Singapore looking to grow its sustainable finance sector: Heng

Singapore

OVER S$6 billion worth of green bonds have been issued in Singapore so far, with plans to grow the sustainable finance sector even further, said Acting Prime Minister and Minister for Finance Heng Swee Keat on Wednesday.

That is one way that Singapore can contribute to sustainable economic development in Asia, he said.

To that end, the Monetary Authority of Singapore (MAS) is seeking to boost the growth of green, social and sustainability bonds, with the expansion of its Green Bond Grant scheme introduced in 2017 to include social and sustainability bonds this year.

Mr Heng was speaking at the Official Monetary and Financial Institutions Forum (OMFIF) held at the Singapore Exchange, where the Global Public Investor Report was launched for the first time outside London.

He noted that rapid growth and urbanisation are putting significant pressure on Asia's public services, infrastructure and the environment, but they also present investment opportunities.

"How we invest and how we respond to these pressures will determine whether Asia's growth is sustainable," he told the audience.

"Singapore seeks to contribute to Asia's sustainable growth by serving as a key node for channelling financing to the region."

Aside from growing its sustainable finance sector, Mr Heng listed two other ways that the city-state can contribute: tapping on the Infrastructure Asia initiative as a channel for institutions to invest in infrastructure development opportunities in the region, as well as contributing to regional efforts to build resiliency against natural catastrophes.

Infrastructure Asia, launched in 2017 by Singapore, aims to build up both the demand and supply of bankable infrastructure projects in the region.

Mr Heng noted that a crucial component of infrastructure development is private sector financing, but only about 10 per cent of infrastructure in the region are readily bankable. An estimated 30 per cent could become bankable with some added support, he said.

An example of a partnership brokered by Infrastructure Asia is the recently announced China-Singapore Co-Investment Platform by Surbana Jurong and the Silk Road Fund. The US$500 million fund will focus mainly on financing greenfield infrastructure projects that can contribute to the sustainable economic and social growth of communities in Southeast Asia.

Singapore is also looking to strengthen the region's fortitude against natural disasters, which have increased in intensity and frequency due to climate change, said Mr Heng.

Only about 5 per cent of the economic losses are insured in developing Asia, he noted.

This puts "tremendous strain" on governments of developing nations when such catastrophes strike, which can set back economic progress in the affected areas for years to come.

To help solve this issue, the MAS is developing the market for insurance-linked securities (ILS) as an alternative risk financing solution, said Mr Heng.

This helps to address protection gaps, diversify costs of natural catastrophe events and alleviate the fiscal burden on governments.

The Natural Catastrophe Data Analytics Exchange was also set up by the MAS to support the structuring, modelling and securitisation of ILS transactions by improving data quality and promoting standardisation.

An ILS grant scheme was also introduced to defray the costs associated with issuing a catastrophe bond in Singapore, with the first such bond issued out of Singapore earlier this year.

"We hope to grow this, to better meet Asia's needs for protection against disasters," he added.