Distinguished guests

Ladies and Gentlemen,

INTRODUCTION

1   I am pleased to be here for the launch of Bloomberg TV in Singapore.  Bloomberg has been enlarging and upgrading its broadcast studios here, and increasing its headcount.  Today, Bloomberg's Singapore setup is its second largest in Asia, after Japan, and is central to its operations.  Now that Bloomberg TV will be distributed in Singapore, it will do more locally produced programming, and bring news on Singapore's companies and business personalities to an international audience. 

2   We welcome these developments.  What Bloomberg is doing reflects a wider international confidence in our business environment, and in the efficiency and reliability of our infrastructure, particularly our infocomms infrastructure.   Bloomberg TV will add vibrancy to our media industry.  As a premier station for financial news, it underscores Singapore's status as an emerging international financial centre.

STARTING FROM SCRATCH

3   There are some parallels in the Bloomberg story and Singapore's development as a financial centre. 

4   Michael Bloomberg founded the company in 1981, after losing his old job as a financial executive.  The idea for the Bloomberg terminal began with its creator recognising that Wall Street's methods for valuing one security against another were slow and too dependent on guesses, informed or otherwise.  Today, the Bloomberg terminal has become the industry standard information device. Within one generation, Bloomberg grew into a major provider of international business news.  It now includes a wire service, on-line news, a book publishing company, a magazine, radio and television shows for public television stations, a radio network and a cable programme. 

5   Singapore's financial centre also started out practically from scratch.  When Singapore became independent in 1965, we were a poor, third world country, plagued by unemployment and homelessness.  Low-end commerce was the mainstay of the economy, and there was hardly any foreign direct investment.  But within one generation we attracted foreign investments, developed our export-oriented industries, and established a strong manufacturing base.  We also developed our service industries, one of the main ones being financial services.

AN INTERNATIONAL FINANCIAL CENTRE

6   Singapore managed to carve out a niche for ourselves despite the presence of more established financial centres in Asia such as Hong Kong and Tokyo.  Over the years, our sound economic and financial fundamentals, stable political situation, conducive regulatory and business environment, strategic location, skilled and educated workforce, excellent infrastructure and pleasant living conditions have attracted many reputable international financial institutions to Singapore.

7   Today, 700 local and foreign financial institutions are in Singapore. They offer a wide range of financial products and services, and contribute 12% of Singapore's GDP.   To grow the industry further, we will continue to improve our regulatory and business environment. Over the last five years, we have actively promoted and developed the financial sector, anchoring existing activities here, and developing new activities in which we have an edge.  Our major efforts included freeing up regulations to promote dynamism and innovation, shifting away from micro-managing the activities of financial institutions to supervising them on a risk-focussed basis, and concentrating our effort and time on the most risky and systematically important institutions and activities.   We also progressively opened up the financial sector, bringing in more competition and pressuring the industry to consolidate and upgrade.  This has transformed the sector.

8   First, in banking, our local banks have consolidated from seven to three banks over the last five years.  They have grown larger and stronger, and are building up their regional footprints.  They have strengthened their management teams and built up risk management systems.  Last year, one rating agency even ranked Singapore banks as being among the strongest not only in Asia but in the whole world.  At the same time with more competition from foreign banks, consumers are enjoying a wider and more innovative range of products and services.

9   Second, the debt market more than tripled in size since 1998.  This is partly driven by the growth of the region, with Asian companies seeking to raise debt to expand internationally.  It is also because we relaxed rules on borrowing Singapore dollars by non residents.  We have attracted foreign issuers, and our own corporates have tapped international markets from Singapore.  Moving forward, we expect more derivative products to be structured here as investors look for better yields or protection.  Asian countries are now cooperating more closely to develop domestic bond markets, and Singapore will participate actively in this effort.  All these factors will help make us a major debt hub.

10   Third, in treasury activities, we continue to be a leading global centre. We are now the Asia Pacific FX hub for almost half of the top 20 global players.  Compared to 2002, FX activity in Singapore grew by 24% last year with an average daily trading volume of US$119 billion.  We also saw the growth of activities across the treasury value chain.  For instance, several financial institutions relocated to Singapore their middle and back office treasury operations over the past two years.  These institutions felt that Singapore's strong fundamentals, competitive cost structure and well-established financial market made us the best location to house these mission-critical functions.  Leveraging off treasury activities, we can also grow commodities trading activities, because financial institutions are now also major commodities players, and FX and commodity trading experts are usually in the same business units. 

11   Fourth, asset management has been a very promising activity.  Total Assets Under Management (AUM) at end-2002 reached S$344 billion, a healthy 12% increase in a difficult year. Singapore has kept itself on the radar screen of investors, and benefited from the consolidation of the asset management industry.  We have launched a Wealth Management Institute last year, to develop and expand our talent pool in this industry, and to support its growth.

12   Fifth, private banking is performing exceptionally well.  Asia-Pacific is the fastest growing region for private banking in the world.  According to Merrill Lynch, Asia-Pacific high net-worth individual wealth jumped 11% last year, supported by high savings rates and robust GDP growth in key regional economies such as China, South Korea and Australia.  Bankers managing private wealth like locations which enjoy political and social stability and possess well-respected regulatory, legal and accounting systems.  This makes Singapore well placed to become a premier centre for private banking business in Asia.  We have also been active in developing the sector. We are exempting from tax interest income as well as many types of foreign-sourced income. We are in the process of modernising our trust law and working out a framework to regulate trust companies.

13   Sixth, the equity market has modernised and opened up.  We have demutualised and listed our stock exchange.  The last few years have been very difficult for stock markets world-wide, but things are now looking up. In Singapore, stock market activity reached record levels for recent months. Last year, SGX securities market traded an all-time high of 218 billion units, almost double the year before.  The SGX derivatives market traded its third consecutive yearly record volume in 2003. There is a queue of Chinese companies wanting to list their stocks in Singapore, hoping to raise capital here to expand and regionalise.  There is also a new interest among regional exchanges to explore alliances with each other. Under the Comprehensive Economic Co-operation Agreement with India, SGX and the Indian Stock Exchange are exploring possible opportunities in capital markets for both nations.

CONCLUSION

14   The steps we took over the last five years have transformed our financial industry.  We started these reforms in the midst of the Asian Financial Crisis, but we knew that they could not be delayed, because the world and the region were changing, and we had to be quick footed to adapt to new circumstances.

15   So today, in a more globalised world, as the Asia Pacific region continues to make progress and China and India draw in manufacturing and services investments, Singapore's financial sector has grown and matured.  I am confident that it will continue to grow, and attract more supporting services such as Bloomberg TV, which will in turn make it more attractive for financial institutions to base and expand their activities here.

16   I congratulate Bloomberg for the launch of its TV station.  I wish you success and many exciting stories ahead.