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Singapore to reap benefits from China's Belt and Road Initiative
AMID the global rise of nationalism, China's One Belt, One Road (OBOR) - now renamed as the Belt and Road Initiative (BRI) - is a breath of fresh air, promising modern economic inclusion and connectivity.
The modern Silk Road equivalent embodies a greater vision of regions connected across the world for mutual economic growth and development. Financial and economic integration is an integral element of the BRI blueprint, not only in enhancing China's trade and financial relations with participating countries, but also to provide the much-needed financial resources to support infrastructure finance - a key sector to stimulate global economic growth.
With the speed up of connectivity between China and the modern Silk Road, another prominent benefit of BRI is the opportunity for renminbi (RMB) to play an even more active role after it has been included in the IMF SDR basket of Reserve currencies since October last year.
Singapore, as a leading global financial centre, holds tremendous promise as a gateway for the BRI into Asean countries, and as a springboard for the promotion of RMB in the region. The allure of Singapore is clear to multinational companies (MNCs) and emerging businesses - the country consistently tops global rankings in competitiveness, innovation, investment and ease of doing business. The relationship between Singapore and China has always been close, with Singapore being one of the largest sources of foreign direct investment into China, and at the same time, being the key destination for Chinese investment.
It is for these very same reasons that China's largest bank, the Industrial and Commercial Bank of China (ICBC), established its first overseas operations in Singapore back in 1993.
With the award of Qualifying Full Bank License by the Monetary Authority of Singapore in 2012 and subsequently appointed by People's Bank of China in 2013 as the sole official RMB clearing bank of Singapore, ICBC Singapore has since introduced various pioneering RMB products and services including cross-border clearing and settlement, debt capital market transactions, corporate financing and global cash management.
These are crucial sources of financing support for Chinese firms looking to invest and expand their operations in Singapore and the wider region, as well as for Singapore firms looking to tap into the enormous Chinese market.
With US$900 billion worth in planned investments across the globe, the BRI is set to integrate China within the world economy on an unprecedented scale. The provision in banking and finance is one of the keys to success for the projects under the initiative. Singapore, being the Asean's key financial hub as well as the very first offshore RMB centre outside of Greater China, is poised to derive benefits from BRI. ICBC Singapore is well positioned to facilitate the financial products and services required for the Singapore companies who are participating in the Belt and Road Initiative.
- The writer is senior advisor, ICBC Singapore, former governer, Central Bank of Pakistan.