Published : 9 June 2022


A most promising area of growth is sustainable finance where singapore aspire to support Asia’s transition to a low carbon economy. 

  • The task of reducing emissions is urgent, as pointed out by the most recent report of the United Nations Intergovernmental Panel on Climate Change.

  • All sectors of the economy need to achieve progressive and deep emission reductions.

  • Some US$2 trillion in infrastructure investments will be needed over the next decade to enable Southeast Asia’s transition towards sustainabilityBain & Company, Microsoft and Temasek, Southeast Asia’s Green Economy: Opportunities on the Road to Net Zero, 2021..

Developing strategies to build a comprehensive ecosystem for green and transition financing.

  • Aligning financing efforts with credible sectoral transition plans, that provide clarity about transition pathways and carbon emission targets. This in turn generates investor confidence and catalyses greater sustainable finance flows.

  • Promoting blended finance solutions, where targeted risk sharing by governments or multilateral development banks can crowd in private capital more effectively.

  • Stepping up efforts to enhance collection of emissions data, develop credible transition taxonomies, and implement consistent climate-related reporting and disclosure standards.

    • One key initiative which MAS has embarked on with the industry is Project Greenprint, which comprises common utility platforms.

    • These platforms will harness technology to address the financial sector’s sustainability data needs, and enable a more transparent, trusted and efficient ESG ecosystem that can catalyse green and sustainable finance.

One of the most encouraging aspects of the strong growth of the financial sector is the number of good jobs that are being created.

  • MAS estimates that there will be more than 9,400 new hiring opportunities for permanent roles in the financial sector in 2022MAS-IBF Employment Outlook Survey 2022..

  • More than 3,000 jobs will be in technology.
    • Software developers and engineers continue to have the highest demand, with more than 700 opportunities.

    • They support a wide range of exciting activities, such as designing and developing digital finance services; applying blockchain technology in trade finance; and using artificial intelligence to detect fraud and money laundering.

  • There will also be interesting new roles in sustainable finance.
    • These range from execution of ESG transactions to advisory services and product development.

    • Many of these jobs will draw on traditional finance expertise such as product structuring, risk management, reporting and pricing, but layered and infused with new knowledge on sustainability.

Climate change is a global existential challenge. Singapore, being a low-lying city state, is particularly vulnerable to the effects of climate change.

Singapore is fully committed to the global climate action, and will play its part as a responsible member of the international community.

In 2021, Singapore launched the Singapore Green Plan 2030 (“Green Plan”), a whole- of-nation movement to advance the national agenda on sustainable development. The Green Plan charts concrete targets over the next 10 years, strengthens Singapore’s commitments under the United Nations’ 2030 Sustainable Development Agenda and Paris Agreement, and positions us to achieve our long-term aspiration of net zero emissions.

The green transition will be a new engine for jobs creation and growth across the economy. This includes the greening of traditional sectors such as aviation, energy, and tourism, as well as the emergence of new sectors such as green finance, carbon services and low-carbon technologies. The Government will work in partnership with the private sector to provide an enabling environment for businesses and workers to take advantage of these new growth opportunities.

To support Singapore’s decarbonisation efforts and deepen Singapore’s green finance market, the Government announced at Budget 2022 that the public sector will take the lead by issuing up to S$35 billion of green bonds by 2030. This will include bonds issued by the Government as well as Statutory Boards.

These public sector green bond issuances will serve as reference for the corporate green bond market, deepen market liquidity for green bonds, and attract green issuers, capital, and investors. This paves the way for greater private sector green finance activity.

The Government has published a national Green Bond Framework (“Framework”), which lays the foundation for the issuance of green bonds by the Government under the Significant Infrastructure Government Loan Act 2021 (“SINGA”), and serves as a reference for Statutory Boards’ respective green bond frameworks.

Singapore Sovereign Green Bonds,
also known as Green Singapore Government Securities (“SGS”) (Infrastructure), will be used to finance major, long-term green infrastructure in Singapore that qualify under the Framework. Borrowing for such infrastructure spreads the costs across the generations that would benefit from these projects.

Examples of eligible green SINGA projects include the upcoming Cross Island Line and Jurong Region Line. Our rail network expansion will enhance connectivity and encourage more commuters to take mass public transport, which together with walking and cycling, are the greenest ways to move.

The Singapore Government will borrow prudently and adhere to stringent safeguards.

(a) In order to qualify for financing via Green SGS (Infrastructure), infrastructure projects will need to meet the high bar to qualify as nationally significant under SINGA, as well as the green eligibility criteria stated in the Framework.

(b) The issuance of such green bonds will be subject to the overall legislative gross borrowing limit and the annual effective interest cost limit under SINGA.

The gross borrowing limit of S$90 billion and annual effective interest cost threshold of S$5 billion apply to the overall SINGA programme, which comprises the issuance of both Green SGS (Infrastructure) and SGS (Infrastructure).

