The government has focused on continually developing Singapore as a regional and international financial centre, offering financial institutions (FIs) and Fintechs a pro-business environment, excellent infrastructure, international connectivity, as well as a highly skilled labour force. In addition, its free market and legal and political stability ensure a competitive, safe and secure jurisdiction for foreign investment.
This year, Singapore’s economy was ranked the freest in the world by Heritage Foundation’s 2021 Index of Economic Freedom, having been noted for its rule of law, regulatory efficiency, and open markets.[i] Its central bank, the Monetary Authority of Singapore (MAS) balances the twin aims of encouraging innovation and investment, and ensuring financial systems remain stable with high levels of investor confidence.
In recent years, a key area of focus has been the development of Singapore’s asset management industry. Assets under management in the Asia Pacific region are projected to grow faster than any other region globally, from US$15 trillion in 2017 to almost US$30 trillion in 2025.[ii] A large part of this is driven by conventional growth in the asset management industry. However, a potentially exciting trend appears to be around shaping the nascent development of funds focused on investing in crypto-assets, and the potential use of fund structures to tokenise a wide range of assets for trading on the blockchain.
In spite of the pandemic, or perhaps because of it, Singapore is well-positioned for growth, driven by a growing middle class with increasing wealth pools and its investor-friendly financial industry.
Clear And Balanced Financial Regulatory Aims
Several key trends and regulatory developments have been identified as contributing to the growth of Singapore as a financial and asset management hub.
Trends in asset management
The asset management industry in Singapore has come a long way since its inception in the early days. However, to ride the growth momentum in Asia, Singapore is not resting on its laurels. A pragmatic regulatory approach, coupled with bold and innovative private endeavours, mean that Singapore continues to find ways to grow and innovate in its fund offerings to investors:
Regulatory and other developments
In early 2020, as part of their response to COVID-19, the MAS announced it would defer implementation of new regulatory policies and guidelines, aiming to reduce strain on FIs’ resources. Since then, regulatory developments have seen a resurgence. A few key themes can be noted – in particular, the developments aim to ease the entry of foreign asset managers into Singapore and ensure the stability of the financial system and continued investor confidence. These include the following developments:
COVID-19 Recovery And Future Economic Priorities
Last year, the world went on ‘pause’ as it battled the COVID-19 pandemic. As a result, Singapore’s economy shrank by 5.4 per cent,[iv] the nation’s worst-ever recession since its independence in 1965. Several COVID-19 economic support packages have been rolled out by the government, including the MAS’ S$125million support package for the financial and fintech sectors to sustain and strengthen capabilities. The funds were focused on workforce training, digitalisation, and increasing access to digital platforms.[v]
In February this year, the Singapore government also announced its annual Budget, including S$24bn of funding to be allocated over the next three years. The pledge will go towards building a more vibrant business sector and innovation ecosystem, helping businesses to transform and scale up their operations, and creating opportunities for workers (e.g. upskilling, digital skills). Heng Swee Keat, Singapore’s Deputy Prime Minister, has said, “Singapore must deepen its position as a global-Asia node to emerge stronger from the COVID-19 crisis”.[vi] In practice, this is expected to involve working to restore Singapore’s physical connectivity with the rest of the world, expand its digital connectivity, and deepen its capacity to collaborate and innovate with global partners.
Going forward, Singapore’s financial and asset management industry is expected to continue growing. Most recently, Goldman Sachs announced its plans to add about 100 staff in Singapore. The new positions will mainly be in technology, supporting the bank’s cash management operations. The firm also plans to hire more investment bankers. E.G. Morse, head of Goldman Sachs’ regional operations, said on the Singapore expansion, “We are looking to really grow our franchise here across all products. [Singapore is] a significant and major client hub from banking clients to asset managers”.[vii]
The Ministry of Trade and Industry has predicted that Singapore’s economy will grow by 4-6 per cent in 2021, expecting to see a “gradual recovery over the course of the year, although the outlook remains uneven across sectors”. In particular, “the information and communications, and finance and insurance sectors are expected to continue to post steady growth, supported by sustained enterprise demand for IT and digital solutions, and credit and payment processing services respectively”.[viii] As also reflected in this year’s Budget – digitalisation, competition, and innovation are expected to be key areas of focus in ensuring Singapore’s continued economic growth and stability.
Peiying is widely regarded as a leading financial regulatory lawyer, advising clients in Singapore and internationally on all issues associated with financial regulation. She leads Linklaters’ Singapore financial regulatory practice, and advises the full spectrum of financial institutions, as well as technology and other companies expanding into the fintech sector, on various issues including: licensing and structuring; compliance with regulatory rules; corporate M&A in the financial services sector; regulatory change projects; and regulatory investigations. Peiying is an active participant in industry discussion on fintech and in lobbying authorities on regulatory reform, including representing the Singapore Fintech Association on various submissions to the MAS including the new Payment Services Act. She has advised on various innovative fintech initiatives, such as Asia-based digital securities offerings and partnership arrangements between banks and fintech firms.
Selwyn is a Singapore-qualified lawyer with expertise advising on all aspects of corporate, commercial and regulatory practice. Selwyn has extensive experience advising financial institutions on corporate transactions (including mergers and acquisitions, bancassurance transactions, joint ventures and restructurings) and regulatory and compliance matters, with a specialisation in regulatory issues within the financial services, fintech, and payments industry.
Melissa is a Trainee Solicitor at Linklaters, Singapore. She studied law at Durham University in the UK.