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Singapore is one of the leading financial centers of the world and a major distribution hub of
finance in Southeast Asia. No wonder, therefore, that the country has created one of the
most advanced banking system in the world, numbering about 700 local and foreign banks
and financial institutions that provide services ranging from consumer banking and asset
management, to stock exchange, investment banking and specialized insurance services.
At the end of 2004, Singapore’s domestic banking sector consisted of assets / liabilities in
the amount of about 230 billion U.S. dollars. Singapore’s leading banks are ABN AMRO,
Citibank, DBS, HSBC, OCBC, Standard Chartered and UOB. Country’s central bank is the
Monetary Authority of Singapore (MAS), which determines monetary policy, regulates banks
and financial institutions and issues the currency. Despite the current lack of government-
sponsored deposit insurance program, MAS plans to establish such a system in the near
future.
Activities of commercial banks licensed in Singapore and is subject to the Banking Act.
Commercial banks may engage in all possible types of banking activities. In addition to
providing commercial banking services, including deposit-taking, lending and checking
operations, banks may also engage in any other kind of banking business, which is regulated
or permitted by MAS, including consulting services in finance, brokerage services in the field
of insurance and capital market placement services (Section 30 of the Banking Act describes
all the possible types of banking activities).
Commercial banks and their representatives do not necessarily need a separate license for
such activities, but must comply with the code of conduct in its business activities
prescribed in the Act on Financial Advisors (IA) and the Law on Securities and Futures Act
(SFA), respectively. In July 2001, the Banking Act was amended by prohibiting banks from
engaging in non-financial activities. Banks were provided three years, until July 2004, on
completion of their non-financial activities. In August 2003, this grace period was extended
for another two years until July 2006 for those banks which have applied to MAS to request
an extension. Currently in Singapore operate 113 commercial banks. Five of them are
registered at the local level and are owned by three local banking groups. Commercial banks
can operate as banks, providing the full range of services, wholesale banks or offshore
banks.
Banks providing a full range of services
Currently, there are 28 banks, offering the full range of services and operating under the
Banking Act in Singapore. Five of them are registered and owned by the local 3 local
banking groups, and the remaining 23 banks are branches of banks registered abroad. Six of
the 23 branches of foreign banks have the privilege to implement a full range of banking
services. Foreign banks, providing the full range of services and those who use the specified
privilege can only have 15 branches and / or ATMs of which a maximum 10 can be separated
from the branches. These banks can use ATMs in conjunction with each other and are free to
change the location of their offices. From July 1, 2002 privileged banks were allowed to
provide services through EFTPOS (electronic funds transfer)debit network, to offer additional
pension package, to use the investment accounts (CPF Investment Scheme accounts) and
take time deposits in the investment scheme with a minimum amount of the deposit.
Wholesale banking
Wholesale banks may engage in the same banking activities that banks offering a full range
of services, except that they do not have the right to provide retail banking services in the
Singapore dollars. They operate in accordance with the Guidelines issued by MAS to work
wholesale banks. In Singapore, there are 37 wholesale banks, and all of them are
subsidiaries of foreign banks.
Offshore banks
Offshore banks have the right to engage in the same activities as banks, providing a full
range of services, as well a activities involving Asian currencies, expressed in units of Asian
currencies (ACU). Units of Asian currencies – is an accounting unit used by banks to account
for all their foreign currency transactions carried out on the Asian market. Banking
operations in Singaporean dollars are accounted separately in the domestic banking unit
(DBU). The volume of transactions carried out in the domestic banking units of offshore
banks a bit more limited in terms of transactions with residents compared with wholesale
banks. Offshore banks operate in accordance with the Guidelines issued by MAS for offshore
banks.
As a part of the liberalization of the banking activities, offshore banks were given greater
leeway in the implementation of wholesale operations with the Singaporean dollar. Limit on
loans in SGD to offshore banks was increased to 500 million now, these banks may transact
“swap” in the Singaporean dollars in relation to the proceeds from the issuance of Singapore
dollar bonds, which are run or released by banks.
In total in Singapore operate 48 offshore banks, and all of them are subsidiaries of foreign
banks.
Merchant banks
In addition to these three categories of commercial banks, there are financial institutions
that can operate as merchant banks. Merchant banks are approved by Monetary Authority in
accordance with the law, and their activity is subject to the directives of the trade banks.
Operations of these banks in terms of Asian currencies also performed in accordance with
the Banking Act. Typically, commercial banks engaged in financing of corporate entities, the
subscription to shares and bonds issued, mergers and merger of companies, investment
portfolio management, management consulting and other reimbursable activities. Most
commercial banks with the permission of MAS work with Asian currencies, through which
they compete with commercial banks in the Asian dollar market. As for DBU, then merchant
banks have no right to demand deposits, savings deposits or borrow from the public.
However, they are allowed to accept deposits or borrow from banks, finance companies,
shareholders and companies controlled by their shareholders. Total in Singapore there are
currently 52 commercial banks.
Financial companies
Financial companies concentrate their activities on a small scale financing, including loans to
purchase cars, consumer durables, and extend loans for real estate purchase. Financial
companies are licensed and operated in accordance with the Law on financial companies.
Financial companies are not allowed to open deposit accounts, which allows to withdraw the
funds at the request of checks, promissory notes or payment request. They are not allowed
to provide unsecured loans in excess of 5,000 Singaporean dollars to any person or for any
transaction in foreign currency, gold or other precious metals or acquire shares,
denominated in foreign currencies, equity or debt securities.
However, financial companies with capital of more than 10 million Singapore dollars, may
apply for permission to carry out transactions in foreign currencies, precious metals and
shares denominated in foreign currencies. Such permit shall be issued, provided that at any
time the aggregate amount of credit granted in foreign currency will not exceed 10% of
equity finance company. In Singapore, there are 3 financial company.
Some of major financial institutions operating in Singapore in accordance with a
license to provide a full range of services:
ABN AMRO BANK NV
AMERICAN EXPRESS BANK LTD
BANGKOK BANK PUBLIC COMPANY LIMITED
BANK OF AMERICA, NATIONAL ASSOCIATION
BANK OF CHINA LIMITED
BANK OF EAST ASIA LTD
THE BANK OF INDIA)
BANK OF TOKYO-MITSUBISHI, LTD
BNP PARIBAS
CALYON
CITIBANK SINGAPORE LIMITED
HL BANK
(HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED
THE INDIAN BANK
INDIAN OVERSEAS BANK
JPMORGAN CHASE BANK, N.A.
