On Singapore's Shenton Way the towering sparkling clean office buildings have been labeled "Southeast Asia's Wall Street." American, French, British, and Dutch banks, to name but a few, look out across this city state's busy harbor.
A few miles uptown are the modernistic, comfortable dwellings that house foreign bankers and their families. It may not quite be home. But the city's Western-style shopping centers and other conveniences make Singapore an easy place for banks the world over to "park" their expatriate officers and family.
Like most other things in carefully planned Singapore, all this is no accident.
A decade ago Singapore's three most powerful men set out to make Singapore a major Asian center for lending, investment, and currency transactions.
Prime Minister Lee Kuan Yew, Deputy Prime Minister Goh Keng Swee and Minister for Foreign Affairs Sinnathamby Rajaratnam started the process by which Singapore became Southeast Asia's financial center -- and what many bankers see as "No. 1 in Asia" for the holding of offshore Asia dollars.
To do this, according to some bankers here, they needed nearly absolute power. Otherwise opposition groups could criticize things such as concessions to foreign banks and foreign multinationals.
But Singapore's authoritarian government was secure enough to forge ahead. It created a low risk profitable banking environment by, among other things, minimizing obstacles for banking licenses and minimizing regulations on the flow of funds through foreign banks.
Hong Kong, Bangkok, and Tokyo all have greater licensing or exchange controls.Although Hong Kong has fewer reporting restrictions on foreign exchange transactions, its licensing registration procedures and foreign currency taxes are tighter and higher, according to some foreign bankers here.
The team of Lee, Goh, and Rajaratnam decided to move in this direction because they concluded it would bring banking revenues and associated businesses and skills to Singapore. Some bankers also say the presence of foreign banks in Singapore helps the city state finance a host of massive construction projects it has embarked on.
Two major functions of Singapore's foreign banks are loans and currency transactions.
Foreign banks in Singapore make loans to oil and gas exploitation projects throughout Southeast Asia, both onshore and offshore. Indeed these financing projects extend as far south as Australia.
The banks also make loans to finance construction projects throughout Southeast Asia.
Local Singapore banks do not have sufficient funds to finance massive Singapore development projects like the $1 billion Marina Center and $1 billion Raffles city complex. Thus much of the money must come from foreign banks.
In currency transactions Singapore's foreign banks are leaders in the holding of dollars in Asia or "Asia dollars." Hong Kong taxes effecting Asia dollar transactions make Singapore an attractive alternative. The Philippines has tried to attract Asia dollars to Manila, but so far has not successfully challenged Singapore.
Since the bulk of Asian commercial transactions is still done in dollars, all this puts Singapore in an important position.
Still, many bankers point out, Singapore has been unable to penetrate beyond Southeast Asia. Tokyo and Hong Kong still dominate the extremely important region of Japan, South Korea, and Taiwan.
Moreover, much of the monetary and investment transactions of overseas Chinese living in Southeast Asia still goes to Hong Kong. This is a long-established traditional practice reflecting Hong Kong's proximity to China, analysts say.
The Singapore government would like to see Singapore-based banks get a bigger share of overseas Chinese business. But surrounding countries like Malaysia and Indonesia are already suspicious that Singapore's financial muscle could infiltrate their economies. Singapore must thus move cautiously and diplomatically to avoid sowing suspicion in the Association of Southeast Asian Nations (ASEAN).
In Singapore itself some of the most aggressive foreign banks are Western European. The French and the West Germans, for example, are moving actively to make loans to Indonesia. By contrast, American anticorruption codes mean american banks must be extra cautious in dealing with countries which define corruption differently.