Mothership Explains: What is CECA & are S'poreans losing out because of it?

MS Explains: It's become a shorthand for Indian nationals working in S'pore, and will soon be debated in Parliament. But here's a look at what CECA actually is.

Nigel Chua | Andrew Koay | Jane Zhang | July 08, 2021, 09:36 AM

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Editor's note: This article was originally published under the headline: "What the heck is CECA & should you be angry at it, explained", which has been adapted and updated in view of current developments. 

CECA. You may have heard the word being thrown around recently.

You may also have seen it on online forums and comment sections, where it is often used as shorthand that refers to Indian nationals, particularly those who work in Singapore.

CECA, short for the India-Singapore Comprehensive Economic Cooperation Agreement, has been thrust into the spotlight a few times over the last few years — and has recently been put up for debate in Parliament.

2019 Hong Lim Park event

The Free Trade Agreement (FTA) was previously brought into the public sphere back in 2019, in the aftermath of an incident involving a Whampoa condominium resident and a security guard.

The resident in question was a Singapore citizen who was identified by netizens as originally being an Indian national.

Anger surrounding his behaviour 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.

2020: Progress Singapore Party's GE manifesto

The Progress Singapore Party (PSP) then highlighted CECA in particular as an example — in fact, the only example — of the free trade agreements that it would review, in its 2020 General Election (GE2020) manifesto.

In February this year, PSP NCMP Leong Mun Wai posed a parliamentary question on whether the Ministry of Trade and Industry had plans to "negotiate for better terms" under CECA — presumably in fulfilment of what the PSP had set out in its manifesto.

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2021: Parliamentary debate challenge accepted

This brings us to where we stand today — with a debate on CECA expected in Parliament sometime in the near future, after Leong accepted a challenge to debate CECA.

Now that you know why there's been so much talk around CECA, what exactly is CECA, and what does it mean for Singapore?

We try and explain, starting with…

How did CECA come about?

CECA had its beginnings in April 2002, when then-Prime Minister Goh Chok 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 that Singaporeans can use these banks for financial services when doing business in India.

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

CECA 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.

But the simple answer is no; CECA does not allow for free flow of immigration and foreign talent.

What CECA does grant to Singapore and Indian citizens and permanent residents is 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 — current employees of a multinational corporation who are transferred from India to Singapore

Under Chapter 9 of the agreement, Singaporeans and Indians are granted temporary entry to India and Singapore for various periods — between 90 days and two years — depending on which of the above four categories of visitors they fall under.

Extensions may be granted, though these are subject to the fulfilment of certain conditions.

For example, an intra-corporate transferee can have their initial stay (of up to two years) extended for up to three years at a time, and can only stay for a total term of eight years.

And even with Chapter 9 of CECA, individuals coming here (and going there from Singapore) still need to apply for and be granted a valid visa in order to enter Singapore.

A further point to note is that CECA does not affect the granting of citizenship, residence, or permanent employment.

As health minister Ong Ye Kung said in a ministerial statement in Parliament on Jul. 6, speaking in his capacity as a former trade negotiator, "the Government retains full rights to decide who can enter the country to live, work or become PRs or citizens."

Chan Chun Sing, Minister for Trade and Industry, also previously told the media in Nov. 2020 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 on the MyCareersFuture website prior to applying for Employment Passes.

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

  • Jobs which pay $20,000 or more per month
  • Intra-corporate transferees 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 could face additional scrutiny by the Ministry of Manpower (MOM).

Such firms could then lose the right to apply for workers to be granted work passes by MOM.

So is CECA good or bad for Singapore?

CECA is one of 26 free trade agreements (FTAs) Singapore has with numerous countries. 

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 then-finance minister Heng Swee Keat also noted in 2015 that the amount of trade we had in 2003, before CECA was implemented, was just 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.

By 2019, bilateral trade grew further, to S$38 billion, Ong said on Jul. 6.

But are we losing jobs to foreigners through CECA?

The foreign workforce here has indeed grown consistently up to 2019.

