Singapore contends with Hong Kong as global financial hub

Hong Kong's financial role is changing and it looks like Singapore will benefit. 

For the first time, Singapore overtook Hong Kong in Vistra's latest ranking of global jurisdictions. More than 600 business services executives assessed the importance of the major financial centers. Hong Kong and Singapore have long competed as midshore financial hubs, also serving as gateways to Asia. Since 2010, when Vistra started compiling the ranking, Hong Kong has always been predominant. This year, Singapore rose to first place along with the UK and the US, while Hong Kong slipped to fourth. Although this would be a marginal advantage, - 46% of respondents preferred Singapore as the financial center for their organization, compared to 43% who said the same of Hong Kong - it is the reversal in the fortunes of the two rivals that is of paramount importance in understanding the future trajectory of each.

The political turbulence plaguing Hong Kong is certainly one of the most favorable factors for Singapore, but its rise is specifically due to government actions in the financial sphere. Singapore has been proactive in increasing its financial attractiveness, particularly fund management and wealth planning. In 2018, Singapore introduced a new investment fund structure, the Variable Capital Company (VCC), to increase the domicile of alternative funds. The VCC offers more flexibility to investors, operational cost savings and tax advantages, entering into challenges with major fund domiciles such as the Cayman Islands. In recent years, Singapore is also attracting a significant share of Asian clients with growing net worth. Its trust laws offer confidentiality to migrants and beneficiaries, as well as tax exemptions. Attracted by favorable tax rates and a stable regulatory environment, more and more billionaire entrepreneurs are deciding to establish family offices in the city-state. The Monetary Authority of Singapore approved more than a hundred family office applications in the first four months of this year. In addition to the capital brought to Singapore, these investors also demand sophisticated financial services, creating jobs for wealth managers. The accumulation of financial and human capital contributes to Singapore's competitiveness as a financial hub.

Regional economic development is another winning aspect. China's zero-COVID policies have prompted manufacturers to shift supply chains to Southeast Asia. Singapore can facilitate such shifts because of its longstanding business presence in the region and familiarity with Chinese processes. Financial institutions connect customers with investors, law firms support the opening of new branches, and consulting firms provide guidance on sourcing regional suppliers and train staff. 

In addition to finance, Singapore and Hong Kong also vie with each other for the primacy of green commercial property. Both attract significant funding to support the development of environmentally friendly urban projects. The city-state was ranked first in the latest Asia-Pacific Sustainability Index by property consultancy Knight Frank. Shenzhen and Hong Kong were the next best-ranked Asian cities, just below Australia and New Zealand, with the cities of Sydney and Wellington. Tokyo completed the top 10. Knight Frank's ranking considers the number of green buildings and the willingness of local governments to push for sustainable urbanization as major factors, while also looking at the market for investable green assets. Knight Frank's report highlighted Singapore's '80-80-80 in 2030' plan, with the goal of having 80 percent of buildings with eco-friendly features, 80 percent of new buildings energy efficient, and for those that are already leaders in environmental sustainability, further energy efficiency from 65 percent to 80 percent is planned. Singapore, like Hong Kong, is also struggling with green financing in the real estate sector. Last year, real estate companies City Developments and MCL Land announced that they had secured $610 million in green loans to finance two projects in the city-state as part of a joint venture.

The gap between Singapore and Hong Kong as financial hubs is narrowing. The global perception of Hong Kong has undoubtedly been altered and it now has to adapt to a new reality, but as a gateway to China and a historic global financial center, it will continue to play an important role internationally.

Singapore's new (controversial) foreign interference law

Some critics are concerned that the new bill may represent a tool to suppress dissent. But what is the Foreign Interference Countermeasure Act really about?

On October 4, after nearly ten hours of debate, the Singaporean parliament passed a new law to limit foreign interference in domestic affairs, known as the Foreign Interference Countermeasure Act.  

This new law gives authorities the permission to intervene in cases of interference in the domestic politics by foreign entities. According to the Ministry of Home Affairs, foreign interference poses a serious threat to Singapore's sovereignty and national security, and this law is an urgent necessity given the increase in cases of foreign interference, especially via the Internet, in local affairs. 

The law allows authorities, for example, to compel Internet service providers and social media platforms to provide information about users, block content, and remove applications used to disseminate content deemed hostile. The law also establishes requirements to identify individuals and entities defined as "politically significant persons," including political parties, political officeholders, parliamentarians, and candidates for election. Such individuals or entities will be required to report donations exceeding 10,000 Singaporean dollars (approximately 6,400 US dollars) and disclose their relationships with foreigners. Civilians may also be designated as politically significant if their activities are directed toward a political end and it is in the public interest to apply countermeasures. However, it is important to remember that this law does not include Singaporeans or other local organizations expressing their views, unless those views are used by foreign entities as agents of interference. 

