Was PM Lee completely outsmarted by the Indians?

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Twelve years ago on 29 June 2005, PM Lee triumphantly went to India to sign the free trade agreement, the Comprehensive Economic Cooperation Agreement or CECA, with the Indian government. At the official dinner hosted by the Indian PM for him in New Delhi, PM Lee happily announced that a “New India” is emerging.

“Singapore is keen to engage this New India,” he said. “With the Comprehensive Economic Cooperation Agreement, or CECA, there is no doubt that our trade and business tie-ups will increase considerably. It (CECA) is much more than a free trade agreement. The CECA will bring our two countries closer together,” he added. “Singapore and India stand to gain immensely from the increased flow of goods, services, investments and talent. As economic linkages expand and the free flow of people and ideas continues, I am confident that the relationship will grow from strength to strength. Distinguished guests, ladies and gentlemen, may I now invite you to raise your glasses and join me in a toast to the good health and success of His Excellency Prime Minister Dr Manmohan Singh, the peace and prosperity of the people of India and the enduring friendship between our countries.”- PM Lee at Dinner hosted by India’s PM, 29 June 2005

And that was how Singapore ended up signing CECA with India.

Cleverly hidden clauses

In the agreement, Chapter 9 provides for the movement of people between the 2 countries.

In particular, it provides very laxed rules for the so-called “intra-corporate transfer” of employees, encompassing some 127 different type of professionals described in Annex 9A: IT professionals, architects, civil engineers, electrical engineers, doctors, biochemists, pharmacists, lecturers, accountants, auditors, financial analysts, psychologists, career advisers, etc.

In Article 9.5, Clause 1, it talks about providing a “long-term temporary entry” to “intra-corporate transferees”. In fact the name itself should have raised a red flag to PM Lee. How can an entry be simultaneously “temporary” but yet “long-term”?

The clause stated that “each party shall grant temporary entry to an intra-corporate transferee of the other party, who otherwise meets its criteria for the grant of an immigration visa, for an initial period of up to two years or the period of the contract, whichever is less. The period of stay may be extended for period of up to three years at a time for a total term not exceeding eight years”.

Bottom line is an “intra-corporate transferee” can stay up to 8 years before he is “rotated” out of the country.

And the person shall be exempted from any labour market testing or economic needs testing, as specified in Article 9.3:

“Neither Party shall require labour market testing, economic needs testing or other procedures of similar effects as a condition for temporary entry, in respect of natural persons upon whom the benefits of this Chapter are conferred.”

That is to say, economic needs testing like Singapore’s fair consideration framework which ensures fair hiring of Singaporeans cannot be applied to “intra-corporate transferees”.

To top it all, CECA Article 9.6 even allows the “intra-corporate transferees” to bring in their spouses or dependents to work too:

“A Party shall, upon application, grant the accompanying spouses or dependents of the other Party the right to work as managers, executives or specialists, subject to its relevant licensing, administrative and registration requirements.”

In cases where their spouses or dependents are not professionals, they shall be allowed to work in other areas:

“Such spouses or dependents can apply independently in their own capacity (and not necessarily as accompanying spouses or dependents) and shall not be barred by the Party granting them the right to work from taking up employment in a category other than that of managers, executives, or specialists solely on the ground that they as the accompanying spouses or dependents are already employed in its territory as managers, executives or specialists.”

India IT companies exploiting the “intra-corporate transfer” loophole

Hence with CECA, Indian IT companies like Wipro or Infosys can exploit the “intra-corporate transfer” loophole, to move large number of Indian IT workers into Singapore since CECA does not set any quotas.

They do not have to hire a single Singaporean in their Singapore-based subsidiaries.

Before the PAP govt notices, tens of thousands of Indian IT workers have already quietly entered Singapore with many of them working and settling in the East side of Singapore, creating their own enclaves.

In recent months, driven by higher unemployment among Singaporean PMETs as well as discriminatory hiring complaints from Singaporean workers, the PAP govt started to slow down the approvals of Indian IT professionals to work here.

Indian govt fighting back

Times of India reported that work visas for Indian IT professionals to work in Singapore have dropped “to a trickle”, prompting the Indian government to put on hold the review of CECA, citing violation of the trade pact.

Some of the Indian IT companies affected include: HCL, TCS, Infosys, Wipro, Cognizant and L&T Infotech.

“This (visa problem) has been lingering for a while but since early-2016, visas are down to a trickle. All Indian companies have received communication on fair consideration, which basically means hiring local people,” the president of Nasscom, their IT association, said.

For all practical purposes, visas have stopped for their IT people, added another Indian industry executive. In retaliation, the Indian government has now decided against expanding the scope of goods where import duties for Singapore goods would be cut unless the concerns of Indian industry are addressed, the report said.

In particular, the Indian govt is against Singapore using our “fair consideration framework” to regulate the employment of foreigners in Singapore.

“They are doing it despite the CECA clearly stating that there will be no ENT (economic needs test) or quotas on agreed services. This is a violation of the agreement,” warned an Indian official.

It looks like the relationship between Singapore and India, instead of growing from “strength to strength” as predicted by PM Lee, it has now hit a low point with India threatening to retaliate with regard to what it perceives as a violation of CECA on Singapore’s part.

source: We want Minister Grace Fu to resign