Singapore outlines financial services reform with focus on green finance boom

Singapore outlines financial services reform with focus on green finance boom

Written by Chen Lin and Shenghui Kwok

SINGAPORE (Reuters) – Singapore on Thursday announced plans to reform its financial services sector by 2025 in a bid to cement its place in a “key battleground” to combat climate change, mobilizing capital to support sustainable finance and green financial technology.

Plans for an ‘Industry Transformation Map 2025’ issued by the Monetary Authority of Singapore (MAS), the city-state’s central bank, will include measures to simplify the corporate structures used by investment funds, including family offices, which offer tax breaks, and an S$400 investment. $1 million ($285 million) in local talent within the industry.

The broad plans, the full details of which have yet to be announced, come with Singapore’s appeal as a growing financial hub in Asia amid prolonged COVID-19 restrictions and concern over China’s heightened scrutiny in Hong Kong.

β€œIf we do this right, our financial center will continue to remain relevant and competitive, and will serve as a major global financial node connecting global markets, supporting Asia’s development, and serving Singapore’s economy,” said Lawrence Wong, Deputy Prime Minister and Finance of Singapore. Minister.

Wong said during a media briefing that there is “a growing interest” among high net worth individuals and family offices to do more in the field of philanthropy.

MAS Ventures’ new plans will see Singapore’s financial sector grow an average of 4% to 5% annually from 2021 to 2025, creating an average of 3,000 to 4,000 net jobs each year.

Plans include a S$100 million fund over five years to support sustainability in the finance sector such as green fintech, new sustainable finance solutions and reinsurance.

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Wong said Asia has been a “major battleground” to combat climate change. “The financial sector must do its part – to mobilize capital through financing and investments that support the region’s transition to net zero,” he said.

Under the plans, the corporate structure used by investment funds will be “strengthened” including family offices called Variable Capital Companies (VCC), although details of the improvements will not be announced until at a later stage. VCCs were first introduced in 2020 and offer tax breaks.

MAS said it has received requests to improve the VCC framework so that more industry participants and asset owners can create VCCs and transform existing corporate structures into VCCs.

β€œSingapore’s asset management industry has continued to perform well in recent years, registering healthy growth despite the pandemic. We continue to see inflows from diverse sources outside of Singapore, including North America, Europe, North Asia and Southeast Asia,” Maas said.

(1 dollar = 1.4050 Singapore dollars)

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