The United Kingdom (UK) and Singapore held the 7th UK-Singapore Financial Dialogue in Singapore today. Both countries renewed their commitment to deepening the UK-Singapore Financial Partnership that was agreed in 2021, discussed mutual priorities such as sustainable finance, FinTech and innovation, and agreed on further cooperation in these areas.
Speech by Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, at the Asia Tech X Singapore Summit on 31 May 2022
Ladies and gentlemen,
1. A very good morning. I am glad to be back for the second edition of the ATX Summit.
a. The inaugural edition last year was fully virtual. So I am happy that we are holding it in a hybrid format this year. A very warm welcome to everyone.
2. Digital technology is changing the world, and COVID-19 has accelerated the pace of change.
a. AI and IoT are now more pervasive. More activities are going online.
b. The digital economy is growing swiftly, even as there are many untapped opportunities.
3. But as the world shifts online, so too have malicious actors and threats.
a. There was a 50% increase in cyberattacks on corporate networks last year, and a 20-fold increase in ransomware attacks against governments.
b. Attacks on SolarWinds and the Colonial Pipeline serve as a reminder of how such threats could derail the digital economy if left unchecked.
4. A new wave of digital technology is emerging, known loosely as Web 3.0.
a. The metaverse, NFT, DeFi, DAO. Are these boon or bane?
5. We are gathered here today at a critical moment.
a. Beyond the digital revolution, there are other structural shifts, including a greater emphasis on sustainability as well as an ageing population in some parts of the world.
b. There are also multiple immediate challenges – learning to live with COVID-19, managing the fallout of the Russia-Ukraine war, and mitigating global inflation and the risk of another global recession.
c. Despite the pull of multiple forces, we must stay focused on building a better future for people.
d. In the context of the digital revolution, this means staying open to emerging disruptions, dealing decisively with threats, and making the most of the available opportunities.
e. Let me share my thoughts on how we can do so.
OPENNESS TO EMERGING DISRUPTION
6. First, we must approach emerging disruptions with openness.
a. Web 3.0 is still nascent and yet to be fully defined. We have seen a fair share of passionate advocates and critical sceptics.
b. Crypto assets, in particular, have garnered much interest. Earlier on, due to their phenomenal growth and promises of higher returns, and lately, due to the crash of Terra Luna, and the rout of crypto currencies.
c. The way to approach Web 3.0 is to keep an open mind. We must pierce through both the hubris and the veil of suspicion, to understand the potentially transformative underlying technologies. Let us not throw the baby out with the bath water.
7. The underlying technologies merit further exploration.
a. Tokenisation enables fractionalisation of assets, which could allow for greater liquidity, better price discovery, and access to illiquid assets.
b. Distributed ledgers, without the need for intermediaries, reduce cost, prevent data monopolies, and discourage rent-seeking behaviour.
c. Allowing for simultaneous settlement – with payment and delivery taking place at the same time – could significantly reduce settlement risks between counterparties.
8. The greatest potential for these new technologies is probably in cross-border transactions.
a. One example is Project Dunbar, which brings together the Bank of International Settlements Innovation Hub, Singapore, and several other like-minded countries.
b. Project Dunbar explores how a common platform for multiple central bank digital currencies could enable cheaper, faster and safer cross-border payments.
c. The project has validated various design approaches through prototyping. It recently published recommendations that will support the G20 roadmap for enhancing cross-border payments.
d. One of the supporting tech platforms for Project Dunbar is Partior, a tech company, established by DBS, Temasek and JP Morgan. Partior enables a real-time blockchain-based interbank clearing and settlement network, using commercial bank digital money or wholesale CBDCs.
9. The crypto asset space is constantly evolving. We recognise this is a highly risky area, but it also has the potential to transform the future of finance.
a. We must continue to adapt our rules to ensure that regulation remains facilitative of innovation, and yet addresses the key risks that crypto assets pose.
