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At the India-Singapore Business and Innovation Summit held in Mariner Bay Sands on Monday (9 Sep), Singapore’s Foreign Affairs Minister Vivian Balakrishnan said Singapore can help India in areas such as infrastructure planning, water conservation and business expansion.
Dr Vivian said India aims to invest about US$13.9 billion in urban infrastructure and solutions over the next five years, as it is set to rapidly urbanize. This presents a huge opportunity for firms in the sector, he said, adding that Singapore is already “welcoming and familiar” to Indian businesses and visitors.
“We believe we are a natural partner as India urbanizes. Our expertise in urban development, planning, and infrastructure finance will be salient to India,” he said.
Dr Vivian’s comments came despite Singapore is currently facing an investment fiasco in the Indian state of Andhra Pradesh. After years of working out with the previous state government to build a multi-billion dollar new capital at Amaravati for the state of Andhra Pradesh, the newly elected state government now headed by the YSR Congress party pulled the plug and stopped the project. From a high priority project championed by the previous state government, the new state capital Amaravati has become a low priority one under the new state government.
The new Andhra Pradesh state’s Finance Minister Buggana Rajendranath described the Amaravati project as something of a “damp squib” (i.e., something that fails to come up to expectations) that did not figure high in the priorities of the new state government.
“We don’t have the money to build a city,” Mr Rajendranath said. “Our priority is bringing up the standard of living, providing equitable development to the entire state, providing an infrastructure for creating a manufacturing base, rather than to build a single city.”
Senior officials of the new state government also told the media that the state is now in favour of developing a decentralised urban environment rather than concentrating all development in a single, large city.
Singapore invests S$4 billion in Andhra Pradesh
Temasek-linked companies have been involved in the Amaravati project since the beginning of 2014. Surbana Jurong submitted the city’s masterplan in 2015, and a consortium of Ascendas-Singbridge (now under CapitaLand) and Sembcorp Development was announced in 2017 as the master developers. It was conceived to be 10 times the size of Singapore, requiring an investment of billions of dollars.
However, the new Chief Minister Jaganmohan Reddy was not keen to pursue the project which was seen as a brainchild of the previous Chief Minister. The new state government even hinted recently that they might drop Amaravati as the new state capital, thereby threatening the investments of those Temasek-linked companies. Chief Minister Reddy even accused the previous Chief Minister of corruption regarding the way land was acquired, as well as other improprieties including insider trading.
Simultaneously, both the World Bank and Asian Infrastructure Investment Bank (AIIB) have withdrawn the US$500 million of funding for the new capital. Due to politics, Modi’s central government has also dropped its support for the Amaravati development.
Earlier last month, Singapore High Commissioner to India Lim Thuan Kuan, alongside officials from Singapore’s Ministry of Trade and Industry, met Chief Minister Reddy in a bid to improve soured relations resulting from the takeover. The High Commissioner reportedly told the Chief Minister that over Rs20,000 crore (S$4 billion) worth of investments have already been made by Singapore companies in Andhra Pradesh. The uncertainty over the fate of Amaravati’s development is said to have led to a sharp fall in land prices across the state in the last two months. It’s not known how the fall in land prices would affect the bottom-lines of those GLCs.
But Dr Vivian said to give the new state government time to sort things out.
In any case, investing in India can be fraught with political risks as investing in the state of Andhra Pradesh has shown. If Singapore bets on the new Chief Minister Reddy and his initiatives now, there is no telling that he might just lose in the next election, resulting in his initiatives being canned by a yet another new Chief Minister coming on board later.