SINGAPORE The banking sector of Singapore must embrace fintech and other innovations as the financial industry changes due to disruptive forces, said Heng Swee Keat, the city-state's minister of finance and the chair of the Future Economy Council. In a recent interview with the Nikkei Asian Review, Heng also said China's economic growth and its Belt and Road Initiative could help Singapore's position as a financial hub with increased yuan- and infrastructure-related financial products.
When it comes to innovation in the finance industry, fintech seems to be the buzzword. How is Singapore riding this wave? The fintech industry is developing in Singapore, [with over] 400 startups. The Monetary Authority of Singapore, as a regulator, has been facilitating this. All three local banks have been active [in this field]. To make sure the banks manage risk properly, we have a strict policy that banks should not do non-bank businesses. But today, the line between banking and commercial activities is no longer clear-cut. We want to give the banks some flexibility to get into new areas and to partner with key people. We want to encourage innovation.
How does this fit into Singapore's overall policy to transform the nation's industry and keep its economy up to date? Fifteen years ago, we started to emphasize research. The next phase is to talk about innovation and enterprise. How do we turn the research results into useful products and services? Our entrepreneurs must develop a deep understanding of what the market needs are.
A very important aspect of our industry transformation map is for all of us to bring [together] management, unions, workers, research bodies and government agencies. If we want to introduce technology, how should we train our workers differently? Each sector has its own challenges and opportunities, and the more we can work out a plan and cooperate, the more we can build new capabilities.
What is the implication of China's rapid economic growth on Singapore's economy and its position as a financial hub? Internationalization of the renminbi (yuan) is progressing. Because we are a major foreign exchange trading center, we are the largest offshore RMB market outside of greater China. We also have specific linkages to cities like Suzhou and Chongqing for RMB-related work, so I think it will progress as Chinese firms start to internationalize.
China is developing the One Belt One Road [initiative]. For good infrastructure projects, you must have good services -- the engineering capability, the structuring and financing. We need people with banking and project financing experience.
In Singapore, we have real estate investment trusts so that real estate can be put into the public market. I think it is possible for us to have an infrastructure trust, where the infrastructure can be put on the stock exchange, or bonds can be issued and banks can sell the projects, loans and structure and the bonds can pay interest. It will be very helpful for insurance companies and pension funds. We have to be creative.
What will be the role of state investment company Temasek Holdings? I must share an interesting story with you about Lee Kuan Yew. His instruction to Singapore Airlines [was that] if he was ever late, the plane was to take off without him, even though he was the prime minister. He saw in many developing countries, the prime minister was so powerful that the plane could not take off [without them], and hundreds of passengers would be affected.
He wanted to make the point that regardless of whether you are owned privately or the government has a significant share, there should be no political interference in how the company is run. In the same way, even though we are a shareholder of Temasek, we do not interfere in commercial decisions of Temasek. The board and management are responsible for making those decisions and they have to operate commercially. Government agencies do not interfere in the decision, so that we can hold them accountable.
Do you have any thoughts about what qualities Singapore's next generation of leaders should have? The core values of the leadership have not changed. When you are in public office, you are doing it to serve the public. Never abusing power, no corruption, [making] a clean government -- these are very key parts of the success of Singapore. Whatever we do, it is not power for power's sake [but to] serve our people. And we have to be forward-looking. The world is changing faster than before. Our ability to anticipate the changes and proactively take measures early to prepare [is] very important.
Interviewed byNikkei staff writersTakashi Nakano and Mayuko Tani