To ask the Prime Minister (a) what has Singapore's exposure been to China's One Belt, One Road initiative; and (b) what does the Ministry intend to do to mitigate downside risks given continued and likely persistent slowdowns in Chinese capital outflow.
Answer by Mr Ong Ye Kung, Minister for Education (Higher Education and Skills) and Second Minister for Defence, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1 Singapore welcomes China’s “Belt and Road” initiative. It is a mutually beneficial initiative that will encourage further economic integration, infrastructural cooperation and people-to-people linkages among countries in the region.
2 As a result of the “Belt and Road” initiative, there is increased interest from Chinese corporates and financial institutions to invest in and participate in infrastructure projects in the region, including Singapore. For example, Industrial and Commercial Bank of China Singapore branch recently signed an MOU with Singapore Business Federation to extend up to RMB 50 billion in funding to Singapore companies for infrastructure projects across Asia. This in turn opens up opportunities for Singapore companies to partner Chinese players in “Belt and Road” projects, in areas such as transport and logistics, mixed-use park developments, construction materials and financing. Given that the “Belt and Road” is a relatively recent initiative, Singapore companies’ direct engagements so far are not large, but I am sure will grow.
3 Capital outflow from China is a separate matter. It is not surprising that there should be a slowdown in such outflows as the Chinese authorities seek to maintain stability in their currency. The slowdown does not pose any material risk for the Singapore financial system or economy.
4 As China grows and becomes more integrated with the world, its capital outflows and investments abroad will likely grow steadily over the long term, and the RMB will become more internationalised. Our cooperation with the Chinese authorities (monetary and financial regulators) fully recognise China’s interest in ensuring that the journey is a stable and orderly one and in guarding against sudden and excessive capital outflows.