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Opening Address by Mr Heng Swee Keat, Minister for Finance, and MAS’s Board Member, at the UBS Wealth Insights Conference on 14 January 2019

14 Jan 2019

Thank you Mr August Hatecke for the introduction. 

Mr Gan Seow Ann, UBS Executive Vice Chairman of Global Wealth Management, and the UBS team. 

1 First, let me thank you for inviting me to join you at this event. 

2 I last spoke at this event about 3 years ago, in 2016. I had said then that despite the headwinds to growth, I believe that Asia can meet the cyclical challenges. Even though growth is slowing down, the structural factors that enabled Asia’s growth, will allow it to continue to do well and outperform the rest of the world by a significant margin. I am glad that what I had said turned out to be largely right. 

3 China, India, and Japan have all been making significant changes to their economic policies and in restructuring their economies, in particular China. ASEAN has also been making good progress. Some recent reports suggest that ASEAN will become the world’s fourth largest economic grouping by 2030. If you think about the history of ASEAN and how ASEAN was formed, this is a remarkable achievement.

4 In fact, when I gave my speech here three years ago, it was also just a day after I chaired the first meeting of the Committee on the Future Economy (CFE). We were then thinking about how to embark on the next phase of restructuring for the Singapore economy that will enable us to meet the new challenges emerging and seize new opportunities.

5 I am glad the global economy and Asia have emerged from the Global Financial Crisis stronger, and the structural drivers for growth remain strong. In fact, the IT sector has grown significantly in the last 3 years and provided support for the whole of Asia, including Singapore. In an age where IT is going to play an increasingly significant role, I think our strength in this sector across the region is going to be an asset.

6 Before I turn to identifying the major economic drivers, we cannot ignore the changes in the political backdrop in the last 3 years. This has come as a surprise to many. Be it the election of President Trump in the US, Brexit in the UK, the election of Macron as one of the youngest leaders in Europe in 2017 and very recently, the problems that we see in France. Even in Germany, where Chancellor Merkel has been a tower of strength for many years, her party did not do so well in the recent regional elections, and there has been a change of party chair. In the region, we have seen President Xi becoming even stronger and the term limit of presidency has been changed. Prime Minister Abe has also done well in strengthening his position. We also saw the Trump-Kim Summit here in Singapore. 

7 I visited UBS’s website for this event – Turning Points – and came across an interesting quote. Let me quote from your website, “Many investors make their costliest errors during transition points in the market cycle”. Indeed, the global economy is going through major transitions. Let me name three of them.

8 First, demographics. Many parts of the world are ageing. Japan, many parts of Europe and China are ageing rapidly, and so is Singapore. Changes in demographics will affect the rate of labour force growth and have longer-term effects on economic growth, as well as on sentiments and expectations about the economy.

9 In Asia, the generation that grew up in the 50s and 60s had little education. What it means is that it is more difficult for this generation to make a transition, and at a time when the rate of change can be very fast. Governments need to look after the needs of their ageing population, and enable older workers to work longer and stay productive. So productivity longevity will be key for many of these countries. I have more interesting examples that I will touch on later. 

10 The second major force in shaping this transition is technology. A few years back, many economists were debating why productivity growth had been so slow. Today, if you look at articles that are being written, it is all about the digital economy and digital transformation, and looking beyond digital, it is about Industry 4.0. There is a whole range of technological advancements, foremost in IT and electronic chips, and the way in which Moore’s law is running its course and what new chip designs will be.

11 Another big area is biotechnology. What unravelling the human genome means for healthcare and all the other things we can apply it to. This will also enable humans to be even better. And that leads to more questions being asked on the man-machine interface and the future of work. What does it mean when you have a computer that is smart enough to do many things – does it replace or augment humans. 

12 And tied to all of these is a whole area of topic on energy. With climate change, what do we do for renewables and to what extent can we expand renewable energy significantly. 

13 So now we have all these technological developments – whether it is about 3D printing, robotics, AI, renewable energy, the circular economy, and more recently space. The Sunday Times carried an interesting photograph just yesterday on the landing of Chang’e-4 on the dark side of the moon, alongside the rover named Yutu-2. This is fascinating. As the Chairman of the National Research Foundation, I have been spending a lot more time looking at the impact of technology, and the evolution of technology. While we cannot predict the future, we can be certain that technology will be a major force in reshaping the global economy and our societies. 

14 The third major force is for the extent of support for globalisation. For several years we talked about how the world has become more and more globalised. But recent developments suggest that this is not so straightforward. Whether it is the election of President Trump, Brexit or the pressure that Chancellor Merkel is facing, there is a group of people who feels that globalisation has left them behind. This is going to be a very significant issue. In the EU, the two biggest issues they are grappling with are trade and immigration. When you add to that the impact of technology, I think you will have a very powerful mix that will reshape the discussion on many key issues. 