MALAYAN BANKING BHD)
PT BANK NEGARA INDONESIA (PERSERO) TBK
RHB BANK BERHAD
SOUTHERN BANK BERHAD
STANDARD CHARTERED BANK
SUMITOMO MITSUI BANKING CORPORATION
UCO BANKhttp://sgbanks.com/singapore-banking-system-opening-account-singapore
Bisnis.com, NUSA DUA - Berbeda dengan Indonesia, sejumlah negara di Asia telah
memiliki skema perlindungan nasabah terintegrasi.
Sebut saja Korea Selatan yang memiliki perkembangan paling pesat dalam
implementasi skema proteksi terintegrasi.
Begitu juga Singapura, bahkan negara tetangga Malaysia yang sudah memiliki lembaga
independen yang menangani perlindungan nasabah perbankan dan asuransi.
Hayden Hyunseok, Senior Manager International Cooperation Team Korea Deposit
Insurance Corporation (KDIC), memaparkan sejak terjadi krisis finansial di Asia pada
1997, struktur industri finansial di Korea berubah drastis dari semula hanya ada skema
kompensasi terhadap perbankan, sampai akhirnya digagas skema kompensasi
terintegrasi.
Tak hanya industri perbankan, pemerintah Korea juga menjamin perlindungan nasabah
di industri asuransi, pasar modal, dan perkreditan. Batasan dana yang diberikan kepada
nasabah setiap sektor antara lain, masing-masing 20 juta won untuk nasabah
perbankan dan pasar modal, dan masing-masing 10 juta won bagi nasabah merchant,
mutual savings bank, serta nasabah serikat kredit.
Bagi nasabah lembaga perkreditan diberikan penggantian kerugian maksimal 30 juta
won, sementara itu penggantian untuk nasabah asuransi tercatat paling tinggi yakni
mencapai 50 juta won.
Di Singapura, lembaga perlindungan nasabah terintegrasi bernama Singapore Deposit
Insurance Corporation (SDIC) bahkan sudah memiliki jenis dan bentuk pungutan yang
jelas dan rinci untuk masing-masing produk asuransi.
Chief Executive Officer SDIC Ooi Sin Teik menjelaskan pihaknya memisahkan premi
dan batasan dana kerugian bagi industri asuransi jiwa dan asuransi umum.
“Untuk produknya pun memiliki klasifikasi dan batasan tersendiri, ada maksimum
kerugian yang diganti,”paparnya dalam seminar 3rd International Workshop on
Integrated Protection Scheme beberapa waktu lalu.
Tak hanya pemisahan persentase premi dan batasan maksimum dana kerugian,
pemerintah Singapura juga memisahkan dana hasil pengumpulan premi masing-masing
industri agar tidak ada cross subsidize dan menimbulkan kerancuan.
http://finansial.bisnis.com/read/20140316/215/211174/contoh-skema-perlindungan-nasabah-terintegrasi-di-beberapa-negara
Otoritas Moneter Singapura atau Monetary Authority of Singapore (Singkatan: MAS; bahasa
Tionghoa: 新加坡金融管理局; bahasa Malaysia: Penguasa Kewangan Singapura) adalah bank
sentral dan otoritas keuangan di Singapura. Hal ini mengelola berbagai hukum yang terkait dengan
uang, perbankan, asuransi penerbitan, sekuritas dan sektor keuangan pada umumnya, serta mata
uang Singapura.
Daftar isi
[sembunyikan]
1 Sejarah 2 Tanggungjawab
o 2.1 Alat 3 Penerbitan uang kertas dan uang logam 4 Lihat pula 5 Referensi 6 Pranala luar
Sejarah[sunting | sunting sumber]
Otoritas Moneter Singapura didirikan pada tahun 1971 untuk mengawasi fungsi-fungsi keuangan
terkait dengan perbankan dan keuangan. Sebelum pembentukan, fungsi keuangan dilakukan oleh
Departemen pemerintah dan agen.
Sebagai negara berkembang Singapura, klaim dari perbankan semakin kompleks dan lingkungan
keuangan mengharuskan perampingan fungsi untuk memudahkan pengembangan kebijakan yang
lebih dinamis dan koheren tentang hal-hal keuangan. Oleh karena itu pada tahun 1970,Parlemen
Singapura melewati hukum Otoritas Moneter Singapura yang mengarah pada pembentukan MAS
pada 1 Januari 1971.
Tanggungjawab[sunting | sunting sumber]
Pada April 1977, Pemerintah memutuskan untuk membawa keseimbangan industri asuransi di
bawah sayap MAS dan pada September 1984 fungsi regulasi bawah Securities Industry Act (1973)
juga dipindahkan ke MAS. Ini berarti bahwa tidak seperti banyak bank sentral yang lain, MAS juga
pihak kuasa keuangan untuk Singapura.
MAS telah diberikan kuasa untuk bertindak sebagai bankir dan agen keuangan Pemerintah. Ini juga
telah dipercayakan untuk memperkenalkan stabilitas keuangan, dan kredit dan kebijakan perubahan
kondusif untuk pertumbuhan ekonomi.
Alat[sunting | sunting sumber]
Namun, tidak seperti banyak bank sentral yang lain seperti Federal Reserve System di Amerika
Serikat atau Bank of England di Britania Raya, MAS tidak mengatur sistem keuangan melalui suku
bunga untuk mempengaruhi likuiditas dalam sistem. Sebaliknya, MAS memilih untuk melakukannya
melalui mekanisme pertukaran asing. MAS melakukannya dengan intervensi di pasar Dolar
Singapura.
Penerbitan uang kertas dan uang logam[sunting | sunting sumber]
Setelah penggabungan dengan Dewan Komisaris Uang pada tanggal 1 Oktober 2002, MAS
diasumsikan fungsi penerbitan mata uang.
MAS memiliki hak eksklusif untuk mengeluarkan uang kertas dan uang logam di Republik
Singapura. Dimensi, desain dan denominasi mereka ditentukan oleh Komite Kebijakan Keuangan
dengan persetujuan Pemerintah. Uang kertas dan uang logam sehingga diterbitkan memiliki status
legal tender di dalam negeri untuk semua transaksi, baik negeri maupun swasta, tidak terbatas.
https://id.wikipedia.org/wiki/Otoritas_Moneter_Singapura
Banking Industry and Major Banks in SingaporeRelated Links
Setting Up a Singapore Company
Opening a Singapore Bank Account
Singapore Income Tax
Singapore is a flourishing financial centre of international repute servicing not only
its domestic economy per se but also the entire Asia Pacific region. The banking
industry is a key player in the country’s financial market segment, soon emerging
as one of the strongest in the world. Factors such as a sound economic and political
environment, conducive legal and tax policies, reputation for integrity, and strict
enforcement against crime and money laundering, have contributed to Singapore’s
status as an International Finance Centre – the third largest in Asia, after Japan and
Hong Kong. Today there are as many as 117 foreign banks and 6 local banks that
dominate the banking scene.
