SINGAPORE AS ONE OF THREE FINANCIAL CENTRES IN THE WORLD

Abstract

When we think of International Financial Centres (IFCs) in the world, London and New York would the first two that come to mind. Having a reputable financial centre is highly beneficial to the domestic economy. As a result, many financial centres are fighting for the much-coveted placing as the third IFC after London and New York. In Singapore, the financial sector accounts for nearly 27% of our GDP. In addition, the Singapore government has always taken a focused and concerted approach to the development of Singapore as an IFC. In this study, we want to gauge Singapore's present and future prospects to become the third IFC in the world, after London and New York. It is noted that in most studies conducted on IFCs, the focus tends to be exclusively on the performance of the financial markets. I feel that many other factors are of equal importance to the formation of IFCs and thus, this exercise attempts to give a fair amount of attention to these factors. The environmental factors and product factors form the criteria by which to measure the financial centres. Singapore is compared to her closest competitors: Tokyo and Hong Kong. After assessing the relative performances of these three financial centres, the conclusion is that Tokyo is presently ahead of Singapore in terms of financial prowess. Thus, Singapore will not be able to become the third IFC after London and New York as yet. However, the potential that Singapore possesses to be an IFC should not be ignored. Below is a brief synopsis of the exercise: In Chapter 1, the concept of an IFC and a theoretical framework to explain its formation will be introduced. In addition, the approach that will be taken by this exercise will be explained. In Chapter 2, we will be looking at London and New York, their historical development and their strengths. We will be considering questions like: "What are the factors that have led to their present renowned international status?" and " What are the reasons for their continued international prominence?" In Chapter 3, an overview about the rise of Singapore as a financial centre will be given. In addition, we will look at the components of her financial sector. We want to answer the following questions: "What are the natural and competitive advantages that Singapore possesses?" and "What has been done to develop Singapore as a financial centre?" Next, in Chapters 4 and 5, we identify Singapore's closest competitors in her quest to be the third IFC. The emphasis of the study will be on Hong Kong and Tokyo. In Chapter 4, the comparison will be done on the environmental factors, while in Chapter 5, the product factors will be assessed. In Chapter 6, Singapore's position will be evaluated. We want to assess the present position of Singapore relative to established players like London and New York and to up-and-coming competitors like Hong Kong and Tokyo. Lastly, we make some conclusions regarding the present and future prospects of Singapore to be the third IFC after London and New York.