The process will be as follows: first, authorities identify a suspected foreign-sourced information campaign that is deemed hostile. If they determine that the campaign is directed at a political purpose and it is in the public interest to take countermeasures, guidance is issued to limit the spread of disinformation. Third parties such as online platforms, Internet service providers and website operators may also be forced to block certain accounts or content in the country. Once identified, perpetrators can be arrested and possibly prosecuted, but they cannot be detained without trial. However, the penalties for violating the act are particularly severe and include up to 14 years in prison and 100,000 Singaporean dollars (about 64,000 U.S. dollars) in fines. Parties involved can appeal to the Minister of the Interior or an independent review tribunal led by a Supreme Court judge.

Despite the negative reaction expressed by foreign media and the criticism received by some NGOs, including Human Rights Watch and Reporters Without Borders, passage of the bill was a mere formality given the decades-long legislative majority of the People's Action Party (PAP), which has been in government since 1959. 

Some critics have expressed concern that the bill could pose a threat to legitimate entities, including academics studying controversial issues or foreigners expressing opinions on Singaporean politics. Indeed, there are concerns that terms such as "foreign interference" are defined so broadly as to include "almost any form of expression and association relating to politics," as 11 human rights organizations stated in an open letter. However, the Minister of Internal Affairs reassured that the law will not be applied towards most academic activities, articles written for international journals and the receipt of international funding. The Minister added that the measure is not intended to target foreigners who comment on local issues in an open and transparent manner.

Another critic that has emerged is that this law was brought to Parliament without being subjected to public consultation or scrutiny by a select committee. However, even on this issue, the Government has responded that the issue of foreign interference has been widely discussed for more than three years in various fora. In any case, the government insists that most Singaporeans agree that the threat is serious and that something needs to be done. However, the concern persists among the many foreign companies in the territory about the future impact of such a potentially broad law.

How Forrest Li (Sea) became the richest in Singapore

On August 31, 2021, Forrest Li, at the age of 43, became the wealthiest man in the city-state, with a fortune exceeding US$20 billion. His story confirms that the demand for digital services has skyrocketed during the pandemic.

Forrest Xiaodong Li, a native of the Chinese port city of Tianjin and later naturalized Singaporean, graduated in Engineering from Jiaotong University of Shanghai and worked in the same city in the HR division of Motorola and Corning city for four years, before deciding to radically change his life and career. With his MBA, "Singapore’s Steve Jobs" began to lay the foundations of his entrepreneurial success: he was among those present when the founder of Apple delivered the famous "Stay Hungry, Stay Foolish" speech to the new graduates at Stanford University in 2005. That became Forrest Li’s life motto, while Jobs’ call to "connect the dots" became the tagline of Sea Limited, the largest company in Southeast Asia by market capitalization (US$185 billion) of which he is President and CEO today.

At a time when so many people are forced to stay at home or to keep social distances, most interactions have inevitably moved online. Li himself, convinced that the pandemic has done nothing but accelerate a transformation already underway, has underlined that the "strong performance in terms of user growth and engagement shows that digital adoption is still rising healthily". Sea Limited, a holding company of which he is co-founder together with Gang Ye and David Chen, operates simultaneously in the flourishing sectors of e-commerce, online gaming and digital payments, which during the pandemic have been growing significantly.

After the debut in the world of videogame development and distribution with the foundation of Garena in 2009, the trio of entrepreneurs launched SeaMoney, provider of digital payments and financial services, and Shopee, an e-commerce site that adopts a mobile-first approach and carries out a policy of low commissions for retailers. The platform is designed to optimize the online shopping experience so as to make it more convenient and functional to navigation from smartphones.

Alongside the ambition to seize the opportunities of accelerated digitisation, Sea Limited also cultivates a sense of responsibility towards those who are less facilitated in accessing technology. Already in April 2020, Shopee announced the introduction of a support package worth 15 million Malaysian ringgit, to the benefit of about 70,000 local small and medium-sized enterprises. The programme includes a series of measures targeted to "help sellers digitalize, reduce expenses and grow sales": not only subsidies in the form of vouchers and significant operating cost cutting for vendors exposed to the challenges of the pandemic, but also a wide range of training courses aimed at providing a step-by-step guide for those who want to relaunch their businesses by starting from e-commerce. The company turns its gaze also outside the ASEAN area, in an effort to intercept the needs of an ever-growing pool of consumers who are focused on embracing the benefits of the new online lifestyle and Shopee is currently working to expand its operations in Latin America, India and Europe.

