Keynote Address by Mr Heng Swee Keat, Minister for Finance at DBS Asian Insights Conference on 13 July 2018, 9.10am at Marina Bay Sands Expo and Convention Centre

Mr Peter Seah, Chairman, DBS Group Holdings,

Mr Piyush Gupta, CEO, DBS Group Holdings,

Ladies and Gentlemen,

Introduction

1. Good morning to everyone. Thank you for inviting me to join you today. My heartiest congratulations to DBS on your 50^th anniversary and for being the only Asian bank to win two awards on this very special occasion – the best digital bank and the best SME bank. This is something which I think all DBS staff would be very proud of and all of us are very proud of.
   
    

2. In the last fifty years, our financial sector has grown significantly, with its share of GDP increasing from 3.0% in 1968 to 13.0% in 2017. Today, we are ranked amongst the top financial centres globally, home to about 1,200 local and international financial institutions.
   
    
   
   Journey Towards An International Financial Centre
   
    

3. We have not gotten here by chance. Our current standing is an outcome that all of us, including DBS, have worked hard for. What are the key decisions that we have taken that enabled us to achieve this?
   
    

4. Now DBS is 50 this year, so I’ll start in the year that DBS was founded, in 1968. The same year our journey towards an international financial centre began with a bold decision made by Mr Lee Kuan Yew to set up the Asian Dollar Market.
   
    
   
    

5. The formation of the Asian Dollar Market paved the way for us to become a major offshore banking centre in Asia. We started off as a funding base, attracting international banks to set up in Singapore to intermediate surplus funds between Asia and the world.
   
   Over time, we reviewed our policies to remove exchange controls and developed our capabilities as a foreign exchange market.
   
    

6. As our financial sector grew and matured, it became apparent that our local institutions needed to keep pace with international developments and technological advancements. Led by PM Lee, who was then DPM and Chairman of MAS, the next phase of development began through the progressive liberalisation of the banking sector in 1999.
   
    

7. The outcome speaks for itself. We now have more than 200 banks in Singapore providing a wide range of activities across the region. Our local banks have also grown to be strong and dynamic players, rated among the top 20 of the world’s safest banks. And earlier you heard the accolades that DBS has just won.
   
    
   
   Role of Finance in Economic Development
   
    

8. The development of our financial sector has been crucial in supporting Singapore’s economic development and Singapore’s growth over the years, channelling domestic savings and international capital flows to productive investments in key economic sectors.
   
    
   
    

9. Looking back, we must not forget the lessons that the Asian and Global Financial Crises taught us – the importance of effective financial intermediation to a well-functioning economy, and the consequences when financial flows became decoupled from underlying economic needs.
   
    
   
    

10. The vitality of the financial sector and the development of the real economy are deeply intertwined.Effective intermediation of capital to channel savings to productive investments enables the real economy to grow, to create jobs for people, and to fund long-term investments in social and physical infrastructures.
    
     
    
    Supporting Asia’s Growth
    
     

11. Singapore’s financial sector and DBS is in the position to support the region’s development as the economic centre of gravity shifts back to Asia. Earlier you heard Piyush spoke about some of the major trends and, in fact, in this year’s Budget, I spoke of three major trends that we must all take into account. One is the shift in the economic centre of gravity back to Asia. Second, the rapid advances of technology especially in the information communications technology, in AI, in the artificial intelligence, and the changing demographic patterns not only in Singapore but across the whole of Asia and in fact, across the whole world.
    
     

12. Now let me touch on the shift of the economic center of gravity first. The IMF projects Asia to lead global growth at an average rate of about 6.4% from now till 2023.
    
     
    
     
    
     

13. We are fortunate to be strategically located in a region with strong growth potential. Let me touch on three areas where we can support Asia’s development.
    
     
    
    Infrastructure Financing
    
     

14. First on infrastructure financing. For Asia to continue growing, the region must invest in infrastructure needs.
    
     
    
    Done well, developments in infrastructure can help boost productivity and economic competitiveness, lift the long-term potential of the region, and create a better living environment for our people.
    
     

15. The ADB estimates that to maintain Asia’s growth momentum, infrastructure investment needs will total US$26 trillion from 2016 to 2030, or $1.7 trillion per year.
    
     
    
    Traditionally, much of the responsibility for infrastructure investment has fallen on the government.
    
     
    
    But given the size of these needs, it is not possible for any single government to fund this fully. Nor any single bank. We need to crowd in private capital from all sources to accelerate infrastructure development in the region.
    
     

16. Singapore set up the Infrastructure Asia office in April 2018 to harness the collective network and capabilities of public sector agencies and private sector firms, and partner key stakeholders across the region to explore better ways to meet Asia’s infrastructure needs.
    
     
    
     
    
    Enterprise Financing

17. The second area is enterprise financing. Digital technologies are catalysing the development of innovative business models and products in and across many sectors.
    
     

18. The growing middle class and young population in Asia, with increasing access to digital technology, is drawing many innovative enterprises to provide digital solutions to meet their needs.
    
     

19. At Budget 2018, I announced that Singapore is positioning itself as a Global-Asia node of technology, innovation and enterprise. Singapore is investing significantly in research, innovation and enterprise development.
    
     
    
    As a major financial centre, with a wide range of financial institutions providing a variety of funding, Singapore is a strong base to serve the needs of innovative enterprises, and to seed the growth of the next-generation of Asian growth companies.
    
     

20. MAS has revised regulations to facilitate the activities of venture capitalists, and to give finance companies greater scope to support small and medium enterprises. We are also working with industry players to establish private market funding platforms to enable growth companies to gain better access to a wider network of investors.
    
     
    
    Adoption of Digital Financial Services
    
     

21. So, now let me touch on the third area, which is the adoption of digital financial services.
    
     

22. Financial institutions can leverage on technology to improve efficiency through the adoption of e-payments. This provides convenience for consumers and businesses while reducing transaction costs.
    
     

23. In Singapore, MAS is working with the industry to enhance the inter-operability of the various e-payment systems in the market to encourage wider adoption. Let me give a recap of the progress we have made.
    
     
    
     
    
    With the SG-QR, merchants will be able to accept all forms of e-payments via a single low-cost QR sticker. Consumers, whether residents or tourists, will not have to hunt for separate QR stickers that support only a particular e-payment scheme. Just one sticker is needed to cover all different payment modes. So, instead of one click, we have one sticker.
    
     

24. Apart from improving efficiency in channelling financial flows, financial institutions can also adopt technology to deepen access to financial services for Asia’s rising middle class.
    
     

25. In addition, the use of technology and innovation can help to facilitate financial inclusion, which is a key priority under our ASEAN chairmanship.
    
     
    
     

26. In Singapore, we are also mindful not to leave behind certain segments of the society in our efforts to digitalise.
    
     
    
     
    
    Conclusion
    
     

27. Let me conclude. The prospects for growth in Asia is good and our financial sector and DBS is well poised to grow together with the region. However, we must not forget the lessons learnt from the past crises and allow complacency to set in.
    
     

28. As we grow and develop our financial sector to serve the needs in the real economy, we must take proper risk management.At the macro-level, to maintain our resilience, we must also be prepared for major disruptions in the global financial markets.Over the years, we have evolved 3 layers of safety nets:
    
     

29. We must continue to strengthen these safety nets, and support the growth and development of economies all around Asia, and the world.
    
     
    
    In this changing economic environment, with the sweeping wave of technological advancements, the possibilities of what we can achieve is only limited by our imagination.
    
     
    
     

30. I wish all of you a very fruitful conference, and DBS success in the next fifty years and beyond. Thank you.

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