An evaluation of the fund management industry and the rule policy makers play
Lee, Ai Ling
Tan, Lee Lee
Date of Issue1994
College of Business (Nanyang Business School)
Singapore's determination to develop itself as a fund management centre of international stature, primarily stems from our vision of becoming a financial supermarket, capable of serving the financial needs of the global population. Singapore's growth as a fund management centre over the past decade has been very impressive. The volume of funds under management here has grown from S$245 million in 1979 to S$37.4 billion in 1992. Through these years, the government had played a pivotal role by introducing new tax policies and making regulatory changes to areas thought to hinder the development of the fund management industry. We have come a long way but we are still far from our aim to be a premier fund management centre. Currently, the volume of funds under management in Singapore is about a fifth of that managed in Hong Kong, our closest yardstick for comparison. A SWOT analysis was done to evaluate the current state of the industry. Succinctly put, our strengths are that we have strong communication and information technology, experience and expertise accumulated through the years, a stable and supportive government and that we enjoy a strategic location in Southeast Asia which is registering very impressive growth. Our weaknesses lie in the fact that our financial market is still immature (lacking both breadth and depth). We do not possess a deep knowledge base, sophisticated research capabilities, and our financial sector suffers from over-regulation. Moreover, our domestic source of funds is very small and the industry is showing signs of complacency. The opportunities for the industry primarily lie in the enormous growth in the volume of funds that we can potentially tap. International funds are flowing into Southeast Asia, there is an accumulation of wealth in ASEAN and even our domestic base of funds, albeit small, is growing. Threats that confront the industry basically result from the emergence of competition from our neighbouring countries coupled with the possibility of the eventual redundancy of Singapore's growth as a gateway into the region. Based on this analysis of the current situation in the industry, a strategy to differentiate the Singapore fund management industry from our upcoming rivals was proposed. The strategy banks on our development as a financial think-tank of the region, and by staying a rank above our neighbours, we will create a niche for ourselves as the leader in the fund management business in Southeast Asia. The strategy recommended also includes our weaknesses by catalysing market maturity and by making further regulatory changes.
Final Year Project (FYP)
Nanyang Technological University