Singapore's Leadership Position in Southeast Asia

Mrs Lina Chiam asked the Prime Minister what plans are in place to ensure that Singapore retains its leadership position in Southeast Asia in terms of (i) stock trading volume; and (ii) scores in business activity and the economic value of employee skillsets.

The Singapore Exchange (SGX) has done well to help our companies raise capital and investors to buy and trade securities in a well-functioning market. SGX continues to be the largest stock exchange in Southeast Asia with a market capitalisation of US$744 billion (S$940 billion) at the end of 2013, a 38% increase from end-2007. The trading volume at SGX for 2013 stood at US$279 billion – up 10% since end-2008 but still about 27% lower than pre-crisis levels at end-2007.1 This puts Singapore in second place for the Southeast Asia region behind Thailand, which has grown rapidly over the last five years.

We must ensure that SGX continues to be soundly regulated, facilitates fair, orderly and transparent trading, and is well-positioned for growth. MAS has been working closely with SGX on four key initiatives to develop the securities market (a) strengthen market rules and practices; (b) enhance regional integration and market infrastructure; (c) boost trading liquidity; and (d) open up new sources of growth.

First, with regard to market rules and practices, MAS and SGX issued a joint consultation paper in February 2014 containing several proposals to (a) promote orderly trading and responsible investing; (b) improve transparency of market intervention measures; and (c) strengthen the process for admitting new listings and enforcing against listing rule breaches. MAS and SGX are currently studying the feedback received during the consultation.

Second, with regard to regional integration and markets infrastructure, Singapore is working closely with other ASEAN regulators and exchanges to promote cross-border collaboration and integrate our capital markets. In 2012, the stock exchanges of Thailand, Malaysia, and Singapore launched the ASEAN Trading Link, which allows investors in these countries to trade securities in one another's markets through a single trading account. Earlier this year, ASEAN Finance Ministers' Meeting set up a task force to look at strengthening trading and post-trade linkages amongst the exchanges, building on the ASEAN Trading Link.

Page: 85

Third, SGX recently announced new incentives to boost liquidity on the exchange, including reducing clearing fees by about 20% from 1 June 2014, which will benefit retail investors. Transfers and onward settlement fees will also be revised to encourage stocks to be traded via the exchange, thereby increasing transparency and liquidity.

Fourth, to position itself for new sources of growth, SGX recently signed a direct listing framework agreement with the Chinese Securities Regulatory Commission that facilitates the direct listing in Singapore of Chinese companies that meet Singapore’s regulatory and governance standards.

SGX recently launched six Asian foreign exchange futures contracts and plans to launch RMB futures in the second half of 2014 alongside other currencies. In addition, it will launch nine commodity derivative contracts over the next two months subject to approval. SGX is also looking at enhancing its post-trade capabilities. It has recently announced a collaboration with Clearstream, an international securities depository, to develop services which would help SGX members better allocate their collateral resources.

Mrs Chiam also asked about maintaining Singapore's edge in scores in business activity and the economic value of employee skillsets. Singapore's strong performance in international competitiveness and business perception surveys, such as the 2014 IMD World Competitiveness Survey, attests to the fundamentals that have been built up over the years: an open and business-friendly environment; good governance; a hard-working and skilled people; a sound infrastructure; and the willingness to keep improving in each of these areas. These factors have made Singapore an attractive place for multinational and local companies to invest in and operate from.

We continue to support our companies' efforts to build new capabilities and help Singaporeans develop higher skills and expertise needed for the future. Besides formal training by the educational institutes, the Government is also working with companies to develop their employees through on-the-job training, internship programmes, as well as leadership development programmes. We are also supporting our companies' efforts to capitalise on growth opportunities overseas through our network of Free Trade Agreements with other countries. These initiatives have been set out during the Budget and Committee of Supply debates. They will enable Singapore to maintain its position as a vibrant business hub in Asia and enable workers' incomes to improve further.

Page: 86