Published Date: 07 June 2016

"Positioning Asia for Growth" - Address by Emeritus Senior Minister Goh Chok Tong, at the Nomura Investment Forum Asia

His Excellency
Mr Manabu Sakai, State Minister of Finance

His Excellency
Mr Kenji Shinoda, Ambassador of Japan

Distinguished Guests
Ladies and Gentlemen


1.    Welcome to Singapore. I am delighted to speak to you at the Nomura Investment Forum Asia.  This is the 13th year Nomura is holding its flagship investment event in Singapore.  It underscores the abiding interest among the global investor community to tap the region’s economic potential and investment opportunities from Singapore, as well as Nomura’s commitment to growing its operations in Singapore.

2.    This year’s Forum has an added significance – it is a SJ50 year, ie Singapore and Japan celebrate 50 years of strong bilateral ties.  Our economic relationship is particularly binding.  Japanese companies play a key role in Singapore’s development and contribute to our Gross Domestic Product.  By the same token, Singapore contributes to Japan’s Gross National Product through these companies.  It is a synergistic symbiotic relationship.

3.    Singapore was the first country with which Japan signed a bilateral trade agreement in 2002 – the Japan-Singapore Economic Partnership Agreement (JSEPA).  JSEPA’s value extended beyond immediate gains in trade and investments for both countries.  It was a firm commitment to freer flow of goods, services and capital within the region, and acted as a catalyst for more and broader trade agreements.

4.    Both countries also work closely on several initiatives in the financial services.  The Cross-Border Collateral Arrangement between the Bank of Japan and the Monetary Authority of Singapore, permits greater flexibility in liquidity management for Japanese banks operating in Singapore.  Major Japanese financial institutions like Nomura have built strong regional franchises in Singapore and contributed to the dynamism of our financial centre.  Similarly, top Japanese corporates, many of which are represented here today, have set up regional hubs in Singapore to service the ASEAN region.

Asia: raising productivity to sustain growth momentum

5.    I last addressed the Nomura Asia Equity Forum, as this Forum was known then, in 2007. Asia has grown even more important to the world economy and financial markets since then.

6.    The region is playing a larger role in the global economy. Asia is projected to account for almost 40% of global GDP this year, compared to 31% a decade ago1. It remains the fastest growing region in the world and is home to both the second and third largest economies. In terms of global trade, Asia’s share of global exports has increased to 36% today from 30% in 20072.

7.    The continued growth and prosperity of Asia is dependent on harmonious, open and inclusive cooperation in the region. So I shall talk briefly on some geopolitical issues before touching on some specific items in Singapore’s financial sector development.

8.    Territorial disputes in the region, if not resolved peacefully, will raise tensions and increase militarisation in Asia. A lingering mistrust among some countries in Asia, in large part resulting from the historical baggage of World War II, hinders regional cooperation. Most importantly, an accommodative relationship between the US, the world’s superpower, and China, a rising power, is critical to Asia’s future. A conflict between them will be disastrous for all.

9.    These challenges have a real impact on regional economies. Asia can only prosper if there is peace and harmony in the region. My two recent speeches in Japan and Korea on these issues were directed at governments and national leaders. For today, I want to challenge you with this question: What can the private sector do to support the development of an open and inclusive Asia? To me, the answer lies in the private sector’s role in building greater economic linkages and inter-dependence between countries in the region.

10.    One example is the building up of transport infrastructure and networks across countries. Multilateral development banks play a big role in supporting regional governments in infrastructure development. Entities such as the World Bank Group and the Asian Development Bank (ADB) have long been the main mode of support in Asian infrastructure development. The Asian Infrastructure Investment Bank (AIIB), launched in January this year to support the building of infrastructure in the Asia-Pacific region, aims to lend USD10 to 15 billion annually in its first years of operation.

11.    Last month, Japan expanded its “Partnership for Quality Infrastructure” programme, under which Japanese agencies would partner the ADB in providing up to USD200 billion in funding for infrastructure projects over the next five years. There is no reason why Japan’s programme cannot work with AIIB where there are opportunities for doing so. Corporations should actively support these infrastructure development initiatives.

12.    Besides physical infrastructure, the private sector also builds a web of linkages through trade and finance. Trade is the lifeblood of the region. We have, over the years, made great strides toward regional economic integration to spur growth and development. But there is scope to do more. Regional economic agreements like the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) promise to spur inclusive growth and productivity in member countries.

