Delivering growth, boosting competitiveness: Singapore’s role in the new economy
In its ‘Doing Business 2015’ report, the World Bank once again ranked Singapore as the easiest place in the world to do business. This validation of Singapore’s success in encouraging and facilitating international trade and investment is very positive, but we cannot be complacent. Rather, we need to look at what has contributed to Singapore’s success in the past, what is changing, and how we can build for the future.
Modern values in early roots
Singapore’s early success as an international trading hub has its roots in the opening up of the Chinese market in the early 1800s, technological innovation with new ocean-going steamships, and the development of early commodities markets.
Among the reasons that Singapore flourished compared with cities such as Jakarta and Manila were the absence of trade tariffs, good governance and the ease with which international and local players could conduct business.
Two hundred years later, these strengths and values are just as attractive: access to China and wider Asia; reputation for technology innovation; governance and the rule of law, and a highly skilled local and expatriate community.
As the nature of international trade has evolved and the skills and infrastructure required to facilitate this trade have developed, Singapore has continually reinvented itself. In the past, our geographic location, infrastructure and trading heritage attracted multinational corporations. More recently, our strength in commodities and renminbi (RMB) clearing have been key strengths.
Today, Singapore is the preferred location for many multinational corporations’ regional treasury centres (RTCs), not only for corporations headquartered in North America and Europe, but also the fast-growing Asian corporations.
While some of the early companies that opened RTCs in Singapore were attracted by tax and business incentives, there is now a wide range of factors that contribute to Singapore’s appeal, including its time zone, depth of talent, double taxation agreements, ease of doing business, technology innovation, strength of physical and digital infrastructure, and international connections.
Despite Singapore’s indisputable appeal, other countries and territories are not standing still, and we cannot rely on reputation and past success alone.
With the launch of China International Payment System (CIPS), for example, RMB centres will need to earn their status. This requires demonstrating their competence and capacity, and by addressing the capital, liquidity and trading needs of corporations and financial institutions. Hong Kong and Kuala Lumpur recently announced new measures to attract RTCs.
While some of Singapore’s strengths continue to be unique, particularly talent, technology and infrastructure, other locations are attractive for other reasons.
As a result, it is vital that we are proactive in maintaining our advantage by adapting to changing economic, technology and cultural trends.
Firstly, Singapore needs to maintain the ease of doing business here and support the international business community through good governance. Secondly, while companies are attracted to the skills and expertise that exist in Singapore today, the competences that they are looking for continue to evolve.
Therefore, without being proactive in nurturing home-grown talent and encouraging the best people in their field from around the world, Hong Kong, Shanghai or Kuala Lumpur may become better alternatives with the skills concentration that corporations are seeking in the future.
Singapore has the potential not only to be a hub for the physical economy, but also the digital economy
For Singapore to remain the foremost trading hub in Asia and to grow globally, we need to develop our unique competences that continue to make Singapore an attractive investment, trading and RMB hub, building on our strengths in areas such as trade, commodities and technology.
Therefore, Singapore’s position as an Asian hub and the centre of the trading ecosystem for both across Asia and beyond should not be underestimated, and we need to leverage on this position in new ways to facilitate growth.
Strengthening the ecosystem
As a trading hub, Singapore brings together buyers and sellers from across Asia and beyond, from small enterprises to the world’s largest corporations. In this way, it serves as a platform, which makes it easier for these trading counterparties to do business with each other, fuelling growth for all parties.
Banks such as Standard Chartered have a pivotal role to play in this respect. Our network comprises corporations and businesses of all sizes across Asia’s growth markets, with a significant number of which either headquartered here, or overseas with strong trading connections with counterparties in Singapore.
Consequently, the value we offer is not simply us serving a particular customer alone, but also providing our services to our customers’ clients and suppliers.
This stimulates growth across the value chain as compared with banks that offer services only to the largest multinationals. For example, banking a company’s buyers helps expand sales capacity; whilst supplier finance strengthens the relationships in a company’s supply chain, supporting key suppliers and reducing costs in the supply chain.
A digital hub
Singapore has the potential not only to be a hub for the physical economy, but also the digital economy. While technology skills and investment levels are already major strengths, Singapore is poised to become a world leader by investing in and incubating fledgling technology businesses, as well as leveraging on its global connections to disseminate transformational technology worldwide.
This is a crucial area of focus for a bank such as Standard Chartered in order to foster the technologies that will shape how both companies and individuals bank in the future, with benefits from better management of the cash flow cycle to the increase of financial participation.
Singapore will remain attractive as a regional and increasingly global hub if we can demonstrate that companies doing business here can achieve sustainable growth. International trade is no longer facilitated by the physical movement of goods alone, but by connecting the increasingly complex networks of supply chain participants, securing these connections and enabling stability and growth across all participants.
Singapore is ideally equipped to harness these changing trends and consolidate its role in this new economy, facilitated by banks such as Standard Chartered that can facilitate growth across the value chain of its clients and champion the coming digital transformation in finance.
Euromoney and Standard Chartered will be running a series of webinars on debt capital markets. The first one will be on ‘Investing China: CGB futures and the Bond Connect’ on May 15. Find out more
This material has been prepared by Standard Chartered Bank (SCB), a firm authorised by the United Kingdom’s Prudential Regulation Authority and regulated by the United Kingdom’s Financial Conduct Authority and Prudential Regulation Authority. It is not independent research material. This material has been produced for information and discussion purposes only and does not constitute advice or an invitation or recommendation to enter into any transaction.
Some of the information appearing herein may have been obtained from public sources and while SCB believes such information to be reliable, it has not been independently verified by SCB. Information contained herein is subject to change without notice. Any opinions or views of third parties expressed in this material are those of the third parties identified, and not of SCB or its affiliates.
SCB does not provide accounting, legal, regulatory or tax advice. This material does not provide any investment advice. While all reasonable care has been taken in preparing this material, SCB and its affiliates make no representation or warranty as to its accuracy or completeness, and no responsibility or liability is accepted for any errors of fact, omission or for any opinion expressed herein. You are advised to exercise your own independent judgment (with the advice of your professional advisers as necessary) with respect to the risks and consequences of any matter contained herein. SCB and its affiliates expressly disclaim any liability and responsibility for any damage or losses you may suffer from your use of or reliance on this material.
SCB or its affiliates may not have the necessary licenses to provide services or offer products in all countries or such provision of services or offering of products may be subject to the regulatory requirements of each jurisdiction. This material is not for distribution to any person to which, or any jurisdiction in which, its distribution would be prohibited.
You may wish to refer to the incorporation details of Standard Chartered PLC, Standard Chartered Bank and their subsidiaries athttp://www.standardchartered.com/en/incorporation-details.html.
© Copyright 2017 Standard Chartered Bank. All rights reserved. All copyrights subsisting and arising out of these materials belong to Standard Chartered Bank and may not be reproduced, distributed, amended, modified, adapted, transmitted in any form, or translated in any way without the prior written consent of Standard Chartered Bank