Legal) – When talking about the island nation of Singapore, many people have the same opinion that this place has a very attractive lifestyle and culture, is one of the most politically stable countries in Asia, has the least corruption in the world, has a sound legal system and a very reasonable tax policy… These factors have proven why entrepreneurs and businesses of all sizes consider Singapore a suitable place to set up their company or business.
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A corner of the financial office buildings in Marina Bay, Singapore
An international financial center based on the rule of law
The Singapore government from the beginning considered the financial services industry not simply a means to support the development of other industries, but a pillar of growth. To do this, Mr. Lee Kuan Yew used the “developmental state” approach. Accordingly, the government identified key sectors that could contribute to GDP and issued appropriate policies to support them.
As early as 1968, Singapore decided to establish the Asian Dollar Market (ADM). Together with the Asian Currency Unit (ACU) established in parallel, the ADM allowed foreign banks and financial institutions to participate in Singapore’s financial services sector. To develop the ADM and ACU, Mr. Lee introduced tax incentives and incentives.
As Singapore’s financial services sector grew increasingly complex and internationalized with the increase of domestic and foreign financial institutions, the need for a more integrated approach to managing and regulating the sector became urgent. Therefore, the Monetary Authority of Singapore was established in 1971. This agency played the dual role of central bank and financial regulator.
The Singapore Exchange (SES) was then established in 1973. The SES was further merged with the Singapore International Monetary Exchange to form the Singapore Exchange (SGX), in response to the growing diversity of Singapore’s capital markets.
The formation of MAS and SGX was an institutional response to the rapid growth of Singapore’s financial services sector during this period. In addition, the island nation established a number of other financial-related agencies, leading the country through a period of further internationalisation and diversification in the 1980s and 1990s.
“Our financial centre was built on the rule of law, with an independent judiciary and a stable, competent and clean government, one that pursued sound macroeconomic policies, and generated surplus revenues almost every year…”, wrote Mr. Lee Kuan Yew in his memoirs.
With strict regulations and close supervision, MAS has helped Singapore develop into a financial center.
Along with developing “soft” infrastructure, Singapore has also continuously invested in developing hard infrastructure for decades to meet the space needs of thousands of financial institutions gathered there.
By 2014, Singapore was the fourth largest foreign exchange center in the world and had a very high capacity for USD financing. In addition to hundreds of multinational corporations using Singapore as a regional headquarters, there are also about 4,000 Chinese companies choosing this place as a launching pad when penetrating Southeast Asia.
In the 90s, Singapore truly became one of the world’s leading financial centers with the foreign exchange market ranking fourth after London, New York and just behind Tokyo.
Today, the position of a financial center established by the late Prime Minister Lee Kuan Yew is still being continuously consolidated. The Global Financial Centres Index updated to September 2021 ranked Singapore as the fourth most influential financial centre in the world, after New York, London, and Hong Kong. Compared to the previous ranking in March 2021, Singapore’s ranking continued to increase by one place.
According to consulting firm Viettonkin Consulting, there are three key factors for Singapore to become a financial centre.
First is policy, with strict regulations and supervision that have brought confidence to investors. Support from the government is said to be very abundant, with incentives to attract more players into the financial sector and encourage the development of this sector.
Second, Singapore has a large number of financial professionals.
Third is business infrastructure. Office rents in Singapore are still lower than those of leading rival financial centres such as London, New York, Hong Kong, and Tokyo. Singapore has an efficient public transport system and advanced IT infrastructure. They are a world leader in transport infrastructure, and are also a prominent aviation hub and a busy port centre.
Least Corrupt in the World
Singapore is at the heart of an international business hub, both geographically and commercially, with the Asia-Pacific region making Singapore one of the fastest growing markets in the world. Stable Economy – The Singapore government is consistently rated as one of the most