Transparency and Integration Will Drive Singapore’s Economic Future

By Blake Day

Source: williamcho's flickr photostream, used under a creative commons license.

The Singaporean government and financial authorities have demonstrated transparency in responding to recent scandals. Source: williamcho’s flickr photostream, used under a creative commons license.

Singapore has faced a spat of corruption cases involving public officials in the past year. Some pointed to these scandals as early signs of future difficulties. But recent actions taken by the Singaporean government suggest that quite the opposite could be true. Through its handling of recent corruption and financial scandals, Singapore continues to live up to its reputation as one of the world’s most transparent economies. And while it continues to tackle corruption at home, the city-state increasingly advocates for further economic and financial integration on the international scene.

In June 2012, shortly after news broke that London-based bankers had manipulated the London interbank open rate, or Libor, the Monetary Authority of Singapore ordered a full investigation of its own interbank rate, the Sibor, and informed international investors of the agency’s procedures and findings afterwards. Although the investigation revealed some degree of rate-fixing, the government’s prudent handling of the situation assured investors that the Sibor was secure, and prevented the matter from spilling onto international markets.

Similarly, the Singaporean government swiftly handled the misappropriation of $1.34 million at the country’s anti-corruption bureau, the Corruption Practices Investigation Bureau (CPIB). Although CPIB chief Eric Tan was not personally involved in the misappropriation of funds, he has accepted responsibility for his supervisory lapse and is currently working with his successor to ensure a smooth transition as he exits the bureau.

As Singapore strives to keep its house in order, it has also adopted measures aimed at promoting global financial integration. The financial sector accounts for 22 percent of Singapore’s gross domestic product, while current assets managed in the city-state total over $550 billion and are expected to quadruple by 2016.

In May 2013, the government moved to make information on possible tax-evaders more accessible to other countries. In July, Finance Minister Tharman Shanmugaratnam called on the United States and the European Union to harmonize various international financial regulations in order to safeguard the global economy and better regulate the banking industry. He also warned against the tendency of many developed countries, including the United States, to turn inward and away from the global economy in recent years. These steps underscore the government’s determination to turn Singapore into a world-class financial center, and its belief that the country’s future prosperity depends on more, not less, integration with the outside world.

The scandals that have plagued Singapore in the past year and a half should serve as a note of caution to Singaporean policymakers. Nonetheless, the government’s responses to these challenges have so far proved that Singapore possesses the tools and vision necessary to succeed as one of the world’s major financial centers.

Mr. Blake Day is a researcher with the Sumitro Chair for Southeast Asia Studies at CSIS. Follow the Chair on twitter @SoutheastAsiaDC

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