10 Intriguing Facts About Singapore’s Role in Global Finance
No Time to Read? Here’s a Snappy Summary of This Article
- What is Singapore’s role in global finance? Singapore is a major global financial hub, offering a wide range of financial services, including banking, asset management, and wealth management, contributing significantly to the global economy.
- How does Singapore attract international businesses and investors? Singapore’s business-friendly policies, stable political environment, and strategic location make it an attractive destination for international companies and investors seeking to establish a presence in Asia.
- What is the Monetary Authority of Singapore (MAS), and what is its role? The Monetary Authority of Singapore (MAS) is Singapore’s central bank and financial regulatory authority, responsible for ensuring the stability and integrity of the financial sector.
- Can individuals open offshore bank accounts in Singapore? Yes, individuals can open offshore bank accounts in Singapore, known for its robust banking secrecy laws and financial privacy, although regulatory changes may affect this.
- Are there any tax incentives for businesses in Singapore’s finance sector? Yes, Singapore offers various tax incentives to attract financial institutions, including reduced corporate tax rates, exemptions, and grants through schemes like the Financial Sector Incentive (FSI) program.
- How does Singapore contribute to sustainable finance and ESG investments? Singapore is actively promoting sustainable finance and environmental, social, and governance (ESG) investments through initiatives like the Green Finance Action Plan and encouraging responsible investing in the region.
Table of Contents
- No Time to Read? Here’s a Snappy Summary of This Article
- 1. Singapore has over 200 banks operating in its jurisdiction
- 2. Singapore is the largest foreign exchange centre in Asia-Pacific
- 3. Singapore is the second largest wealth management centre in Asia-Pacific
- 4. Singapore is the largest offshore RMB clearing centre outside Greater China
- 5. Singapore is the leading fintech hub in Southeast Asia
- 6. Singapore is the largest fund management centre in Southeast Asia
- 7. Singapore is the leading Islamic finance hub in Asia
- 8. Singapore is the largest catastrophe bond centre in Asia
- 9. Singapore is the first Asian country to issue green bonds
- 10. Singapore is the first country to launch a variable capital company structure
- Meanwhile, Check Out Tropika Club’s Ecosystem of Websites
Introduction
Singapore is a small island nation that has achieved remarkable economic success since its independence in 1965. One of the key drivers of its growth and prosperity is its role as a leading global financial centre that offers a wide range of financial services and products to domestic and international clients. Singapore is ranked third in the world among the most competitive and influential financial centres, behind only New York and London, and ahead of Hong Kong, Shanghai and Tokyo. Singapore is also recognised as a major wealth management hub, a regional treasury centre, a fintech innovation hub and a gateway to Southeast Asia and beyond.
Here are 10 intriguing facts about Singapore’s role in global finance that you should know:
1. Singapore has over 200 banks operating in its jurisdiction
Singapore has a vibrant and diverse banking sector that comprises over 200 banks, including commercial banks, merchant banks and representative offices. These banks offer a full range of banking services, such as deposit taking, lending, trade finance, foreign exchange, treasury, investment banking and private banking. Some of the world’s largest and most reputable banks have a significant presence in Singapore, such as Citibank, HSBC, DBS, UOB, OCBC, Standard Chartered, Bank of China and ICICI Bank.
2. Singapore is the largest foreign exchange centre in Asia-Pacific
Singapore is the largest foreign exchange centre in Asia-Pacific and the third largest in the world, after London and New York. The average daily turnover of foreign exchange transactions in Singapore was US$633 billion in April 2019, accounting for 7.6 per cent of the global market share. The Singapore dollar (SGD) is also one of the most traded currencies in the world, ranking 13th in terms of turnover.
3. Singapore is the second largest wealth management centre in Asia-Pacific
Singapore is the second largest wealth management centre in Asia-Pacific and the sixth largest in the world, after Switzerland, the United States, the United Kingdom, Hong Kong and China. The total assets under management (AUM) of wealth managers in Singapore was US$1.1 trillion in 2018, representing a compound annual growth rate (CAGR) of 9 per cent from 2013 to 2018. Singapore attracts high-net-worth individuals (HNWIs) from around the world with its political stability, strong rule of law, favourable tax regime, skilled workforce and high quality of life.
4. Singapore is the largest offshore RMB clearing centre outside Greater China
Singapore is the largest offshore renminbi (RMB) clearing centre outside Greater China and the third largest in the world, after Hong Kong and London. Singapore accounted for 6.3 per cent of global RMB payments by value in December 2019. Singapore also hosts the largest pool of offshore RMB deposits outside Greater China, with RMB 280 billion as of June 2019. Singapore plays a key role in facilitating RMB internationalisation and promoting trade and investment linkages between China and Southeast Asia.
