Lee Hsien Loong
It has been a promising
start to 2004.
The world economy is experiencing a strong, synchronized
recovery. The Singapore economy grew a robust 7.5%
(year-on-year) in the first quarter of 2004, up from
4.9% in the last quarter of 2003. The Ministry of Trade
and Industry has raised the GDP growth forecast for
this year to 5.5-7.5%. Growth is expected to be broad-based
across both the manufacturing and services sectors,
while the labour market should register steady improvement
through the year. Nevertheless, the favourable outlook
not without risks. These include a sharp economic slowdown
in China, rising oil prices and security concerns.
Barring mishaps, we expect a sustained upturn for Singapore
and the global economy. Confidence is high. As economic
activity picked up, early signs of inflationary pressures
emerged. Against this backdrop, in April 2004 we shifted
the monetary policy stance from a zero per cent appreciation
path to a policy of modest and gradual appreciation
of the trade-weighted Singapore dollar.
The rapid recovery reminds us how volatile the global
environment is, and how important it is to continue
strengthening our ability to assess and manage risks.
MAS made further progress in risk-focused supervision
and risk-based capital requirements. We aim manage risks
in our financial system more precisely and sensitively,
without placing unnecessary regulatory burdens on well-managed
financial institutions. We are also
making progress toward a longer term goal: applying
equivalent prudential and market conduct standards to
financial institutions across different sectors conducting
similar business activities that are subject to similar
In a more risky environment, financial institutions
need to understand their statutory responsibilities
as well as the desired outcome of MAS supervision.
To make supervisory initiatives and policies more transparent,
we published a monograph setting out our supervisory
and regulatory approach for the financial sector.
To benchmark ourselves against
international best practice, we completed the IMF/World
Banks Financial Sector Assessment Programme (FSAP).
The report published in April this year endorsed the
resilience and robustness of Singapores financial
sector despite the difficult conditions. It also commended
degree of observance of international standards and
codes. We take heart from the FSAP findings but we will
not be complacent. We must remain vigilant to maintain
the soundness of our financial system and confidence
We have established good partnerships with industry.
The research scheme introduced by MAS and the Singapore
Exchange has produced encouraging results. Our consultation
papers attracted valuable feedback, which helped us
to formulate the new Business Trust Act, fine-tune the
Securities and Futures Act and the Financial
Advisers Act, and make other important regulatory changes.
In our disclosure-based regime, corporate governance,
market discipline and a well-informed investor community
are key to fair dealing. MAS, working with other government
agencies, launched a national financial education programme
(MoneySENSE) to enhance financial literacy and self-reliance
of consumers. We will
continue to work with market participants and industry
associations to promote higher standards of market conduct.
Looking ahead, we must capitalise on the opportunities
from the global and regional economic recovery. MAS
will strive to keep Singapore an attractive regional
hub for financial sector activities. Together with our
counterparts in the region, we will develop initiatives
to further strengthen, liberalise and integrate our
financial markets. We will
adapt and respond to market developments and enhance
Singapores position as a premier international
I wish to take this opportunity to express my sincere
thanks to Mr Lam Chuan Leong for his significant contributions
to MAS and the financial sector. Mr Lam stepped down
from the MAS Board in December last year, having served
as a member since January 2000. I would also like to
welcome Mr Lim Chee Onn back to the board.
Lee Hsien Loong
Monetary Authority of Singapore