Speech by Mr Lawrence Wong, Minister for National Development and Second Minister for Finance, at the Opening of the Korea Investment Corporation Singapore Office on 15 September 2017
Mr Kim Daesik, Chairman of the Steering Committee, Korea Investment Corporation
Ladies and gentlemen,
1. I am delighted to join you in celebrating the opening of Korea Investment Corporation’s Singapore office. This event marks a significant milestone, for several reasons:
a. First, it is KIC’s first overseas office in Asia, and only the third international office after New York and London. This reflects KIC’s strong commitment in Asia’s future growth, and Asia’s importance as an investment destination.
b. Second, it reaffirms Singapore’s attractiveness as a pan-Asian asset management hub, not just for global financial institutions but also for Asian asset managers.
c. Third, it strengthens the excellent partnership between the Republic of Korea (ROK) and Singapore. We have deep and longstanding cooperation across a broad range of areas. Both countries signed the Korea-Singapore Free Trade Agreement (KSFTA) in 2006, and progressively over the years, we have continued to deepen our economic cooperation across many areas. We look forward to further collaborations in the coming years, in particular as Singapore and Korea will jointly chair the ASEAN+3 finance track meetings in 2018.
Growing Role of Global Public investors
2. KIC is one of the world’s leading sovereign wealth funds and public investors with USD125 billion of assets under management.
3. The goal of most global public investors is to preserve their capital and achieve good long-term stable returns for future generations. With their long-term investment horizon and global mandates, sovereign investors are ideal financiers of new growth companies and infrastructure assets. As strategic players, public investors can play a useful role in driving the economy, not just at home and in developed markets, but also in emerging and developing markets.
Opportunities in Asia
4. Going forward, we believe that global public investors will increasingly build their long-term portfolio around Asia. Asia is the fastest growing region in the world, and we are positioned for sustained long-term growth. Asia offers much promise to investors everywhere. This is underpinned by three important trends:
a. First, Asia has a growing middle class who will consume more, but also save more and invest more;
b. Second, Asia is experiencing rapid urbanisation, and the rise of megacities in Asia means that we will need more infrastructure like sanitation, clean water, energy, transport and telecommunications; at the same time, we see the growth of an internet-savvy generation which will lead the demand for technology and innovation in Asia;
c. Thirdly, Asia too is experiencing climate change and global warming like countries and regions everywhere. And that will further drive investments in resource and sustainable sectors.
5. Today, Asia is already a major investment destination for private market assets such as private equity (PE), real estate and infrastructure.
6. In fact, VC and PE investments into Asia have grown rapidly to reach about USD60 billion and USD90 billion respectively in 2016. As Asian companies stay private for longer, and become increasingly receptive to the PE value proposition, opportunities abound for institutional investors in companies along the entire growth spectrum.
7. Real estate and infrastructure investments are also on the rise. The momentum will continue with initiatives like the Belt and Road, which will continue to spur infrastructure investments in the region. Multilaterals such as the World Bank, ADB and AIIB are also playing a key role in financing projects, and they offer new opportunities for public-private partnerships. Increasingly, regional governments and MDBs are looking beyond traditional government and bank financing to the capital market and institutional investors to finance their projects.
8. From the investment side, the growing interest in the region among investors is also motivated by the need to achieve more diversified portfolio investments. Emerging Asia offers both geographical and asset diversification. The growth potential of Emerging Asia is not only different from that of developed Europe and America, but also differentiated from one another in their growth dynamics, which offers opportunities for diversification.
Singapore: Pan-Asia Asset Management Centre
9. Having said that, building an alternative and less correlated private market portfolio is not an easy task. It will require deep local market knowledge across asset classes, industry sectors and geographies.
10. This can only be achieved by leveraging on partnerships with a comprehensive network of external managers as well as sovereign investor peers. You also need a conducive environment to build a strong team of specialists to define and execute the strategic asset allocation over time.
11. I am very glad that KIC has chosen Singapore as its first Asian office because we offer all of these factors as an ecosystem. And it’s all the more significant because we are located in the same Asian time-zone as Korea.
12. Over the years, Singapore’s asset management industry has grown in size and diversity.
a. The assets under management (AUM) in Singapore grew by 7% to reach SGD2.7 trillion in 2016.
b. Most of the funds here are sourced from outside Singapore and two-thirds are invested in Asia, reflecting our key role in serving regional and international investors and their continued interest in this part of the world.
13. Singapore is located in the heart of a fast growing Asia. We offer a wide range of investment options for global institutional investors to tap on new growth opportunities.
14. With a diverse ecosystem of global and regional PE/VC managers, coupled with new Asian infrastructure development opportunities, Singapore is well-positioned to serve global institutional investors in their efforts to rebalance towards alternative investments in Asia.
a. Our fund managers here can have a deep network to partner with. They are able to readily access deals, and support Asian companies throughout their life cycle.
b. In fact, eight of the top ten global PE firms have an office in Singapore today.
c. So do some of the top global real estate managers.
d. We have in Singapore a strong ecosystem of infrastructure industry players too, offering solutions in project advisory, financing, legal services, as well as dispute resolution. So on top of being a financial hub for the region, we believe Singapore can play a useful role as an infrastructure exchange for Asia.
15. In closing, global public investors such as sovereign wealth funds can be a force for good. They are pivotal players in supporting regional economic and financial market development.
16. Here in Singapore, KIC will be joining an expanding network of global sovereign and pension funds, all of whom have decided to anchor their overseas offices in Singapore – Korea National Pension Service, Swiss National Bank, Norges Bank Investment Management, Investment Company of the People’s Republic of China, just to name a few. And the pool is continuing to grow. We welcome more to join us, so that we can expand the ecosystem here. Together with public investor platforms like the OMFIF and Sovereign Investor Institute Global East Government Funds Roundtable, KIC can look forward to beneficial exchange of investment ideas and opportunities for meaningful collaborations in Singapore.
17. Once again, my heartiest congratulations to the Korea Investment Corporation on the opening of your new Singapore office. And we look forward to many more years of fruitful partnership together. Thank you very much!