Factors that have contributed to the success of the banking industry in Singapore
include:
Liberalisation of the domestic banking market.
Local banks strengthened their regional presence through mergers and
acquisitions.
Expansion of foreign banks, some of which made Singapore a regional or even
global platform for important banking services, which in turn led to increased
competitiveness.
Increased competition spurred the development of innovative products and more
competitive pricing models.
Provision of sophisticated banking services like corporate and investment banking
activities, apart from traditional lending and deposit-taking functions.
Strict banking secrecy laws, tax friendly policies and a suite of wealth
management services created a private banking boom. Swiss giants Credit Suisse
Group and UBS AG have expanded private-banking operations in Singapore to
cater to new demand from Asians and Europeans.
Recognising and catering to the needs of Small and Medium Enterprises who
comprise a sizable banking market in Singapore.
This guide provides an overview of the banking industry in Singapore focusing on
the key trends, the major domestic and international players and the services they
offer, the role of the Monetary Authority of Singapore (MAS) and banking regulations
that govern the industry today.
Singapore’s Banking Industry TrendsLiberalisation of banking sector
In May 1999, MAS launched a five-year liberalisation package to strengthen the
banking system and to improve Singapore’s reputation as an international financial
centre. The measures included issuing a new category of full banking licenses
known as Qualifying Full Bank (QFB) licenses to foreign banks, increasing the
number of restricted banks, and giving offshore banks greater flexibility in
Singapore Dollar wholesale business. MAS also set out to improve corporate
governance practices. Furthermore, the 40 percent foreign shareholding limit in
local banks was lifted.
The second phase of liberalisation began in June 2001 during which the restricted
banks were re-classified as wholesale banks to improve competitiveness in retail
banking. QFBs were given more privileges (permission to establish more locations,
provide debt and special account services). Qualifying offshore banks (QOBs) were
given priority to upgrade themselves to wholesale banking status. Consolidation of
local banks was seen as a positive, stabilising move as these banks play a pivotal
role in providing resilience and stability to the banking system, especially during a
financial crisis.
Growth of private banking industry
Singapore has capitalised on the growing number of high net worth individuals in
Asia and other regions like Europe and the Middle East, emerging as a leading
private banking destination for international investors. Singapore has earned the
sobriquet “Switzerland of Asia”, attributable to
Strict banking secrecy laws – Section 47 of the Banking Act states that customer
information shall not, in any way, be disclosed by a bank or any of its officers, to
any other person except as expressly provided in the Banking Act.
Non-recognition of the 2005 European Tax Directive – Singapore is one of the few
remaining offshore centres that has not signed up to the EU’s Savings Tax
Directive, whose country members can exchange private information relating to
individuals who bank and invest in these countries.
Generous tax incentives – Capital gains and interest income from outside
Singapore are not taxed here.
Private banks such as UBS, Credit Suisse, Citigroup and Standard Chartered to
name a few, provide
global wealth management services
wealth and lifestyle advisory services
investment strategies
tax and estate planning
asset protection
credit services
Investment banking hub
The investment banking industry opened up as Singapore matured into a key
international debt arranging hub in Asia. The following factors have contributed to
the country’s active and thriving capital market:
Encouraging a steady flow of issuance from the Singapore Government, statutory
boards, supra-nationals and corporates.
Launching the Approved Bond Intermediary Scheme that nurtured bond investors
to sustain the debt market.
Growth of SGX as an International exchange which attracted many foreign
companies, who account for more than a quarter of total listings.
High standards to maintain investor confidence led to various initiatives to
enhance disclosure, strengthen market discipline and improve corporate
governance of listed companies. These measures included: the Code of Corporate
Governance, revisions to the SGX listing rules and the introduction of the new civil
penalty regime under the Securities and Futures Act.
Most investment banks in Singapore perform various corporate-finance and
investment related activities like:
Underwriting securities
Acting as an intermediary between an issuer of securities and the investing public
Acting as a broker for institutional clients
Facilitating mergers and acquisitions; and corporate reorganizations
Strengthening of local banking groups
A major move in the local banking sector was the consolidation of the previously 6
local banking groups into the present 3 main local banks (DBS, OCBC and UOB).
This led to strengthening the banks’ capabilities, building their management teams
and enhancing operational effectiveness. They have expanded their range of
business activities and have also improved their business and risk management
capabilities. Today, the local banks are “one stop shops” designed to meet all the
needs of their banking customers. With greater financial strength from the mergers
and increased competition at home, local banks have begun to venture abroad and
develop a regional footprint through overseas acquisitions.
SME Banking Services
Local and foreign banks alike have recognised that SMEs are an important segment
of the market and offer a wide range of financial services tailored to meet their
needs. Deposit products and cash management services, loan products, card
products, insurance products, trade financing services (import/export products) and
investment products are all designed to cater to the needs of these enterprises. In
addition to commercial credit, the Government also has financing schemes to assist
SMEs to upgrade, modernise and expand their operations.
Industry Snapshots
With one of the more well-established capital markets in Asia-Pacific, the
Singapore Exchange (SGX) is the preferred listing location for more than 200
global companies.
Singapore has grown to be the largest Real Estate Investment Trust (REITs)
market in Asia ex-Japan and also provides an extensive offering of investments in
business trusts of shipping, aviation and infrastructure assets.
With an extensive range of both Singapore government securities and foreign
corporate bonds available, Singapore offers fixed income investors a wide range
of investment opportunities.
As one of the top 5 most active foreign exchange trading centres in the world,
Singapore is also the second largest over-the-counter derivatives trading centre in
Asia, and a leading commodities derivatives trading hub.
Singapore is recognized as one of the premier asset management location in Asia
with total assets under management around S$1 trillion.
