What the heck is CECA & should you be angry at it, explained

It's the acronym that's got many people worked up.

Andrew Koay| Jane Zhang| November 10, 04:45 PM

CECA. You may have heard the word being thrown around recently and you may even be angry at it.

But what is it really?

Short for the India-Singapore Comprehensive Economic Cooperation Agreement, CECA has recently been thrust into the spotlight by the recent furore over an infamous incident involving a Whampoa condominium resident and a security guard.

The resident in question is one Erramalli Ramesh, a Singapore citizen who was identified by netizens as originally being an Indian national.

The anger surrounding Erramalli's behaviour has opened the doors to discontent about immigration and job security in Singapore, with some putting the blame on CECA.

A rally was even held in the aftermath of the incident where Singaporeans showed up to voice their anger at CECA.

So, what exactly is CECA, and should you be angry about it?

We try and explain, starting with…

How did it actually come about?

CECA had its beginnings in April 2002, when then-Prime Minister Goh Chock Tong and India's then-Prime Minister Atal Bihari Vajpayee announced intentions to explore the benefits of closer economic ties between the two countries with a view towards launching a comprehensive economic partnership agreement within one year.

A 10-member India-Singapore joint study group was established to research the extent and structure of the agreement.

The group included representatives from the two countries' ministries of foreign affairs, commerce, and finance, as well as representatives from the business and industry sectors.

Its study focused on the effect of the liberalisation of trade in goods, services, and investments, as well as areas related to international trade, with the group's resulting report accepted as the framework for talks held between Singapore and India over what CECA would look like.

Singapore sent a 30-member negotiation team led by Deputy Prime Minister and Finance Minister Heng Swee Keat, who at the time was our permanent secretary for trade and industry.

After 13 rounds of negotiations, CECA was signed off on June 29, 2005, during Prime Minister Lee Hsien Loong's state visit to India.

A press release issued at the time said that the agreement would "further enhance bilateral ties by catalysing the already growing flows of trade, investment, ideas and people."

What does this actually mean for Singaporeans?

A whole lot of things, but we'll try and explain some of the key points.

For one, both sides agreed to do away with tariffs — taxes on imports from either country.

When CECA was first announced, a press release from the Ministry of Trade and Industry (MTI) said that tariffs on approximately 75 per cent of Singaporean exports to India would be eliminated or substantially reduced within five years.

The Singaporean sectors that would benefit included:

  • Electrical and electronics
  • Instrumentation
  • Pharmaceuticals, and
  • Plastics

It was also agreed that Indian goods entering Singapore would not be subject to any tariffs as soon as CECA came into force.

How do tariffs affect us as regular Singaporeans?

Higher tariffs means that customers need to pay more for the goods. By lowering and removing tariffs through CECA, Singaporeans can save money on imports from India that are covered under the agreement.

This also means that there are lower barriers of entry for Singaporeans looking to enter the Indian market through exports.

Still sounds a bit abstract, doesn't it?

What else does CECA have an influence on?

Quite a bit, really — it is after all "Comprehensive".

If you're interested, you can read the full legal text of the agreement here. But you're probably not going to, so let's continue.

One other thing is of interest is the liberalisation of services.

According to the MTI, CECA would also ensure that service suppliers in India and Singapore were guaranteed access into each other's markets.

In banking, for instance, CECA allowed both DBS and UOB to establish themselves in India. There, they are treated equally to local Indian banks, and another plus point is Singaporeans can use these banks for financial services when doing business in India.

But let's get to the part you're here for...

What about immigration and foreign talent? Does CECA allow them to come into Singapore as they please?

While the agreement has become a point of grievance for Singaporeans who believe that an influx of Indian professionals has cost them their jobs or is crowding out our society, the simple answer to this question is no.

What CECA does grant is Singapore and Indian citizens and permanent residents guaranteed entry and stay in each other's countries as:

  • business visitors — this is pretty self-explanatory, we trust.
  • short-term service suppliers — people who are sent to Singapore to provide a service to folks over here over a short period (of up to 90 days)
  • professionals — people who are hired directly by a company in Singapore
  • intra-corporate transferees (ICTs)— current employees of a multinational corporation who are transferred from India to Singapore

Under Chapter 9 of the agreement, Singaporeans and Indians are granted entry to India and Singapore for various periods — between two months and three years — depending on which of the above four categories of visitors they fall under. However, individuals coming here (and going there from Singapore) still need to apply for and be granted a valid visa.

