Singapore does not protect any holy cow: Deputy PM on black money

Tharman Shanmugaratnam was responding to a question as to whether Indians are hiding money in Singapore to avoid tax

In the wake of the Panama Papers leak, the issue of rich people stashing their money in tax havens has come to limelight. At a time when countries are discussing ways to strengthen global tax laws, Singapore’s Deputy Prime Minister Tharman Shanmugaratnam on Thursday said his country was open to scrutiny if some Indians are hiding money there to avoid tax.

“Singapore is totally open to scrutiny. We do not protect any holy cow in Singapore, let me be very clear,” Shanmugaratnam said, responding to an audience question on allegations that some Indians could be using the island nation to hide their wealth.

Shanmugaratnam was in Mumbai for a public interaction with Reserve Bank of India (RBI) Governor Raghuram Rajan at Singapore Symposium 2016, organised by the Confederation of Indian Industry.

RBI is one of the agencies probing 500 Indians whose names have appeared in the Panama Papers. Rajan on Tuesday had said it was important to distinguish between legitimate and illegitimate wealth. On Thursday, he stressed the same point and said looking down on legitimately earned wealth was dangerous.

“Increasingly, this talk about whether entrepreneurial wealth is illegitimate, whether self-made people should have what they have and whether that is something that’s fair game… I think this is dangerous,” Rajan said at the symposium.

“The fact that there are occasions when people are found to be hiding their wealth, as in the Panama allegations, essentially contributes to this process. I think it is extremely important to sustain the legitimacy of wealth,” he said.

Rajan also criticised those who think a slowdown in China is good for India because the two countries compete for global investments. He said, in an interconnected global economy, any weakness in one particular region percolates to other region.

“I think one mistake we make sometime in India is seeing downturn elsewhere as necessarily beneficial for us. It is important to say that we would never benefit from another large country doing badly,” Rajan said.

He added, “there may be silver line, in the sense that commodity prices could become cheaper etc, but the world is now so interconnected that any problem elsewhere would come back to affect us very quickly.”

A few months back, Rajan had said that a slowdown in China is bad news for not only global growth, but also for India.

Shanmugaratnam said Singapore benefited immensely in taping the global value chain and there was scope for India too to tap into the existing value chain. Infrastructure such as airports are important for creating sophisticated jobs and India should move towards creating world-class infrastructure.

According to the deputy PM, India’s use of digital penetration is something that Singapore can take a lesson from.

Rajan said India’s progress towards infrastructure creation is commendable and the involvement of private sector like e-commerce firms building warehousing and logistics infrastructure is commendable. “We are on the verge of a revolution,” he said.

The Governor said the policy environment of keeping rupee volatility low was a key for foreigners to invest in India’s infrastructure. With the new monetary policy framework in place, where inflation would be contained at around 4 per cent, the currency volatility would be contained better. “When an entrepreneur invests in infrastructure keeping the exchange rate being a secondary concern, it should remain a secondary concern,” Rajan said.

Shanmugaratnam said Singapore benefited immensely in taping the global value chain and there was scope for India too to tap into the existing value chain. Infrastructures like airports are important for creating sophisticated jobs and India should move towards creating world class infrastructure. According to the deputy PM, while there are many issues where Singapore is ahead of many, India's use of digital penetration is something that Singapore can take a lesson from.