MAS to roll out new financing options for growth companies

The Singapore national flag flies next to signage for the Monetary Authority of Singapore.
The Singapore national flag flies next to signage for the Monetary Authority of Singapore.PHOTO: BLOOMBERG

Easier financing for new entrepreneurs and smaller companies; steps to spur innovation

Sweeping reforms are on the way to make it easier for smaller firms and budding entrepreneurs to secure financing for their businesses.

There are also initiatives to drive innovation in a number of areas, including strengthening Singapore's already leading role as a foreign exchange centre.

The reforms are a response to recommendations by the Committee on the Future Economy to help firms grow and develop new capabilities amid global competition and technological change.

The measures, which were announced yesterday by the Monetary Authority of Singapore (MAS), are designed to gear up the financial sector for the future, including "strengthening financing channels" for firms with strong growth potential.

MAS managing director Ravi Menon said in a statement yesterday: "The underlying thrust ... is to provide a conducive environment for innovation - which is critical for the future of financial services.

 

"We do this through a judicious regulatory framework and enabling technology infrastructure. And even as we allow more risk- taking, we want to do so without compromising the safety of financial institutions and the stability of the financial system."

Several initiatives address the financing needs of firms and entrepreneurs, including what MAS calls "next-generation Asian growth companies". It will also tweak the regulations to enable finance companies to lend more to small businesses.

There are moves on the innovation front as well, with MAS and a local finance technology firm developing an electronic trade-finance platform. It is also promoting electronic trading platforms for foreign exchange to underpin Singapore's competitive edge as Asia's leading hub for currency trades.

CIMB economist Song Seng Wun told The Straits Times that the initiatives are positive steps to help firms access funding, but it also depends on the financial institutions' appetite for risks.

MAS said it is also looking to simplify the authorisation process and regulatory framework for venture capital managers in the coming year to support start-ups.

"It shows that the MAS is listening to market feedback and is making Singapore a more progressive ecosystem for venture capital firms to operate in," said Mr Vinnie Lauria, founding partner of Golden Gate Ventures, which helped start-ups such as Carousell.

MAS may also introduce dual- class share structures to support the growth of high-tech firms.

MAS also said it is forming a new Data Analytics Group with effect from March 15, to help it enhance the supervision of financial institutions and make regulatory compliance more efficient for the banks.

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A version of this article appeared in the print edition of The Straits Times on February 14, 2017, with the headline 'MAS plans to reform financial sector'. Print Edition | Subscribe