Speeches

Distinguished Guests,

Ladies and Gentlemen,

1 I am pleased to be able to join you this evening at the inaugural Financial Awards 1999 to recognise excellence in our financial services sector.

2 The financial services sector is an important sector in our economy, making up more than 12 per cent of our GDP. Over the years, we have built up comprehensive services in commercial banking, investment banking, foreign exchange and securities trading, insurance and supporting financial services. This full range of financial services makes Singapore more attractive as a manufacturing and services hub for the region.

3 The financial services sector has been an engine of growth for Singapore. In the last ten years, it has enjoyed steady growth averaging 8 to 10 per cent per year. This steady growth however, masked the need for major structural changes in order to respond to the global financial developments.

4 The government decided in 1997 that a concerted effort to reform the financial sector was necessary. The onset of the Asian financial crisis did not detract from this aim. If anything, it added urgency to the task.

5 Our financial sector emerged relatively unscathed from the financial crisis. This is a reflection of the strong position of our financial institutions as well as our sensible and pragmatic response to the crisis. Most of you are familiar with the story of our financial sector reforms: that despite the Asian crisis, Singapore persevered with its deregulation strategy and active promotion efforts. The rest as they say is history. Our initiative and consistency differentiated Singapore from the other crisis countries. This has been well covered and reported by today's organisers and retold by various other local and international media.

6 The latest growth statistics released by the Ministry of Trade and Industry bear testimony to the resilience of our financial sector. In the second quarter of this year, the financial services sector rebounded strongly to post a double-digit growth of 15 per cent. This strong recovery however, must not detract us from continuing with our efforts to make Singapore more competitive. We have set in place the framework to position Singapore as a premier international financial centre. Let us not lose the momentum.

7 Let me summarise the key components of our strategy.

8 First, commercial banking forms the bedrock of our financial sector. We have started to liberalise the domestic banking sector. We will continue to encourage and assist our banks to restructure and prepare themselves for greater competition.

9 Second, investment banking offers new opportunities as we build Singapore up as a key international debt arranging hub in Asia. Over the last two years, we have painstakingly developed the ingredients for an active and thriving capital market. We have encouraged a steady flow of issuance from the Singapore Government, statutory boards, supra-nationals and corporates. We have launched the Approved Bond Intermediary Scheme. We must continue to nurture the breadth and depth of bond investors to sustain the debt market. Then with time and the interplay of market forces, the pie will grow.

10 Third, treasury and securities trading leverages our position as a global hub for FX trading to include other trading activities. We have been successful in attracting more MNCs and finance houses to use Singapore as their treasury and securities trading centre. The critical massof trading activities is building up rapidly.

11 Fourth, the asset management function is picking up. We are promoting Singapore as the centre to manage the Asian mandate for global investors as well as the global mandate for Asian investors. Assets under management are steadily increasing and our market share is growing.

12 Fifth, the insurance sector can play an important role to serve the more sophisticated needs of our domestic market as well as the expanding requirements of the regional market. To do so requires restructuring the insurance sector and introduction of sophisticated insurance services. This is forthcoming.

13 Singapore has come thus far as a financial centre by capitalising on our strategic geographic location, political stability, consistent legal framework, excellent communication and transportation infrastructure, and prudent regulation. We will continue to maintain these competitive advantages. We have put in place the key pieces to strengthen our competitiveness. However, these factors are necessary but may not be sufficient.

14 The financial industry is a global industry driven by technology, innovation and competition. The pace of change is unrelenting. We cannot keep up with the competition if we do not have talent.

ATTRACTING AND NURTURING TALENT

15 In order for Singapore's financial centre to continue to thrive and stay ahead amidst this challenging environment, we need to have a pool of highly skilled professionals who are at the forefront of their respective specialist areas. We should therefore enhance our own local financial sector talent, as well as expand our efforts to attract and retain top international financial talent into Singapore.

16 We must ensure a steady flow of young talented Singaporeans into the financial industry. Given the fierce competition within Singapore for top scholars, I urge our financial institutions to step up their efforts to attract bright, talented young Singaporeans into the industry.

Training Opportunities

17 We must be able to offer world-class opportunities to equip financial sector employees with advanced knowledge and sophisticated skillsets. I am pleased that tertiary institutions in Singapore have tailored their courses to address the growing needs of the financial sector. For example, both the National University of Singapore and the Nanyang Technological University have introduced Masters in Financial Engineering to hone specialist skills in what is becoming a "rocket scientist" field of finance. Foreign universities which are known for providing excellent financial training, such as INSEAD and University of Chicago have also chosen to locate their Asian campuses in Singapore. In addition, the Singapore Management University has tied up with the prestigious Wharton School of the University of Pennsylvania to offer business degree courses beginning next year. Such moves by world-class educational institutions to provide more market-relevant courses in Singapore augur well for the future of the financial industry.

18 Financial institutions, too, can do their part to provide such continual training opportunities for their employees. In Singapore, international banks such as ABN Amro and UBS have set up regional training centres here to serve the training needs for their Asia Pacific companies. We urge other global institutions with a strong Asia-Pacific presence to look into setting up similar regional training centres inSingapore.

19 Last year, MAS conducted a survey among the almost 700 licensed financial institutions in Singapore on their manpower needs. The bulk of financial sector professionals continue to be employed in traditional areas such as commercial banking, general insurance, corporate finance, general treasury and trading activities. Looking ahead, as we continue to develop new initiatives to grow our financial sector, we will need to build up a critical pool of specialists who are proficient in sophisticated financial instruments such as financial modelling, structured derivatives, quantitative research methods, risk management and specialised insurance activities. We will also have to develop a strong pool of resources to provide ancillary services, such as legal support and financial advisory work, which are critical to support the growth of Singapore as a full- serviced financial centre.

20 The manpower needs of the financial industry cannot be met overnight. One way to bridge the skills gap and to increase the manpower resources available in Singapore is to recruit more international talents into our shores. Currently, international talent form approximately 15 per cent of the total executives in Singapore's financial sector. As more foreign players increase their presence in Singapore, we can expect a greater proliferation of such financial talent into our shores. This will lead to greater cross-fertilization of ideas and increased innovation amongst industry players. This will provide the cutting edge for our competitiveness.

CONCLUSION

21 Today's ceremony marks the organisers' efforts to recognise the diverse capabilities and contributions of the various financial and business players. We hope that the financial awards will serve to motivate industry players to work towards even greater excellence. Let me extend my heartiest congratulations to the eight recipients of the financial awards. For all of you present this evening, I look forward to your active and sustained participation in the Singapore financial sector.