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Singapore on Tuesday warned that investors could look to other destinations in Asia if they sensed that the political will for economic reforms was lacking in India.
"Foreign investors are closely watching what is going on in India. If investors sense that the political will for reforms is lacking, they will move to other parts of Asia," visiting Singapore Prime Minister Goh Chok Tong said in New Delhi at a joint FICCI-CII meeting on Tuesday.
Stating that the Vajpayee government had shown great determination to press ahead with economic reforms, he said the pace was being closely watched and it was important to continue to send the right signals.
He said the Singapore government was prepared to set up a $1 billion fund to invest in Indian businesses and in India's infrastructure after the Comprehensive Economic Cooperation Agreement between India and Singapore comes into force.
The CECA had been agreed to a year ago during Prime Minister Vajpayee's visit to Singapore. The CECA would create a free trade area (FTA) between the two countries; an open skies agreement to facilitate unimpeded air links; education and investment promotion, and other steps to integrate Singapore's economy with India's.
The CECA would also help catalyse more investment by Singapore into India; more investment by India into Singapore to serve the wider ASEAN market; and greater interaction between the businesspeople of the two countries.
He said India had all the ingredients for continued high growth over the next decade, and there was no reason why it could not do better.
Tong said India had liberalised its foreign direct investment regulations and its economic growth had averaged six per cent annually over the past decade.
He said developing countries like India, China and Brazil which were experiencing the fruits of liberalisation, could serve as constructive examples for the rest of developing world.
Terming terrorism and proliferation of weapons of mass destruction as critical problems, he said political and security environment was very different and challenging for all countries across the world.
Economically, there is greater global integration and interdependency, he said and added that September 11 and war in Iraq had dampened prospects for all economies.
Singapore should also be the bridge that brings together the two large and fast growing economies of the world-India and China, said the Singapore prime minister. "This bridge would benefit all three countries, and it would come into play when India and Singapore implemented the CECA," he said.
In response to a question, he said that he hoped to complete the CECA within twelve months.
As part of greater people-to-people cooperation, Singapore would launch the Asian Business Fellowship for India. This would sponsor Singaporeans to work as interns in Indian companies or Singapore companies that are based in India.
It would offer full-time post graduate programs in prestigious academic institutions like the Indian Institutes of Management.
The lunch event saw the launch of the 'Bridge Singapore,' an initiative taken by CII to promote greater business cooperation between the two countries.
Earlier the prime minister, who is on his fourth visit to India said that the proliferation of free trade areas between different countries and regions was helping to push for trade liberalisation.
South East Asia was at the center of many of these trade agreements and he looked forward to an India-ASEAN free trade agreement soon, he said.
He also lamented the slow progress of WTO negotiations under the Doha Round. He hoped that all countries, especially the developed countries, would show sufficient political will to make a success of the next WTO meeting at Cancun in September.
He said that India's economic and trade reforms could inspire other developing countries to liberalise. It is important for India to continue to send the right signals, because investors have other options in Asia to look to, he said.
Additional inputs: PTI