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Source:
www.mas.gov.sg |
Incentives to Encourage
Development of Infrastructure Finance |
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Minister for Education and Second Minister
for Finance Tharman Shanmugaratnam announced that Singapore will
introduce a set of incentives aimed at catalysing the growth of project
finance through Singapore's capital markets, and meeting the demand for
infrastructure funding in the region. |
The incentives include the following: |
a. Tax exemption will be granted to
investors on the interest income they derive from bonds issued to
finance qualifying infrastructure projects. This is aimed at
stimulating investor interest in project bonds.
b. Tax exemption will be given on
interest received from overseas by infrastructure funds or other
entities listed on the SGX, which are engaged in offshore
infrastructure projects. This is aimed at encouraging investment in
infrastructure projects in the region.
c. To better service regional funding
needs, Singapore will tax income received from providing project
advisory services, and from arranging, underwriting and distributing
project bonds at a favourable concessionary tax rate. This will help
grow the pool of project finance professionals with the requisite
financing and structuring skills that are critical to the development
of a vibrant infrastructure finance market.
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Speaking at the International Institute of
Finance (IIF)-ASEAN Finance Ministers Forum, Mr Shanmugaratnam said that
there was a major need and opportunity to develop corporate bond markets
in the region in coming years. |
Financing for infrastructure projects was
overly dependent on bank lending. The region will benefit from
diversifying sources of infrastructure finance from loans to the bond
market. |
He added that there were lessons from the
experience of developed capital markets which were relevant. |
Infrastructure funds have emerged as a
separate asset class in the portfolio of global pension funds and
insurance companies in developed countries. |
This is because they provide investors with
a convenient way to own part of a professionally managed portfolio of
infrastructure assets, and to receive a stable and predictable flow of
income from those assets. |
Likewise, project bonds, used to fund long
term infrastructure projects, were flourishing in the developed capital
markets. Mr Shanmugaratnam said, "Singapore wants to catalyse the
markets for funding infrastructure projects in the region". |
The Monetary Authority of Singapore and the
Ministry of Finance will announce further details of the infrastructure
financing incentives before the end of October. |
Source:
www.mas.gov.sg Press Release
16 Sep 2006 |
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