15 So in the face of all these, what should governments be doing? I want to touch on how government needs to be very proactive in partnering our private sector in supporting the transition to a very different economy. And in fact to go a step further, in enabling the transformation of our economy, and the redesigning of jobs and reskilling of workers. So let me share briefly three key areas that we have been working on in Singapore. 

16 First, the ageing population. I have spent a lot of time discussing with Health Minister Gan Kim Yong our healthcare needs and how to provide for that. You will also recall that Prime Minister Lee spoke about the Pioneer Generation Package several years ago and the Merdeka Generation Package in last year’s National Day Rally. I will provide more details on the Merdeka Generation Package together with Minister Gan during the Budget next month.

17 Second, on the economic front, we have embarked on our economic transformation, first through the work of the CFE. After we finished our work on the CFE, we now have the Future Economy Council, which I lead with a group of ministers and private sector leaders, as well as our unions. From the 23 Industry Transformation Maps (ITMs) that have been developed, we have gone on to the second stage of looking at 6 key industry clusters, where there will be significant synergies. 

18 For instance, in the area of advanced manufacturing, IT is a common denominator that links across all sectors. We are looking at how our companies in Singapore can deepen their IT capabilities to embark on the next phase of manufacturing. Because I think manufacturing will be very different in 10 to 15 years’ time from what it is today. So economic transformation will entail investments in research, innovation and technology. 

19 Third, beyond Singapore, I remain optimistic about the outlook for Asia. It will continue to be a high growth region. There will be some slowdown in growth as we are in a different phase of the cycle now. A lot will depend on whether Asian economies are successful in its transformation efforts. I mentioned about demographics earlier. Countries that are facing ageing populations will have to work very hard on how to use technology more effectively. Interestingly, the one country with the most human beings, is actually the country with the most number of robots, for 3 years in a row – China. 

20 If you look at the demographic profile of India, Indonesia, and many others in ASEAN, they have a very youthful population. We will be able to reap the demographic dividends. However, this will depend critically on one thing – education. If we can do this well, and be able to deploy technology with humans, Asia will make huge progress.

21 Transformation in China is going to be very significant. We need to pay greater attention to what is going on in China. I have gone to China many times as the Chair of the Singapore-Jiangsu Cooperation Council. Every time I go to China, I visit a different part of Jiangsu. And every time I return to Singapore very impressed by the tremendous changes I have seen there.

22 Many are interested to know how the Chinese economy will develop, whether it is on track to be the largest economy in the world. Based on estimates from IMF and many private economists, China is on course to be the world’s largest economy between 2030 to 2050. I trust that these predictions will not go terribly off track. But no one can predict the future, and that is something all investors need to know.

23 In sum, the global economy goes through cycles. This was well-documented by Professor Charles Kindleberger, whose book “Manias, Panics and Crashes” was also a favourite of the late Mr Lee Kuan Yew. In fact, the book is now in its 7th edition, and with every revision, it takes into account the new cycles that have taken place. The central message however remains – that greed and excesses are uncontrollable, and part of the cycle. Therefore, as an investor, it is important to be careful, and know how to ride this cycle.  

Singapore as Global-Asia Node of Technology, Innovation and Enterprise – Supporting Asia’s Growth

24 Given Asia’s optimistic outlook and our strong links to the region, let me highlight three areas where Singapore can leverage its position as a Global-Asia node of Technology, Innovation and Enterprise to support Asia’s development and growth.  

Financing the Rise of Asian Enterprises

25 First, Singapore is well positioned to serve as the financing hub for Asian enterprises, which have been actively expanding their regional and global footprint, riding on the waves of the Asian growth story. This has led to a surge in capital raising needs for the region. The regional start-up scene is thriving, with close to 7,000 start-ups in Southeast Asia alone. Furthermore, Asia’s share of companies with market value of more than US$10 billion has been growing, from 20% just 10 years ago to more than 30% today[1]. These Asian enterprises need various types of financing across its corporate lifecycle – from start-ups to big corporates. The Monetary Authority of Singapore (MAS) has introduced a number of initiatives to build up an ecosystem to support corporates’ financing capabilities across the corporate lifecycle – from early stage financing to tapping on the public market. 

26 In the private market space, MAS has in the past two years focussed on channelling financing into enterprises. These include the simplified regulatory regime for venture capital fund managers to facilitate start-ups’ access to capital in 2017, and a deal making platform called MATCH (Meet ASEAN’s Talents and Champions) to connect global capital and the ASEAN enterprises community in 2018. To date, MATCH has generated more than 17,000 matches between 380 investors. More recently, MAS launched the Private Market Programme (PMP) under which it will allocate US$5 billion of its own funds as part of its investment portfolio into the private markets, to strengthen the financing channels to support enterprises.

