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More FTAs and shift from traditional markets to help Singapore tap Middle East money

Channel NewsAsia, Singapore

More FTAs and shift from traditional markets to help Singapore tap Middle East money

By Matthias Chan, Channel NewsAsia

13 September 2006

SINGAPORE: Singapore asset managers have not been more actively seeking opportunities in the Middle-East because the market is still relatively new.

But market-watchers also say they expect to see a pick-up.

The comment came following a call from Senior Minister Goh Chok Tong on local firms to grow their business in the Gulf region.

Management of Middle Eastern assets from Singapore has increased by some 30 percent over the past two years.

In an interview with Channel NewsAsia, Senior Minister Goh said he was disappointed that the growth was not bigger considering the low base and that the growth was partly contributed by foreign banks.

Some analysts say it is because Singapore was late in the game.

"Its only after 9/11 that Singapore saw the potential to attract Middle Eastern money into Singapore itself, so we are almost talking coming from zero base and the amount of money has been relatively small compared to the global environment so in that context, Singapore has been a bit late in terms of Middle East," said Song Seng Win, regional economist, CIMB-GK Research.

But analysts add that the various initiatives embarked by Singapore should change the situation soon.

"What we are really seeing now is Singapore is very active in promoting itself in the Middle East. We are in talks to wrap up FTA with many of the Middle Eastern countries and in that regard, we will find that Singapore and Asia will continue to see big flows coming into Asia, into Singapore as they diversify from traditional investment markets like the US and Europe," said Song.

The competition to manage the petrodollars is expected to intensify but analysts are taking on a positive stance, saying Singapore has the fundamentals to forge ahead.

One of Singapore’s key competitor chasing after the Middle Eastern money is Malaysia because of the depth of its Islamic banking.

But some analysts point out that Singapore has also been aggressive on that front, coupled with its solid regulatory and corporate governance framework, Singapore will soon be a key manager of Middle Eastern wealth. -