Published Date: 07 June 2010

Keynote Address By Mrs Lim Hwee HuaMinister In The Prime Minister’s Office and Second Minister for Finance and TransportAt the Nomura Asia Equity Forum

Mr Kenichi Watanabe,
President and CEO of Nomura Holdings

Distinguished guests,

Ladies and Gentlemen,

1   I am very pleased to join you this morning at this year’s Nomura Asia Equity Forum, where Nomura has brought together some 1,600 delegates from the financial sector and other important industries.


2   I would not be exaggerating if I were to say that many things have happened since the Forum last year. Most notably, the severe pessimism associated with the global recession has given way to a strong and broad-based recovery in many regions. However, recent events such as the EU sovereign debt crisis have shown that many political and economic uncertainties beset this recovery. This continues to present many challenges, not just for governments but also for investors and businesses.

A changed world post financial crisis – but opportunities abound in Asia

3   We see three trends characterising this changing global environment. First, while overall growth is projected to reach 4.25% this year , growth will be uneven across regions. In particular, growth in emerging economies is likely to outpace that of developed economies, especially those that have been harder hit by the fallout from the financial crisis. The ongoing uncertainties in Europe are a good example of how worries about sovereign indebtedness in developed economies could lead to further risks that may stop the recovery in its tracks.

4   Second, there is a shift in the economic centre of gravity away from North America and Europe, towards the emerging economies of Asia, South America and Africa. While the advanced economies will no doubt remain major global players, emerging economies are well-positioned to seize the opportunities offered by the very different global landscape. Having said that, we should nonetheless beware of incipient asset bubbles in these markets. If not properly managed, such bubbles can turn to busts and trigger another economic downturn.

5   Third, the global marketplace, while still open, will face increased scrutiny. Following the financial crisis, rigorous debates on financial regulation have been taking place at international fora such as the G20 and Financial Stability Board. There have been moves to ensure that financial institutions have stronger capital and liquidity buffers. Accounting standard setters are also working to improve convergence of international standards to achieve a set of high quality, global accounting standards. There are also efforts to introduce greater transparency to the trading of over-the-counter financial products.

6   Notwithstanding the risks for the global economy, opportunities abound in Asia. For the first time, the global recovery is being led by Asia, with the region’s GDP growth forecasts having been recently upgraded to around 7% for each of 2010 and 2011 . By 2020, Asia is expected to account for about 43%, or almost half, of global GDP, 35% of global exports, and 20% of global outward foreign direct investments.

7   Intra-regional linkages are becoming increasingly important as strong cross-border vertical supply chains have been developed in Asia. This started between China, Korea and Taiwan upon China’s accession to the World Trade Organization in 2001.  Works to establish the ASEAN Economic Community by 2015, whereby ASEAN economies transform into a single market and production base, are also underway. ASEAN members are also becoming more closely integrated with their Plus 3 partners.  By 2020, intra-Asian trade is expected to constitute at least 50% of all Asian trade . 

8   Asia’s growing wealth can be seen in the rising number of high net-worth individuals, as well as the scale of assets managed by Asian institutional investors and pension funds. The impact of Asian multinational corporations and small and medium-sized enterprises on global business and innovation is also intensifying by the day.

Singapore’s response to the post-crisis world

9.   What is Singapore’s response to the post-crisis world? We seek to remain relevant as a place to exploit opportunities in Asia by growing Singapore as a global city in the heart of Asia.

10   In the past half century, Singapore has been a vital part of the Asian growth story – both as a place where Asia meets to do business, and as a springboard from which investors from both within and outside the region can access the myriad opportunities available in this part of the world.

11   It is gratifying that our efforts have been recognised by many observers, most recently in the Institute for Management Development’s survey which ranked Singapore as the most competitive economy in the world, as well as in the World Bank’s Ease of Doing Business Survey 2010 in which Singapore has clinched the top rank for the fourth time this year. We will continue to work hard to maintain and improve upon this competitive position.

Productivity as the key driver for sustainable growth

12   Going forward, Singapore has identified productivity as the key driver of sustainable economic growth. Looking at the events of the past decade, we can see that certain drivers of growth are temporary at best. We have seen for example the undesirable effects of over-leveraging in developed markets, causing asset bubbles and crashes.

13   Productivity, through having our workers work smarter and better utilise technology and soft skills, will be the catalyst and enabler for sustainable growth in Singapore and beyond. Singapore is moving ahead to improve the quality of our workforce in both manufacturing and services. We aim to grow a ready pool of professionals and workers, as well as to create a fertile ground for thought leadership and innovation.

