higher, by over 380,000. So 380,000 for local PMEs, 112,000 for EP holders.

And these numbers underline an important point: That competition between foreign and local PMEs is not a zero-sum game.

In fact, the converse is often true. By combining and complementing local and foreign expertise, we can attract more investments and create many more good job and career choices for Singaporeans.

The downside is that with more foreign PMEs in Singapore, they can compete for jobs with locals at the company level and at that level, there can be a zero-sum situation.

So there is a trade-off at play here, if I put it simply: (A) Many jobs, strong competition; (B) few jobs, no competition. And we need to find the right balance where there are more jobs, some competition.

And that is the way to advance the interest of Singaporeans – not swing to an extreme position, but strike that careful balance and then adjust if we find that that balance is off.

But if someone promises you more jobs, no competition from foreigners, they are selling you snake oil. It is not possible. It cannot be on any government’s policy menu.

I should point out that besides complementing our local workforce to create more opportunities, foreign PMEs also help cushion the impact on the local workforce when times are bad. Because during a downturn, foreigners bear the brunt of job loss.

During COVID-19, for the 12 months to April 2021, the number of Employment Pass holders dropped by about 21,600 and S Pass holders fell by about 26,800. On the other hand, local employment has been stable. Unemployment rate for local PMEs in June 2020 - despite this is immediately after the "circuit breaker" - was at 2.9 per cent. Resident unemployment rate - September 2020 was 4.8 per cent; May 2021, 3.8 per cent - came down by 1 percentage point. Without the foreign buffer, when our economy ran into trouble, the situation would have been much worse. Singaporeans would have lost many more jobs.

So while the stock of EP and S Pass holders can fluctuate, Singaporeans enjoy greater security of employment, with help from various Government measures. Jobs Support Scheme held firm, helped enterprises keep their workers. We have a multi-ministry national jobs council that came up with many initiatives to help place displaced Singaporeans into jobs, including also a job growth incentive to help to encourage companies to hire local workers. So when Mr Leong Mun Wai said in his Facebook post that we need to recoup a few tens of thousands of jobs from foreign work pass holders, he may not know that we have already done so. This always happens in a downturn.

The second challenge is the profile of the foreign PMEs. They are concentrated in certain sectors, and from certain countries of origin. And indeed, as our digital economy and our needs for tech talent grew, more PMEs from India came into Singapore, through our EP framework.

And when that concentration happens in areas such as Changi Business Park, some may feel that we have lost a part of Singapore. Members of the House have raised this concern. We are taking this seriously and studying what we can do to lessen the problem.

I hasten to add that dealing with excessive concentration is not a straight-forward matter of chopping up the operations of a company here. We don’t want to unintentionally cause the whole investment to move elsewhere. And this will hurt even more Singaporeans. And this is part of the careful balancing that I talked about earlier.

Third, at the company level, there may be unfair hiring practices, with department heads preferring to hire foreign PMEs or even foreign PMEs from certain countries.

And this is not right. Whatever system we set up, there will always be some abuses. We must tackle the abuses when they occur as swiftly as possible, while continuing to adopt sensible economic policies that are good for Singapore and Singaporeans.

MOM takes a strong stance against such discriminatory practices and together with our tripartite partners has been actively enforcing against errant employers. The Minister for Manpower will speak on this further.

I have explained the underlying reasons for the difficulties faced by our PMEs, so that we know what it means for us in terms of public policy choices and how we can most effectively address the challenges. If we mistakenly blame FTAs and CECA for these problems, our responses would be disastrously wrong and would make our problems worse.

BE CAREFUL OF THE RISE OF XENOPHOBIA AND NATIVIST POLITICS

As I explained earlier, our FTA strategy has benefited Singaporeans and Singapore. So it is disappointing that FTAs are now a target of political attack. But perhaps, I should not be surprised as this has happened in many countries.

Such a debate goes beyond FTAs. The question of global versus local has emerged as the new dominant political divide in democracies around the world.

In the US, labour unions and various industry lobbies are against free trade. The Trump Administration pulled out of the Trans-Pacific Partnership (TPP) within a week of taking office, even though the US was the architect of the TPP agreement.

In the UK, Brexit was the culmination of a bitter political contest between those who want to be part of the European Union and those who wanted out.

In France, the next presidential election is likely to be a face-off between the incumbent President Macron and the far-right nationalist candidate.

These political divides arose because of globalisation. While globalisation presents opportunities and creates jobs, it also brings about greater competition, displacement of industries and jobs, inflow of immigrants.

These consequences go beyond the economic sphere, and often strike at the heart of a nation and a community’s sense of identity and security. And this is the most unsettling change, causing people to become unsure if they are on the whole better with globalisation.

And such concerns are genuine, and deserve serious and proper attention. We are a small country, and an unrestricted flow of workers from a large country can change the lived experience of Singaporeans, alter the character of our society and even overwhelm us. But we need to be careful that these valid concerns are not exploited by political groups and intentionally or not, end up sowing division, stoking fear, fanning hatred.

As representatives of the people, we all have a responsibility to realise that our words and deeds can shape public opinion and the direction of our political discourse.

That is why when Mr Leong Mun Wai said in this House some months ago that the naturalised Singaporean CEO of DBS was not "home grown" and deemed this a failure, Minister Iswaran responded with a word of caution. And I agree with Minister Iswaran and feel that Members of the House should be very careful about what we say on such matters if we are not to give credence to very negative, even ugly, minority view.

And that is also why we appreciate the Leader of the Opposition standing up to say that when it comes to racism and xenophobia, we all have to reject them and there can be no "if"s and "but"s about it.

CONCLUSION

Mr Speaker Sir, before I conclude, let me remind Members that the House has invoked Standing Order 44 so that the members from the PSP can give a full response after Dr Tan See Leng’s speech. Even if Mr Leong Mun Wai and Ms Hazel Poa choose not to, I will be happy to clarify questions from members.

The PAP always fights for the welfare of Singaporeans. We have done so for more than 60 years now – kept our country safe, brought jobs to Singaporeans, built up our infrastructure, and taken care of the welfare of all.

As a city state connected to the world, we want to welcome diverse talents from all over the world.

And when they are here, we invite them to fit into our society, respect our social habits and norms, appreciate our multi-cultural society. Join us at the hawker centres, try some durians, try some "sambal belacan", speak a few phrases of Singlish.

And when Singaporeans go overseas to live and work – and about 200,000 of us do – we also expect the same of ourselves and hope that we also receive hospitable welcomes from our foreign hosts too.

I decided to make this statement today so that we can approach the debate on the PSP’s subsequent motion with the right perspective and motivation. The House should continue to debate robustly the pros and cons of various policies to help Singapore navigate this balance between global and local.

But we must not inadvertently shake the bedrock that has enabled Singapore to succeed. We cannot survive – we cannot earn a living – without being connected to the world, without being welcoming to the world, without the House unanimously supporting our FTA strategy.

We must always be a big-hearted people, even while we grapple with the significant challenges of globalisation to forge the best path forward for Singapore.

Source: CNA/jt

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