How S'pore can aid sustainable growth in Asia

Only about 5 per cent of economic losses in Asia are insured, putting great strain on governments if a natural disaster strikes, says Mr Heng Swee Keat.
Only about 5 per cent of economic losses in Asia are insured, putting great strain on governments if a natural disaster strikes, says Mr Heng Swee Keat (above).

Measures include boosting resilience to natural disasters, developing infrastructure: Heng

Singapore can contribute to sustainable growth in Asia by helping to strengthen the region's resilience to natural disasters, said Acting Prime Minister Heng Swee Keat yesterday.

To this end, the Monetary Authority of Singapore (MAS) is developing the market for insurance-linked securities as an alternative risk financing solution, he said.

These can help provide financing quickly in the wake of regional disasters or catastrophic losses.

Mr Heng, who is Deputy Prime Minister and Finance Minister, said that only about 5 per cent of economic losses in developing Asia are currently insured, despite the fact that natural catastrophes have increased in intensity and frequency due to climate change.

"This puts tremendous strain on governments of developing nations in the event of a natural catastrophe, which can set back economic progress in the affected areas for years to come," he added.

He was speaking at the Official Monetary and Financial Institutions Forum's Global Public Investor report launch, held at the Singapore Exchange.

Global public investors are central banks, sovereign funds and public pension funds that impact global markets. The report gives insights into these institutions' performance and practices.

To develop the market for insurance-linked securities, the MAS has set up a Natural Catastrophe Data Analytics Exchange, Mr Heng said.

This initiative supports the structuring, modelling and securitisation of such transactions by improving data quality and promoting standardisation.

It has also introduced a grant scheme to defray the costs of issuing catastrophe bonds here, with the first such bond issued out of Singapore earlier this year.

During his speech, Mr Heng outlined two other ways in which Singapore can contribute to Asia's sustainable growth.

Its Infrastructure Asia initiative, launched in 2017, can be a conduit for institutions to invest in infrastructure development opportunities here, he said. The initiative by Enterprise Singapore and the MAS aims to connect Asian governments with the relevant experts for infrastructure projects, helping them build capabilities.

Singapore is also growing its sustainable finance sector, with the MAS seeking to nurture the growth of green, social and sustainability bonds, as well as raising awareness of sustainable financing in the financial sector.

"Asia will face significant challenges, as well as opportunities, on sustainable economic development in the coming years," Mr Heng said.

"Nations around the world have committed to the United Nation's Sustainable Development Goals - it is critical that we generate economic growth and, at the same time, protect the environment of our planet."

A version of this article appeared in the print edition of The Straits Times on June 13, 2019, with the headline 'How S'pore can aid sustainable growth in Asia'. Print Edition | Subscribe