Ravi Menon: MAS’ Annual Report 2014/15 Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at MAS’ Annual Report 2014/15 Media Conference, Singapore, 21 July 2015. *  *  *  1. Highlight six areas. •  Economic growth – weaker than expected but not likely to deteriorate further  •  Inflation – coming in at lower half of forecast range  •  Monetary policy – considerations driving recent decisions  •  MAS’ financial performance – stable investment gains amidst volatile currency translation effects  •  Consumer initiatives – helping Singaporeans manage their finances  •  Financial centre development – broad-based growth across all segments  Economic growth Economy clearly lost some momentum in Q2 2. Real GDP contracted by 4.6% in Q2 on QoQ SAA basis  •  Trade-related industries declined, dragged down by weakness in pharmaceuticals, marine & offshore engineering, and electronics. •  Domestic-oriented industries pulled back after strong performance in Q1. But growth momentum not expected to deteriorate further in H2 3. First, global and regional economic recovery remains broadly intact – should provide support for Singapore’s outward-oriented sectors. •  US economy has regained momentum. o  o o •  PMI readings show manufacturing and services sectors expanding. Consumer spending should be buttressed by strengthening labour market. In China, picture is mixed. o  •  Contraction in Q1 largely weather-induced. Excess capacity has been weighing on production.
•  Individuals purchasing property are constrained on their total debt service ratio. 36. MAS announced new unsecured credit rules two years ago. •  FIs will not be allowed to grant further unsecured credit to borrower whose aggregate unsecured debt exceeds borrowing limit for 3 consecutive months. •  This limit has been set at 24 times borrower’s monthly income, and will be lowered to 18 times from 1 Jun 2017 and 12 times from 1 Jun 2019. 37. Vast majority of Singaporeans manage their debt well. •  Less than 2% of unsecured credit users affected by industry-wide borrowing limit. •  Nonetheless, this is about 22,000 borrowers who need help to manage down their debt. There are measures to help unsecured borrowers pay down their debts 38. Banks have worked with Credit Counselling Singapore (CCS) to develop a new Repayment Assistance Scheme (RAS). •  Convenient one-stop solution for borrower to work out centralised repayment solution with creditors. •  Lower interest rate of 5% p.a. over repayment period of 8 years for debt in excess of 12 times a borrower’s monthly income. Second consumer initiative: facilitate retail access to simple, low cost investment products 39. Last year I spoke about how MAS was working to improve savings and investment options for retail consumers. Made progress on three fronts. •  introduced Savings Bonds for flexible risk-free returns  •  facilitated access to $ corporate bonds for stable, long-term returns  •  expanded ETF options for diversified equity returns  40.