Why Singapore became the finance center of the Far East

Why Singapore became the finance center of the Far East
12019 / Pixabay

Tropical Singapore is an economic marvel the type unseen in the history of humanity. It has become one of the hotspots known for its bustling infrastructure, rooftop bars, chili crabs, and a number of other achievements like the only city in the world to host Formula 1-night racing.

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The Monaco of the East

It is often dubbed as the “Monaco of the East.” The city has been on the economic win streak since the 1970s when it all started to shape into what it is today. The city’s success can be attributed to an individual Lee Kuan Yew, who was Singapore’s first prime minister and held the office from 1959 to 1990. He is by far the world’s longest-serving prime minister in history and managed to take the country from the economic recession while transforming a deserted spot into a tropical paradise. Singapore broke away from neighboring Malaysia gaining independence in 1965.

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Only 60 years ago the country was an island without any peculiarity or much to see in it. There were no natural resources or pretty sights to see. No skyscrapers or any interest from international investors. During this time the country managed to transform itself into a city-state with a touristic value that other countries with a vast history and historic architecture only dream off. Apart from this, the country has two casino-integrated resorts that accommodate a huge number of rich visitors and the airport that has been branded as the best in the world.

Lee Kuan Yew has left a huge legacy for the city. He managed to form the city into the most attractive destination of the 21st century and not just physically but financially as well. He managed to put an emphasis on growth which draws investors like a magnet towards the region with the addition of world-class manpower. This is a legacy of strong infrastructure with top of the line air and sea highways, incredibly low transportation taxes, robust regulatory and legal framework, and the most important neutral diplomatic policy which puts the country in the middle of two giants - the US and China - where it benefits from both at the same time.

The regulations applied to all of the financial institutions in Singapore are quite strict. They protect the interests of the citizens even outside of the borders of the country. For example, if you are a forex broker and a Singapore citizen is registered on your platform it is mandatory to provide the services in their native language as well as special financial benefits like withdrawal times and the extra fund security. This is why forex brokers that are licensed by the Monetary Authority of Singapore (MAS) are the most well-regarded firms in the world. However, this does not mean that the treatment of their clients is the same regardless of their citizenship. It is worth noting that these regulations only apply to you if you have active citizenship of Singapore and not a second more. The clients have added benefits of MAS taking over some of the disputes with additional investigations that no broker wants to go through.

Singapore Surpasses Hong Kong

One of the biggest achievements of the country as of late is the time when Singapore surpassed Hong Kong as the third-largest financial center in the world coming right after London and New York. This is a milestone achievement due to the fact that Hong Kong has had its ties with British and support as well as relaxed regulations from China. However, things have changed during the last 1 year for Hong Kong as well as its citizens. One of the major points was when the USA decided to drop the “Special Status” of Hong Kong where they would get certain tax cuts and benefits from the western countries. This has caused the support for Hong Kong democracy protests to fall, however, the movement is still strong within the city but it seems like China is winning this fight against democracy.

The milestone achievement has put Singapore as the number 1 largest economy in the whole of Asia. It is home to the biggest institutional and interbank trading ecosystem and a financial center with its enormous exchanges. This has aided the FX efforts of the country as OANDA Corporation’s Asia Pacific operations to lead Rajesh Yohannan has taken the number 1 FX broker position with 18% of market share and headquarters in Singapore. OANDA is closely followed by three British firms, IC Group, CMC Markets, and City Index with the addition of Singaporean Phillip Futures that are all in the top 5 list as of now. The country is housing so many strong financial institutions due to the fact that they have a leading-edge banking system. Singapore is known for its advanced interbank as well as institutional and retail FX which are extremely popular in the region.

Even in the face of the novel coronavirus pandemic rocking the world, Singapore has not dropped the phase. Well, the last statement may not be entirely true due to the fact that it did slow down the economic development of the country as tourism industry as well as traveling is basically out of question for the year 2020 but what we meant by that is that the UK is getting hit even harder to the point where its economy has shrunk 20%. At the very same time the second position holder, New York, located in the US, has not fared that much better as well with the nation’s economy shrinking by 33%. Although, there has been a massive stock market rally after this information has come to light in April with a 50-day historic rise in the stock market values. All of this goes to show that Singapore while being a tiny nation in comparison to other global players, is still on the competitive market and is slowly but steadily closing the gap between the first 2 positions. Regardless, the 3rd spot for the nation-state is extremely financially favorable and goes to show just how strong the Singapore market is.

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