Singapore’s finance sector can support Asian development but risk management also key: Heng Swee Keat

SINGAPORE – Singapore is positioned to support the region’s development by financing infrastructure and enterprise in Asia, including bringing in private capital, said Finance Minister Heng Swee Keat on Friday (July 13).

The Republic’s adoption of digital technology can improve transaction efficiency and raise financial inclusion, he added, calling higher access to financial services “a key priority under our Asean chairmanship”.

But, citing the Asian and global financial crises of the past two decades, Mr Heng cautioned that “proper risk management” is also needed.

“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,” he said, in his keynote address at DBS’ Asian Insights Conference, at the Marina Bay Sands Expo and Convention Centre.

The minister cited the absence of proper risk management in Asian emerging economies, as well as the United States and Europe, as factors behind the recent crises – “the consequences when financial flows became decoupled from underlying economic needs”.

National, regional and global safety nets for the sector must continue to be strengthened, he said, pointing to processes such as Asean+3 financial cooperation initiatives and the International Monetary Fund’s multilateral support.

“The vitality of the financial sector and the development of the real economy are deeply intertwined,” said Mr Heng, calling for “effective intermediation of capital to channel savings to productive investments”.

He went on to remark that Singapore’s financial sector is now “in the position to support the region’s development, as the economic centre of gravity shifts back to Asia”.

“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,” he said.

“Traditionally, much of the responsibility for infrastructure investment has fallen on 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.”

To that end, Singapore has set up the Infrastructure Asia Office and will hold the Asia-Singapore Infrastructure Roundtable in October, he noted.

Private funding will also come into the enterprise sphere, as digital technology sparks new business models and products, Mr Heng said.

The Monetary Authority of Singapore “has revised regulations to facilitate the activities of venture capitalists, and to give finance companies greater scope to support small and medium enterprises”, said the minister. “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.”

He added that with the rise of digital technology and innovation, financial institutions can not just improve “efficiency in channelling financial flows”, but also facilitate and deepen financial inclusion, especially with a growing middle class in Asia.