CHONGQING - Singapore has become an attractive venue for Chongqing companies to raise cheaper funds overseas, said Monetary Authority of Singapore managing director Ravi Menon on Monday (Sept 4).
This was made possible thanks to the financial cooperation between Singapore and the southwestern city under the Chongqing Connectivity Initiative (CCI), a joint project between Singapore and China to improve regional connectivity in four key areas: financial services, aviation, transportation and logistics, and information and telecommunication.
At the end of last year, Chongqing firms have raised 22 billion yuan (S$5 billion) in 39 cross-border financing deals.
The average financing cost for these deals was 4.86 per cent, which is 0.7 per cent lower than the average interest rate for one- to three-year loans denominated in yuan in Chongqing.
This has helped the firms save some 152 million yuan in financing costs, said Mr Menon in a keynote address on Monday at the second Singapore-China (Chongqing) Financial Conference.
Besides raising funds, Chongqing firms have expanded into Asia, with the support of Singapore banks, said Mr Menon.
The China Chongqing International Economic and Technical Cooperation Group, the first Chongqing state-owned enterprise to set up shop in Singapore, will be signing a memorandum of understanding with United Overseas Bank on the sidelines of the conference.
The two banks will cooperate on getting Chongqing firms to invest in South-east Asia as part of China's signature Belt and Road Initiative.
Small and medium-sized enterprises in Chongqing are also set to tap on Singapore to access overseas financing as a result of collaboration through the CCI.
"OCBC Bank and Chongqing Rural Commercial Bank are working on innovative solutions to provide cross-border funding to small and medium-sized enterprises in Chongqing," Mr Menon added.
He suggested that in the next phase of the CCI, both sides should look for new ways to deepen collaboration.
This includes tapping on the private sector to finance infrastructure projects, promoting the listing of Chinese real estate and infrastructure assets in Singapore's stock exchange, and developing insurance and risk management solutions to support investment.
The CCI was launched in November 2015 during Chinese President Xi Jinping's visit to Singapore, as the third government-to-government project between Singapore and China after the Suzhou Industrial Park and the Tianjin Eco-city.
It aims to boost growth in China's less-developed western regions and support the Belt and Road Initiative, a plan to revive ancient trade routes linking Asia, Africa and Europe to boost global commerce.
More than 400 financial professionals and officials from Singapore and Chongqing attended the one-day conference held in a downtown hotel in Chongqing.
"The conference helped to deepen the interaction among financial institutions and corporates from Chongqing and Singapore," said Mr Menon.
He also noted that the financial services area of the CCI "has made remarkable progress in a short period of time, judging by the deals completed and collaborative projects being undertaken".
Trade between Chongqing and Singapore has been growing at a healthy annual average of 5.2 per cent in the last five years, he said, adding that annual direct investment between the two cities has more than doubled 7.4 billion yuan to 22.2 billion yuan during the same period.
Chongqing vice-mayor Liu Guiping said the conference has created an interaction platform for financial regulatory bodies from both sides to help facilitate cooperation.
"This will promote a market oriented financial industry, increase efficiency in allocating financial resources and achieve greater and more effective integration between the western region of China and South-east Asia," Mr Liu added.