14   Earlier this year, the Government established the National Productivity and Continuing Education Council to spearhead  efforts to boost productivity and skills in Singapore’s workforce. For the financial sector, MAS is developing ideas with financial institutions and industry associations to develop a better trained and more effective financial sector workforce. These initiatives require long-term commitment by the Government, investors and the private sector in Singapore.

15   The financial sector has a two-fold role in Singapore’s drive to grow its economy – the first as an enabler for enterprise through its role in the intermediation of capital, and the second, as an engine of growth in its own right.

Financial sector as an enabler for enterprises

16   A key driver of productivity gains and economic growth in Singapore will be the small and medium-sized enterprises, or SMEs. The Economic Strategies Committee found that Singapore’s small domestic market makes it necessary for our enterprises to internationalise in order to grow. Hyflux, Koda and YCH are examples of successful, internationally-recognised brands that were SMEs not that many years ago. With distinctive capabilities and growth aspirations, they now have global brand-names and presence.

17   Today, Singaporean enterprises have even greater opportunities to tap into the region’s growth potential, as Singapore enhances its position as a hub from which supply chains are managed. Companies are sourcing from resource-rich countries such as Indonesia and Australia, manufacturing in countries like China and Vietnam, and with management, design and logistics coordinated through Singapore. 

18   To enable and exploit these flows, financing is a crucial enabler of SMEs that have the potential to grow into the Hyfluxes of tomorrow. There will be a demand for long-term growth capital from value-adding investors, equipped to lend their experience to nurture enterprises over time. There will also be demand for cross-border financing by companies venturing overseas to seek new markets.  The Government is currently developing solutions to aid our enterprises to gain access to cross-border financing, but for any solution to be effective, we must partner with the many market players in our financial sector.

19   As such, the financial sector will play a vital role in leading the provision of such financing through various means like bank lending, capital raising, research coverage and other forms of intermediation of capital. Though banking is still the predominant form of financing in the region, Singapore has built up a strong network of venture capital and private equity players, as well as well-developed capital markets infrastructure, that provide a wider range of financing options for SMEs and other enterprises.

20   Aside from providing financing for growth and investment, a robust and well-governed financial sector also provides tools for companies to efficiently run their businesses. For example, judicious use of derivatives by treasury and risk management desks can allow corporations to effectively plan and manage their cost of doing business.

Financial sector as an engine of growth

21   The financial sector has been a vital component of Singapore’s growth in the past ten years. A robust and well governed financial sector will enable the sector to be an engine of Singapore’s growth for many more years.

22   Singapore has undertaken several broad initiatives to achieve our goal of building a world-class financial centre. First, Singapore will continue to promote the hubbing of high value-added services like legal and arbitration services, accounting, education, marketing and consulting. Singapore is a natural location for such activities owing to its advantages like location, neutrality, infrastructure, a stable business environment, skilled workforce, and openness. In the area of arbitration, we have established the Maxwell Chambers, which will house a first-class venue for international hearings equipped with state-of-the-art facilities for arbitration. 

23   This has in turn attracted parties such as the World Intellectual Property Organization (WIPO) to set up its first office here, outside of Geneva, to resolve IP disputes in Asia Pacific.

24   Even within the financial services sector itself, we are encouraged by the increasing number of high value-added activities being set up in Singapore.  These include infrastructure finance, treasury activities, commodities trading, wealth management and risk management. Strong growth has also been seen in the area of commodity trading, with more of both the physical and derivative trading players hubbing their operations here to meet Asia’s fast-growing demand for resource commodities. Treasury activities have also picked up in tandem with the internationalisation of Asian corporates who have found Singapore to be an ideal location to manage their global and regional treasury activities.

25   Second, we will leverage our position as a Global-Asia business hub to grow activities which emphasise integration between different areas. This will see us maximising our strengths in various financial services to enable us to play an increasingly important role for sectors of the real economy where we have a competitive advantage in. For example, financial institutions specialising in shipping finance have leveraged our location as a transhipment hub to tap on the opportunities brought about by the increasing trade linkages between Asia and the world. Also, dealers and corporations who trade in energy derivatives have taken advantage of our role as a major oil refining location and established bases here to complete their global trading network in serving regional and global customers.

26   Thirdly, we will provide the appropriate physical infrastructure to cater to long-term growth. Just across from where we are now, you will see the Marina Bay Financial Centre taking shape. Once completed in 2012, the Marina Bay Financial Centre will boast a sizeable catchment of space dedicated to supporting the new business and financial district, a place to live, work and play.


27   Despite political and economic uncertainty in the global recovery, Asia through Singapore remains fertile ground for high value and productive activities and investments.

28   We welcome the active participation of investors and businesses in Singapore.

29   With that, I wish all of you a fruitful conference ahead. Thank you.