Published Date: 01 September 2020

"A Vibrant Sector for Singaporeans" - Speech by Mr Ong Ye Kung, Minister for Transport and Board Member of the Monetary Authority of Singapore, at the debate of President's Address on 1 September 2020

1.     Mr Speaker Sir, foreign manpower has become a hot topic. I join members before me to address the issue of foreign manpower. As a member of the Board of the Monetary Authority of Singapore (MAS), I will talk about the issue from the perspective of the financial services sector, the people who work in it, and the people who want to work in it. 

2.     This is a key sector of the future economy, a very bright spot in a COVID-19 stricken economy. Through agility, hard work and good fortune, we have carved out a place in the borderless and fast changing world of global finance.

3.     The fundamental challenge we have is this: How do we defend and grow this position, against very tough global competition, in a way that provides the best opportunities for Singaporeans? 

How Did We Get Here

4.     Let us talk about how we grew into a global financial hub today.  It all started from the late 1960s, when we seized the chance to become an international foreign exchange trading centre. 

5.     It was born from a simple but powerful insight. Due to our time zone, we could seamlessly bridge East and West, to facilitate US dollar transactions after the New York market closed, before London opened. This became the Asian Dollar Market (ADM), which grew into a vibrant activity in Singapore. 

6.     The earliest banks to obtain licences to operate in the ADM were foreign banks, the first being the Bank of America. The early traders were also mostly foreigners. But over time, these foreign financial institutions trained a whole pipeline of Singaporean talent. 

7.     Wealth management is another important case study. Singapore is one of the top international wealth management centres today. To get to where we are, we had to overcome our initial lack of knowledge, lack of expertise and networks. So we attracted a critical mass of global players and international talent to get us started.

8.     UBS was one such player. Today, it employs close to 3,000 employees across its various business lines.  60% are Singaporeans. It has instituted a range of training programmes, including converting our former Command House into the UBS APAC Business University, to develop local talent. Last year, it appointed a Singaporean to oversee the bank’s entire business in the Asia-Pacific.

Sector for the Future

9.     We have come a long way, from the ADM in the late 1960s, to a complex ecosystem of activities, from retail and corporate banking to trade finance, investment banking, insurance, wealth management, infrastructure finance, and FX and derivatives trading.

10.     What has underpinned this growth?  In essence, keep bringing in new activities, and keep developing new capabilities. In the build-up phase, inject foreign expertise where necessary - people with track records in the area.  But over time, grow our own timber, and when Singaporeans gain the expertise, we take on more roles in multi-national teams, here as well as abroad.  

11.     Using the same approach, we are now developing FinTech and Green Finance. 

12.     As a result, the sector continues to create new jobs. About 22,000 financial sector jobs were created over the past five years, with 15,000 going to Singaporeans. There are also positive spillovers, contributing to jobs in the legal and accounting fields, many of which go to Singaporeans.

13.     This is one of our most promising sectors, especially for the young. We observe this in the way financial institutions and our fresh graduates mutually sought out each other.

14.     For example, every year, up to a third of SMU fresh graduates, and that includes this year’s graduates, are hired by the financial services sector. Being a former Minister for Education, I observed the same pattern from NUS’ Business Administration faculty. Students from other disciplines such as accountancy and engineering also find the financial sector a very attractive destination.

15.     The financial institutions know that our education system prepares our young well for the sector. And our students know there are bright careers in the sector too.

16.     There is no doubt that being a global financial hub has benefitted Singapore. I also think that by and large Singaporeans are not uncomfortable with this approach.  Why then has foreign manpower raised concerns amongst Singaporeans?

17.     We need to take the concerns seriously. Let’s start by examining some of the data, including the details of manpower in different activities and at different levels that MAS has been painstakingly compiling in recent years, and which it has released recently. 

Addressing Concerns

18.     At 13% of our economy, the financial services sector employs about 171,000 workers. 

19.     Based on MAS’ estimates, about 70% of the workforce are Singaporeans, 14% PRs, and 16% work pass holders. If we zoom in on senior roles, Singaporeans account for 44%, PRs 20%, and work pass holders 36%. These proportions have remained stable in recent years.

20.     The non-Singaporeans in senior roles have diverse backgrounds. They come from over 50 countries, the largest group comes from Europe, with other significant nationalities from across Asia and North America.

21.     When MAS released its figures recently, one concern came up, which was that 44% of senior positions going to Singaporeans could be too low. The worry is that the large number of foreigners in senior positions may crowd out Singaporeans. This concern is understandable, and I will address it.   

22.     The reason for the higher share of foreigners in senior roles is mainly due to the large international component of the activities here. Singapore has grown as a global financial centre as more financial institutions set up regional or global functions here. They have made us the hub for expertise, networking and oversight of operations in other markets. 

23.     This is an enviable position. And if you ask Singaporeans if this is a good thing for our country, I think most would say yes. These functions tap on growth outside Singapore, and support the region’s development. In so doing, they bring opportunities and jobs here.

24.     Moreover, for financial institutions to site these operations here is a concrete show of confidence for Singapore. It raises the stakes the world has in Singapore, and that makes us safer and more secure. 

25.     But the staff profile of regional and global activities, like in any leading financial centre, tends to be more internationally diverse. This is especially so for senior roles. As MNCs, financial institutions will fill these ranks with global expertise that they deploy across their offices.

26.     We can see this in the data. As MAS has shared, in 2019, Singaporeans accounted for about 70% of senior management roles in retail banks’ local functions. In non-retail banks, where there is a higher concentration of regional and global functions, the proportion is lower, at about 40%.

