Following is the transcript of a CNBC interview with David Gerald, President & CEO of Securities Investors Association Singapore. The interview was broadcast on CNBC on 24 April 2017 at 10:00AM SG/HK Time, during CNBC's "Hong Kong versus Singapore" theme week.
All references must be sourced to a "CNBC Interview'.
Interviewed by Dan Murphy, Correspondent, CNBC and Oriel Morrison, Anchor, CNBC.
Dan Murphy: When it comes to market capitalisation, market liquidity and when it comes to the overall number of listings, what we really have is Hong Kong coming in above the bar when it comes to a comparison against Singapore. What is really Singapore's competitive advantage then?
David Gerald: Well it is, really the quality of companies, it's not really quantum. China enjoys the listings from; I mean Hong Kong enjoys listings from China, a number of companies have come across the border to Hong Kong to list.
We have been careful here about insisting on quality. The recent initiatives are to further cement that criterion, that we want good companies. Now, we have Hong Kong leading companies like Hong Kong Port, we have you know Hong Kong Land, and we have Hong Kong Hutchison. They're all listing here, why? Because of the established business structure, the business environment is conducive to do business, neutrality of doing business, and the best judicial system and arbitration for commercial disputes if any.
Above all, I think the regulatory framework is transparent, and provides an environment that's clear and transparent. Also, Singapore provides the gateway to global investors, to some 400 billion Asian, the market is 400 billion worth, so and there are 200 banks here and many more banks are setting up Singapore as a headquarters for the operations. Why? Because there is predictability, there is stability in governance, our government is stable, and it provides a good environment for business.
So, we don't have problems, alright, you come and set up business here, we help you all the way, and you expand into Asia, so this is the gateway to Asia.
Oriel Morrison: Let me bring Chris (Wei, Chairman of Aviva) into the conversation, Chris let me ask you directly, you do business in both, well you do business in Asia. Singapore versus Hong Kong specifically, which of these places is easier to do business in?
Wei: I think it's hard to answer that question specifically, let me put it up a notch. If you look at the underlying demographics of both markets there are actually a lot of similarities. Sort of natural one child phenomenon, you have aging populations in both.
Both cities are financial centres, they have been health care centres, they have been education centres, and they're tourist centres. What's different in terms of heavily serviced dependent economies is I think, Singapore is getting a little bit ahead in terms of the innovation agenda, and they're putting the weight of the Singapore government behind it. We're seeing a little bit more momentum, certainly in the fintech area, in terms of regulatory, in terms of the regulatory developments, as well as the government investing, in terms of helping lubricate the digital economy.
What that means is for example, giving access to financial institutions, to Singapore government databases for identity validation, for anti-money laundering validation etcetera. That helps a lot. So I think Singapore has taken a little bit of a lead in that. The journey is not over, it's a long term one, but that I think is the next wave.
Oriel: That's the positive, if you look at the negatives surely one of the negatives of doing business in Hong Kong, I guess the influence, the negative side of the influence of China, which is the lack of transparency and regulation, which you don't know when it's going to change. Is that a fair comment?
Wei: I think Hong Kong's political environment is very clear, I think certainly in our industry, the insurance side, the office of commission of insurance has become an independent insurance authority that's probably the most volatile segment, in terms of financial services regulatory changes.
But it's very clear on the banking side; it's very clear on the security side. Hong Kong exchanges at the moment, a lot bigger than the Singapore Exchange. And if you look at what China is trying to do, I mean our partner is a state owned enterprise, there's a big drive towards transparency, and I think there's a big drive to going international in terms of standards towards corporate governance. So we feel that our joint venture in China is managed professionally as any of our international businesses.
Oriel: David, you've just heard what Chris had to say about doing business in Hong Kong, versus doing business in Singapore. Where do you stand, on that front, what would your reaction be to what Chris had to say?
Gerald: Well Singapore has been ahead of the curve, in fintech for example, we've taken the lead in Asia, we make doing business much easier, and the collaboration between the public sector and the private sector is quite strong, and that is helping businesses to find its way around here and doing better business and to access Asian market.
Regulators have been very active in Singapore, to make the framework much easier, much more transparent.
You must remember, we have a British tradition, we are actually a commonwealth country, and we have been improving on what the British have left behind, and we are making strikes, and making it more and more easier for businesses to do business in Singapore. And we're helping them expand into Asia, mind you there's a 400 billion market waiting for investors through Singapore.