10. The Monetary Authority of Singapore, or MAS, has consistently warned the public against trading in cryptocurrencies, and has taken steps to limit promotion of cryptocurrencies to the general public earlier this year.
a. Many investors suffered losses and even lost their life savings in the recent meltdown of TerraUSD and Luna, which triggered knock-on effects on Bitcoin and other cryptocurrencies.
b. Retail investors especially should steer clear of cryptocurrencies. We cannot emphasise this enough.
11. But the digital asset ecosystem comprises an entire range of services beyond cryptocurrency trading. We remain keen to work with blockchain and digital asset players to encourage innovation, and build up trust in the sector.
a. In the past 2 years, MAS has granted licenses and in-principle approvals to 11 digital payment token service providers.
b. These include stablecoin players like Paxos, crypto exchanges like Coinhako, and traditional financial institutions like DBS Vickers.
c. We will continue to evaluate applications, and facilitate live experiments through regulatory sandboxes, to enable safe adoption in the financial sector.
d. MAS has also been working with the industry on several digital asset initiatives. I am pleased to launch , a collaborative effort by MAS to partner the industry to explore the tokenisation of financial assets and develop the future of finance infrastructure. The first industry pilot will be to explore potential DeFi applications in wholesale funding markets.
12. In short, we must approach emerging tech with an open mind, separating the hubris from its true underlying potential.
a. Through regulation, we work constructively to realise the gains of these new technologies, and partner responsible and innovative players with strong risk management capabilities to build the foundations of the digital asset ecosystem.
VIGILANCE TO INTENSIFYING THREATS
13. Second, let me move on to how we approach threats in cyberspace. To harness the full potential of cyberspace, we must guard against malicious activities – including cyber heists, data theft, and cyber terrorism.
14. The good news is that the global cyber response is ramping up.
a. The global cybersecurity market is projected to grow at more than 14% annually in the coming years, faster than the growth of the digital economy.
b. Countries around the world are formulating cybersecurity strategies, introducing legislation, and building capabilities.
15. Singapore has done likewise.
a. We have made digital defence the sixth pillar of Total Defence, and updated the Singapore Cybersecurity Strategy. We are also nurturing a pipeline of cybersecurity professionals to meet growing needs.
b. At the same time, we are setting broader social standards for cybersecurity – urging companies to put in place robust measures for handling data, and raising cyber awareness among our people.
16. But cyber threats, like most criminal activities, are ultimately a “cat and mouse” game. We try to stay one step ahead of malicious actors, but these actors seek to exploit new gaps. The cyber landscape is also fast evolving, with quantum technology as a potential game changer.
a. Strong encryption is key to the security of digital networks. The current encryption standard – AES 256 – has held up, as few have the computing power to use brute force to break the encryption.
b. But this could change with quantum computing. For some cryptographic functions, the fastest quantum computer is more than 150 million times faster than the fastest supercomputer. Quantum computers can solve in minutes a problem which takes a supercomputer 10,000 years.
17. This is one reason why quantum technology is a global research focus. Quantum is also a key research area under our national R&D plans.
a. The Centre for Quantum Technology, or CQT, in Singapore is one of our national research centres of excellence, and a leading research institute in this field in the world.
b. More recently, we started the Quantum Engineering Programme, or QEP, to apply quantum tech to solve real-world needs and to build up quantum engineering capabilities and human capital.
18. One recent initiative under QEP is the National Quantum-Safe Network, which seeks to deploy commercial quantum-safe communication technology in our energy grids and other critical networks, as well as for the handling of sensitive data, including those related to healthcare and finance.
19. Let me announce two new programs under the Quantum Engineering Programme today.
a. The first program is the National Quantum Computing Hub, formed by pooling expertise from CQT and across other institutions in Singapore. This will enable us to further strengthen talent development – as this is a fast-growing area – and provide better access to quantum tech.
b. The second program is the National Quantum Fabless Foundry, which will support micro and nanofabrication of quantum devices across partner cleanrooms. Building on our strengths in advanced manufacturing, we seek to partner the industry to develop more quantum devices for solving real-world challenges.