Types of BanksMost banks in Singapore cater to different types of clients – individuals, corporations
or government agencies. These banks provide commercial banking (catering to
businesses and corporations), retail banking (catering to individual members of the
public) and private banking (catering to HNWIs) services. Banks can be classified
into 2 main categories:
Local Banks (6)
Foreign Banks(117) – further sub divided into
o Full Banks (27) – provide the whole range of banking business approved under
the Banking Act. Six of the foreign banks operating in Singapore have been
awarded Qualifying Full Bank (QFB) privileges. These banks include: HSBC,
Citibank, Standard Chartered, Maybank, ABN AMRO and BNP Paribas.
o Wholesale Banks (53) – engage in the same range of banking activities as full
banks, except Singapore Dollar retail banking activities. All wholesale banks in
Singapore, operate as branches of foreign banks. Examples: ING bank, National
Australia Bank, Barclays Bank, Deutsche Bank etc.
o Offshore Banks (37) – engage in the same activities as full and wholesale
banks for businesses transacted through their Asian Currency Units (an
accounting unit, which banks use to book all foreign currency transactions
conducted in the Asian Dollar Market). The banks’ Singapore dollar transactions
are separately booked in the Domestic Banking Unit (DBU). All offshore banks in
Singapore, operate as branches of foreign banks. Examples: Korea
Development Bank, Bank of Taiwan, Bank of New Zealand, Canadian Imperial
Bank of Commerce etc.
o Merchant banks (42) – provide corporate finance, underwriting of share and
bond issues, mergers and acquisitions, portfolio investment management,
management consultancy and other fee-based activities. Most merchant banks
have, with MAS’ approval, established ACUs, through which they compete with
commercial banks in the Asian Dollar Market. In their DBU, they may accept
deposits or borrow only from banks, finance companies, shareholders and
companies controlled by their shareholders. Examples: Credit Suisse Singapore
Ltd, Barclays Merchant Bank Singapore Ltd, ANZ Singapore Ltd, Axis Bank Ltd
etc.
Major Banks in SingaporeMajor local banks
1. DBS (Development Bank of Singapore) established in 1968, is considered the
largest bank in Singapore and Southeast Asia, as measured by assets. It is a
leading consumer bank in Singapore and Hong Kong, serving over 4 million and
1 million retail customers respectively. It also has the largest retail network in
Singapore, with 80 branches at present. It ranked 14th in The Banker’s “Top 200
Asian Banks 2008″.
2. OCBC (Oversea Chinese Banking Corporation) established in 1912, is one of the
largest financial institutions in the Singapore-Malaysia market with total assets
of S$184 billion. It ranked 1st in “Top 5 Regional Banks”, Asia Risk End-User
Survey 2008.
3. UOB (United Overseas Bank) established in 1935, is a leading bank in Singapore
with a strong presence in the Asia-Pacific region. As at 31 December 2007, the
UOB Group had total assets of S$175.0 billion. It was awarded the “Best Overall
Fund Group in Singapore” during The Edge-Lipper Singapore Fund Awards 2008.
Major foreign banks
1. HSBC – In Singapore, The Hong Kong and Shanghai Banking Corporation Limited
first opened its doors in December 1877. HSBC is an approved Primary Dealer in
the Singapore Government Securities Market and an Approved Bond
Intermediary (ABI). It is a QFB honoured with 33 awards at Global Finance
Awards 2006 by Global Finance.
2. Standard Chartered – Standard Chartered’s Singapore operations began in 1859
and today boasts of a largest branch network (20) among international banks in
the Republic. It is the Group’s second largest consumer banking market and
was awarded a Qualifying Full Bank (QFB) licence in 1999. It is the largest
custodian bank in Singapore for foreign institutions, rated top for the past seven
years in Global Custodian’s Agent Bank Survey.
3. ABN-AMRO Singapore – ABN AMRO is now owned by RBS, Santander and the
Dutch government. Its various businesses around the globe are currently being
separated from ABN AMRO and integrated in line with each owner’s plans.
4. Maybank – Maybank’s presence in Singapore began in 1960 as a full-licensed
commercial bank. Maybank is currently among the top five banks in ASEAN and
is a Qualifying Full Bank in Singapore. As of June 2008, Maybank’s total assets
amounted to S$22.7 billion in Singapore.
5. BNP Paribas – BNP Paribas has been at the forefront of banking in Singapore
since 1968 and was awarded a QFB status in 1999. Today, BNP Paribas
Singapore assumes a prominent presence in the region by acting as the Group’s
regional hub for its business in Corporate and Investment Banking as well as
Private Banking.
6. Citibank – Citibank was the first American bank to set up a branch in Singapore
in 1902. Although a relative latecomer to the retail-banking sector, the bank has
grown into a formidable market player with major market share in key
businesses including unsecured lending, deposits and investments and secured
assets. Citibank was among the first four foreign banks to be awarded the
Qualifying Full Bank (QFB) license in 1999.
Bank Regulations and LegislationIn Singapore, the laws regulating banking are found in the relevant Acts passed by
Parliament (and their related subsidiary legislation), the common law and principles
and rules of equity. The common law and principles and rules of equity are derived
from case law. These legislations not only regulate the banking sector in Singapore,
but also ensure that the legal framework for banking in Singapore keeps pace with
the latest developments in the financial world. The relevant acts pertaining to the
banking industry include:
1. Banking Act – The Banking Act (Cap 19, 2003 Rev Ed) is the legislation that
governs commercial banks in Singapore.
2. Monetary Authority of Singapore Act (Cap 186, 1999 Rev Ed) – governs all
matters related to and connected to MAS and its operations.
3. Anti Money Laundering Regulations
4. Payment & Settlement Systems Guidelines
5. Securities and Futures Act
Role of Monetary Authority of SingaporeIn Singapore, the Monetary Authority of Singapore acts as a defacto central bank. It
was established in 1971 in order to regulate Singapore’s financial industry to aid in
its development as an international financial centre. Its primary function is to
ensure that the financial markets operate in an efficient and smooth manner, in line
with national economic goals. The MAS is responsible for the following:
Implementing monetary policy
Supervisor of the banking systems
Banker to the government
Banker to the banks
Controller of International Reserves
Issuer of currency
Issuer of banking licences
Lender of last resort
http://www.guidemesingapore.com/doing-business/finances/singapore-banking-industry-overview
Government Funding and Assistance SchemesRelated Links
Singapore Company Setup Guide
Private Equity Financing Guide
Private Debt Financing Guide
Recognizing that lack of adequate funding is often the most common stumbling
block for start-ups in general. In this regard, the role of the Singapore government
and its associated agencies cannot be overemphasized in contributing to
Singapore’s success as a start-up friendly nation. Enterprise development is on the
top of the government’s agenda. It has consciously crafted a pro-business, and
supportive environment conducive to entrepreneurs who want to start a business
here. Singapore-based start-ups can benefit from an optimal business environment,
excellent infrastructure, low-tax system, lack of bureaucracy, strong legal
environment, a readily available workforce.
