ECHOES OF SINGAPORE’S SUCCESS

Fazmina Imamudeen believes that we can learn lessons from the city-state

As Sri Lanka sets its sights on a brighter economic future, it finds itself at a crossroads with much to gain from the wisdom of the Southeast Asian city-state – Singapore.

In the inspiring memoirs of Lee Kuan Yew, the founding father of Singapore, lies a gem of insight: “If I were to choose one word to explain why Singapore succeeded, it is confidence.” This confidence, he noted, was the powerful magnet that drew foreign investors to its shores, sparking an economic miracle.

But this confidence didn’t sprout from thin air; it was nurtured by predictability – consistent policies and actions, rather than inconsistent and arbitrary decision making.

Sri Lanka, with its own aspirations of economic prosperity, can take a leaf from Singapore’s playbook. The key lies in building strong institutions and systematic frameworks rather than pinning one’s hopes on personality driven governance.

A shift toward fiscal and monetary regulations that prioritise balance and stability can fortify Sri Lanka’s macroeconomic foundations. Likewise, a steadfast commitment to upholding the rule of law will set the stage for an inviting investment climate.

Singapore, which was once resource poor and unassuming, has transformed itself into a financial powerhouse. At the heart of Singapore’s success lies its know-how in managing public assets and wealth, marked by a clear separation of policy objectives from commercial interests.

In the world of finance and wealth management, its ascent to global prominence is noth­ing short of remarkable.

One of the fundamental principles that Singapore practises is the separation of wealth management from policy-making. This process has been in place for decades, and is reflected in the establishment of institutions such as the government debt management office and central bank, which oversee critical financial operations independently.

The separation ensures that the management of public assets remains focussed on value maximisation rather than being influenced by short-term political considerations.

Sri Lanka can take a cue from Singapore’s distinction between the two types of funds – i.e. sovereign wealth funds (SWFs) and public wealth funds (PWFs).

SWFs like the Government of Singapore Investment Corporation (GIC) primarily handle reserve funds and invest in well-established markets. On the other hand, PWFs concentrate on managing active assets such as airports, ports, utilities and real estate with the goal of maximising their value.

This entails establishing independent financial institutions, emphasising long-term value over short-term political gain and setting up a dedicated public wealth fund to manage commercial assets. The creation of a PWF in Sri Lanka will enable more proactive management of these public commercial assets. And this will ultimately boost productivity and ensure fiscal stability for the country.

Such a strategy can enhance economic stability, promote transparency and attract private sector expertise. By implementing this separation, Sri Lanka will be able to avoid political interference, and foster an environment that’s conducive to sustainable economic growth and prosperity.

As retail banking and wealth management expert Anurag Mathur points out, “Singapore’s ability to attract global businesses, and its rich ecosystem of services and capabilities to support wealth managers, makes it an important financial hub for global banks.”

Singapore’s ascent as a global financial powerhouse is underscored by impressive growth in its asset management sector. In 2021, the city-state witnessed a record-breaking 16 percent surge in total assets under management, reaching an astounding 5.4 trillion Singaporean Dollars.

This exceptional growth was largely driven by the flourishing alternatives sector, which encompasses private equity, venture capital, hedge funds, real estate and related investment trusts.

Of particular note is the exponential year on year growth within the alternatives sector. Private equity and venture capital assets under management in Singapore experienced astounding growth rates of 42 percent and 48 percent respectively.

Furthermore, the number of licensed and registered fund management firms in Singapore surged by 15 percent, underscoring the city’s undeniable appeal to businesses and investors.

In this defining moment, Sri Lanka has the opportunity to embrace transformation and seize its rightful place among the champions of economic greatness. Just as Singapore’s confidence became the magnet for success, Sri Lanka’s commitment to transparency and governance can attract the investments and prosperity it deserves.

The echoes of Singapore’s triumphs should serve as a clarion call for Sri Lanka to embark on a journey of economic resurgence.