China’s push to internationalise the yuan and promote connectivity through infrastructure building in the region are potentially big wins for Singapore in its role as an Asian financial centre, said Mr Wee Ee Cheong, chief executive (CEO) of UOB Group.
The city state’s strong regulatory system should be used to attract more funds to bolster its position in the area of financing, he said at a press conference in Beijing yesterday where the bank outlined some of its new services to help firms take advantage of the increasing use of the yuan for global trade.
“If Vietnam or Myanmar wants to develop and build long-term infrastructure, where can they find the capital? They will look to Singapore or Hong Kong for financing,” Mr Wee said.
“If Singapore can play this role well, it will be very good for the country, and also of course good for the bank,” he added.
First proposed in 2013, Chinese President Xi Jinping’s “One Belt, One Road” initiative is meant to spur economic development along the overland Silk Road economic belt and a maritime Silk Road that connects China with South-east Asia, Africa and Europe.
Infrastructure building, which is often capital-intensive, is a key part of the strategy – and one that Singapore seems to be readying itself for as it strengthens its role as a financial hub.
The Singapore Savings Bonds, a new type of government bond expected to be launched this year, for instance, are a start in attracting funds to Singapore, Mr Wee said.
“You can’t be a financial or private banking centre without funds.
“Many financial products are overseas products that channel funds back to the US and Europe so it is important to create and offer products that can attract funds (to Singapore),” he said.
Yesterday, UOB China’s CEO Lian Wenhui touched on the pace of financial reforms in China that are meant to let the market play a more decisive role in the economy as it transitions to a “new normal” of slower but better-quality growth.
He said the world’s No. 2 economy has “done well” in the Shanghai free trade zone with the implementation, for the first time, of a foreign investment negative list – that is, investments are allowed in all sectors except those listed. This is significant as it signals a shift in mindset.
While he hoped that Beijing would be bolder in its pace and extent of reforms, Mr Lian acknowledged the complexity and risks that must be taken into account.
“It cannot be a one-size-fits-all type of policy change since China is a big country. But incrementally, reforms are happening and businesses, especially banks, have benefited greatly,” he said.
This article was first published on June 18, 2015.
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