The Singapore government has rolled out several initiatives to enable start-ups to
gain access to funding. These funding initiatives include cash grants, government
backed equity financing schemes, business incubator schemes, debt financing
schemes, and tax incentives.
This guide sheds light on the various support programs that have been instituted to
help Singapore start-ups gain access to funding to turn their business ideas into
reality. Start-ups in Singapore have a lot to look forward to in terms of government
aided financial assistance schemes. The funding initiatives instituted by various
government agencies for start-ups include the following:
Government-aided equity financing schemes
Cash grants
Business incubator schemes
Debt financing schemes
Tax incentive schemes
Equity Financing SchemesEquity financing is capital that is lent by investors to a business in exchange for a
share of ownership in the company. This form of financing is ideal for start-ups that
need additional capital, especially in their early-stage of development. In addition to
private sources of equity capital, there are certain co-investment equity financing
schemes that have been launched by the Singapore government in order to
catalyze the supply of private capital. In other words, the government co-invests in
start-ups along with a third-party investor. The popular government-backed equity
financing schemes include the following:
SPRING Startup Enterprise Development Scheme (SPRING SEEDS):
SPRING SEEDS is an equity investment scheme where SPRING SEEDS Capital, a
subsidiary of government agency SPRING Singapore, co-invests in commercially
viable Singapore-based start-ups along with independent third-party investor(s),
matching dollar-for-dollar up to a maximum of S$1 million; the first round of
investment is usually limited to S$300,000. SPRING SEEDS Capital and the third-
party investor(s) will take equity stakes in the company in proportion to their
investments. For more details, please visit here.
Business Angels Scheme (BAS): The Business Angels Scheme is an equity
investment scheme where SPRING SEEDS Capital, a subsidiary of government
agency SPRING Singapore, co-invests in growth-oriented, innovative Singapore-
based start-ups along with pre-approved business angels matching dollar-for-
dollar up to a maximum of S$1.5 million. SPRING SEEDS Capital and the business
angel group will take equity stakes in the company in proportion to their
investments. For further information, please click here.
Early-Stage Venture Funding Scheme (EVFS): The Early-Stage Venture
Funding Scheme (EVFS), that is administered by the National Research
Foundation (NRF), is a co-funding scheme where selected venture capital firms
who raise at least S$10 million from third-party investors will receive dollar-for-
dollar matching from the NRF up-to a maximum of S$10 million in order to invest
in early-stage technology start-ups. Certain qualifying technology start-ups can
approach the venture capital firms directly in order to seek funding of up-to S$3
million. Click here to find out more.
Cash GrantsOne of the advantages of starting-up in a country like Singapore is that aspiring
entrepreneurs can gain access to business grants disbursed by different
government agencies to fund start-ups across various industries. Each grant has its
set of terms and conditions including qualifying criteria and disbursement method.
Typically, grants only cover a percentage of the finance needed. The business
owner will have to pitch in for the remaining capital. Most grants for start-ups are
designed to encourage investment in innovation, research and development, and
social causes. You are advised to review the terms of the grant prior to making an
application with the appropriate government agency. Some of the popular grants
that are made available to start-ups in Singapore include:
ACE Start-ups Scheme: ACE Start-ups Scheme is a financial assistance scheme
where ACE (Action Community for Entrepreneurship) will match S$7 to every S$3
raised by an entrepreneur for up to S$50,000. In other words, the entrepreneur
will need to raise S$21,429 if (s)he wishes to receive a grant of S$50,000. For
selected ventures, ACE will match S$3 to every S$7 raised by the entrepreneur for
an additional S$50,000. For these ventures, the total grant is capped at
S$100,000. ACE does not take equity in exchange for the financial grant. For more
details, please click here.
Technology Enterprise Commercialization Scheme (TECS): The TECS that is
jointly administered by the Infocomm Development Authority (IDA) and SPRING
Singapore spurs the formation of new technology start-ups in Singapore by
addressing their early-stage funding needs towards the commercialization of
proprietary technology ideas. The following grants are offered under the TECS:
o For applicants who wish to develop proprietary ideas at conceptualization stage:
Up-to 100% of qualifying costs for each project up to maximum of S$250,000.
o For applicants who wish to carry out further research and development on a
technology project, including the development of a working prototype: Up to
85% of qualifying costs for each project up to maximum of S$500,000. The
applicant must demonstrate proof of interest from a potential customer or third-
party investor. Click here to find out more.
iSTART:ACE Scheme: The iSTART:ACE (Accelerate & Catalyse Entrepreneurship)
grant scheme that is administered by the Infocomm Development Authority (IDA)
aims to encourage and assist Singapore-based start-ups to accelerate technology
commercialization and catalyze go-to-market activities by leveraging
internationally proven technologies. Under the iStart:ACE scheme, the IDA will
offer funding support to qualifying start-ups by way of a grant that covers up-to
50% of salaries of five technical staff for one year up-to a maximum cap of
S$250,000. For more information, please click here.
iSPRINT: Another project by the IDA, iSPRINT (Increase SME Productivity with
Infocomm Adoption & Transformation) covers improvements through packaged
solutions, such as for accounting and payroll, to more complex customized
solutions for areas such as customer relationship management and supply chain
management. Any customized solutions require that the development must be for
the first-time automation of business functions. In addition, it should be carried
out in Singapore, and must not have started before the grant is approved. iSPRINT
is open to all locally registered or incorporated SMEs. For more information,
see iSprint Scheme Details.
ComCare Enterprise Fund (CEF): The ComCare Enterprise Fund that is
administered by the Ministry of Social and Family Development (MSF; formerly
Ministry of Community Development, Youth & Sports) provides seed funding for
social enterprise start-ups (strictly from the social services sector) that train and
employ disadvantaged Singaporeans of up-to 80% of the capital expenditure and
first two years’ operating costs, subject to a maximum of S$300,000. More details
can be found here.
New Initiative Grant (NIG): The New Initiative Grant that is administered by
the National Volunteer and Philanthropy Centre (NVPC) provides seed money for
Singapore-based start-ups with new initiatives that meet community needs in
Singapore and are strong in volunteerism and/or philanthropy. Qualifying start-
ups will receive funding that covers up to 80% of costs (e.g. manpower, rent,
equipment, volunteerism and philanthropy-related costs) in furtherance of the
initiative for one-year subject to a maximum of S$200,000. Click here for more
details.
*Currently on hiatus till July 2015.