Li’s vision is in fact a long-term one, in which seizing the opportunities for growth and conquering new market shares is a priority compared to making profits quickly. During the ceremony of the thirty-fifth Singapore Business Awards in November last year, at which he was appointed "Businessman of the Year", the CEO reiterated his confidence in the potential of the conglomerate strategy, based on the synergy between the businesses that make it up. Actually, the same name of the group (Sea) is, at the same time, an acronym that recalls the Southeast Asian region, center of gravity of the activities of the company, and the image of the sea that, connecting between them the countries, makes it possible to keep faith with one of the core values of the tech company led by Forrest Li: "Make the world an even more connected community through innovative products and services."

Anthony Tan: the man behind the success of the unicorn Grab

Among the Singapore’s 50 Richest 2021, Anthony Tan is the CEO and co-founder of Grab, the dominant ride-hailing app in Southeast Asia and the region's first unicorn.

Born in Kuala Lumpur in 1982, Anthony Tan is the heir to one of the Malaysia’s wealthiest families. His father, Tan Heng Chew, is the chief executive of Tan Chong Motor Holdings Bhd, one of the biggest automotive groups in the country. His academic background includes a B.A. in Economics and Public Policy at University of Chicago honors and a prestigious M.B.A at Harvard Business School (HBS), completed in 2011. It all started from there. During an interview for the Financial Times in 2014, Tan said he was heavily influenced by entrepreneurship courses and meetings with personalities like Steve Chen, co-founder of YouTube, and Eric Ries. All this opened his eyes of new opportunities, with much displeasure of his family.

Tan met Tan Hooi Ling, who will become co-founder of Grab, at Harvard Business School in 2009 while they were working on their MBAs. They wrote together a business plan for a mobile app that would connect taxi seekers directly with taxi drivers closest to their location. Both of Malaysian origins, they wanted to find a solution to move into the great urban congestion. The drivers would have been supplied with smartphones so they could communicate directly with potential customers. It was an Uber-like app designed to benefit both taxi drivers, who are continually besieged and always looking for rides, and customers, to make them feel safer.

That project was a runner-up in the HBS New Venture Competition in 2011. Using the $25,000 from the winning and their personal funds, Anthony Tan and Tan Hooi Ling launched the MyTeksi app in June 2012. By giving up his role in the family business, Anthony was able to find various upfront funding from various investors in the US and Asia, strenuously continuing to develop his project, while his relatives struggled to understand what he was doing. Tan never had regrets: “Building something from scratch from just a PowerPoint and seeing the lives we affect is a lot more rewarding”, he said.

After raising the funds to support a regional expansion, in 2016 the startup was moved to Singapore and renamed Grab. Today, in addition to ride-hailing, it includes delivery services (food, shopping, packages), online payments and financial services. It is present in 8 ASEAN countries: Singapore, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Thailand, Vietnam. Grab's investors include Softbank, Didi Chuxing and Toyota. Uber acquired a stake after Grab bought out its regional operations in 2018. When the Softbank investment was announced, Tan confirmed the willingness to pursue his goal of growing so fast, continuing the “fight for market share”.

“What we’ve built sounds glamorous but if you really want to be hardcore and survive in this race, you need to be hyper paranoid and constantly thinking that the guy on your right is trying to murder you,” Tan said. Tenacious and motivated, the people who work with him say he always wants to be the “number one”. He has a deep spiritual side, and he cites Jesus Christ as one of his leadership examples. He feels his work as a “mission" to serve Southeast Asians’ daily needs. Before the pandemic, he met with many ministers in several cities in the region to support the legalization of ride-hailing.

He is married to Chloe Tong, the daughter of the founder of Phileo Allied Bank, and they are expecting their fourth child. People who know Tan say his strengths are determination and time management skills. He is known for studying business cases or taking calls while running on the treadmill. On the other hand, Tan had clear ideas from an early age: at six he said he wanted to become a businessman. HBS was where his idea was born, but getting out on the streets of Kuala Lumpur, riding in taxis, talking to taxi drivers, and not being afraid to introduce technology in a reluctant environment transformed his plan into a winning business.  

In April 2021, Tan announced Grab's U.S. listing by merging the firm with a special-purpose acquisition company (SPAC) of Altimeter Growth. The deal is expected to close by the end of this year, making the company reach a valuation of $40 billion. Perseverance paid off. With a net worth of $790 million, Tan ranks 47th in the Singapore's 50 Richest 2021 according to Forbes.

Singapore commits to a sustainable solar future

Climate change hardly affects Southeast Asia. Singapore is banking on solar energy for decarbonisation but, despite efforts, the road to sustainability is still uphill

Singapore is one of the Southeast Asian countries most affected by climate change. Amidst the worrying rise in sea levels in the region's climate, the city-state on the Malaysian peninsula has taken the international commitments of the United Nations 2030 Agenda for Sustainable Development very seriously. This is the reason why, recently, various de-carbonization programmes have been implemented, including the construction of a huge solar panel, in the Strait of Johor.