5. Singapore is the leading fintech hub in Southeast Asia
Singapore is the leading fintech hub in Southeast Asia and one of the top fintech hubs in the world. Singapore ranked fifth out of 27 fintech ecosystems globally in terms of performance, innovation policies and talent availability. Singapore had over 490 fintech firms as of June 2019
6. Singapore is the largest fund management centre in Southeast Asia
Singapore is the largest fund management centre in Southeast Asia and one of the largest in Asia-Pacific, after Japan, China and Australia. The total assets under management (AUM) of fund managers in Singapore was S$4.5 trillion in 2019, representing a compound annual growth rate (CAGR) of 15 per cent from 2015 to 2019. Singapore offers a conducive environment for fund management activities, with its robust regulatory framework, diverse talent pool, strong connectivity and access to regional markets.
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7. Singapore is the leading Islamic finance hub in Asia
Singapore is the leading Islamic finance hub in Asia and one of the top Islamic finance hubs in the world, after Malaysia, Bahrain and the United Arab Emirates. The total assets of Islamic financial institutions in Singapore was US$55 billion in 2018, representing a CAGR of 11 per cent from 2014 to 2018. Singapore offers a comprehensive range of Islamic financial products and services, such as sukuk (Islamic bonds), takaful (Islamic insurance), murabaha (cost-plus financing), musharaka (partnership financing) and halal funds. Singapore also hosts several Islamic finance events and initiatives, such as the World Islamic Banking Conference Asia Summit and the Islamic Banker Asia Awards.
8. Singapore is the largest catastrophe bond centre in Asia
Singapore is the largest catastrophe bond centre in Asia and one of the largest in the world, after Bermuda, the United States and the Cayman Islands. Catastrophe bonds are a type of insurance-linked securities that transfer the risk of natural disasters from insurers to investors. The total issuance of catastrophe bonds in Singapore was US$2 billion in 2019, representing a CAGR of 67 per cent from 2017 to 2019. Singapore offers a favourable ecosystem for catastrophe bond issuers and investors, with its sound legal system, tax incentives, grant schemes and regulatory sandbox.
9. Singapore is the first Asian country to issue green bonds
Singapore is the first Asian country to issue green bonds, which are bonds that raise funds for environmentally friendly projects. The first green bond issued by a Singapore entity was by City Developments Limited (CDL) in 2017, which raised S$100 million for green building projects. Since then, several other entities have issued green bonds in Singapore, such as DBS, UOB, OCBC, Manulife and SP Group. The total issuance of green bonds in Singapore was S$6.7 billion in 2019, representing a CAGR of 72 per cent from 2017 to 2019. Singapore supports the development of green finance through various measures, such as issuing green bond guidelines, providing grants for external reviews and launching a green bond grant scheme.
10. Singapore is the first country to launch a variable capital company structure
Singapore is the first country to launch a variable capital company (VCC) structure, which is a new corporate structure for investment funds that offers greater flexibility and efficiency. The VCC structure allows funds to vary their share capital without shareholder approval, consolidate multiple sub-funds under one umbrella entity, re-domicile existing foreign funds to Singapore and enjoy tax benefits under certain conditions. The VCC structure was launched in January 2020 and has attracted over 100 applications as of June 2020. The VCC structure aims to enhance Singapore’s attractiveness as a fund domicile and management hub.
Conclusion
Singapore is a leading global financial centre that plays a vital role in the world economy. By offering a wide range of financial services and products, it serves as a platform for financial intermediation, innovation and inclusion. By leveraging its strengths and opportunities, it strives to maintain its competitiveness and relevance in the dynamic and evolving global financial landscape.
Frequently Asked Questions (FAQ)
Q: What is Singapore’s role in global finance?
A: Singapore is a major global financial hub, offering a wide range of financial services, including banking, asset management, and wealth management, contributing significantly to the global economy.
Q: How does Singapore attract international businesses and investors?
A: Singapore’s business-friendly policies, stable political environment, and strategic location make it an attractive destination for international companies and investors seeking to establish a presence in Asia.
Q: What is the Monetary Authority of Singapore (MAS), and what is its role?
A: The Monetary Authority of Singapore (MAS) is Singapore’s central bank and financial regulatory authority, responsible for ensuring the stability and integrity of the financial sector.
Q: Can individuals open offshore bank accounts in Singapore?
A: Yes, individuals can open offshore bank accounts in Singapore, known for its robust banking secrecy laws and financial privacy, although regulatory changes may affect this.
Q: Are there any tax incentives for businesses in Singapore’s finance sector?
A: Yes, Singapore offers various tax incentives to attract financial institutions, including reduced corporate tax rates, exemptions, and grants through schemes like the Financial Sector Incentive (FSI) program.
Q: How does Singapore contribute to sustainable finance and ESG investments?
A: Singapore is actively promoting sustainable finance and environmental, social, and governance (ESG) investments through initiatives like the Green Finance Action Plan and encouraging responsible investing in the region.
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