This is one instructive example of how consumer or investor bodies, such as CASE, can play a useful role bringing together and articulating the common concerns of consumers. The second example is structured deposits. Structured deposits have become a popular new investment instrument providing the chance of higher returns than conventional fixed deposits, in exchange for the risk of lower returns if the bet turns out wrong. However, the calculation of returns and risks on such products may be complex. The average retail investor may not understand what the outcome depends on, much less judge the odds of things working out in his favour. Investors may also be misled by the assumption that, being deposits, such products are very safe. Nevertheless, MAS has not prohibited such structured deposits, because that would restrict investor choices and would benefit neither the industry nor the consumers. But under our disclosure-based philosophy, it is important that consumers understand exactly what they are buying. So MAS has proposed guidelines for full and meaningful disclosure of the risks involved, including reasonable illustrations of potential benefits, and clear explanations of any limits on returns. We have also required banks distributing such products to treat these as investment products rather than deposits which can be sold over-the-counter by bank tellers. These guidelines are currently under consultation. MAS will monitor how the market develops to see if further action is required. Going forward, we will produce educational materials to help consumers understand these products better. VI.

We now expect the economy to grow between 0.5-1% this year. But we believe that in the short-term recovery will still be less vigorous, compared to previous cycles. This reflects the continuing restructuring in the Singapore economy, particularly in low-end manufacturing. However, both the manufacturing and services sectors appear poised to ride the recovery and next year we expect GDP growth to pick up to 3-5%. 1  Source: Asian Development Bank. 2  The Business Times, 30 Oct 2003 “KL’s growth will average 6% in 2004-05: Mahathir”. 3  The Business Times, 24 Oct 2003 “Global economy bouncing back, says IMF”. 4  The Business Times, 5 Sep 2003 “East Asia will be fastest with 6.1% growth in 2003”. In the financial services sector, stock market activity reached record levels, with fund management and corporate finance activity also growing strongly. Following several negative quarters, the financial sector started growing again in the second and third quarters. As a result, growth in the first three quarters of this year averaged about 2.5%. The sector should register moderate growth for the rest of the year, and strengthen further into 2004. Prospects for Singapore’s financial centre What does the improved economic and financial outlook mean for Singapore’s financial sector? Back in 1998, when the Financial Sector Review Group was developing strategies for growing the financial sector, we thought that Singapore could become an international financial centre for certain activities, like London. For example, we were already the fourth largest FX centre in the world.