Under certain circumstances, extensions may be granted.

But the most important thing to note here is that the guarantee of entry does not apply to citizenship, residence, or permanent employment.

Chan Chun Sing, Minister for Trade and Industry, told the media on Saturday (Nov 9) that CECA does not grant Indian nationals unconditional access into Singapore or immigration privileges.

Can these Indian nationals be given preferential treatment over Singaporeans?

Once again, the answer is no.

The government has said that all foreigners, including those from India, must meet the criteria for their work pass before they are allowed to work in Singapore.

Part of the criteria includes the Fair Consideration Framework (FCF), which lays out fair employment practices that must be followed by all firms operating in Singapore. One of the requirements of the FCF is that companies post job advertisements in the national Jobs Bank prior to applying for Employment Passes.

However, the following groups of employees are exempted from the Jobs Bank advertising requirement due to what is stated as "practical reasons":

  • Jobs which pay $15,000 or more per month
  • ICTs holding senior positions with decision-making responsibilities who are redeployed from another country
  • Jobs in firms with fewer than 10 employees

Still, companies that are exempted due to the above must follow fair hiring practices, and any company suspected of discriminatory hiring practices face being placed under additional scrutiny by the Ministry of Manpower and could lose the right to give out work passes.

So is CECA good or bad for Singapore?

CECA is one of 24 free trade agreements (FTAs) Singapore has with numerous countries. It will be 25 FTAs soon as the FTA between European Union and Singapore is set to take effect on Nov 21.

The countries Singapore has FTAs with vary as far as China, Australia, Panama, and Sri Lanka. FTAs such as CECA allow for easier trade in goods, services, and investments between two or more economies by reducing or eliminating barriers — and if you're not directly in business yourself, much of this is likely to fly over your head, just like it did ours. But perhaps the key thing to try to understand is that these FTAs allow Singapore to be economically competitive in the global market. 

Having good trade relations with India is important for Singapore, considering that trade between Singapore and India in 2017 amounted to S$25.2 billion, according to the MTI.

And our Finance Minister also notes that this is a four-fold increase from the amount of trade we had before CECA was implemented — S$5.9 billion.

In 2017, India was also Singapore's largest trading partner in South Asia, and Singapore was India's second-largest trading partner in ASEAN.

But is it good for Singaporeans? Are we losing our jobs to foreigners through CECA?

It's hard to definitely say yes or no to this.

CECA, or at least many Singaporeans' understanding of it, has created a real fear on the ground that Singaporeans are vulnerable to the streamlining of processes for foreigners to enter our workforce.

Foreign workforce numbers supplied by the Ministry of Manpower indicate that:

  • Employment pass numbers have increased from 178,900 in 2014 to 185,800 in 2018
  • S pass numbers have increased from 170,100 in 2014 to 195,500 in 2018

This shows that the foreign workforce as a whole has grown steadily in that period.

At the same time, broad statistics given by the Ministry of Manpower indicate that in 2018, local employment saw an increase in 27,400 jobs from 2017, with increases of various degrees also experienced every year since 2014.

However, these numbers don't indicate what kind of jobs Singaporeans have been getting. A repeated trope has been that ex-professionals have found themselves working as Grab drivers due to the influx of CECA-admitted foreign talent.

However, there are no statistics available to prove this allegation and the sentiment continues to rely mostly on anecdotal evidence.

This makes it impossible to determine — based on the facts we have, at least — if CECA has truly harmed the job security of Singaporeans, as many have claimed.

And that brings us back to our friend Ramesh

Whilst many Singaporeans online have been happy to make Erramalli the symbol of everything wrong with CECA, it is important to remember that his citizenship was obtained through marriage, as his wife is Singaporean.

Online speculation aside, there is at this time no evidence to suggest that he entered Singapore under CECA. Whether that matters or not is up to you, but hey — at least now you know a little bit more about CECA.

Perhaps the question we should be asking ourselves instead of "Is CECA good for Singapore or not?" is, how much effort should these Indian nationals coming to Singapore for various work purposes make to assimilate into Singapore society and our accepted cultural norms? And, is there anything the government can do to pursue this objective?

Both of these, though, are questions that CECA doesn't quite have the answers to, unfortunately.

Top image collage adapted from screenshots from video, images by Peter Nguyen via Unsplash and Andrew Koay, Heng Swee Keat's Facebook page, Goh Chock Tong's Facebook page, and Narendra Modi's Facebook page.