The Lion City has become an attractive place for firms from Chinese megacity Chongqing looking to raise cheaper funds overseas.
This was the result of financial cooperation between Singapore and the south-western city of some 30 million people under an official joint project, said Monetary Authority of Singapore managing director Ravi Menon yesterday.
The project, the Chongqing Connectivity Initiative (CCI), was launched in November 2015. It aims to improve connectivity in China's less developed western regions in four key areas - financial services, aviation, transportation and logistics, as well as information and telecommunication.
By the end of last year, Chongqing firms had raised 22 billion yuan (S$4.6 billion) in 39 cross-border financing deals in Singapore and at a cheaper rate.
The average financing cost for these deals was 4.86 per cent, 0.7 per cent lower than the average interest rate for one- to three-year yuan loans in Chongqing. This helped the firms save some 152 million yuan in financing costs, said Mr Menon in a keynote speech at the second Singapore-China (Chongqing) Financial Conference.
Small and medium-sized enterprises in Chongqing, too, will in future be able to tap Singapore to access overseas financing via the initiative, the third Sino-Singapore government-to-government project after Suzhou Industrial Park and Tianjin Eco-city.
"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 told more than 400 Singapore and Chongqing financial professionals and officials.
He suggested that in the next phase of the initiative, both sides should look for new ways to deepen collaboration. This could include tapping the private sector to finance infrastructure projects, promoting the listing of Chinese real estate and infrastructure assets on Singapore's stock exchange, and developing insurance and risk management solutions to support investment.
In conjunction with the conference, Singapore banks - DBS, OCBC and UOB - signed cooperation pacts with Chongqing enterprises to facilitate cross-border trade and investment deals for Singapore firms looking to venture into western China via Chongqing, as well as Chinese firms looking to expand into South- east Asia via Singapore.