27 The public equity markets also play an important role in our entrepreneurial ecosystem by complementing private with public financing for high growth companies. In line with this objective, I am pleased to announce the introduction of a new grant scheme to support equity financing for Asian growth companies. MAS will commit close to S$75 million over three years to help domestic and regional companies list and raise equity capital on the Singapore Exchange, and support initiatives that will broaden and deepen our research ecosystem, including grooming and retaining equity research talent.   

Serving as the Investment Gateway to Asia

28 The second area is that Singapore has always played a key role as gateway to investment opportunities in Asia. Besides providing a conducive environment to support the financing needs of Asian enterprises, Singapore plays an integral role in crowding in global investments by offering asset managers and institutional investors an attractive platform to access Pan-Asian investments. Assets Under Management (AUM) in Singapore increased further by 19% to S$3.3 trillion in 2017, partly because of higher valuations and partly because of continued inflows to Asian strategies managed out of Singapore. About two-thirds of the AUM are reinvested in Asia-Pacific to tap into the region’s growth opportunities, further reinforcing the financing ecosystem for enterprises. 

29 Building on our strengths, MAS will be introducing the Variable Capital Company (VCC) framework later this year, following the passing of the legislation in October 2018. The VCC structure complements and expands the suite of fund structures available for investor’s diverse needs. In addition, the VCC structure will allow Singapore-based fund managers to reap economies of scale by co-locating fund domiciliation with their fund management activities in Singapore. There are also on-going initiatives to deepen our bilateral and regional market access through the ASEAN Collective Investment Scheme (CIS). 

30 And I am happy that there are many more institutional investors such as sovereign wealth funds and pension funds locating and managing their Pan-Asian or global assets here. We are now home to leading global public investors, including Korea Investment Corporation (KIC) and Ontario Municipal Employees’ Retirement System (OMERS). So I think all these underscore the attractiveness of Singapore’s stable political environment, strong rule of law, comprehensive network of tax treaties and sound standards of living, healthcare and education. 

31 Another area that we are seeing good growth is family offices. To make Singapore even more conducive for family offices, we will raise the level of sophistication and professionalism of family office professionals by partnering institutes of higher learning to develop training programmes for family office professionals, and strengthen the links and networks between family offices in Singapore.

Supporting Asia’s growth, sustainably

32 The third area MAS is doing is to ensure that the growth is achieved in a sustainable manner, avoiding the negative consequences associated with rapid expansion – climate change and global warming. As the ASEAN chair last year, Singapore included sustainable finance as part of the ASEAN 2018 finance agenda. We have achieved quite a bit. Building on the ASEAN Green Bond Standards, the ASEAN Capital Markets Forum (ACMF) – a grouping of ASEAN securities regulators – launched the ASEAN Social Bond Standards and ASEAN Sustainability Bond Standards in October 2018 to provide issuers and investors a comprehensive suite of green, social and sustainability bond standards that are aligned with international standards. These standards help to provide guidance for ASEAN companies seeking to raise financing, and raise the profile of ASEAN as a region that is committed to sustainable financing.

33 Singapore will also be doing our part to continue support for the sustainable finance agenda. I am pleased to announce that MAS will expand the Green Bond Grant Scheme  to go beyond green bonds, and include all social and sustainability bonds as qualifying types of bonds under the grant scheme. Similar to the Green Bond Grant Scheme[2], issuers of qualifying social and sustainability bonds can offset 100% of expenses attributable to obtaining an external review for such bonds. MAS will provide more details on these new initiatives later.


34 Let me conclude. As the global economy grows at a more sustainable pace, there are opportunities. And in particular, the structural story for Asian growth remains strong.

35 In Singapore, we started charting our next phase of growth since early 2016 and I am glad that our companies and workers are doing well under the ITMs. I will be looking to announce in the Budget what more we can do in this area. 

36 At the same time, Singapore is well-positioned as a Global-Asia node of Technology, Innovation and Enterprise to continue supporting Asia’s growth and development in a sustainable manner. I have shared some of these initiatives with you today.      

37 I hope that this will be a happy new year for everyone and that companies will do well because the more money they make; the more taxes I collect. 

38 Thank you very much.


[1] QUICK-FactSet, Nikkei Asian Review.
[2] Under the Green Bond Grant Scheme, qualifying green bond issuances (e.g. issuances which adhere to internationally-recognised green bond standards) can offset 100% of expenses attributable to obtaining an external review for green bonds, up to a cap of S$100,000 per issuance.