Financial Sector Receives Booster for Further Growth
Singapore, 17 February 2006...Prime Minister and Minister for Finance Lee Hsien Loong announced several tax measures in his budget speech, to promote further growth and development of Singapore's financial sector, including measures to build up the depth and breadth of the Capital Markets and to further promote Islamic Finance in Singapore.
2 Singapore's derivatives market has seen strong growth in recent years. Singapore is the second largest OTC derivatives centre in Asia. Singapore has also forged a lead role in the trading of commodities. We are currently the world's third largest oil refining centre, top bunker port, and the Asia Pacific centre for the pricing and trading of oil and rubber. To reinforce our position as a major oil-trading, ship-broking and financial risk management hub, we will offer concessionary tax rates to facilitate the clearing of OTC derivatives in Singapore.
3 The REITs market in Singapore has also seen steady growth in the last year. As at December 2005, there were seven listed REITs worth almost S$12 billion. Measures have been introduced to further encourage REITs listed in Singapore to grow their pool of foreign assets.
4 Singapore has developed into a key regional hub in Asia for international corporates which hub their Asian operational headquarters as well as regional financial treasury and risk management activities in Singapore. To facilitate these activities further, the scope of activities qualifying for our Finance and Treasury Centres Incentive will be expanded to include trading and arranging of derivative products for their network of companies. For corporates who look to manage their risks through captive insurance vehicles, we have enhanced the tax concession for approved captive insurance companies writing offshore risks. This will in addition create beneficial spin-offs to Singapore's status as an insurance and reinsurance centre.
5 We continue to strive to enhance the environment for the structuring of Islamic financial products in Singapore. To level the playing field, we have aligned the tax treatment of a wider range of Islamic Finance products with equivalent conventional financing contracts. These changes will facilitate product innovation and broaden the range of instruments available to regional and international investors.
6 These measures are effective immediately. Details of these measures will be released by end of May 2006. For further information please contact Celeste Cheo (65 6229 9169).