OPENING REMARKS FOR WORLD FINTECH FESTIVAL IN BRUNEI DARUSSALAM BY CHARGE D’AFFAIRES AD INTERIM RAYMOND CHOW FROM HIGH COMISSION OF THE REPUBLIC OF SINGAPORE ON 9 DECEMBER 2020

OPENING REMARKS FOR WORLD FINTECH FESTIVAL IN BRUNEI DARUSSALAM BY CHARGE D’AFFAIRES AD INTERIM RAYMOND CHOW FROM HIGH COMISSION OF THE REPUBLIC OF SINGAPORE ON 9 DECEMBER 2020

Dear Yang Berhormat Pehin Orang Kaya Seri Kerna Dato Seri Setia (Dr.) Haji Awang Abu Bakar bin Haji Apong, Minister of Home Affairs and Deputy Chairman of AMBD

Yang Mulia Hajah Rokiah, Managing Director of AMBD

Distinguished guests, ladies and gentlemen

I am deeply honoured to be invited to provide opening remarks for the World Fintech Festival in Brunei Darussalam organised by the Monetary Authority of Singapore in collaboration with SingEx and Centre for Islamic Banking, Finance and Management, supported by Authoriti Monetari Brunei Darussalam. 

This forum is timely in addressing issues and challenges related to fintech development in the region.  This morning, I hope to share with you some personal thoughts and observations from a diplomat’s perspective. 

First, technological innovation is profoundly changing financial service provision, which has implications for the efficiency, financial stability, integrity and inclusiveness of economies around the world. Recognising fintech’s transformative potential, countries are strongly embracing fintech and working on building an enabling environment for fintech firms to grow. At the same time, they have to confront the challenges of establishing robust data protection frameworks to guard the financial ecosystem from cyber risks, as well as thorny issues with respect to data ownership, privacy, integrity, and ethics.  Some of these issues require a mindset change as they challenge conventional ways of providing financial services, putting competitive pressures on traditional financial institutions. Policymakers need to keep pace with the rapid developments of fintech, while ensuring that fintech risks are well understood and mitigated.

Second, Asia seems to be one of the frontrunners in this transformation, and is riding high on the growth in Fintech.  According to the IMF and World Bank, one-third of global fintech revenue is now earned in Asia.  Asian tech giants—such as Alibaba, Tencent, and Baidu in China, bKash in Bangladesh and GO-JEK in Indonesia—have become important providers of financial services, rivalling traditional financial institutions. Many fintech products have been developed to facilitate other digital activities such as e-commerce (e.g., Alipay in China and PhonePe in India), as fintech innovations are often pre-conditions for other digital innovations.  While fintech firms currently represent a small share of overall revenue of the financial services industry, their growth and contribution to innovation is undeniable.

Third, there is heterogeneity in Fintech development in the region.  As a result, key challenges include laying out an appropriate regulatory framework to govern Fintech, generate interoperability between economies, and providing the necessary infrastructure to enable Fintech’s wide use in our economies.  In this regard, regulators in many ASEAN countries have established specialized departments dedicated to fintech developments. Some countries laid out regulations on digital lending (e.g., Indonesia, Malaysia, the Philippines, Singapore, and Thailand) and equity crowdfunding (e.g., Malaysia, Singapore, and Thailand). Regional initiatives such as the ASEAN Financial Innovation Network are aimed at facilitating broader adoption of fintech innovation and development. There are high expectations of the potential of fintech to expand financial inclusion for households and MSMEs, as well as reduce the urban-rural gap. As such, there is much merit in countries and stakeholders continuing to share best practices for improving consumer awareness and education, reviewing policy frameworks, and improving institutional capacity to enable fintech investment, innovation, and adoption.  There is scope to promote greater international cooperation on fintech, including but not limited to: cybersecurity, Anti-Money Laundering, Combating the Financing for Terrorism, payments and securities settlement systems, international standards for crypto-assets, cross-border payments, and sharing technological know-how.

Fourth, Fintech innovations offer significant opportunities for Islamic finance to contribute to financial development and inclusion. This includes broad fields of innovation, such as Peer-to-Peer lending, and investment platforms that provide Islamic financial services to retail investors and MSMEs. Islamic Enhanced Competency Frameworks offer opportunities for financers and investors who are looking for products and services compliant with the Islamic principles. Advances in fintech have also created a conducive environment to scale up the offering of these products, and to deepen the social and ethical impacts of financial services. The use of Distributed Ledger Technology holds promise in enabling secured trading of sukuks and establishing a new class of assets that promotes and deepens Islamic capital markets. In 2018, blockchain was used in the resale and settlement of Islamic sukuk by a private Islamic bank in the United Arab Emirates that was worth US$500 million and will mature in September 2023. Another initiative leveraged blockchain technology to enable retail investors to invest in the sukuk, which will then use the proceeds to provide Islamic microfinance under a new initiative in Indonesia.

Given these four observations, my sense is that the opportunities and potential for Singapore and Brunei Darussalam to cooperate with one another on Fintech are tremendous.  In the past years, we have made good progress in strengthening our bilateral cooperation in this field.  During the State Visit of Singapore President Halimah Yacob to Brunei Darussalam in 2018, both sides signed a Fintech Cooperation Agreement to foster financial innovation in the financial services.  This provided the framework for both countries to explore opportunities for cooperation, including enhancing retail payment eco-systems and other innovative projects. One unique feature of the special relationship between Singapore and Brunei Darussalam is our Interchangeability Currency Agreement, which allows for the one-to-one exchange of Singaporean and Bruneian dollars.  We should continue capitalising on this to strengthen cooperation in Fintech, embrace the latest transformative technologies, and harness the Fourth Industrial Revolution to generate new jobs and catalyse future growth in our economies as well as the region as a whole.

Thank you