Singapore is the financial center of the Asia Pacific region and an emerging hub for accounting financial services in the world. The finance industry in the country contributes to around 13% of the nation’s GPD that is pretty impressive; especially considering the entire industry utilizes just 5% of the Singapore population. There are many reasons why and how Singapore became a global hub and some of these reasons are good business environment, good regulatory bodies, great infrastructure, good economical fundamentals and a good workforce.
Accounting Financial Services in Singapore
Singapore’s banking and finance industry has been booming since for the last two decades and now it is considered one of the most powerful banking systems in the world. The industry provides a wide range of banking and financial services including traditional functions, investment banking and corporate banking activities.
- In 2005, there were 110 commercial and 47 merchant banks in the country. And now there are 111 commercial banks, 49 merchant banks and 45 foreign banks with their offices there.
- Currently Singapore has the 4th largest foreign exchange market in the world (the first three are London, New York and Tokyo). In 2004, the trading volume of Singapore foreign exchange was around $156 billion and in 2013 it was recorded at $383 billion.
- The same goes for the bond market which has been continuously developing since 1998.
Insurance services are a big part of the accounting financial services in Singapore. Many of the world’s popular insurance companies as well as risk management companies have their offices and even headquarters in Singapore. These companies provide their services to the domestic markets as well as to their international clients from where they get around 50% of their insurance business revenue.
Despite all the progress Singapore has made in last couple of decades, it is not the only powerful finance hub in the region. Although there is Mumbai and Shanghai, but usually Singapore is closely compared with Hong Kong because of some similarities between these two financial markets. First of all, Hong Kong is also politically stable just like Singapore and both of the countries have powerful legal systems.
Why Financial Industry of Singapore is so Powerful?
As you can expect, the success of the financial industry of Singapore isn’t a dramatic event but it is the fruit of some revolutionary steps IRAS (Inland Revenue Authority of Singapore) and other governing bodies took years ago. Let’s take a closer look.
The domestic banking industry was made powerful and as a result, the local banks became powerful via mergers and acquisitions. Government not only gave domestic banks more influence in the market but at the same time gave foreign banks room to grow. These large banks made Singapore a global hub for accounting financial services and also created competitive environment.
The competiveness encouraged banks to introduce more products with better pricing models to attract local and international clients. As a result of those efforts, many other services besides traditional lending and deposit taking services were introduced; for example, corporate banking and investment banking.