SINGAPORE (July 11): The Monetary Authority of Singapore (MAS) is working with the financial industry to create a healthy investment ecosystem and achieve three objectives.
These are investing for yield in private markets; safe investment for retirement planning as well as investing for sustainability amid climate change, says Ravi Menon, managing director of MAS, at SIAS 1st Master Series Investment Conference.
In Asia, private market opportunities have seen strong growth, with the private equity (PE) and venture capital (VC) industry in Asia-Pacific hitting a record of nearly US$0.9 trillion ($1.2 trillion) last year. Within the region, Asean is also emerging as a hotbed for PE and VC deal flow.
“A vibrant PE and VC ecosystem is critical for the ongoing technological and digital transformation of Singapore and Asean. Deep and diverse private markets offer investors an opportunity to tap on the returns potential of Asia’s growth companies,” says Menon.
With this, MAS has made the growth of the private market ecosystem a key plank in its industry development agenda and introduced supporting initiatives.
Initiatives include simplifying the regulatory framework for VC managers to help increase access to financing for startup and growth-stage businesses; working with industry players to establish private market platforms in Singapore to help match Asian growth companies with international investors and launching a programme to allocate US$5 billion of MAS funds as part of its investment portfolio into the private markets assets class.
Secondly, given the proportion of those aged 65 or over in East and Southeast Asia is expected to jump from 11% in 2019 to 24% in 2050, safe investment is needed for retirement planning.
Across Asia, the focus is also shifting from pure wealth creation to wealth preservation and wealth bequest.
“As people live longer and the workforce shrinks, individuals will face an uphill struggle to fund longer retirements,” says Menon, who suggests to retirement plan should start from young.
Although financial institutions offer a range of retirement solutions, MAS has issued the Singapore Savings Bonds (SSB) to provide a flexible risk-free investment option for investors to diversify their portfolio for retirement.
“Last year, we doubled the individual limit for holding SSBs to $200,000, due to the increased appetite for safe investments,” says Menon. In addition, MAS is working with the industry to strengthen Singapore’s value proposition as a centre of excellence for managing family wealth.
Thirdly, an increasing number of investors are looking at investment through the lens of environmental sustainability – both with a view to managing climate-related risks as well as to support efforts to reduce carbon emissions.
To achieve this, MAS is working on a comprehensive, long-term strategy to make sustainable finance a defining feature of Singapore’s role as an international finance centre.
It has also made some early moves to promote sustainable investing and mobilise private capital for environmentally-friendly projects. These include the introduction of the Green Bond Grant scheme to level costs associated with issuing a green bond versus that of a conventional bond and to promote the adoption of internationally accepted standards on sustainability.
This year, the Green Bond Grant Scheme has also been renamed to Sustainable Bond Grant Scheme after MAS included social and sustainability bonds, and lowered the minimum issuance size requirement.