The Sunseap Group - the largest solar energy supplier in Singapore - was responsible for the solar platform’s construction. The installation consists of 13,312 panels, with an area equivalent to about seven football field. It will be able to offset up to 4,000 tons of carbon dioxide per year and power 1,400 residential flats. As a local entrepreneur engaged in the sector pointed out, "after having exhausted the roofs and the available land, which is very scarce, the next great potential is our own water area." The sea is considered the new frontier for solar installations, as global warming and rising water levels pose a serious threat to the coastal populations of Southeast Asia. Sunseap Group's floating panels are designed to withstand changing weather conditions, with a system that keeps both the platform and the operational equipment onboard stable.

According to officials from the Ministry of Sustainability and the Environment, Singapore embraced sustainability many years ago: also known as the "Garden city", it is considered one of the greenest cities in the world. It has implemented virtuous policies in favor of environmental respect, also introducing taxation on carbon emissions. The Minister of Sustainability and the Environment, Grace Fu, launched the new Green Plan 2030 in February. According to the government, indeed, the green economy can be a key competitive advantage, capable of creating new employment and growth opportunities. The Enterprise Sustainability Program (ESG) was launched for companies, with the aim of accompanying them towards more sustainable business models: as an ESG official suggested, "sustainability needs not to be at odds with profitability". Edwin Chow, assistant managing director for innovation and business at ESG, added "As consumers become more aware of corporate sustainability and trade, companies are under pressure to improve business practices as sustainability needs to be embedded in processes, products and services".

However, despite projects on decarbonisation, Singapore is not out of danger yet. The small Asian city-state has been facing extreme climatic phenomena for decades. The so-called "twin challenges” are the main threat: these are coastal floods and severe storms with extreme rainfall that can cause inland flooding. Much of the Singaporean territory is located just 15 meters above the mean sea level, and 30% of the country less than 5 meters.

Meteorological phenomena are not the only climate-related challenge that the authorities are called upon to manage. The city heats up twice as fast as the global average. In fact, in Singapore, there is only one season, which residents have ironically divided into four levels of tolerance: “hot, hotter, hottest and hell”. For decades, citizens have made extensive use of air conditioning, but it is considered an energy-consuming technology. As Bloomber reports, Singapore is also emblematic of the so-called "urban heat island" effect: due to the hard surfaces of buildings and buildings that absorb heat, the temperature of a built-up urban area can be significantly higher than that of surrounding land. The Asian Garden City is unable to compensate for the production of anthropogenic heat with the benefits of greenery, which it has also invested in for a long time.

Singapore faces a tricky dilemma: it needs to make the city’s conditions more liveable for its 6 million inhabitants, without dangerously increasing its carbon emissions. The construction of the huge solar panel platform in the northern strait of the island seems to be going in the right direction, but there is still a long way to go. The city-state is one of Asia's largest per capita carbon dioxide emitters. Local environmental movements accuse the government of not doing enough to address the challenges of anthropogenic climate change since, despite the expansion of the renewables sector, natural gas remains the main source of energy (according to some environmental protection organizations it would still produce 96% of the energy used). According to Climate Action Tracker, even if the country remained faithful to the objectives announced in 2020 to contribute to the reduction of emissions established by the Paris Agreement, these commitments would still be insufficient. Singapore has indeed embarked on the path to sustainability, but the urgency of climate change will require even bolder measures.

Can Singapore overtake Hong Kong?

The dispute between Beijing and Hong Kong is driving foreign investors increasingly to Singapore

In the last years, Beijing’s pressure on Hong Kong’s domestic politics has generated clear implications not just with regards to the political-administrative aspect of the island, but also affecting indirectly its economy. The riots in Hong Kong have warned foreign investors that they would begin to increasingly redirect their investments to Singapore, the second largest financial hub in Southeast Asia.

The triggering cause of this trend is precisely the political influence of China on Hong Kong: for the city-State, in fact, the definition of "one State, two systems", the one that was adopted in 1997, the year in which the United Kingdom gave back Hong Kong's sovereignty to the People's Republic of China, is fading away.

Last month the Heritage Foundation, an American think tank that deals with analyzing the data of all the countries of the world drawing up their economic characteristics, has decided to remove Hong Kong from the ranking and its data now are no longer available on the association's website: a severe blow for Hong Kong, which, from 1995 to 2019, was considered by the American foundation the country with the freest economy in the world, the perfect place for foreign investors.

The decision comes from the fact that Hong Kong, from a political-bureaucratic point of view, is no longer considered autonomous: the association has therefore decided to combine its data with China, ranked 107th among the freest economies. In light of these developments, Singapore smiles: having overtaken Hong Kong last year, today the small State continues to hold the top spot on the list with a score of 89.7, far ahead of New Zealand by almost six points. 