Overview of Singapore Government Borrowings Details on how Green SGS (Infrastructure) fits within the Singapore Government’s existing suite of borrowings.

Bonds & Bills – Monetary Authority of Singapore Details on Green SGS (Infrastructure) such as the issuance calendar, auction updates and bond return calculator.

Sustainable Finance

Sustainable finance is the practice of integrating environmental, social and governance (ESG) criteria into financial services to bring about sustainable development outcomes, including mitigating and adapting to the adverse effects of climate change.

Singapore’s financial sector can play a useful role in catalysing sustainable and green finance in the region. MAS is taking active steps to promote sustainable financing in our financial sector, including engaging financial institutions to consider ESG criteria in decision making processes, support the adoption of industry standards and guidelines, encourage industry-led capacity building efforts, develop the green bond market in Singapore and collaborate with local stakeholders and international counterparts to distill best practices.

Key Facts

Key Facts

MAS is working on a comprehensive, long-term strategy to make sustainable finance a defining feature of Singapore’s role as an international financial centre, just as wealth management and FinTech have become.

– Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at Singapore Financial Forum 2022 SIAS 1st Master Series Investment Conference

MAS SGD Facility for ESG Loans

The MAS SGD Facility for ESG Loans (“Facility”) provides low-cost funding for banks and finance companies to grant loans under Enterprise Singapore’s Temporary Bridging Loan Programme (“TBLP”) and Enterprise Financing Scheme – SME Working Capital Loan (“EFS-WCL”). The TBLP provides additional cash flow support for Singapore-based companies in all sectors to meet their working capital needs, while the EFS-WCL helps Singapore-based small and medium enterprises (“SMEs”) access financing for their operational cash flow needs. Banks and finance companies participating in the TBLP and EFS-WCL can apply for funds at the Facility to support loans made under the TBLP and EFS-WCL until 30 September 2022. The reduction in funding cost will help to lower the interest rates charged to eligible corporate borrowers.

Key Details

Eligible Counterparties  Participating banks and finance companies in the TBLP and  EFS-WCL   administered by Enterprise Singapore (“ESG Loan Schemes”) 
Transaction Type
Collateralised borrowing or Repurchase transaction
Tenor  2-years 

Fixed rate of 0.1% p.a (up to April 2022 application window)
Fixed rate of 0.5% p.a (from May 2022 application window)

Amount  Drawdown allowance for each Eligible Counterparty will be based on the total amount disbursed to local enterprises for loans under the ESG Loan Schemes received by 30 September 2022, which are not using ESG funds.
Eligible Collateral 
  • Category A1: Singapore Government Securities (“SGS”) Bonds
  • Category A2: Other S$ debt securities issued by any Singapore statutory board and AAA-rated or AA-rated public sector entity, supranational, sovereign, sovereign-guaranteed company or non-financial company
  • Category C: Loans to local enterprises under the ESG Loan Schemes received by 30 September 2022, which are not using ESG funds
Initial Haircuts  Collateral haircuts will be sent to Eligible Counterparties upon request. 
Application and Settlement Window  Monthly, from April 2020 till October 2022, and two additional windows in January 2023 and April 2023. 
Application Schedule (112 KB) (updated as at 18 February 2022)  
Terms and Conditions  Available to Eligible Counterparties upon request. 

Sustainable Finance Initiatives

1. Sustainable Bond Grant

Sustainable bond issuers can tap this grant to cover the initial cost of obtaining an external review. The grant offsets up to S$100,000 for eligible green, social, sustainability and sustainability-linked bonds. The grant is valid till 31 May 2023.

More information on the Sustainable Bond Grant

2. IFC-MAS Partnership

MAS is partnering the International Financial Corporation (IFC), a member of the World Bank Group, to promote the growth of green bond markets in Asia.

More information on the IFC-MAS Memorandum of Understanding

3. ABS Guidelines on Responsible Financing

Guidelines developed by the ABS which defines the minimum standards on responsible financing practices to be integrated into member banks’ and financial institution’s business models.

More information on Guidelines for Responsible Financing

4. Sustainable Insurance Forum (SIF)

MAS participates in the SIF which is a network of leading insurance supervisors and regulators seeking to strengthen their understanding of and responses to sustainability issues for the business of insurance.

More information on SIF

5. Asia Sustainable Finance Initiative (ASFI)

Based in Singapore, the ASFI is a multi-stakeholder platform bringing together industry academic, and science-based knowledge partners to support financial institutions in implementing ESG best practices.

More information on ASFI

6. Singapore Stewardship Principles

The principles provide useful guidance to responsible investors towards fostering good stewardship and creating sustainable long-term value for all stakeholders.

