As business leaders and bankers meet at Sibos this week to shape the future of the world’s financial industry, the venue – Singapore – could hardly be more appropriate.
As an international hub for finance and trade, Singapore has already demonstrated its ability to reinvent itself.
In the past, it was Singapore’s geographic location and trading heritage that attracted multinational companies. More recently, its strengths in commodities and renminbi (RMB) clearing have been key differentiators.
It’s no wonder Singapore is one of the preferred location for regional treasury centres, for companies headquartered in North America and Europe, as well as fast-growing Asian companies.
While some of the first companies to open regional treasury centres in Singapore were attracted by tax and business incentives, a wide range of factors now contribute to Singapore’s appeal – including its time zone, talent pool, double taxation agreements, ease of doing business, technology innovation, physical and digital infrastructure, and international connections.
While Singapore’s appeal is indisputable, others are not standing still, and the city state cannot rely on reputation and past success alone. Hong Kong and Kuala Lumpur, for example, recently announced new measures to attract regional treasury centres. It is vital for Singapore that it maintain its advantage by adapting to changing economic, technology and cultural trends.
First, Singapore needs to continue to make it easy to do business and support the international business community through good governance.
Second, while companies are attracted to the skills and expertise that exist in Singapore today, the competencies they are looking for will continue to evolve. If Singapore is not proactive in nurturing home-grown talent and attracting the best people in their field from around the world – Hong Kong, Shanghai or Kuala Lumpur may also be able to provide the concentration of skills that corporations will be seeking in the future.
"Singapore needs to develop unique competencies that will help it remain an attractive hub for investment"
Third, for Singapore to remain the foremost trading hub in Asia and more widely, it needs to develop unique competencies that will help it remain an attractive hub for investment, trading and RMB, building on its strengths in areas such as trade, commodities and technology.
In particular, Singapore’s position as an Asian hub, and therefore the centre of a trading ecosystem across Asia and beyond should not be underestimated. It needs to use this position in new ways to facilitate growth.
As a trading hub, Singapore brings together buyers and sellers across Asia and beyond, from tiny producers to the world’s largest corporations. Making it easier for these counterparties to do business will fuel growth across such this ecosystem, from producer to distributor, retailer and customer.
"Singapore is poised to become a world leader by investing in, and incubating, fledgling technology businesses"
Singapore has the potential not only to be a hub for the physical economy, but also the digital one. 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 and using its global connections to disseminate transformational technology worldwide.
Singapore will remain attractive as a regional, and increasingly global hub, if it can demonstrate that companies doing business here can achieve sustainable growth: international trade is not longer facilitated by the physical movement of goods alone, but by the joining up of increasingly complex networks of supply-chain participants. Singapore is ideally equipped to harness these changing trends and consolidate its role in this new economy.
Building for the future
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 the country’s success in encouraging and facilitating international trade and investment is very positive, but it cannot afford to be complacent.
Rather – much like the delegates from the world finance industry descending on the city state for Sibos week – Singapore needs to look at what has contributed to its success in the past, what is changing, and how it can build for the future.