CFA Society Singapore
SINGAPORE (June 23): Asia’s overall medium-term prospects are good and Singapore is strategically positioned to offer investors an excellent platform to tap into the region’s investing opportunities, says Ravi Menon, MD of the Monetary Authority of Singapore.
The republic also offers a dynamic ecosystem for investors looking towards Asian infrastructure, providing quality solutions in project advisory, project financing, and legal services, and dispute resolution.
In his keynote speech at the DBS Institutional Investor Symposium 2017 on Thursday, Menon says Asia’s economic fundamentals remain sound despite political, economic and social uncertainties.
IMF is forecasting Emerging and Developing Asia will grow by an average of 6.3% p.a. from now to 2022 while Asean economies are expected to grow by about 5% p.a., China by about 6% p.a., and India by 7-8% p.a.
“Singapore is a developed pan-Asian asset management centre with a strong pool of global and regional players,” says Menon, “Fund managers here have a deep network, are able to readily access deals, and can support Asian companies throughout their life cycle.“
Singapore’s financial centre – with more than 120 global and regional banks, a diverse ecosystem of over 650 asset managers, and extensive connectivity with the rest of Asia – offers an excellent platform to tap into these opportunities.
“Regardless of the investment approach, project structuring is critical in bringing to fruition infrastructure projects,” says Menon.
MAS is also taking steps to deepen Singapore’s VC and PE ecosystem and enhance the operating environment for VC and PE managers.
“We will start with simplifying the regulatory framework for VC managers in the next few months. This will facilitate faster time-to-market for VC managers, and promote financing for enterprise development,” says Menon, “we are also working with government agencies, universities and industry players to explore industry-wide talent development programmes for VC and PE managers.”
Meanwhile, there has a growing suite of opportunities in bankable infrastructure projects. Investors with strong in-house infrastructure expertise can engage in direct investments in green-field projects, says Menon. This can be done alongside multilaterals and commercial banks while others can tap on established fund managers focused on Asian infrastructure.
According to Menon, three factors will drive investment opportunities in the region. These are a growing middle class and rapid urban migration, sustained investments to build up physical and human capital, as well as growing economic integration within the region.
By 2030, about 1 billion people across China, India and Asean will be in the middle-income bracket.
“This is more than a threefold increase from today, and presents significant potential for growth in private consumption,” says Menon.
Secondly, there will be sustained investments to build up physical and human capital by countries in the region.
China’s fixed asset investment in education and infrastructure has expanded rapidly, growing by about 20% annually since 2009. Indonesia, Thailand and the Philippines have also ramped up development spending to address infrastructure deficits while Vietnam has been making heavy investments in education, at almost 20% of total public expenditure.
Third, there will be growing economic integration within the region. Asia already has extensive cross-border production networks, particularly in the electronics and automobile industries. And as new projects gain traction, there will be increased regional flows of trade, capital, and people in the next five to 10 years.
Finally, there is a new source of untapped potential – the CLMV countries: Cambodia, Laos, Myanmar and Vietnam.
“[The CLMV countries] are increasingly plugged into the global economy and regional supply chains, participating as downstream manufacturers in regional production networks… To be sure, Asian economies will continue to be subject to the political, economic and social uncertainties that characterise emerging markets. But the region’s fundamentals are sound,” says Menon.