More information on Singapore Stewardship Principles

7. Network of Central Banks and Supervisors for Greening the Financial System (NGFS)

MAS is a founding member of the NGFS along with other international partners. The NGFS aims to enhance the role of the financial system to manage risks, and to mobilise capital for green and low-carbon investments in the broader context of environmentally sustainable development.

More information on NGFS

Note* Materials and data obtained or referenced from https://www.mas.gov.sg/, this publication has not been reviewed by the MAS

A Diversify Range of Asset Classes

VCC Solidifies Singapore’s Financial Dominance in Asia

VCC Solidifies Singapore’s Financial Dominance in Asia

How do you transform one of the smallest but one of the most well-managed sovereign states in Asia into an even greater financial powerhouse?

The Singaporean Variable Capital Company Act, or VCC Act, is one of the most significant developments in Asian finance to occur in recent years. Administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA), this legislation opens an entirely new world for foreign and domestic funds seeking to incorporate Asian investment instruments into their portfolios.

Offering a highly flexible fund structure, the VCC is poised to solidify Singapore’s position as the de facto financial and investment capital of Asia. First piloted in 2019 with the inclusion of 18 fund managers, the VCC Act officially went live on January 15th, 2020. Launching or redomiciling a VCC in Singapore is a straightforward process that is doable via the ACRA website. To ease the financial burden of registration, the Monetary Authority of Singapore (MAS) has launched a Variable Capital Companies Grand Scheme program. This program will co-fund up to 70% of incorporation or registering expenses, so long as they are paid to a Singapore-based service provider.

One of the most attractive benefits of using the VCC structure is the ability to issue a fund as a stand-alone entity or an umbrella entity. The former is comprised of a single investment portfolio and is a relatively traditional format for a fund. A VCC umbrella fund is much more dynamic and allows investors to issue various segregated sub-funds, all held under the same umbrella investment fund. Part 4, Subsection 29 of the VCC Act, is one of the essential sections of the Act that touches on umbrella funds. This section states that the segregation of sub-funds means that the liabilities are self-contained to each specific sub-fund. If one sub-fund goes under, the other sub-funds within the same umbrella fund are not affected.

Both open and closed funds are available for registration under the new VCC Act. Open-ended funds can issue an unlimited number of shares, which are generally priced daily based on the fund’s net asset value (NAV). Open-ended funds are usually more liquid and hold diversified portfolios. Close-ended funds raise a fixed amount of capital and publicly trade on secondary markets. This fund style generally entails higher yields than their open-ended counterparts and are priced more frequently than once per day. Each of these fund styles has relative pros and cons, and Singapore’s VCC Act allows investors exposure to both types.

The United States represents a significant portion of the investment world. With portfolios becoming increasingly globalized, any legal framework is well-advised to consider how to incorporate US investors with relative ease. Bringing previously off-shore capital into on-shore funds is often best accomplished using the “check the box” rules associated with IRS Form 8832. These rules allow entities to be treated by the US as “pass-through” entities, offering US investors an enticing level of inclusion. While the legislation is still young, Singapore’s VCC Act allows US investors to take advantage of this attractive election opportunity.

Investors may wish to make the permanent move and redomicile in Singapore, given its emerging status as the de facto entry point to Asian financial markets. If a company is already doing business in Singapore, redomiciling allows for complete business continuity and confers many tax benefits. It is important to note that redomiciling in Singapore is irrevocable as there are currently no provisions for entities incorporated in Singapore to redomicile overseas.

While this means redomiciling is a permanent decision, the VCC Act demonstrates that the city state’s financial environment is further liberalizing, conferring both business and legal benefits for any entities that decide to redomicile in Singapore.

If a company is already doing business in Singapore, redomiciling allows for complete business continuity confers many tax benefits.

The subject of taxation naturally entails bilateral and multilateral trade agreements, of which Singapore has many. Singapore beats out most other nations in terms of tax treaties with 86 in its jurisdiction. This amount compares to 83 tax treaties in Luxembourg, 74 in Ireland, and 37 in Hong Kong. Any potential investor must consider the tax treaty benefits conferred by incorporating or redomiciling in Singapore as a second-order benefit. The OECD’s Base Erosion of Profit Shifting (BEPS) initiative focuses on eradicating predatory tax rate shopping by international corporations, and Singapore is a dedicated signer of this initiative. Notwithstanding this further demonstrates the veracity of the VCC Act and Singapore’s earnest approach to confidently stepping up to the plate as the new financial doorway to Asia.

The VCC Act takes the best aspects of other tax havens’ financial frameworks and optimizes them Singapore’s unique situation. This Act comes at a near-perfect time as the city-state is poised to receive massive investment from off-shore funds seeking to redomicile as on-shore entities due to geopolitical uncertainties. Many considerations must be taken into account before a company decides to expand into a new legal jurisdiction.

However, with Singapore’s dedication to Common Law, near-perfect position in the Strait of Malacca, and increasing economic liberalization, one would be hard-pressed to find a better candidate for foreign investment.