The Monetary Authority of Singapore's latest efforts to bolster Singapore's status as a regional money management hub, announced in March, is entering the selection stage, following a Dec. 5 deadline for managers to offer proposals for expanding their operations in the city-state in return for central bank mandates.
In contrast to the broad net cast in MAS' previous efforts, the latest program could end up focusing on a select group of five to 10 of the biggest global managers, according to industry executives who declined to be named discussing a non-public RFP. The steps MAS has taken since 1999, when the central bank announced its first external manager program, have helped boost the ranks of Singapore-based money management firms to more than 600 now from fewer than 200.
MAS, whose mission statement includes promoting Singapore's development as a financial center, has succeeded in getting a who's who list of global managers to plant their flag here over the past decade or two, noted one industry veteran whose firm responded to the central bank's RFP. Now MAS is looking to partner with firms that can build extensive operations in Singapore, rather than simply opening a lightly manned office, said the executive, who declined to be identified.
The size of the mandates MAS could award pegged at somewhere between $500 million and $1 billion could be considerably larger than those of past programs, industry executives said.
In an e-mailed response to questions, a MAS spokesman confirmed that the latest iteration of the central bank's external fund manager program, is intended to offer stronger incentives (i.e. larger mandates) to fund managers that are able to offer commensurately large commitments to deepening their presence in Singapore and developing their Singapore operations in a significant way.
Meanwhile, the Dec. 5 deadline for proposals won't mark the beginning of the program's end. The new EFM program is intended to be rolled out over the course of the next three to five years, the spokesman said.
As of the March 31 close of its latest fiscal year, MAS reported S$332 billion ($246 billion) of official foreign reserves.
Money management executives say MAS management has been savvy in its efforts to promote and develop Singapore's asset management industry, beginning with its initial external fund manager program in 1999, which distributed S$10 billion in mandates to managers over a three-year period, and a second round announced in 2004, which added another S$5 billion in mandates.
MAS' efforts to promote the asset management industry's growth have continued since those early announcements, with some analysts pegging the total amount the central bank has awarded external managers around $30 billion.
Even so, money management executives predict the central bank will have its work cut out for it.
The region's economic center of gravity gives Northern Asia, including the Greater China region, Japan and Korea, a natural advantage in attracting a global manager's resources, foreign money management executives noted.
And with other central banks and government-linked investment firms in the Asia Pacific region including the Hong Kong Monetary Authority and Malaysia's Employees Provident Fund prepared to hand out mandates for firms that commit to building up their local operations, industry veterans say MAS' latest program could face some tricky issues, such as not ignoring those firms that already have established extensive footprints in Singapore.
Money managers said the developmental RFP MAS issued earlier this year has been a request for proposals in the truest sense of the words, with managers asked to propose what segments of their businesses they were interested in expanding or introducing in Singapore.
Still, the central bank has made clear some of the things it is hoping to see, managers said.
For one thing, MAS is focusing its attention on global firms' plans for hiring Singaporean nationals, with the proposals submitted in early December spelling out in detail how many locals would be added in coming years, managers said.
The pendulum appears to be swinging from an extremely liberal open-door policy, where the authorities were largely indifferent about the preponderance of foreign talent, to one where having a core of local professionals is being seen as a cornerstone of Singapore's ambitions to build a world-class asset management industry, said Lee Kher Sheng, a managing director in Singapore with the London-based Alternative Investment Management Association. Mr. Lee serves as AIMA's co-head of APAC and deputy global head of government affairs.
Joseph Cherian, a professor and director of the Center for Asset Management Research & Investment at the National University of Singapore business school, said promoting a Singapore core through supply-side steps to nurture a globally competitive home-grown talent pool is likely to prove more effective than simply offering business incentives to hire local. Intensifying support for programs such as CAMRI, which has groomed graduates capable of garnering jobs with top asset management firms since its launch six years ago, will help enhance Singapore's competitive position from a human capital perspective vis-a-vis Hong Kong, he said.
Meanwhile, financial technology is likewise something MAS executives are hoping will become a more prominent part of Singapore's asset management ecosystem, managers said. One veteran money management executive with a firm that was looking to compete for MAS mandates, who declined to be named, said now, with proposals submitted, it will come down to some real horse trading, with topics on the table such as how many people a foreign manager will commit to hiring, for what type of work, as well as how much money MAS will park in which of a manager's strategies.
While uncertain as to when MAS will choose the firms with which it will partner, money managers said a logical occasion would be the Investment Management Association of Singapore's conference scheduled for March. n