If already in 2019 there were the first signs of an increasingly marked economic crisis for Hong Kong, the draconian law on national security, promulgated by Beijing last July, has caused some companies to run for cover towards the shores of Singapore. Deutsche Bank for example, stated its intention to move the office of the new CEO of the Asian area to Singapore, no longer considering Hong Kong a safe place. The new security law would affect two of the main pillars on which the strength and attractiveness of Hong Kong’s economy was based: the protection of property rights and the rule of law. For these reasons, another phenomenon that has been marked in the last two years is the decision of many companies to rely on arbitrary judges in other cities such as Singapore or London, fearing the lack of transparency of the new Hong Kong bureaucracy. 

Even for business expansion, companies are looking more towards Singapore: according to a Financial Times survey, some credit companies and banks would show more interest in expanding their branches in Singapore rather than Hong Kong: on Linkedin, jobs position opened by UBS and JP Morgan in Singapore are eight times than those in Hong Kong, while Credit Suisse and Goldman Sachs have doubled their advertising campaign in Singapore.

However, not all the analysts agree with the decline of Hong Kong: the strong interest of tycoon and Chinese companies are giving new impetus to the island’s economy.

However, with its excellent results in terms of protection of property rights and government integrity, Singapore has the opportunity to establish itself as the main hub for international investments in the Southeast Asia. 

By Alberto Botto

The “One Million Trees Movement” in Singapore

The city-state aims to bring nature back to the city by planting more than a million trees

As a city-state with limited land resources, Singapore has long been torn between urban development and nature conservation by losing much of its green spaces in the 19th century to deforestation, and a century later, a growing population and rapid urban development meant that other trees were removed for land reclamation.

But now Singapore is trying to reverse course by organizing an ambitious reforestation campaign. In fact, in August 2020, the government announced the launch of the new Sungei Buloh Park Network, a 990-acre park in the northern part of the island that is a refueling site and an essential stop for migratory birds coming from Siberian Russia and going to Australia and home to eastern hornbills, otters, saltwater crocodiles, and many other unique species. However, Sungei Buloh is part of a larger project that aims to plant 1 million trees over the next 10 years, “The One Million Trees Movement” launched in March 2020 by the government agency National Parks Board (NParks).

Over the next 10 years, NParks plans to conserve more than 70 native animal and plant species and to redevelop 30 hectares of forest, marine and coastal habitats. The multi-level seeding will be carried out along the city streets, called Nature Ways with the aim of covering about 300km and transforming almost every street in the city into a long-term Nature Way by making the roads fresher and more aesthetically pleasing. 500km of park connectors will also be available by 2030, effectively putting all families within a 10-minute walk from a park.

To move from a “city in a garden” to a “city in nature” Singapore will need to implement four key thrusts: more natural parks, transformation of the wild environment into public gardens, integration of nature into the building environment and making green spaces more accessible. In fact, by 2030, there will be another 200 hectares of natural parks, which will serve as complementary habitats and protect nature reserves from urbanization. For example, only for the Khatib Bongsu Nature Park an area of 40 hectares is planned. Waterways and water bodies in gardens and parks will also be protected from rising sea levels and floods.

“Trees play an important role in creating a livable environment”, said Adrian Loo, director of NParks Conservation Group. “They act as natural air filters, reflect radiant heat making the surfaces cold and provide the ambient temperature through the shadow and evapotranspiration; help mitigate the so-called urban heat island effect and climate change”. In fact, making the city greener will also help mitigate the aforementioned “heat island” effect created by the pavement and skyscrapers, which absorb and radiate solar radiation and increase the temperature of Singapore’s urban core.

Adrian Loo said, however, that for the One Million Trees project to be effective, everyone must be involved: “The success of the project is also measured by our ability to instill a sense of respect among Singaporeans, towards trees and the environment”. The government agency Clean and Green Singapore (CGS) aims to inspire city dwellers to care for and protect common spaces and the environment, adopting a clean and sustainable lifestyle.

However, Singapore is not the only ASEAN country to carry out projects of this type: environmental education is in fact an important pillar in the cooperation of member countries. An example of this is the ASEAN Eco-school program, which aims to create a school culture oriented towards the protection and conservation of the environment through the management, commitment and cleanliness of the territory. These activities are dedicated to education, facilitating and inspiring school communities to protect and support the environment, both in schools and at home, but also in the community and within the state in general. Currently, several ASEAN member states have already adopted the eco-school program including Cambodia, Indonesia, Malaysia, Philippines and Thailand.

