Proposals by Singapore’s Committee on the Future Economy affecting PE and VC asset managers
Key features of the Report of the Committee on the Future Economy which might impact private equity (PE) and venture capital (VC) asset managers.
The Committee on the Future Economy (CFE) comprising five Cabinet ministers and 25 private sector members, led by Singapore Finance Minister Heng Swee Keat, have come up with a report on proposals to help Singapore thrive in the face of a slowing economy and global political uncertainty.
Overview of the Report of the Committee on the Future Economy
The report outlined seven “mutually-reinforcing” strategies that will maximise the chances of Singapore’s success, namely:
- Deepen and diversify our international connections
- Acquire and utilise deep skills
- Strengthen enterprise capabilities to innovate and scale up
- Build strong digital capabilities
- Develop a vibrant and connected city of opportunity
- Develop and implement Industry Transformation Maps
- Partner each other to enable innovation and growth
On 08 February 2017, Singapore Prime Minister Lee Hsien Loong responded in a letter indicating the Government’s acceptance of the CFE’s proposals, and that the Government will pursue all of them. Further, the Prime Minister stated that various Ministers will provide a full response during the 2017 Budget Speech and Committee of Supply debates.
The report sets out certain recommendations which would be of particular interest to PE and VC asset managers:
Enhancing the financing ecosystem for start-ups
Most notably, the report mentions the need for more “smart and patient growth capital” in order for enterprises based in Singapore to scale up. The CFE highlighted the need to encourage a variety of private sector funding sources, such as banks, VC funds and PE funds.
To achieve this, the report recommends simplifying the regulatory framework for VC firms, in particular, the authorisation process for VC managers. This echoes the intention of the Monetary Authority of Singapore (MAS) to “review some of the regulatory requirements placed on venture capitalists”. In August 2016, speaking at the launch of the MAS’ innovation lab, Looking Glass @ MAS, the MAS’ managing director Mr Ravi Menon highlighted the need for Singapore to develop its fintech scene to catch up with leading fintech ecosystems such as those in New York and Silicon Valley. This goes hand in hand with the CFE’s proposal for the Government to design a regulatory environment to support innovation and risk-taking.
Increasing the supply of financing for Singapore-based firms
The CFE recommends encouraging more PE firms to be based in Singapore so as to improve and develop their knowledge of the opportunities in Singapore and the region. The report highlights the need for the Government to consider how to encourage PE firms to invest more growth capital into Singapore-based companies looking to regionalise.
Looking ahead
Singapore continues to prioritise its adaptability to our challenging global economic and political landscape. The CFE’s proposals in respect of the VC and PE space showcase Singapore’s desire to remain innovative and relevant to the world.
