Singapore’s Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat took the stage at The Nomura Investment Forum Asia on 7 June 2023, sharing insightful perspectives on Asia’s economic landscape and the exciting prospects it holds. His remarks shed light on the region’s potential and the role that Japanese financial institutions, like Nomura, can play in harnessing the opportunities at hand.
Let us explore the key highlights from his address, which further reinforce the anticipation surrounding Asia’s vibrant future.
Vibrancy of the Asian region
The Nomura Conference, centered around the theme of Asia’s promising future, further reinforces economists’ predictions that Asia will remain a very vibrant region. Projections indicate that by 2030, India’s economy will reach a remarkable US$7 trillion, while the 10 economies comprising the Association of Southeast Asian Nations (ASEAN) are expected to collectively achieve US$10 trillion, with 70% of the population ascending to the middle class.
Notably, ASEAN’s startup ecosystem is rapidly evolving, boasting an impressive count of 53 unicorns today compared to a mere one a decade ago. The prevailing optimism among regional policymakers hints at the immense opportunities waiting to be harnessed.
Capitalizing on opportunities
Amidst these burgeoning opportunities, Japanese financial institutions such as Nomura can play a pivotal role. Reflecting on past financial crises, such as the Asian financial crisis and the global financial crisis, mismatches in lending and economic activities and the misallocation of capital through intricate financial engineering are unsustainable.
It is imperative to channel capital towards productive endeavors within the real economy to foster overall growth and improve livelihoods. Japan has long been a leader in this regard. During Asia’s industrialization phase, the flying geese formation analogy represented Japan’s guidance, reducing friction and facilitating smaller economies to progress more smoothly.
Envisioning a new formation, Mr Heng proposes a collective effort involving ASEAN, India, and other major economies like Japan, China, the United States, or Europe. Each participant can leverage their unique strengths to propel the region forward collectively.
During Mr Heng’s recent visit to Japan, he had the privilege of engaging with various companies, institutions, and policymakers. He was particularly impressed by Japan’s continued commitment to advancements in science and technology.
Visits to organizations like AIST and discussions with the Japan Science and Technology Agency highlighted the potential for close collaboration between Singapore and Japan to pursue mutually beneficial opportunities.
However, it is crucial to foster collaboration at multiple levels, extending beyond government-to-government interactions. Singapore’s universities already boast strong partnerships with their Japanese counterparts, welcoming top-class Japanese researchers. Sustaining and intensifying these exchanges of scientists, researchers, and students will be instrumental in nurturing innovation.
Moreover, it is essential to ensure that companies, both Japanese and from other nations, effectively capitalize on these collaborative efforts. Facilitating meaningful capital intermediation to support companies eager to expand their presence in the region will yield benefits for all stakeholders involved.
Asia’s dynamic landscape presents a wealth of prospects, with India and ASEAN poised for significant economic growth and the startup ecosystem flourishing. By channeling capital towards productive avenues within the real economy, these countries can uplift societies and mitigate the risks associated with financial crises. Japan, drawing upon its historical role as a leader, can collaborate with ASEAN, India, and other major economies to create a formidable force driving progress in the region.