To date, ASEAN countries face an enormous challenge in maintaining a delicate balance between environmental sustainability and economic development as despite the abundance of natural resources, rapid population growth and even faster economic and industrial growth risk threatening natural resources causing serious environmental problems. However, ASEAN has recognized the need for a major change of direction towards a greater balance between people, planet earth and profit for proper sustainable development.

This transformation will require a change in the way of thinking and acting of the new generations of Southeast Asia who must be educated to safeguard green spaces and give weight to sustainability and the environment, also exploiting the opportunities of digital transformation. 

Singapore home of the 2021 World Economic Forum

The city-state will host the World Economic Forum this year given the still uncertain Covid-19 situation in Europe

The annual meeting of the world’s leading decision makers will be held in Singapore from May 13th-16th, and will feature heads of state and government, CEOs, civil society leaders, global media and youth leaders from seven continents. “A global leadership summit is vital to address how we can bounce back together. The World Economic Forum 2021 will be the moment in which leaders from business, politics and civil society will meet in person for the first time since the pandemic began. Public-private cooperation is more necessary than ever to rebuild trust and address the challenges that emerged in 2020”, said WEF founder and executive chairman Klaus Schwab.

In fact, the event will be attended by many academics, world leaders in politics and business to discuss the most urgent issues of the moment. The aim is to focus on the objectives to be achieved, including sustainable development, and to discuss topics such as technology and commercial governance.

The WEF’s decision to hold its annual meeting in Singapore reflects the trust the city-state has gained through its handling of the Covid-19 pandemic; unlike previous editions, in fact, the 2021 meeting will not be held in the Swiss town of Davos. “After careful consideration, and in light of the current situation regarding Covid-19 cases, it was decided that Singapore was in the best position to host the meeting”, a WEF spokesperson said.

The city-state has in fact kept the virus under control with strict measures such as the implementation of a partial block for two months, the obligation to wear a mask and the limitation of social meetings. This has allowed the economy to gradually reopen from mid-June, with daily cases in the community dwindling to minimal or even zero, while most of the new cases are imported.

In fact, despite the economic impact of the pandemic, Singapore managed to attract foreign investment worth $13 billion in the first four months of 2020, said Chan Chun Sing, stating that these investments come from the electronics and technology sectors. Companies that have invested in the city-state include electronics company Micron, e-commerce platforms Lazada and Shopee, and manufacturing company Thermo Fisher Scientific.

Companies like Twitter, Tencent, Zoom, Snap and Rakuten Mobile have also expanded to Singapore in the midst of the global pandemic, but the city-state is no stranger to frequent investments by tech companies as it hosts 80 of the 100 most innovative in the world. The main factor behind these companies to expand into Southeast Asia is the presence of approximately 650 million people, more than half of whom are under the age of 30. Other reasons are also the rapid digitization of ASEAN, the burgeoning middle class, rapid urbanization and industrialization, and the effects of Covid-19 which are increasing demand in sectors such as e-commerce and robotics.

For this reason, many international companies are looking for a hub within ASEAN where it is easy to do business and which contains a dense ecosystem of customers, suppliers and partners. Companies already based in Asia have also chosen to establish a presence in Singapore, such as the Chinese tech giant, Tencent Holdings, which announced in September 2020 that it had chosen Singapore to support its expansion into ASEAN.

Singapore’s global leadership in the digital sector is the result of years of active government-supported technology initiatives. These were also joined by private initiatives such as that of Google, which launched the Skills Ignition SG in July 2020 with the aim of training participants in works related to digital marketing and cloud technology. The rates of the training programs and the monthly salary of the participants are covered by the government of Singapore which, by supporting the technology industry in setting up such initiatives, can ensure that attractive companies have access to competent technicians ready to support their needs in the city-state.

Digitization will therefore have a very significant impact on the labor market, and Singapore, as the financial hub of Southeast Asia, will benefit from the growth and economic transformation of post Covid-19 Asia. To maintain this status, however, it will need to continue to be the global and regional headquarters of financial institutions, attracting highly skilled technicians, hiring responsibly in every professional sector and distributing the benefits among Singaporeans, while also valuing local talent.

Singapore bets on cryptocurrencies

How Singapore is becoming the new Asian capital of digital currencies 

At the end of October, one of Southeast Asia's largest banks, BDS Bank of Singapore, accidentally posted information concerning the imminent launch of their cryptocurrency exchange. Despite being deleted, a Twitter user managed to take a screenshot. The exchange would support the Singapore, American and Hong Kong Dollars and the Japanese Yen alongside some of the main cryptocurrencies. The platform would also include tokenization services for securities and assets, and custodian services for cryptocurrencies and tokens. However, the exchange is still under development and awaiting for regulators’ approval. The news confirm not only the interest of Singapore for the digital transformation of finance but also the recognition by traditional banks of the growing potential of cryptocurrencies.

