PSP has made FTAs, CECA 'political scapegoats' to discredit PAP: Ong Ye Kung

SINGAPORE —The Progress Singapore Party (PSP) has made free trade agreements (FTA), particularly the Comprehensive Economic Cooperation Agreement (CECA) between Singapore and India, "political scapegoats" in order to discredit the People's Action Party government, said Health Minister Ong Ye Kung in Parliament on Tuesday (6 July).

Ong told the House that the PSP has repeatedly alleged that CECA allows professionals from India “a free hand” to come and work in Singapore. "Nothing in the agreement implies Singapore must unconditionally let in professionals, managers and executives (PMEs) from India,"said Ong, a former trade negotiator who was delivering a Ministerial Statement.

"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 FTA that we have signed."

Ong charged that, for months, the PSP has alleged that FTAs and CECA have led to the "unfettered inflow" of Indian professionals, displacing Singaporeans from their jobs, and bringing about all kinds of social ills.

"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 disturbing xenophobic views about Indian immigrants."

In the process, said Ong, "toxic views" turned into verbal and physical assaults on Indians, including Singapore citizens.

It was the opening salvo of a debate with the PSP on CECA, a challenge issued by Law and Home Affairs Minister K Shanmugam which the opposition party accepted last month. Last Thursday, PSP also refuted Ong’s “false allegations” that it has helped fuel sentiment against Indian immigrants arising from its position about CECA.

Signed in 2005, CECA was India’s first comprehensive bilateral FTA with any country.

CECA is 'part of the solution'

On Tuesday, Ong declared, "Our FTAs in general, and CECA in particular, are not the cause of the challenges our PMEs face; if anything, they are part of the solution."

Singapore's network of FTAs is a "major selling point" for investors, with its total trade in goods and services three times its gross domestic product. Since 2005, its total trade has nearly doubled from around $890 billion to $1.5 trillion.

Ong explained that an FTA requires a country to remove or lower tariffs on substantially all trade between FTA partners. He noted that FTAs are especially important to Singapore's small and medium enterprises, as they free them from being constrained by the small domestic market, and give them access to world markets.

"We could not have advanced the welfare of Singaporeans to the degree we have without FTAs. When you attack FTAs, and worse if your attack succeeds, you are undermining the fundamentals of our existence."

CECA, claimed Ong, gave Singapore a "strategic first-mover advantage" in India, just when the latter was taking off to be an economic powerhouse.

According to Ong, CECA reduces tariff barriers, which made Singapore goods more competitive in the Indian market. Partly because of that, bilateral trade between the two countries had grown by over 80 per cent, from $20 billion in 2005 to $38 billion in 2019.

Similarly, Singapore’s direct investment abroad in India grew by nearly 50 times, from $1.3 billion to $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 too. In 2019, they employed 97,000 locals," said Ong, who is also a Member of Parliament for Sembawang.

More competition for jobs

Ong conceded that many parties to FTAs commit not to impose labour market tests. This is a common clause in Singapore's FTAs, including with India, Australia, China and the US, and means that companies are not required to go through "onerous processes" and documentation to prove that no suitable locals will take a job, before they can hire a foreigner.

Instead, the common and best practice is to interview the suitable candidates, consider them fairly, and make a judgement on the best person. "These are all market-friendly, widely adopted, reasonable obligations."

Ong acknowledged that this means foreign PMEs can compete for jobs with locals at the company level and there can be a zero-sum situation. Hence, a trade-off is at play – many jobs, strong competition, or few jobs, no competition, he added.

He revealed that the number of employment pass (EP) holders has increased from 65,000 in 2005, to 177,000 in 2020. This is an increase of 112,000, or an annual growth rate of just under 7 per cent.

He stressed, "Over this period, the increase in number of local PMEs is much higher, by over 380,000. We need to find the right balance where there are more jobs, some competition."

Ong warned, "If someone promises you many more jobs with no competition from foreigners, he is selling you snake oil. It is not possible. It cannot be on any government’s policy menu."

The minister noted that foreign PMEs also help cushion the impact on the local workforce when times are bad, as they bear the brunt of job losses. Amid the pandemic, 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.

Foreign PME concentrations

Ong also acknowledged that foreign PMEs are concentrated in certain sectors, and from certain countries of origin. "Indeed, as our digital economy and our needs for tech talent grew, more PMEs from India came into Singapore, through our EP framework."

The Minister added, "And when the concentration happens in areas like Changi Business Park, some may feel that we have lost a part of Singapore. Members of the House have raised this concern."

However, dealing with this "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. This will hurt even more Singaporeans."

Welcoming diverse talent

As a city-state connected to the world, Singapore must welcome diverse talent from all over the world and invite them to fit into society. "When Singaporeans go overseas to live and work – about 200,000 of us do – we expect the same of ourselves, and hope that we receive hospitable welcomes from our foreign hosts too," said Ong.

The minister alluded to Non-Constituency MP Leong Mun Wai's comment in the House that Piyush Gupta, the naturalised Singaporean CEO of DBS, was not "home grown", and that this was a "failure".

He urged members of the House not to give credence to "very negative, even ugly, minority views" and that they should be very careful about what they say on such matters.

"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."

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