Singapore is ideally positioned from a strategic, economic and cultural standpoint to play an important part in OBOR. With its leading position as a global financial centre – the world’s second largest wealth management centre, third largest financial market and a thriving commodities hub, Singapore could play a vital role in OBOR. Its strategic location makes it an ideal Asian infrastructure hub with a strong cluster of companies in the infrastructure development space.
Singapore boasts some of the best trade and related services infrastructure for overseas business operations in the world. OBOR envisions the use of the yuan as an international currency for business transactions, particularly in the Central Asia region, where exchange rate flux has led to high hedging costs for transactions in their own currency. As the second largest foreign offshore centre for Chinese yuan (RMB)with well-cultivated business links to China, the Monetary Authority of Singapore has been quick to sell the country as a ‘Regional Gateway for RMB where Singapore-incorporated institutions have unprecedented access to RMB liquidity, enhanced trade settlement and centralised financial solutions. While the initiative is chiefly targeted at the ASEAN region, there is also an opportunity for Singapore to ride on a wave of OBOR-backed investment and development to penetrate Central Asia’s gradually liberalising financial markets.
Singapore is set to benefit from OBOR as it will become the single biggest economic development exercise in history. A unique sweet spot for intermediating capital and trade flows linked to OBOR as Singapore hosts many financial institutions and specialists with the expertise to undertake infrastructure project structuring and financing. They are in a strong position to complement and augment the funding being provided by multilateral organisations like the AIIB.
Singapore companies have also developed niche expertise across the infrastructure value chain such as in master-planning, engineering, design, procurement, construction and operations. Singapore companies can provide a proven international track record and market knowledge to complement the Chinese companies spearheading the envisaged infrastructure projects. Given the complex geopolitical dimensions to OBOR, Singapore can also put its strong credentials as an impartial intermediary to use. In a world of changing international alliances, Singapore is ideally suited to play the role of honest broker, using its reputation for clean, efficient and corruption-free governance to ensure that these same standards of transparency and accountability are engendered within the initiative.
OBOR connects businesses and people around the world at reduced costs, this is a natural desire of economies craving a better tomorrow, particularly for an increasingly integrated Asia. Intra-regional trade in Asia has surged in recent years to levels comparable with the Eurozone economies. Furthermore, high-level cross-border investments reflect the integration of complementary production capabilities and resources to serve both traditional Western consumers and surging Asian consumption.
Asia accounts for 60 per cent of the world’s growth and to sustain this, Singapore must identify and capture cross-country synergies and stimulate innovation. Achieving this requires economic openness and good physical infrastructure which strengthens connectivity.
OBOR’s benefits are clear. In the long run, it promises a rosy outlook: affordable connectivity that will lead to economic cooperation and innovation. In the short run, infrastructure investment will immediately stimulate global growth. The intriguing consideration is that, in the intermediate term, OBOR’s promise of an attractive economic outlook inspires improvements in government behaviour and capital markets. The gist of this logic is that OBOR’s obvious rosy outlook combined with severe resource constraints will induce disciplined economic behaviour as infrastructure investment is costly.
It takes great leadership to do the right thing: not to compete for short-term glory, political results and not to let national ego distort long-term rationality. OBOR is for the long term – harmonious cooperation and shared development for the world. In a world threatened by nationalism, nativism, and self-serving statesmanship, this is an opportunity for Singapore as a international hub with long-term vision and courage to show leadership.