Several industry leaders have already opened their offices in Singapore, such as Binance (a leading trading platform), Wirex (a payments platform) and Coinbase (cryptocurrencies exchange). And 91 new start-ups have been established in the small city-state in 2020, for a total of 234 new entities in this industry. Some of these are involved in projects with Mastercard, Visa, Alibaba, Tencent and Facebook.

In the broader Asia-Pacific, the first countries that adopted the cryptocurrencies were Japan, China and South Korea, despite in some cases either limiting or banding their usage. Singapore opted for a different approach. The Monetary Authority of Singapore (MAS) – the local Central Bank and regulatory authority – has proactively monitored the evolution of these technologies and businesses. It first advised consumers and investors on the risks involved in these kind of investments. In some instances it directly intervened by asking to return the funds to investors of a Singapore based ICO or by sending warnings to cryptocurrencies exchanges that did not properly inform local authorities on their activities.

The purpose of these actions was not aimed at disrupting or prohibiting these new businesses but rather to monitor this new industry in order to develop an adequate regulatory framework. In 2017 a Guide to Digital Token Offerings was issued and in 2019 a more detailed regulation, in effect as of January 2020, the Payment Services Act, was developed. This law regulates digital payment services, including cryptocurrency exchanges in Singapore. As a consequence, entities that operate in the crypto space need to register and obtain a license in order to do business in Singapore.

Having a clear regulatory environment in this new industry will allow Singapore to maintain its current international financial center status as well as take advantage of these new technologies and investment opportunities. In the meantime, many jobs opportunities have already been created. 

The government of Singapore is also interested in these new technologies for other reasons. Blockchain technologies are not limited to the financial space. The way information is organized and stored grants a very high degree of security. It allows to create what one could call a “digital authentic”. Its applications are therefore not limited to the monetary, but they can be extended to other fields such as the public administration, register office management and other public services.

MAS has recently announced it shall grant 180 million USD in the next three years to the financial sector. These funds shall be aimed at Fintech and financial digitation projects, including artificial intelligence for financial services. With the National University of Singapore and the National Research Foundation, MAS has also established the Asian Institute of Digital Finance which aims at promoting and coordinating innovation between universities, research institutions and businesses in order to promote projects ranging from Fintech, blockchain, digital financial platforms up to next generation financial services on 5G networks. It’s starting its operations by the end of this year.

It seems that Singapore is setting up the basis to become a hub of technological innovation in the digitization of finance. The idea is to promote public and private synergies to cultivate the digital financial environment of Singapore, and this strategy may very well lead to a successful outcome.  

By Luca Annone

Innovation and Renewal in Singapore

In the current global context, the future of the Singapore model will depend on its ability to harness new technology and its own capacity for change  

The extraordinary transformation of Singapore from small trading post of the British Empire into vibrant centre of the nascent global economy is a source of pride for Singaporeans and a matter of interest for the rest of the world. At the time of its expulsion from the Federation of Malaysia in 1965, the ‘City of the Lion’ was a small island at the far end of the Malay peninsula, without natural resources, leave aside its strategic geographical position and the still unexplored potential of a young and diverse population (mostly made up of Chinese migrants). Yet, in the two decades immediately after independence, the Singaporean economy grew every year at an average rate of 8.5% and the fledgling city-state went from third world to first in just one generation. 

Several experts and scholars have tried to identify the secret of Singapore's success: geographic location or demographic structure; cultural identity or political regime; all very important factors but perhaps not the decisive ones. "The simple answer - according to former Singaporean diplomat Kishore Mahbubani - is extraordinary leadership." A ruling class educated in the best universities in the United Kingdom and returned to Singapore with the ambition of putting traditional British pragmatism at the service of the nascent national sentiment. Lee Kuan Yew himself, founding father and Prime Minister of Singapore, the man who ruled the city-state directly and indirectly for over 50 years, argued that the success of the Singapore model stemmed from its ability to respond effectively to new situations.

Indeed, Singapore's grandiose development might not have been possible if its leaders had not been driven by an abiding faith in technological innovation and a firm belief that economic success also depends on the ability to innovate and renew oneself. It is also due to this 'faith' that a city-state known all over the world as a commercial and financial hub never wanted to renounce to its manufacturing sector. Manufacturing, a major growth engine in the 1960s, has undergone a major technological transformation and it represents today a high added value sector worth around 20% of GDP. Meg Whitman, CEO of Hewlett Packard Enterprise, one of many big companies which have decided to bet on Singapore, has dubbed the city-state a miniature Silicon Valley. Very recent news seem to confirm this view: forced out from the Great America of Donald Trump, Chinese tech companies ByteDance and Tencent have decided to throw in their lot with Singapore and invest several billion dollars in the ‘Little Red Dot’.

