Singapore outlines financial services overhaul in anticipation of green financial boom

A view of the Monetary Authority of Singapore headquarters in Singapore June 28, 2017. Picture taken June 28, 2017. REUTERS/Darren Whiteside/File Photo

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SINGAPORE, Sept 15 (Reuters) – Singapore on Thursday announced plans to overhaul its financial services industry by 2025 in a bid to solidify its position in a “key battleground” for fighting climate change and to mobilize capital to support sustainable finance and green fintech.

The Industry Transformation Map 2025 plans, released by the Monetary Authority of Singapore (MAS), the city-state’s central bank, include measures to streamline corporate structures used by investment funds, including family offices that offer tax breaks, and a $400 million (US$285 million) investment in local talent within the industry.

The sweeping plans, for which full details are yet to be announced, come as Singapore’s appeal as a financial hub in Asia grows amid ongoing COVID-19 restrictions and concerns over mainland China’s increasing control of rival Hong Kong.

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“If we get this right, our financial hub will continue to remain relevant and competitive and be a key global financial hub, connecting global markets, supporting Asia’s development and serving Singapore’s economy,” said Lawrence Wong, Singapore’s Deputy Prime Minister and Finance Minister.

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

The MAS projects that Singapore’s financial sector, with its new plans, will grow at an average of 4% to 5% per year from 2021 to 2025 and create an average of 3,000 to 4,000 net jobs per year.

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

Wong said Asia is an “important battleground” in the fight against climate change. “The financial sector must play its part – to mobilize capital through financing and investments that support the region’s transition to net zero,” he said.

According to the plans, the corporate structure used by mutual funds including family offices called Variable Capital Companies (VCC) will be “improved,” although details of the improvements will not be announced until a later date. VCCs were first introduced in 2020 and offer tax exemptions.

MAS said it has received requests to improve the VCC framework to allow more industry participants and asset owners to set up VCCs and convert existing corporate structures into VCCs.

“Singapore’s wealth management industry has continued to thrive in recent years, posting healthy growth despite the pandemic. We continue to see inflows from diversified sources outside of Singapore, including North America, Europe, North Asia and Southeast Asia,” said MAS.

($1 = 1.4050 Singapore Dollars)

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Reporting by Chen Lin and Xinghui Kok in Singapore; Editing by Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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