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Source:
www.mas.gov.sg |
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Speech by Mr Lee Chuan Teck,
Executive Director, Monetary Authority of Singapore, at the Public
Lender & Insurer Infrastructure Finance Summit 2006 on 21 Sep 2006 |
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An Excerpt |
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But let me share with you how I believe
Singapore can contribute to Asia's infrastructure financing activities. |
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Firstly,
there is a sizeable pool of experience and expertise in Singapore, which
can be shared with governments, developers and investors in Asia. |
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In terms of domestic projects, the Singapore
government has handled several large scale projects that involved
substantial private sector participation. As I mentioned earlier, we
embarked on PPP in 2004. We have since awarded a number of projects: A
desalination plant, a water-recycling plant, an incinerator and a
software project for Singapore customs. |
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We are exploring PPP in a number of other
projects. Along the way we picked up some valuable lessons on which
projects are more suited for private investment, how to structure a deal
taking into commercial concerns and public needs, how we organize a
tender in a fair and transparent manner and so on. |
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On the other side of the fence, a number of
Singapore-based companies are active infrastructure developers in Asia
and elsewhere. |
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We have also developed or are developing
industrial parks and Special Economic Zones in a number of countries -
Indonesia, Vietnam, China, India and Russia. This wealth of knowledge
and expertise, from both the public and private perspective, makes
Singapore an ideal location where public officials, supra-nationals and
private investors can gather in conferences like this and exchange ideas
and views on infrastructure development. |
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Second,
as a dispute mediation centre. In any multi-party ventures, disputes
will occasionally emerged. Rather than going through litigation, which
can be expensive and time-consuming, it may be better to go through an
arbitration or mediation process. |
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I'm no legal expert but I was told that the
difference between arbitration and mediation is that in an arbitration
process a third party decides on the outcome while in a mediation
process, the disputing parties mutually agree on the outcome. |
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It seems to me then that the ability to
mediate successfully depends on there being a broad set of behavioral
norms and values that disputing parties subscribed to, and which can
then guide the mediation process. |
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Singapore has a trusted, world class legal
system, with a strong blend of Asian values. Both are natural advantages
for mediating Asian infrastructure disputes. |
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Third, as a financing centre. Through
the Asian Dollar Market, Singapore based banks have been actively
financing Asian projects throughout Asia since the 80's. We can broaden
this to the capital markets. |
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The REITs market is a useful illustration on
how this can be done. We started developing the REITs market in 2002, by
giving certain tax advantages to REIT structures. At first, the
underlying assets were mainly retail malls in Singapore, placed in a
REIT structure for tax advantages. Then, it was expanded to warehouses
and hotels. |
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Over time, as investors and developers
became more comfortable with the asset class, it was expanded to
overseas assets, including properties in China, Indonesia and so on.
Investors who want an exposure to a diverse range of Asian commercial
properties invest in the Singapore REIT market. |
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On the other hand, Asian property developers
who need to raise funds efficiently issue a REIT in Singapore because
there is a ready pool of investors there. In this way, Singapore became
the conduit for funneling global investments to Asian property
developments. |
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The same can be done for infrastructure.
Singapore is a leading project finance hub in Asia. Leading banks such
as Standard Chartered, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui, Mizuho
and BNP Paribas having sizeable on-shore project finance teams to access
regional opportunities. |
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To complement this, last Saturday, we
announced a set of tax incentives to promote the use of Singapore's
capital markets to finance infrastructure projects in Asia through
targeting the investors, issuers and intermediaries. |
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To build investor familiarity, interest
income derived from qualifying infrastructure project bonds will be
fully tax exempt. |
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In addition, we are seeking to facilitate
more asset securitizations via the listed markets. Currently, an
exemption already exists for qualifying foreign sourced dividends. |
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We have expanded this exemption to interest
received from overseas by infrastructure funds listed on the SGX. |
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Finally, income from providing project
advisory services will be taxed at a concessionary rate. Details of the
tax scheme will be released in a month's time. |
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To conclude, I believe Asia is in an
exciting phase of growth. To maximize our potential, much needs to be
done to relieve infrastructure bottlenecks. Public lenders and insurers
have a major role to play. And Singapore is happy to contribute to this
process... |
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Full Text of Speech |
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FrontPage Edition: Sun 24 September 2006
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