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help!Need help with incorporation? Find out how we can
help!Business Incubation SchemesBusiness incubators are an invaluable resource for start-up entrepreneurs who are
not only looking for funding but are also keen on getting guidance and know-how for
their venture. In general, business incubators offer a physical space for the new
business to operate along with access to cost-effective shared services, business
guidance, and financial assistance during their early-stage of development. It is
ideal for start-ups that are looking for regular support, mentoring, funding and
networking along with low-start up costs. The current incubation schemes that are
available to start-ups in Singapore include:
i.Jam Micro Funding Scheme: The IDM (Interactive Digital Media) Jump-start
And Mentor (i.JAM) scheme that is administered by the Media Development
Authority’s inter-agency, Interactive Digital Media Programme Officeappoints
incubators to identify, nurture, and administer funding to technically competent
start-ups. More specifically, the incubators will advise start-ups on the uniqueness
of their ideas, aggregate start-ups with similar ideas, offer networks, and provide
guidance on securing additional funding. Incubators will invest 10% to 25% of the
qualifying project costs of the start-up. In addition, start-ups will receive a grant
up-to a maximum of S$50,000 of the project’s qualifying costs. Incubators will
take equity stakes in the company in proportion to their investment. The grant
will be disbursed to the start-up on a reimbursement basis. To find out more,
please click here.
NRF Technology Incubation Scheme: The National Research Foundation has
selected fifteen technology incubators to nurture high-tech Singapore start-ups by
way of mentorship as well as funding. The NRF will offer up-to 85% co-funding in
each start-up company in the incubator, up to a maximum of S$500,000. The
incubator will be required to invest the remaining amount of at least 15%. NRF
and the incubator will take equity stakes in the company in proportion to their
investments. Click here for more information.
Incubator Development Program: The Incubator Development Program that is
administered by SPRING Singaporeprovides up-to 70% grant support to incubators
and venture accelerators who actively introduce programs that help nurture start-
ups including cost of hiring mentors, expenses incurred to market
services/events, hire incubator managers, train staff, provide shared
services/equipment for start-ups, etc. Innovative startups can benefit from the
programmes offered by the various incubators and venture accelerators
supported under the Incubator Development Program. To find out more, please
click here.
Incubator for Disruptive Enterprises and Start-ups (IDEAS) Fund: The
IDEAS Fund that was launched by Innosight Ventures Pte. Ltd. a Singapore-based
venture capital firm and the National Research Foundation (NRF) is an incubator
fund for early-stage start-up companies. Start-ups with disruptive innovation
potential will be identified and offered guidance during their early-stages
including funding investment to the tune of up-to S$500,000-S$600,000. The NRF
supports the incubator with 85% co-funding. For additional information, please
click here.
Fast-Track Environmental and Water Technologies Incubator Scheme
(Fast-Tech): The Fast-Tech scheme that is administered by the Economic
Development Board offers start-ups in the environmental and water technology
sector funding assistance of up-to S$300,000 or up to 85% support level,
whichever is lower, over two years. In addition, the start-ups will be housed in
water-technology incubators who will offer mentorship and guidance. The
designated incubator will take an equity stake in the company. The grant will be
disbursed to the start-up on a reimbursement basis. To know more, please
click here.
Debt-Financing SchemesDebt-financing is a viable start-up funding option for entrepreneurs who wish to
raise capital without having to give up a share of their profits. The only downside is
that loan repayments have to be made on time and that borrowers are indebted to
lenders, irrespective of whether the start-up is generating profits or not. Traditional
sources of debt financing are “friendship loans” from family and friends as well as
private debt-financing schemes. However, there are a significant number of
government debt-financing schemes that have been designed for SMEs in
Singapore. Start-ups that meet the qualifying criteria can also avail of these
schemes. The various government debt-financing schemes in Singapore include:
Micro-Loan Program: Under the Micro-Loan Program, participating banks and
financial institutions will lend eligible Singapore companies loans of up-to
S$100,000 for their daily operations or for automating and upgrading factory and
equipment. The SMEs will have to pay a minimum 5.75% interest rate for a less
than four years loan tenure. For details, click here.
Loan Insurance Scheme (LIS): The Loan Insurance Scheme insures loans
against default risks. The government will co-share the insurance premium with
the start-up enterprise. The LIS supports both domestic trade and overseas trade
facilities. There is no maximum loan quantum for the LIS. The premium rate,
interest rate, and loan tenure will be determined by the insurer based on the risk
profile of borrower. The government provides premium support of 50%. The
repayment structures and collateral requirements will be determined by the
participating financial institutions. Further information can be found here.
Local Enterprise Finance Scheme (LEFS): Under the LEFS, participating banks
and financial institutions will lend eligible Singapore companies loans of up-to
S$15 million for automating and upgrading factory and equipment/construction
equipment/heavy vehicles, and/or purchasing factory and business premises. The
SMEs will have to pay a minimum 4.75% interest rate for a less-than-four-years
loan tenure and 5.25% interest rate for a loan tenure of more than 4 years. To
know more, please click here.
Tax Incentive SchemesOne of the very prudent and noteworthy initiatives of the government has been the
introduction of several tax benefits for start-ups. Tax breaks act an incentive for
entrepreneurs to build more companies and generate more jobs for the economy.
Listed below are the various tax incentives that are made available to start-ups and
SMEs in Singapore.
Tax Exemption for Start-ups: Singapore startups that meet certain qualifying
criteria can avail of a full tax exemption on a certain amount of their taxable
income for the each of their first three consecutive years. A newly incorporated
Singapore company that satisfies the qualifying conditions (viz. be incorporated in
Singapore, be a tax resident of Singapore and has no more than 20 shareholders
of which at least one is an individual shareholder holding at least 10% of shares)
will be taxed as follows:
o For each of its first three consecutive tax years – corporate tax rate of 0% on
the first S$100,000 of taxable income and 8.5% (partial exemption) tax rate on
the next S$200,000 of taxable income. The taxable income above S$300,000
will be charged at the normal headline corporate tax rate of 17%.
o From the fourth tax year onwards – 8.5% tax rate on taxable income of upto
S$300,000 per annum. The taxable income above S$300,000 will be charged at
the normal headline corporate tax rate of 17%. For more information, please
refer to our Singapore Corporate Tax guide.
Development and Expansion Incentive (DEI): The DEI encourages Singapore-
based companies to move into high value-addition business activities, expand
their operations in the country, and procure advanced machinery and equipment
by offering a reduced tax in the range of 5%-10% on incremental income derived
from qualifying activities.
Investment Allowance: Companies may claim capital allowance on plant and
equipment used in connection with their trade or business, subject to meeting
certain conditions. Budget 2012 saw the introduction of a new Integrated
Investment Allowance Scheme that will provide an additional allowance on fixed
capital expenditure incurred for productive equipment placed overseas on
approved projects with effect from YA 2013.
