S’pore to announce new incentives for family offices, launches trade finance registry to counter risks

SINGAPORE – Singapore can help to fight the global threat of climate change by incentivising and organising capital from the public, private and philanthropic sectors and channelling new models of blended finance into sustainable projects that promise longer-term returns, Senior Minister and Monetary Authority of Singapore (MAS) chairman Tharman Shanmugaratnam said on Friday.

“The (climate) challenges we face require significant amount of investment over a long period of time. And Singapore should look at this as a growth opportunity,” he added.

He was speaking at the 50th anniversary of the Association of Banks in Singapore (ABS) at Shangri-La Singapore.

“One important source of (growth capital) that we’re now looking at are single family offices, which is a significant pool of capital that is growing faster than most other sources of wealth,” he said.

MAS will announce in July improvements to its tax incentive scheme for single family offices in Singapore.

These include providing tax privileges, incentives or grants for contributions to charity, channelling capital towards blended finance and investing in the mitigation of climate change globally, Mr Tharman said.

“Overall, we have to strengthen the whole ecosystem of capital, expertise and compassion to address the triple-headed crisis of global warming, loss of biodiversity and a global water crisis.”

The changes are also expected to encourage family offices to pay more attention to the social causes that require compassion, impact, investment and deep engagement in society.

ABS on Friday also launched an information registry to securely maintain a centralised record of trade finance transactions here.

The new Trade Finance Registry will help to mitigate risks such as duplicate financing that are common in the business.

Participating banks will start by registering new trade financing transactions in the registry, and if any of the transactions are found to be duplicated, notifications will be triggered in near real time for further action.

Only information on corporate customers will be provided to the registry, with data encrypted to ensure privacy.

Trade finance refers to the financing provided to facilitate the commercial trading of goods between importers and exporters across international borders.

It is a business that typically involves several parties such as banks, insurers, freight forwarders and logistics service providers.

Duplicate financing is a common risk in trade finance as it involves multiple parties financing a single transaction or shipment.

This occurs when a trader obtains financing from different banks using the same invoice as collateral for each loan, and can result in over-financing and raise the risk of fraud.

Mr Sriram Muthukrishnan, group head of product management, global transaction services at DBS Bank, said: “As an industrywide utility, the Trade Finance Registry seeks to tackle key issues of fraud and duplicate financing that banks face due to information asymmetry.”

ABS director Ong-Ang Ai Boon said the association is “pleased that in bringing the industry together, we have created a utility that will bolster the confidence of all stakeholders in undertaking trade finance in Singapore”.

Outgoing ABS chairman Wee Ee Cheong said the move “will help enhance trust and confidence between banks and traders. It will strengthen Singapore’s reputation as one of the world’s leading centres for trade”.

In his speech, Mr Wee, who is also deputy chairman and chief executive of UOB, took stock of the local banking sector’s progress and success over the past 50 years.

“At the heart of it all is trust – mutual trust among members and trust in banks by the public and other stakeholders. The trust we have now was built through decades of sound and credible actions by the industry and ABS,” he noted.

“The latest Banking Trust Index for Singapore found that more people believe that banks will do right by them. This is a good sign. Trust is, and will always be, key to the business of banking.”

Mr Wee said ABS has in recent years led important industry initiatives on the digital front, such as the Singapore payment systems PayNow and eGiro.

“As we make payments increasingly frictionless and digital, we must weigh the trade-off between convenience and security. The onus is on banks to ensure that banking services are secure to uphold customers’ trust,” he added.

He stressed that preventing scams will be a key priority not just for the banks, but also the authorities, the telcos and the merchants moving forward.

DBS chief executive and incoming ABS chairman Piyush Gupta said the banking industry has a critical role to play in sustainable financing and ensuring there is sufficient talent in the sector to work with artificial intelligence and how to deploy it ethically.