The race to establish global financial centres is often pitted as a fierce competition where the winner-takes-all.
But in reality, the establishment of global financial hubs around the world is much more nuanced and collaborative as learnt during the Singapore-Tokyo Asset Management & Fintech Roundtable organised by Oliver Wyman and FinCity.Tokyo on November 1.
Global financial centres such as those in Tokyo and Singapore have a lot of opportunities to work together, says Keiichi Aritomo, Executive Director of FinCity.Tokyo, an organisation dedicated to cementing Tokyo’s profile as a global financial hub.
“Both countries are very different in nature so there is a lot of scope to complement and learn from each other,” said FCT’s Aritomo.
Being a conduit between policy makers and the financial world, Aritomo says that collaboration is necessary to solve the social and environmental challenges facing both cities, such as an aging population and the green transition.
By focusing on digital and investment enhancements, both cities can lead a data driven green transformation of industries and their supply chains, he continued.
Historic Ties
Collaboration between the two countries is a prerogative that has trickled down from a national level. Singapore and Japan inked two agreements in May 2022 to promote the flow of entrepreneurship between both countries and enhance their governments’ digital transformations.(1)
As part of the memorandum of cooperation on digital government transformation, both countries will explore the mutual recognition of verified credentials for their residents’ digital identities. This will hopefully benefit digital trade and people-to-people flows between both countries.
Echoed during the roundtable, Aritomo highlighted that one of FCT’s key policies is “to make Tokyo’s financial ecosystem more diversified.”
These new agreements are in many ways a natural evolvement as Singapore and Japan’s economic and trade ties go back a long way.
Japan is the fourth-largest investor in Singapore in 2020,(2) while Singapore is Japan’s third-largest foreign direct investor.
Total merchandise trade between Singapore and Japan grew 8.6% year-on-year to S$53.9 billion (USD39.9 billion) last year.
During the event, Kazuhiko Yoshimatsu, General Manager and Chief Representative of the Tokyo Stock Exchange in Singapore, also highlighted that five initial public offerings of all cross-border companies in Tokyo in 2021 were coming from Asia and two were by Singapore-based companies via the JDR scheme, with the pipeline steadily increasing year by year.
Meanwhile, Seo Young Lee, Head of Southeast Asia at Oliver Wyman, pointed out how each city’s geographic and economic realities are complementary.“Tokyo is a city in a very large economy where the domestic market is very big. Meanwhile, Singapore is a city state but also a hub that facilitates capital flows across ASEAN and beyond,” said Lee.
“Rather than seeing the next journey as a competition, these two cities can create deeper corridors and shared ecosystems, especially in the areas of technology and trade, which are very natural places to start,” continued Lee.
Tokyo’s relentless focus on technology was a key tenet in many of the speakers’ presentations be it from a policy or community-driven angle.
Japan’s Financial Services Agency has been key at embracing innovations and technologies, says Yuko Kawai, a Director of the Japan Fintech Association and CEO of Japan Digital Design (Mitsubishi UFJ FG). The agency shows clear focus on blockchain technologies and has removed uncertainties through the legislation of crypto exchanges.
Ryosuke Ushida, Chief Fintech Officer & Head of FinTech and Innovation Office at the Financial Services Agency Japan, agreed, underlining how his organization was “very supportive of innovation” adding that the FSA was “in the business of business matchmaking.”
Yet innovation and growth is often borne out of shared ideas and what is key is building the right community, says Akika Hamakawa, Deputy General manager of Heiwa Real Estate Co. Ltd. during the panel discussion. The new financial district FinGATE based in Tokyo’s Kabutocho was set up specifically to support the growth of start-ups especially fintech companies through fostering information sharing and talent development.
Greater Opportunities
With both countries so focused on their country’s digital transformation, Tokyo and Singapore have a lot to gain from working collaboratively, propped by their strong historic ties and common outlook for the region.
As Tokyo starts to open up and has lifted most of the remaining coronavirus travel restrictions, there is a greater opportunity for partnership, as seen during FCT and Oliver Wyman’s roundtable organised on November 1.
“There is a great push within the Tokyo metro government to enhance Tokyo’s stature as a financial hub,” said Oliver Wyman’s Lee. “It is something that the private sector and other governments from around the world should take note of and leverage.”
