MAS International Advisory Panel Identifies Challenges and Opportunities for Singapore in the New Financial Landscape
Singapore, 1 Feb 2000 - The Monetary Authority of Singapore's International Advisory Panel (IAP) identified challenges and opportunities for Singapore's financial sector during their one-and-a-half day meeting in Singapore. The IAP, chaired by Mr J Y Pillay, comprised leading figures in international finance from the US, Europe and Japan. The list of IAP members who attended this year's meeting is at .
2 The IAP agreed that consolidation in the global financial industry would continue, driven by deregulation, globalisation and increased competition arising from the provision of financial services through new technology. Consolidation drives down costs by capitalising on economies of scale, promotes business synergies and enhances the capital base, thereby increasing the institutions' capacity to manage risk.
3 Given this trend, the IAP stressed that Singapore needs to further enhance its competitive advantage. Singapore should define itself more broadly as a gateway to the region and the world, moving well beyond the domestic market. Singapore cannot compete on the basis of cost, but has to continue to develop an environment conducive for financial institutions to innovate and provide higher value services. In this regard, they agreed that the critical factor is intellectual capital. Singapore has to build an environment that will attract and retain a cross-section of international talents, who are highly mobile.
4 The IAP members reviewed the financial sector reform measures undertaken in the past year aimed at enhancing our operating environment, aligning our supervisory regime with international best practices, and liberalising our banking, insurance and securities industries. They were encouraged by the progress made during the past year and agreed that Singapore should continue to build on its strengths in each of the financial product lines while capitalising on the synergies between the various financial activities. The IAP also commended Singapore's move to speed up the liberalisation of its telecommunications sector which would help reduce business costs for the financial sector.
5 In the area of treasury management, the IAP members noted the success that Singapore had made in attracting some of the major financial and non-financial institutions to consolidate their treasury operations in Singapore. This reflected the favourable country risk profile, greater regulatory flexibility and the presence of suitable counterparties. In their view, it is important for Singapore to continue to attract corporate treasuries to locate their regional operations in Singapore.
6 As for asset management, the IAP felt that Singapore should continue to attract foreign intermediaries to locate the management of funds, especially Asian mandates, in Singapore. In this regard, Singapore's move to place government funds with private fund managers is a step in the right direction.
7 The IAP emphasised the Internet will continue to be a major driving force of change in the new financial landscape. Major reductions in cost were being obtained as a result of applying the Internet and other technologies within financial institutions themselves. The IAP members felt that both banking and capital markets will be transformed by technology in the coming years, even though it is premature to conclude which of several competing business models would succeed. Singapore should therefore aim to maximise the opportunities arising from this transformation and ensure that its supervisory framework remains flexible enough to promote growth and diversity in the industry.
8 The IAP members also discussed the prospects of a sustained Asian economic recovery. While the IAP was encouraged by near term prospects, it noted that uncertainties remain over the medium term. Among the uncertainties are: continued progress in the needed structural reforms, especially in the banking sector in individual countries, sustainability of growth in the US, and implications of the large fiscal deficit and public debt burden in Japan.
9 The IAP members also had discussions with Prime Minister Goh Chok Tong, Senior Minister Lee Kuan Yew and Deputy Prime Minister and MAS Chairman Lee Hsien Loong.ANNEX 1
MAS IAP MEMBERS AND ADVISORS WHO ATTENDED THIS YEAR'S MEETING
Mr J Y Pillay, Chairman of the IAP and Chairman, Singapore Exchange;
Mr Alfred Berkeley, President of the Nasdaq Stock Market Inc;
Mr Gerald Corrigan, Managing Director, Goldman Sachs & Co.;
Mr Toyoo Gyohten, President of the Institute for International Monetary Affairs;
Mr Jan Kalff, Chairman of ABN AMRO Bank NV;
Mr John Mack, President, Morgan Stanley Dean Witter;
Mr Michel Pebereau, Chairman of Bank Nationale de Paris;
Sir Brian Pitman, Chairman, Lloyds TSB;
Mr John Reed, Chairman of Citibank NA; and
Mr Douglas Warner, Chairman, JP Morgan & Co.
Mr Brian Quinn, Chairman of Nomura Bank International plc.
Mr Stephen Thieke, formerly Managing Director of JP Morgan, now retired