Pioneer Incentive Scheme: Companies from the manufacturing or services
sector that engage in activities that raise overall industry standards may be
eligible for full corporate tax exemption on qualifying profits for up to 15 years.
Productivity and Innovation Credit (PIC) Scheme: The PIC scheme is a tax
benefit scheme that was first introduced in 2010 to encourage companies to
engage in innovative and productive activities. Under the scheme, businesses can
enjoy up-to 400% deduction or allowances on up to $400,000 of expenditure
incurred in each of the following qualifying innovative activities. The qualifying
activities include Research & Development; Intellectual Property registration;
Intellectual Property acquisition; Design activities, Automation through technology
or software; and training of employees. Note businesses will be allowed to
combine the $400,000 expenditure cap per year for YA 2013 to YA 2015 into a
new ceiling of $1,200,000 over the three years. Businesses with a low taxable
income, can choose to convert up to S$300,000 of the tax deductions and
allowances credited to them into a cash grant, up to a maximum of S$21,000
each year. Businesses can also exercise an option to convert upto S$100,000 of
their expenditure into a non-taxable cash payout at a conversion rate of 30%. The
cash payout rate will be increased from 30% to 60% for up to S$100,000 of
qualifying expenditure from YA 2013 to YA 2015. Earlier the PIC benefits were
applicable only to R&D activities performed in Singapore. However, effective YA
2011 PIC benefits will also extend to R&D done overseas.
Industry-specific tax incentives: In addition to the above-mentioned tax
incentives, there are various industry-specific tax incentives for Singapore-based
SMEs, including start-ups. For a comprehensive overview of these incentives,
please refer to our guide on Industry-specific Tax Incentives in Singapore.
On A Final NoteToday, Singapore has emerged as a premier destination to do business. The World
Bank has consistently ranked Singapore as the best place to do business for the last
six consecutive years. It has also been ranked as Asia’s most entrepreneurial
economy and the best country to nurture start-ups for expats. Singapore has
emerged as a hub for first-time entrepreneurs and the city has witnessed the
mushrooming of several start-ups over the past few years. Start-ups, defined as
companies employing at least one employee and less than 5 years old, have
increased from 27,000 in 2002 to more than 36,000 in 2009 in Singapore. These
start-ups have employed more than 300,000 workers and generating more than
S$166 billion in turnover.
The Singapore government has taken cognizance of the key role played by new
businesses in spurring economic growth and has consequently spent considerable
amount of money, time and effort in devising a support ecosystem for start-ups in
Singapore.
http://www.guidemesingapore.com/doing-business/finances/singapore-government-schemes-for-startups
Venture Funding Options for Singapore CompaniesRelated Links
Singapore Company Registration Guide
Private Debt Financing Guide
Government Assistance Schemes Guide
In equity financing, you sell partial ownership of your company in exchange for
cash. The investors assume all the risk i.e. if the company fails, they lose their
money. But if it succeeds, they typically make much greater return on their
investment than interest rates. Compared to debt financing, equity financing is far
more expensive if your company is successful, but far less expensive if it isn’t.
The rise of Asia is rapidly spurring the birth of new startups and private equity
players in Singapore. In recent times, the Singapore government has been actively
encouraging more private investors to invest in the country’s numerous start-ups by
introducing timely tax incentive schemes. According to a news report, Singapore
accounted for almost 52% of all private equity investments in Southeast Asia
between 2005 and 2010. The country is also considered to be the fourth attractive
market for venture capital and private equity firms. This spells good news for start-
ups that are looking to raise capital through equity financing.
This guide provides an overview of the private equity financing options for start-ups
in Singapore.
What is Private Equity Financing?One of the major challenges that start-ups face in their early stage is access to
capital. Many new business ventures are funded with informal capital often sourced
from the founders, or their family and friends. However, often to fund their growth
or to build out their infrastructure, informal sources of funding no longer suffice.
This is where private equity financing can play a role in addressing the gap.
Private equity financing refers to capital from private investors who are looking at
capital gains and possibly dividend returns in return for their investment in a firm.
Private funding is an attractive source of start-up funding especially for businesses
that do not have sufficient collateral for traditional loans. In order to have a good
chance of securing equity capital in Singapore, you need to have a comprehensive
business plan, a clear exit strategy, reasonable financial projections, an experienced
management team, and strong growth potential. Determining the stage of your
business life cycle is key to finding the right investor. Venture capitalists and
business angels are the two major sources of private equity capital. Other sources
of private equity capital include banks, investment companies and financial
institutions.
Angel investors are wealthy individuals who generally invest in high risk, early
stage business ventures in exchange for a share of the business. In other words,
business angels are private investors who invest their business skills and capital
in start-ups and early-stage businesses in exchange for equity in the investee
company. Business angels can operate independently or can be part of an angel
network. They are usually interested in investing in start-ups that have high
growth potential and that belong to business sectors that they are familiar with.
Some business angels play an active role in the business in offering guidance, and
mentor-ship to start-ups while some act as sleeping partners. The best source of
private equity capital for start-ups in the seed or early-stage are business angels.
Venture capitalists are professional investors who play a very active role in
your business. Like most business angels, venture capitalists not only offer
funding, but also advise you on how you can enhance the profitability of your
business. Venture capitalists look for a higher rate of return from the company
they invest in, usually 25% and above. Most venture capitalists prefer to invest in
start-ups that are at advanced stage and are in high growth sectors such as
biotechnology, nanotechnology, or IT.
Private funds are the third source of equity financing for startups. Banks,
financial institutions, and investment companies are the main sources of private
funds. Managers of private funds are not interested in playing an active role in
managing the business. Their main purpose is to receive an attractive return on
their investment. Such funds are only suitable for those businesses that are
already established, are generating revenue, and have a high growth potential
and not start-ups in the early-stage of growth.
Angel Investment Scene in Singapore Angel investment is a significant source of raising capital in Singapore.
Angel investors are typically successful businessmen with an appetite for start-up
companies with higher risk.
Usually, business angels offer early-stage investment to start-ups.
Angel investors tend to invest in start-ups that have a certain competitive
advantage in the market. This could include innovative technology, exclusive
marketing and distribution relationships or a strong brand or access to scarce raw
material, etc. The business idea should demonstrate that it will generate returns
for the investors.
Start-ups that have a high growth potential win the favor of most business angels.
Angel investors not only provide funding but also offer mentorship and strategic
guidance to the companies they invest in.
