NEW DELHI: Singapore's prime minister on Wednesday urged India to press ahead with economic reforms and added that foreign investors need a “predictable” environment in which to invest their money.
Visiting Prime Minister Lee Hsien Loong's comments in New Delhi come as foreign investors have become increasingly alarmed about India's paralysed reform process, policy flip-flops and erratic taxation moves.
“India has transformed over the last two decades... liberalisation does benefit its people,” said Lee, accompanied by his wife Ho Ching, who heads Singapore's powerful state-run investment firm Temasek Holdings.
But Lee, who is on a two-day official visit to India, added foreign investors need not only an open economy, “they want predictability” as well.
“They want to be sure the terms you go in on are the same for the next 20 to 30 years,” Lee said. “The more these aspects can be strengthened, the better it will be for India.”
Singapore is India's largest trading partner among the Association of the Southeast Asian Nations (ASEAN) and the second biggest source of foreign direct investment inflows into Asia's third-largest economy.
Foreign investors have sounded alarm, in particular, over India's plans for retroactive taxation of some transactions - a step aimed partly at recouping over $2 billion in capital gains tax from British telecoms giant Vodafone.
Lee also pressed for a swift conclusion of talks to update an economic cooperation agreement with India, first signed in 2005, as well as to allow more airline flights between the two countries.
“One quick win is to improve air connectivity,” Lee said.
He noted Singapore and China already enjoy an “open skies” arrangement, allowing unlimited flights, and said liberalisation of aviation between India and Singapore “will promote the exchange of business, ideas, art and culture.”
Lee urged New Delhi to increase its ties with ASEAN and added that he hoped an investment and services agreement between the two sides would be signed soon.
“There are many more opportunities to be (gained) by integrating our countries' economies with each other and with the region,” he said.
India has been attaching increasing importance to its eastern neighbours under its “Look East” policy, hoping for increased commerce and investment with the ASEAN zone of 600 million people.