Blended finance can help bridge gaps, fuel green transition in Asia: DPM Wong
He also says Singapore has the potential to be a hub for philanthropy in Asia, with the government reviewing its tax schemes to help bring this about
Michelle Quah
THERE is much scope in Asia – and in Singapore, in particular – for more innovative financing, such as public-private partnerships in the form of blended finance, to help battle climate change and foment a just and fair green transition in the region, said Deputy Prime Minister Lawrence Wong.
He was speaking at the Philanthropy Asia Summit on Friday (Sep 30), organised by Temasek Trust, in a chat with DBS Group chief executive officer Piyush Gupta.
“Asia will be the battleground for climate change, and we need to accelerate that green transition in Asia,” the DPM said.
But, Asia’s needs are tremendous and diverse, he added, with countries in the region being at different stages of development. “In many parts of South-east Asia, you have millions of people who don’t even have basic access to electricity and water.
“So, how do we ensure a just and fair transition for many of these countries, to (help them) achieve their net-zero plans? The one thing that’s needed is much greater focus on transition activities and transition finance,” said Wong, who is also Singapore’s Finance Minister.
He noted that many countries in the region have tremendous potential for carbon mitigation and for renewable energy projects, but that financing is an issue.
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“You can build a solar plant, you can build a wind farm or a hydro-power plant, but the offtake is too expensive, because electricity is highly subsidised by coal, or fossil fuels. So, there is a gap. And if the gap exists, that project is not bankable and will not be financed.
“How do we bridge that gap? One way is through blended finance, where we can bring concessionary capital into the picture and that concessionary capital can come from multilateral development banks, or it can come from philanthropists. And then we can crowd in and catalyse private capital, worked out blended structures to get more of these projects underway,” he explained.
Blended finance, defined simply, is the bringing together of official development assistance with other private or public resources – so that each can leverage the others.
Wong recognised that blended finance platforms do already exist in Singapore, but that these need to be scaled up. “There certainly is a lot of scope; it’s something that we are focused on, particularly in the area of sustainable finance and green financing.”
The DPM also pointed out that climate change is not the only challenge that Singapore and the region should be focused on – with investment in public health and human capital also being critical.
“Public health is a huge area, where we really need to strengthen our systems, strengthen our ability to collaborate with one another, strengthen our primary care network… and thinking about how we can do that collaboratively all over the region.”
He warned that the danger of sleepwalking into the next pandemic is real, if countries do not learn the lessons from the current Covid-19 pandemic.
Education is also a key priority, with human capital being so essential to any country’s development. “And human capital means starting from young – (from) pre-school, (continuing through) adult learning and lifelong training,” he said.
As for the theme of the summit, Wong said that the government sees an opportunity for Singapore to be a hub for philanthropy in Asia – where businesses, individuals and family offices can use Singapore as a base to contribute meaningful and impactful solutions.
And, he reiterated, the Republic is reviewing its tax incentive schemes to help bring this about.
“When we look at Singapore, we are seeing a growing base of successful entrepreneurs, unicorns, as well as more and more family offices being set up here in Singapore. (And) many of them tell us they would like to leave behind a legacy beyond wealth accumulation – they are looking for investment opportunities that have ESG (environmental, social and governance) characteristics that align with their values, and will leave behind a positive impact on society.”
According to Wong, Singapore wants to encourage these to do more, in terms of contributing towards philanthropic causes and setting up charitable foundations. Reiterating a point he raised at an event at the Wealth Management Institute earlier this week, he said: “We are reviewing our tax incentive schemes to see how we can encourage family offices to not only give within Singapore, but to give overseas as well.”
He said that details would be announced in due course, when the review of the matter is completed. “The bottom-line message is this: to anyone who’s interested in wanting to give, in an impactful manner, we would like to say the best place to do this is right here in Singapore.”
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