But even then, it's hard to definitely say whether the growth would have been slower if not for CECA, since there were also other factors affecting this at the same time.

For example, changes in government policy on employment passes and S passes, as well as broader economic trends.

In other words, one cannot say with certainty that there would have been more jobs for Singapore residents today, if CECA had not been signed.

As manpower minister Tan See Leng said in Parliament on Jul. 6, the total number of intra-corporate transferees that have come to Singapore to work is "very small" — just 500 of them were from India in 2020, out of a total of 4,200.

This was one of the reasons why Tan said that CECA had become a "red herring", especially since the number of employment pass holders was much more significant.

Regardless, CECA, or at least many Singaporeans' understanding of it, has created a real fear on the ground that Singaporeans are vulnerable to foreigners entering our workforce — a fear real enough that the government apparently saw fit to issue a challenge to debate the matter.

What can be expected from the upcoming CECA debate?

Following the debate in Parliament on Jul. 6, Leong conceded that he and fellow PSP NCMP Hazel Poa are "for FTAs" and accepted that jobs and livelihoods were not being used as "bargaining chips" in negotiating such agreements.

But he maintained that he needs more time to study the numbers provided about CECA before deciding whether it's beneficial for the country.

The actual debate on CECA has yet to take place, with the ball being in the PSP's and Leong Mun Wai's court.

As Leong himself explained on Jun. 22 while outlining his plans for the debate, it is now up to him and the PSP to decide on a "suitable time" to file a motion, before the Speaker confirms the date of the debate itself.

But what does the debate (and its possible outcomes) mean for Singapore?

The government's position is that CECA is one of many FTAs which are critical to Singapore — as seen from Ong and Tan's ministerial statements.

CECA will be here to stay for the foreseeable future, even if Leong, and the PSP remain unpersuaded.

Either way, the government gets what it wants: for the conversation about and around CECA to have a "proper public airing", in Ong's words.

This is important because of the link between anti-CECA discussions and the issue of racism, which home affairs and law minister K Shanmugam brought up in Parliament on May 11 when issuing Leong the challenge to debate CECA.

Then, Shanmugam said that CECA and government policies should not be used as a justification for racism or xenophobia, calling attention to the fact that canards (or, unfounded rumours) and false statements were being made about the FTA.

He then brought up a report of a racist incident being discussed in a coffeeshop, and said that "highly racist comments targeting Indians" were "getting into the ground and being repeated".

Ong also drew the link between CECA and racist/xenophobic sentiments in his ministerial statement on Jul. 6.

He said that the PSP had been making the "seductively simplistic argument" that an "unfettered inflow of Indian professionals" into Singapore through CECA was to blame for social ills.

According to Ong, this then stirred up xenophobic emotions, which were expressed in the form of CECA-themed websites, but then spilled out of the online space.

"Words gradually became deeds, and toxic views turned into verbal and physical assaults on Indians, including our citizens," said Ong.

From that point of view, one can understand why it is important for any falsehoods about CECA to be debunked.

The government likely issued its invitation to debate CECA hoping that Singaporeans who tuned in would be able to get the right facts about CECA and its impact on Singapore.

But even if that does happen through the upcoming CECA debate, what the government also hopes for is to also address what Tan called "the heart of the matter": How Singapore can remain open to global talent, so that it can create opportunities for Singaporeans, while managing the social repercussions along the way.

The three social repercussions that Tan identified were:

  • Worries about Singaporeans' jobs and livelihoods, as the number of employment pass holders here grows.
  • Concerns that some workplaces have become concentrated with a single nationality.
  • Cases of discrimination against local job seekers and employees.

Unfortunately, these are issues that CECA, or even a full parliamentary debate on it, won't quite be able to address.

But at least — at the end of this article — we now know what CECA is.

Mothership Explains is a series where we dig deep into the important, interesting, and confusing going-ons in our world and try to, well, explain them.

This series aims to provide in-depth, easy-to-understand explanations to keep our readers up to date on not just what is going on in the world, but also the "why's".

Top image via Unsplash