Singapore on Thursday announced plans to thoroughly overhaul its financial services sector by 2025 in an effort to strengthen its position in a “key battleground” for fighting climate change, by mobilizing capital to support sustainable finance and green fintech.
The”Industry Transformation Map 2025″ plans announced by the Monetary Authority of Singapore (MAS), the Central bank of the city-state, include measures to streamline the business structures used by investment funds, including family offices, which offer tax benefits, and an investment of S$400 million ($285 million) in local talent within the sector.
The broad plans, the full details of which are yet to be revealed, come at a time when Singapore’s appeal as a financial center in Asia is increasing amid prolonged COVID-19 restrictions and concerns about China’s increasing surveillance of rival Hong Kong.
“If we do this well, our financial hub will remain relevant and competitive, and remain a major global financial hub that connects global markets, supports Asia’s development, and serves Singapore’s economy,” said Lawrence Wong, Singapore’s deputy prime minister and finance minister.
Wong said at a press conference that there is “growing interest” among wealthy individuals and family offices to do more in the field of philanthropy.
The MAS expects Singapore’s financial sector to grow by an average of 4% to 5% per year between 2021 and 2025 through its new plans, creating an average of 3,000 to 4,000 net jobs annually.
The plans include A s$ 100 million fund over five years to support sustainability within 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 do 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 investment funds, including family offices, called Variable Capital Companies (VCC), will be “improved”, although details of the improvements will not be disclosed until a later stage. VCCS were first introduced in 2020 and offer tax exemptions.
MAS said it had received requests to improve the VCC framework so that more industry participants and asset owners can establish VCCS and convert existing business structures into VCCS.
“The asset management sector in Singapore has continued to do well in recent years and has shown healthy growth despite the pandemic. We continue to inflow from diversified sources outside Singapore, including North America, Europe, North Asia and Southeast Asia,” said MAS.