Lawrence Wong
Singapore
“Sir, we will provide more information. I see the value of getting Ministries to put out more information, to share more about how their resources are being used and what outcomes they have achieved.”
“Sir, I agree fully with Mr Azhar that human capacity, human capital is critical. In fact, I would say the long-term potential of Singapore, how far we go really depends on us being able to maximise our human potential. That is key and that is why we have long invested in education. And it is not just about the investments.”
“Sir, we have been maintaining that commitment of 1% for some time now. I do not think it is about saying that we just have to do more and spend more. As many have highlighted, we want to ensure good outcomes from our R&D spending as well. So, we will continue if the outcomes are good.”
“This has never been the case. Temasek, when it started, was always very clear about its mandate from the very beginning – commercial, not doing national service, focused on commercial outcomes.”
“Sir, the MOF economists when they look at fiscal projections use Government's forecast of the economy, which is also published. We would typically use the mid-point of the range and then, of course, because these are in nominal terms, you have to factor for that. And the projections are done on those basis.”
“Sir, I was relieved that Mr Loh said he only has one question, but he asked the most difficult question. To answer the question, we will continue to monitor cost of living across all segments of society.”
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“Whether the rates may be skewed, whether we should use actual rates rather than nominated rates – these are all part of the considerations which we want to look at to see how fundamentally SIBOR can be strengthened. How can there be better transparency in the rate-setting process? How can there be use of actual data? It is something we have been studying and will continue to study. As I have said, it is something that many other jurisdictions are also looking at. They are all looking at similar issues: transparency, better price discovery so that the rate-setting process can be more robust and more rigorous. We share the same interests and we are studying. Once our review is completed, we will be able to have a more robust SIBOR-setting process. Page: 585”
“Mr Speaker, Sir, I thank the Member for the questions. I think these are very relevant questions which we are studying. The first point to make is we should look at the broader context of how SIBOR came about, or how LIBOR came about. These are price-discovery mechanisms for lending and borrowing between banks, and so the way these rates were fixed or set were done by associations, because these were inter-bank rates. That was what happened in the case of LIBOR and that is also how our SIBOR rates have evolved. These were inter-bank rates relevant between banks and so the Association of Banks got involved in setting these rates. That was the historical context of how these rates evolved. Over time, these inter-bank rates also came to be used for other purposes – for loans to corporates, to individuals. And so, there is a case for stronger governance or for strong supervision over how these rates are being set. That is why we are now in the process of reviewing the SIBOR-setting process, looking at how the SIBOR can be more fundamentally strengthened. Pending the outcome of the review, I do not want to speculate on the sort of recommendations or the framework that we will end up with. It is something we are studying and MAS is, indeed, looking at it more fundamentally to see how SIBOR can be strengthened. We are also studying what other jurisdictions are doing because this is not just a matter for Singapore alone. Many other jurisdictions are also having similar reviews and studies. It is also a discussion happening at international forums, and so we are keeping track of these. As these reviews in other jurisdictions are taking place, we will also see whether there are implications and whether there are aspects which we can adapt and apply to our context.”
“Other jurisdictions are also reviewing their benchmark setting processes, and we will study those closely as well.”
“Besides SIBOR, it is possible to peg contracts to other benchmarks of similar tenures, such as the Swap Offer Rate (SOR), central bank bills or Government bills and bonds. However, each benchmark will have its own unique characteristics so banks can decide. In 2009, ABS reviewed its rate-setting procedures and adopted several improvements. These included the establishment of a Financial Markets Committee to oversee the governance and procedures for daily rate setting; and establishing a minimum number of participating banks – 12 of them – and a minimum number of contributed rates for each daily setting – six rates. ABS also appointed an administrator to review the rates contributed by participating banks, including checking for consistent outliers and comparing with broker rates. Page: 584 In line with the investigation into LIBOR, regulators in several jurisdictions are looking into how key market interest rate benchmarks have been set by banks. MAS is doing the same in Singapore, and has directed banks that are on the ABS' rates contributing panels to conduct independent reviews to verify the integrity of their rate-submission processes. Pending the completion of these reviews, it is premature to draw conclusions about the impact on financial institutions in Singapore. MAS is also working with ABS and the Singapore Foreign Exchange Markets Committee (SFEMC) to review the SIBOR-setting process more fundamentally. The review will take into account what SIBOR is used for, how it can be strengthened, whether proposed changes are resilient to future changes in market structure, as well as the impact on the existing stock of contracts that are already pegged to SIBOR. We are mindful that any change will impact lenders and borrowers.”
“The London Interbank Offered Rate (LIBOR) is an important interest rate benchmark that is used by market participants globally, including in Singapore, to directly price financial products or, indirectly, as a reference when setting interest rates. As an international financial centre, we host many global banks that trade and offer financial products that are referenced against LIBOR. The process for setting the Singapore Interbank Offered Rate (SIBOR) is similar to that for interbank offered rates in several other jurisdictions. The basic model for most jurisdictions has followed that for LIBOR, which is set by the British Bankers' Association (BBA). So, for us, the SIBOR is currently set by 12 participating banks, and published by the Association of Banks in Singapore (ABS). Prior to 11.00 am every business day, each participating bank submits the interest rate at which it could borrow Singapore Dollars in the interbank market, at tenures ranging from one month to 12 months. These rates are then collated and ranked. The middle two quartiles – the middle band – of six submitted interest rates which are in the middle of the range – are then averaged to determine the official SIBOR, which means that the outliers, or the rates that are at the bottom and top end of the range, are not included in the computation of SIBOR. ABS publishes the SIBOR at 11.30 am daily. As SIBOR is a measure of the cost of borrowing Singapore Dollars in the interbank market, banks have found it to be an appropriate benchmark to price their Singapore Dollar-denominated loans. Such loans include commercial term loans and residential property loans.”