The Comprehensive Economic Cooperation Agreement (CECA) that was signed between India and Singapore appears to have some problems. The Monetary Authority of Singapore (MAS), or central bank, has taken up with RBI the issue of Temasek, the government's investment arm, being prohibited from hiking its stake during a recent equity-raising exercise by the Indian bank.
"As part of a cordial and professional dialogue with RBI on various issues, MAS has written to the Indian regulator," MAS managing director Heng Swee Keat was quoted as saying. "RBI assured us that it would look into the issue."Indian regulators have taken the position that both Temasek and the Government of Singapore Investment Corporation (GIC) are owned by the Singapore government, and their combined stake in ICICI would cross the 10 percent limit allowed to any one party in a private bank, the newspaper said.
"GIC and Temasek are separate entities, each with the right to invest up to 10 percent," said an MAS spokesperson. The agreement, which provides for greater access by each country's banks to the other country's financial sector, took effect last August. The problems were detailed as the dust was still to settle on Temasek's purchase of a major stake in Thai telecommunications giant Shin Corp.
Opponents of caretaker Thai Prime Minister Thaksin Shinawatra, who announced his resignation Tuesday, were incensed over his family's sale in January of its controlling stake in telecommunications giant Shin Corp. to Temasek.The tax-free sale amounted to $1.9 billion. The transaction triggered two months of mass protests demanding Thaksin's resignation for selling off national assets. The sale outraged many Thais who accused Thaksin of selling off sensitive state concessions to a foreign entity. Shin Corp operates several lucrative government-granted concessions including the country's largest mobile phone system and the nation's satellite network.