Singapore & Mauritius: State visit results

The economic slowdown in the US and Europe has led some Singapore companies to look beyond traditional markets towards Africa for new opportunities.

They are exploring ways to use Mauritius as a springboard into the region.

Mauritius and Singapore share many similarities - both are small island economies, dependent on international trade and boast a multi-racial population fluent in English.

Both have also positioned themselves as gateways into their regions.

On Monday, business leaders from both sides inked agreements to explore activities into third countries.

Two memoranda of understanding were signed - one between the Singapore Business Federation and the Mauritius Board of Investment, and another between the Singapore Business Federation and the Mauritius Chamber of Commerce and Industry.

It is just the first step, said President SR Nathan, who was present at the signing ceremony, and who voiced his support for closer economic ties.

Mr Nathan said: "Governments like ours and the one in Mauritius, we can only facilitate that get-together. But ultimately, the translation of the MOUs into deeds depends on you."

Mauritius has long relied on tourism, textiles and agriculture for its economic growth, but it is diversifying into services and knowledge-based industries. 

It is also looking beyond its traditional markets in the EU, and into emerging markets in Africa, and is offering Singapore companies the opportunity to come along for the ride.

It is what Maurice Lam, chairman of Mauritius' Board of Investment, describes as perfect timing.

Mr Lam said: "Africa has been developing, in particular, they're changing the way they're governing their country - there's more good governance there. And also they have opened up their countries to foreign businesses and foreign direct investment. 

"So it's the right time for Singapore companies to look at Africa and to be there in the beginning of the transformation - that's going to happen to the African economies."

Mauritius' membership of regional trade bodies means preferential access into Africa, and its favourable tax regime means potential savings.

It currently has double taxation avoidance treaties with 36 countries, out of which 14 are with African states. It also has a similar treaty with Singapore.

For Singapore retailer Crocodile, the push to seek new manufacturers in Mauritius is partly due to rising costs in traditional supplier China and high cotton prices.

Lim Keng Boon, assistant general manager, Crocodile International, said: "If I get my local source, I can manufacture here. I don't have to pay the tax and it'll be better that way - it'll bring down the price further."

Mauritius' established legal framework and stable government also provide safe harbour for Singapore firms.

Graeme Robertson, chairman and CEO, Intrasia Capital, said: "Make sure that you rely on the Mauritius system, in terms of arbitration, in terms of getting into agreements, (and) in terms of the security against appropriation of developments that you do in African countries."

Pravind Kumar Jugnauth, the vice-prime minister of Mauritius and its minister of finance and economic development, said the country has also cut down on the red tape for businesses. For example, a company can be incorporated within an hour, and can become operational, with relevant permits sorted out, within three days.

However, challenges remain. 

Ray Ferguson, regional CEO, Standard Chartered S'pore & SEA chairman, Standard Chartered, said: "Mauritius is a long way from anywhere, so the air links, the connectivity internationally, could be better.

"We have a limited number of flights every day, in and out of Mauritius, and that restricts the ability of people to get in and out of here."

Observers said the lack of high-speed connectivity and a shortage of skilled manpower might also hamper the country's drive to be the business capital of Africa.

As hubs of their respective regions, Singapore and Mauritius have a "natural synergy" that they can leverage for mutual benefit, says Singapore President S.R. Nathan at a state banquet in his honour on Monday night.

Mr Nathan is in the African country for a four-day visit that ends on Tuesday.

He noted growing interest in the "vast untapped potential" in parts of Africa, including from Singapore businessmen, some of whom had accompanied him on the trip.

Mr Nathan's speech, delivered to an audience that included Mauritius Prime Minister Dr Navinchandra Ramgoolam and other dignitaries, touched on the similarities between the two countries.

In particular, he noted that population movements of the 18th, 19th and early 20th centuries have a unique blend of races, cultures and religions.

"We must be proud of this rich, diverse and enduring heritage, which has been held together with mutual understanding, respect and tolerance," said Mr Nathan. 

The fact that both have enabled its people to occupy positions of prominence in various fields, regardless of ancestry, "is testament to the openness and inclusiveness of both our societies."

Mauritius has a population of about 1.3 million, of which nearly 70 percent are of Indian descent, with another 27 percent of Creole heritage.

There is also a Chinese minority.

Mr Nathan also said as small island states, both countries recognise the importance of a stable and open international order.

That explains their active participation in multilateral forums, where they cooperate closely on issues of common interest.

The bilateral friendship extends to the early days of independence of both countries.

As prime ministers, Sir Seewoosagur Ramgoolam and Lee Kuan Yew had forged a personal friendship, which Mr Nathan noted is now being built upon by a new generation of leaders, including his son - Prime Minister Dr Navinchandra Ramgoolam.