Singapore and Chongqing form fintech alliance
Chongqing and Singapore will work together to apply FinTech solutions to make STC hassle free, safe and cost efficient for stakeholders.
Strengthening fintech collaboration between Chinese city Chongqing and Singapore under the Chongqing Connectivity Initiative (CCI) could broaden activity between Western China and ASEAN, according to Monetary Authority of Singapore (MAS) managing director RavI Menon.
In his keynote address at the inaugural Singapore-China (Chongqing) Financial Summit, Menon highlighted how there is great scope to leverage on technology to strengthen connectivity, particularly along the Southern Transport Corridor (STC). It is being established as the connection between Western China and Southeast Asia, Menon noted.
His speech also mentioned how if the current trade conflict persists, investment would be the most serious casualty as such conflicts are bad for confidence resulting in global businesses to scale back investments.
“A decline in investment will reduce productive capacity, delay technological upgrading, and compromise productivity growth,” he added. Fintech collaborations would be the way forward to mitigate effects on the Asian economy, with Singapore at a good position for such activities.
Two out of five, or 39%, of ASEAN fintechs are located in Singapore according to UOB, with 28% of the payment fintech startups in the ASEAN region as of 9 October 2017 calling the country home.
Besides efforts to reduce physical distance, reducing friction in the trade process should also be a key goal Menon said.
“There is friction in clearing customs, handling trade documents, checking for fraud in trade finance, and ensuring the safety and timely delivery of goods,” Menon added. “This is because the approach to trade and trade finance is still manual and paper-based. We need to have end-to-end digitalisation of trade processes.”
Chongqing’s interest to develop a fintech experimental and demonstration zone in the western region is timely he noted, as the zone can serve as a source of technology solutions for the successful development of the STC.
Several players have embarked in initiatives in this area, according to Menon.
“For example, VCargo Cloud from Singapore has worked on digitalising the STC’s work flows onto cloud services, synchronising and sharing the information provided by different parties from trade, logistics and supply chain,” he stated.
“Ongoing trade tensions will pose risks for Asian economies which rely heavily on global trade,” he explained. “The effects of the tariffs will likely become more discernible as we go into 2019 - especially if the coverage of these tariffs is expanded.”
Meanwhile, the immediate impact of the tariffs imposed to date has been mild, affecting about 2% of global trade, according to Menon. It is estimated to shave off about 0.2% points from China’s GDP growth in 2019 and 2020.
A four-party Memorandum of Understanding (MOU) at the summit which will catalyse fintech cooperation between Chongqing and Singapore will be signed during the summit, Menon revealed. He also added that under a separate MOU, OCBC, Chinese electronics company XIaomi Inc and Chinese financial service Hanhua Financial Holding will explore fintech collaboration in retail and institutional financial services in China.