13.    The TPP is the largest regional FTA to date – the 12 TPP member countries account for about 40% of global GDP and one-third of world trade. The Peterson Institute estimates that the global annual income gains from TPP alone could be about USD300 billion by 2025. The member countries have spent a significant amount of time and effort negotiating these trade agreements, and we are almost there. The TPP and RCEP will bring us closer to our shared goal of regional economic integration. Your voice is important. At this critical juncture before ratification, businesses and the private sector can educate the public and persuade legislators on the immense benefits of such high standards trade agreements.

14.    Trade, investment and regional economic cooperation will improve the lives of our people much more than any political or economic gains that countries can wring from territorial disputes. In other words, while territorial and border disputes are sovereignty issues which no country can yield, there must be a sense of proportionality of the costs and benefits of such disputes to the lives of the people. Here, diplomacy can take a page from business. In business, the companies understand that they need to strike deals and come to agreements, in order to prosper with one another.

Singapore: supporting regional economic growth and integration

15.    As a small country, Singapore understands keenly that the continued growth of countries in the region rests on peace, cooperative relationships and greater economic integration. Hence, Singapore will continue to play its role in supporting regional trade and investment as a financial hub.

16.    Banks in Singapore, including Japanese banks, are major players in trade finance. Asset managers in Singapore facilitate regional and international investors’ access to regional investment opportunities. In 2014, 81% of total assets under management (AUM) was sourced from outside Singapore. Asia Pacific was ranked as the top investment destination, with 68% of 2014 AUM invested in the region.

17.    We are working with financial institutions and other stakeholders to develop new financing and technology solutions to meet the growing needs of the region. Last year, Singapore delivered the world’s first application of distributed ledger technology to trade finance. By digitising the traditionally paper-based trade finance invoices and posting hashes of these invoices on a distributed ledger, two banks demonstrated the potential to help guard against duplicate invoice financing fraud – which is a growing area of concern in many parts of Asia. At the same time, we lay the foundations for creating more efficient processing solutions for the industry.

18.    Singapore has also been active in developing infrastructure debt as a new, investible asset class. This will help narrow Asia’s infrastructure financing gap, and at the same time provide new sources of long-term returns for investors. We have embarked on several partnerships with multilateral organisations such as the World Bank and the G20’s Global Infrastructure Hub to address key issues impeding private sector participation, such as information asymmetry and a shortage of bankable opportunities. We are also working on an industry solution to support the transfer of infrastructure debt from banks to investors. Such a facility would improve investor access and help banks recycle capital for new green-field investments.

19.    With their expertise in project finance globally, Japanese banks can develop deeper capabilities here, leveraging on Singapore’s capabilities as a regional infrastructure financing hub. I am very pleased that Nomura will be establishing an Asia Infrastructure Project Office in Singapore to explore regional infrastructure development opportunities.

20.    For financial services globally, the advent of digital and mobile technology innovation presents tremendous new opportunities as well as challenges. FinTech is transforming all aspects of banking and financial services from capital markets, commercial lending to retail banking. It has immense potential to improve efficiency, security, convenience and financial inclusion.

21.    MAS is committed to developing Singapore as a Smart Financial Centre, one that is characterised by innovation, and where its businesses and people benefit from the use of technology. We are putting in place support structures that encourage companies to innovate and experiment, and we are adopting a risk-based approach to ensure that innovation, while not stifled, is taking place within controlled boundaries.

22.    Industry response has been positive. More than ten local and international financial institutions have set up innovation centres or teams in Singapore, and industry-wide projects are underway. FinTech collaboration has gone across borders, with the recent Singapore-UK “FinTech bridge” paving the way for more global, as well as regional, partnerships. I invite you to participate actively in sharing and experimenting with ideas, and partner Singapore in driving financial innovation in the region.

Concluding thoughts

23.    Let me conclude.

24.    Asia has tremendous economic potential. We can only unlock this potential if countries cooperate and work for a harmonious and prosperous Asia. With this necessary condition fulfilled, I am optimistic of the region’s longer term prospects, as countries push through structural reforms, build infrastructure and achieve greater economic integration. As leaders of the private sector, many of you play an important role in developing linkages for regional integration. Singapore and the region’s progress will continue to present more opportunities for borrowers, investors and financial intermediaries as they expand their global footprint.

25.    On this note, I wish all of you a fruitful and rewarding discussion. Thank you.


1 IMF World Economic Outlook Database, April 2016; GDP based on PPP (2011)
2 WTO statistics