Richard North, 11/02/2019  

If I had the time and energy, I would probably enjoy deconstructing Roger Bootle's latest piece in the Telegraph where he argues that once we are free of the EU's "over-wrought regulations", our country can thrive.

But at least we can make a start on one little gem: in making a case for reduced regulation in the UK, Bootle praises Singapore. He states that few people have fully understood the way that country really works. It is certainly not a paragon of laissez-faire, he states, acknowledging that the state is extremely powerful and plays a major role in the economy.

What should not go unchallenged are his key points, where he asserts that Singapore's regulations are made by Singapore for Singapore, with a keen eye on promoting growth and fully aware of the economic consequences of excessive restrictions. The excellence of its economic governance, Bootle claims, is the reason why this tiny island has transformed itself into one of the world's most prosperous countries.

This, I suppose, is what is technically known as bullshit. The reason why Singapore has grown so significantly came from the decision in the late 70s and early eighties to develop the then limited port facilities into a major container port, turning it into a regional hub serving the Asian "tiger" economies.

Much of the development depended on the influx of migrant labour, creating an unbalanced demography where, currently, the island state in 2015 with a population of just over five million recorded 29 percent non-residents.

That alone, would preclude the UK following the Singapore model but that is not the least of it. That famous laissez-faire regulatory regime has its darker side, where Singapore has become a destination country for women and girls trafficked for the purpose of labour and commercial sexual exploitation.

Not only that, it has also become a global hub for the exploitation of maritime labour, where its vibrant recruitment agency sector has become the by-word for modern-day slavery, exploiting (mainly) Filipinos, but also sailors from India, Indonesia, Mauritius and Tanzania.

Just to add to this glowing picture, Singapore's exports have been falling and last December they fell 8.5 percent in its worst decline for two years, slowing further from a 2.8 percent decline the month before.

Nor is the overall picture much better with a recent poll of economists expecting the Singapore economy to slow a notch further in 2019 than predicted. A significant problem is the trade war between China and the United States. Shipments across Asia are noticeably in the red and the trade data almost certainly means a downward revision to GDP. And nor is this helped by the expansion of Shanghai, which has displaced Singapore as the largest container port in the region.

Pundits generally are gloomy, noting that Singapore's stellar record of economic growth can no longer be taken for granted.

Perversely, one of the main reasons is that the nation's labour force growth – one of the two main pillars of economic growth along with productivity growth – is slowing to a crawl. Between 2006 and 2010, the labour force grew at an average of about 4.5 percent a year. This slowed to about 2.4 per cent a year between 2011 and 2016.

Now, low birth rates are partly to blame. Singapore already has a high labour force participation rate and is grappling with an ageing population, further stunting the growth of the resident workforce. And despite government intervention and considerable investment, productivity growth continues to disappoint.  

Although no one would begin to suggest that the Singapore economy is a basket case, or anywhere near approaching one, this nation is far from the nirvana that Bootle suggests. And, while it continues to freeboot on much of its regulation, international pressure is increasingly forcing the Singapore government into line.

But the ultimate irony is that Bootle's claim that "Singapore's regulations are made by Singapore for Singapore" is just as hollow as the rest of his assertions. The Singapore government considers itself part of the international community and has fully integrated its banking regulation with the Basel standards.

The Monetary Authority of Singapore (MAS) is a member of the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB) and actively participates in its discussions on the global financial system and banking supervision.

The government itself states that standards issued or developed by BCBS and FSB "are taken into consideration, where relevant to Singapore". For example, MAS Notice 637 implements Basel III capital standards for Singapore-incorporated banks, and establishes the minimum capital adequacy ratios for banks incorporated in Singapore.

This stands to reason as only international pariahs such as North Korea can stand apart from the global regulatory system. Thus, the Singapore government also works closely with the EU on regulatory issues, and especially on financial services.

The contact is organised through the Financial Services Committee (FSC) of the European Chamber of Commerce in Singapore (EuroCham), which represents the European financial services industry in Singapore. EuroCham itself "engages with market participants, regulatory authorities and other stakeholders on important issues concerning the financial services industry".

This works under the aegis of the EU–Asia Pacific forum on financial regulation. And, unsurprisingly, the topic of its 2018 meeting was "EU and Asia-Pacific regulators meet in KL to strengthen cross-border cooperation and regulation".

The parties involved were regulators from the European Commission Directorate-General for Financial Stability, the European Securities and Markets Authority (ESMA) and Asian regulators participating to the International Organisation of Securities Commissions (IOSCO) Asia-Pacific Regional Committee.

They met in Kuala Lumpur to discuss regulatory developments in the two regions, including cross-border implications of EU regulations. Illustrating the international scope of the forum, the meeting was also held back-to-back with the IOSCO Asia-Pacific Regional Committee meeting.

Oddly enough, the first meeting in 2016 was held in Singapore, where the agenda was future regulatory developments at EU and at Asia-Pacific level; issues and challenges that may arise in cross-border coordination for regulatory purposes; and forward-looking and emerging policy priorities for the global regulatory agenda.

Of course, there is no suggestion that the Asian and European systems are fully integrated, but there is clear evidence that they are working together, and will be closely cooperating in the future – and especially Singapore which only recently signed up to the EU Singapore Free Trade Agreement.

Looking at the detail at that FTA and the Investment Protection Agreement that runs alongside it, it cannot in any way be said that Singapore is any more standing alone as a wholly independent regulatory entity. Bootle, as he so often does, is talking nonsense.

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