For many years now Singapore has ranked in the top spots of the Global Competitiveness Index and the Ease of Doing Business Index, just to name two of countless global indicators celebrating the city-state as one of the best places in the world for doing business. The result is partly ascribable to its advanced financial and judicial system, but cutting-edge physical and digital infrastructures also play a role. It is precisely on the latter that the government wants to focus to overcome the Covid-19 crisis, which is dragging the city-state into the worst economic recession since 1965. Singapore, in the words of Prime Minister Lee Hsien Loong, must prepare for "a very different future," one which, according to a senior official, will be made of "bits and bytes, submarine cables and data", not just cargo and containers.

The cabinet had been working on it for some time: Covid-19 made it necessary to accelerate. In fact, already a year ago, the Enterprise Development Board, the government agency that guides the country's industrial development, presented to potential foreign investors some of the early achievements: the highest concentration of submarine cables in the world, the fastest broadband connection and a mobile penetration rate of 159%. The Digital Readiness Index 2019, an indicator developed by Cisco to identify the countries which are best prepared to accept the challenges of digitization, placed Singapore in the first place. Thanks to the growing tension between the United States and China and the exasperation of the situation in Hong Kong, even large multinationals of the likes of Amazon and Alibaba could not resist the call.

Five years ago, Kishore Mahbubani, in a book with a very suggestive title, "Can Singapore Survive?", singled out three major perils that the city-state would have to face in the years to come: a challenge from populist politics, the geopolitical clash between the United States and China , and a 'Black Swan', an extremely rare and hardy predictable event that would have put the Singapore model into question. The prophecy may have come true in 2020, at least with regards to its international dimension. After an initial moment of loss, Singapore seems coming to his senses: a city-state connected to the world, albeit through new digital ways, without giving up on the ambition to be everyone's friend and nobody's enemy. The faith in innovation which made possible Singapore’s astounding growth could now allow its survival.

By Francesco Brusaporco

Singapore and the Covid-19 emergency

Singapore’s experience with the virus reveals the complexity of the pandemic and the importance of a cautious approach to its management.

On June 25th the Italy-ASEAN Association organized a webinar on Singapore and its response to the pandemic with the Italian Ambassador in Singapore, Raffaele Langella and the President of the Singapore Institute of International Affairs, Simon Tay. 

When Singapore confirmed the first case of Covid-19 on January 23rd, the government rapidly implemented effective measures that contributed to contain the virus and significantly limit the number of infected people. Subsequently, between February and March, Singapore experienced a second moderate wave of contagion, attributable to flows of Singaporeans repatriated from abroad. Until the beginning of April, Singapore had less than 1000 cases and only 3 deaths due to the virus. However, in April, Singapore was hit by a third wave of Covid-19. This time the vast majority of cases occurred among the more than 300,000 migrant workers living in large dorms at the outskirts of the city, and the number of infections increased rapidly within a few weeks. As a result of this new surge, the Singaporean government was forced to impose more restrictive measures on the movement of citizens. Since 7 April, Singaporean citizens have had to comply with preventive measures called circuit breakers, which include the closure of all non-essential activities and the obligation to respect social distancing measures.circuit breaker​, che prevedono la chiusura di tutte le attività non essenziali e l’obbligo di rispettare il distanziamento sociale. 

In economic terms, Singapore's GDP is expected to fall by between -7% and -4% this year. Therefore, the government has responded with a significant increase in public spending, through four economic stimulus packages to support the economy, amounting to about 19% of Singapore's GDP. The intervention aims at supporting families, businesses and workers with measures such as subsidies, moratoria, tax deductions and favorable financing conditions for the most affected sectors (in particular tourism and aviation).  

The evolution of the health emergency in Singapore has shown both strengths and weaknesses of the city-state. Technological infrastructures and high level scientific research have enabled the government to respond effectively to the first cases of coronavirus in the country, revealing a certain scientific reactivity. This has allowed many economic activities to continue despite the pandemic, reducing the impact of the virus on the productive fabric of the country. However, the pandemic also showed some weaknesses of Singapore’s country system. As a commercial and financial hub, its dependence on regional and global interconnections has weighed and will weigh heavily on the government's ability to revive the country. Air and naval traffic has dropped dramatically, and this threatens to create serious problems for Singapore's economy. Moreover, the case of the immigrant workers has revealed one of the few weak points of the city-state: a direct dependence on foreign labor that is fundamental for the effective functioning of a smart-city like Singapore. 

It will be crucial for Singapore to reopen its economic system to international trade as soon as possible, in order to intercept new trends and strengthen the global dimension of the Singaporean economy.

Article edited by Tullio Ambrosone