27.     But this does not mean that Singaporeans are getting the short end of the stick, because this is not a zero-sum game. Let me give you two reasons.

28.     First, while the share of Singaporeans in senior roles has remained steady, the absolute number of Singaporeans in these roles has increased. This is because as we have grown as a financial centre, the base has expanded significantly. So same share, but of a growing base.

29.     To illustrate, MAS estimates that from 2014 to 2019, the number of senior positions sited in Singapore grew from 3,900 to 5,900. And the absolute number of senior jobs that went to Singaporeans increased from 1,700 to 2,600. That is more than a 50% increase in five years, or an additional 900 Singaporeans taking up senior roles, embarking on a new and fulfilling stage in their careers.

30.     Second, when these functions come here, Singaporeans gain precious global and regional expertise. This complements overseas assignments and exposure, which are key to preparing Singaporeans to assume senior management roles in global firms.

31.     There are promising signs that more locals are taking up roles with international exposure. We spoke about the Bank of America being one of our earliest licensees for the ADM. Today, the bank’s electronic FX business in Asia-Pacific is headed by a Singaporean, who is now based in Hong Kong after having previously worked for them in Singapore and London.

32.     Or take Standard Chartered. It currently has 140 Singaporeans working overseas, in key markets like Indonesia, China and the US, and as far afield as Nigeria.

33.     There are many more Singaporeans working overseas in the financial sector. MAS and EDB are in touch with about 2,000 such overseas Singaporeans.  About 120 of them are C-suite executives, another 750 hold at least Director/Vice President positions, or higher. 

34.     Still, there is more that we can do to create opportunities for Singaporeans. MAS is working with the industry to groom Singaporeans to be leaders and specialists in financial services.

  • One such scheme is the Finance Associate Management Scheme (FAMS), which supports financial institutions to hire and groom Singaporeans through structured talent development programmes. 
  • Another is the International Postings (iPost) scheme, which incentivises financial institutions to send Singaporeans for international exposure. 

35.     A further concern that I have heard, is that amongst some firms there may be an unconscious bias amongst business heads towards hiring people from their own nationality, and they do not give Singaporeans a fair shot. 

36.     We know that it is within the cultural DNA of most international financial institutions to cherish diversity, which is a value Singapore believes in, because of our multiculturalism and openness.  

37.     But let me also be clear - there is no place for unfair hiring practices for the financial services sector. MAS holds our financial institutions to high standards and will not condone firms that fall short of fair hiring practices.

38.     We are aware that there are financial institutions that are on the Ministry of Manpower’s Fair Consideration Framework Watchlist. MAS has been engaging these firms actively to understand the reasons for this. Where their HR practices are found wanting, we make sure improvements are made.

39.     Another concern is the high concentration of one nationality in the technology departments of financial institutions. It happened because the adoption of technology is a worldwide phenomenon. There is an explosion of demand for technology professionals and we are unable to fill all the posts domestically.

40.     We are furiously growing our local talent pipeline in this area, through mid-career skills upgrading, and expanding computer science places rapidly in our universities. But this is not likely to meet the demand and foreign manpower is still needed.

41.     So the concern will remain and we will need to address it. After all, over-reliance on a single source leaves us more susceptible to unexpected disruptions. We saw this as borders began to shut amidst the COVID-19 pandemic. MAS has been stepping up engagements with the top leadership of key financial institutions on the need to maintain robust HR practices that are merit-based and support workplace diversity. 

42.     Another possible approach is to encourage the offshoring of certain business functions that are lower in value-add, and which employ a disproportionate share of foreign manpower.

43.     But any such measures must be approached with caution, because it may not be straightforward to dissect a business into high and low value-add and then outsource the latter. There are often linkages across different functions. 

44.     So foreigner-heavy technology functions may move offshore at the expense of good quality jobs in Singapore for locals. We have to look at this very carefully and not rush to chop off businesses.

Finding The Right Discourse

45.     Mr Speaker Sir, where does the financial services sector go from here? I think the discourse can go either way.

46.     Today, the world is globalised and digital with its attendant benefits and problems. The apprehensions are real, but are also shaped by social media.  So in times of economic difficulties and job insecurity, nativism, and the ‘us-versus-them’ perspective may take hold.  We have seen how toxic the discussion can become in other countries, and how it can change the course of history.  

47.     This is not a discourse Singaporeans deserve, nor do I think it is what most Singaporeans want.  The more widely held view, I think, understands the international character of our financial centre, but wants to see Singaporeans do better, with greater assurance of fair hiring practices that put us on a level playing field.  These are valid concerns.  

48.     The fact is – small and young as we are, we are emerging as one of the nerve centres in the global financial system – sharing a stage with places like New York, London and Hong Kong, and with the largest chunk of jobs going to Singaporeans.

49.     But the competition is relentless and our competitors are hungry. We cannot take this position for granted. 

50.     So this is not about growth at all costs, or accepting ‘trade-offs’ for the sake of growth, but about whether as a people we can strengthen our place in the financial world, hold our own, develop the expertise, seize the opportunities, to make Singaporean lives better. 

51.     We have forged a very close partnership with our financial institutions over the years. We could not have come so far without them. They are here because our location, our rule of law, our stability as a country, our inclusivity and openness, the ethos and talent of our people, make us a great place to do business.  In turn, we work with them to catalyse new areas of growth, and create new opportunities for Singaporeans.

52.     We must continue in concert, to further strengthen this partnership, grow this international financial centre in Asia, invest in and grow our Singaporean talents, and make lives better through the generations.