20. Our investment in quantum computing and quantum engineering is part of our approach of trying to anticipate the future, and proactively shaping the future that we want.
a. The greater the potential of cyberspace, the greater the cyber risks. Malicious actors will seek to profit from these through any means. It is not sufficient to try to stay just one step ahead. If we do, we often end up one step behind, chasing down and closing the last threat.
b. To counter them, we not only need to remain vigilant to present threats, we must also stay invested to stay much further ahead. In this way, we can put a greater distance between critical parts of the digital space and threat actors.
COLLABORATION TO UNLEASH POTENTIAL
21. This brings me to my third point – on collaboration to unleash potential.
a. Many countries have developed a digital first strategy, with a strong emphasis on adoption, investment in innovation, and closing the digital divide.
22. Singapore is doing the same. We started the Smart Nation movement almost a decade ago.
a. Digitalisation and innovation are core to our future economy strategy.
b. We started the Digital for Life movement to enable our people to embrace digital as a lifelong pursuit.
c. We are actively helping smaller merchants and companies digitalise payments and processes.
23. These efforts can achieve more, if we collaborate widely and more effectively.
a. We are now enabling collaboration through digital marketplaces, and through platforms such as the Open Innovation Platform which matches real-world problems with innovation solutions.
b. The Open Innovation Platform has seen an uptick in collaboration since COVID-19, hosting over 200 challenges since the start of the pandemic.
c. Such platforms are a good start. But the matching of problems to potential solutions tends to be more piecemeal.
24. We need more proactive collaboration to better tap new opportunities – where stakeholders come together to build the digital commons, in such a way that everyone gets back more than they put in.
a. One good example is SGTraDex, which is a public-private partnership that I launched at this Summit last year.
b. Even in the best of times, supply chains have not been most efficient. The current crisis has further exposed the fragility of supply chains. But no single company – however dominant – can on its own optimise its supply chains and build greater resilience.
c. SGTraDex is a common data infrastructure for the sharing of regulatory, logistics and trade financing data. This will enable supply chain players to optimise cargo handling and operations, and build confidence in trade financing.
d. The more companies we have on board SGTraDex, the greater its value. From the outset we designed SGTraDex to be “plug and play”, not as a bespoke system.
e. Over the past year, three use cases have been piloted to test the value of SGTraDex. These pilots have been successful, yielding very substantial savings for current participants.
f. I thank all companies and agencies that are part of this effort, including PSA International and Trafigura Group.
25. We are now into the next phase of SGTraDex, with plans to expand this digital common over the next few years.
a. We will expand SGTraDex to include a few more use cases, including green and sustainable trade financing.
b. We will seek to enrol more companies within the supply chain ecosystem onto SGTraDex.
c. Over time, we hope to expand SGTraDex beyond our shores and contribute to the optimisation of supply chains abroad.
d. Minister Josephine Teo will announce the details tomorrow.
26. SGTraDex is an example of how we must invest in the digital commons to unlock new opportunities.
a. We must design the digital commons to be inclusive from the outset and make it easy to onboard new participants.
b. We must also structure the digital commons in such a way that the value created accrues fairly to all participants.
c. Only through collaboration, can we push beyond existing limitations to unlock new opportunities for the betterment of everyone.
27. Let me conclude. We are at a critical phase of global economic recovery as we pull away from the shadows of COVID-19 only to encounter new challenges. Structurally, technological advances, especially digitalisation, are reshaping the global economy.
a. We must stay focused on creating a better life for people. I have highlighted three ways that we can do so.
b. The first is to keep an open mind on emerging tech, and to separate the hubris from its true potential.
c. The second is to remain vigilant and invest in cybersecurity, so that we can stay ahead of threats.
d. The third is to unlock new opportunities through collaboration, by working together to build an inclusive digital commons.
28. There is much more we can do to harness the potential of digital technology, and we must go beyond words to action.
a. Over the next few days, this conference will cover many areas, from engendering trust in the use of AI to empowering women in tech.
b. I hope you will not only exchange ideas, but also germinate new partnerships that will turn ideas into action, and action into reality.
c. As a Global-Asia node for technology, innovation and enterprise, Singapore can support you and your company in this journey of discovery and growth.
d. Through our collective action, we can create a better future for Asia and the world.
29. I wish everyone a productive conference. Thank you.