According to research conducted by the National University of Singapore,
business angels in Singapore tend to invest in the retail, hospitality and business
services sectors.
Typically, individual business angels invest anywhere between S$25,000-
S$100,000, while angel groups invest much larger sums in the range of
S$250,000-S$750,000.
Angel investors often form angel networks or groups in order to pool their
resources and capital. Angel networks are often a good source of capital for those
seeking early-stage or seed funding. The networks help match entrepreneurs with
appropriate business angels. Some of the popular angel investment networks in
Singapore are listed below in the article.
Venture Capital Industry in Singapore The venture capital industry in Singapore is relatively new and small as compared
to the US and Europe.
The Singapore government plays an active role in attracting foreign venture
capital firms to set up their regional base in the country. Today, there are more
than 100 venture capital firms in Singapore.
Venture capitalists in Singapore not only provide financing but also offer
mentoring to start-up companies. Most entrepreneurs turn to venture capitalists
for both financing as well as to gain access to professional management skills and
expertise.
It must be noted that most venture capital firms in Singapore tend to focus on
“late-stage expansion financing” and investment in late-stage startups or mature
companies, rather than early-stage financing in new start-ups. Certain venture
capitalists prefer to invest in companies that are already making profits rather
than investing in a potentially profitable start-up. However, some firms do offer
financing for start-ups in their early stages.
There are different types of venture capital firms in Singapore ranging from
independent limited partnership venture capital firms to corporate backed
venture capital firms. Due to attractive tax incentives and other beneficial
government policies a number or cash-rich large corporations, government
boards and high net worth individuals have setup venture capital funds in
Singapore.
Venture capitalists in Singapore pay a great deal of attention to the services
industry, manufacturing industry, and the high-tech industry. In recent years a
significant portion of venture capital investments were directed towards high-
return sectors such as biotechnology, medicine, genetic engineering, etc.
On an average, venture capitalists invest up to four to five times the net earnings
of a company.
Generally, venture capital investments last between 2-5 years.
Businesses that are likely to turn into multi-million dollar companies in due course
are most favored by venture capitalists.
Venture capitalists expect an ROI of at least 25%-30% for each year of
investment.
Venture capitalists look for the following factors while investing in seed stage
start-ups: A brilliant business idea that will have a competitive edge in the market
such as a scientific breakthrough or IP; a top-notch team; business model
innovations; and the economic and market benefits of the business plan/idea.
The business team plays a key role in securing the favor of venture capitalists.
More specifically, venture capitalists will look at how qualified the team is, what is
the role of each team member, what are the technical skills they possess, etc.
Venture capitalists assess the milestones that have been set for the business and
how much capital will be required to achieve them.
Venture capitalists assess the team’s understanding of the current market and
competition.
Venture capitalists are not interested in knowing long-term financial projections,
unrealistic claims about how the company will grow and acquire a large customer-
base in the short or long term, businesses that are solely seeking for funds
without any guidance from venture capitalists.
Private Equity Fund Industry in Singapore Private equity funds are setup by financial institutions, banks, or investment
companies.
Usually, private equity funds do not invest in early-stage or developing start-ups.
Established start-ups that are already in operation and demonstrate high growth
potential are preferred by private equity funds.
Private equity funds do not offer management and technical expertise; they only
provide funding.
There are different types of private funds such as:
o Independent funds: Such funds are typically setup by wealthy individuals, cash-
rich companies or families.
o Institutional funds: Such funds are setup by banks and financial institutions.
o Corporate funds: Large companies setup a separate fund in order to invest in
smaller companies.
List of Private Funding Resources in SingaporeThere are several networks in Singapore that help match start-ups with business
angels and venture capitalists. The country also boasts of investment funds that
invest in innovative companies. Some of these networks and firms include:
Business Angel Network Southeast Asia (BANSEA): Matches start-ups in the seed
stage of enterprise formation with business angels. BANSEA invests in companies
that offer exceptional opportunities for high returns on investment. This usually
implies early stage ventures with the potential to achieve high growth, strong
market position and sustainable advantages. BANSEA invests in companies that
have the potential to grow to more than S$50 million in annual revenue within
five years. This should be either in a developing market or in an existing market
with international scope.
Deal Flow Connection: Deal Flow Connection assists enterprises that are at
different phases of their growth and from different industry sectors to gain access
to intermediaries and various sources of funds such as banks, finance houses,
venture capital firms and investors. Start-ups can expect to raise capital of
S$50,000 or more.
Angel Capital Network: Invests in entrepreneurs and companies in a variety of
industries and stages of development.
Business Angels Pty Ltd: Refers businesses to angel investors.
Draper Fisher Jurvetson: DFJ invests in emerging technologies, from the Internet
and life sciences to clean energy and nanotechnology.
ENDEAVOR: Invests in all stages with a preference for late-stage expansion, joint
venture and distressed investments.
K1 Ventures Ltd: Invests across diverse industry sectors.
Sirius Capital Holdings Pte Ltd: Is a boutique venture capital and entrepreneurial
finance firm, focused on small and medium-sized companies in Singapore and
overseas.
Upstream Ventures: Focuses on early-stage venture creation by providing
funding, expertise and networks to emerging companies
Singapore Investment Network: Provides access to one of Singapore’s largest
databases of angel investors who are regular investors in various industries
across Singapore.
Angels Den: A UK based angel network that has recently set up shop in Singapore.
Business Angels primarily look for a profitable return on their investment within
three to five years.
3V Source One Capital: Focuses on growth to late-stage companies with an Asian
link or growth strategy.
Extream Ventures: Is an early-stage venture fund focused on Asia-based
technology driven companies in the areas of Internet (enterprise, consumer,
retail), IDM (interactive digital media), mobile & wireless (applications & services),
security & biometrics, and semiconductors (fabless design) It typically targets
Singapore-based early stage companies with significant regional market
opportunities. Extream Ventures assumes the role of lead investor in early stage
companies, typically investing up to a maximum of S$3M per company as part of
a Startup or Series A round of funding.
Bio Veda: Invests in health-care companies in the developmental or expansion
stage.
Walden International: An international venture capital firm that provides seed and
startup funds for emerging growth companies, as well as capital for expansion
financing and acquisitions.
Nanostart Asia: Invests in young, up-and-coming companies in Singapore which
seek to commercialize a highly promising nanotechnology-based product or
process and who are approaching market launch.
Raffles Venture Partners: Invests in innovative start-up companies.
OWW Capital Partners: Invests in service providers in infocomm technology,
logistics, education/training, healthcare, financial services and consumer services
sectors.
BAF Spectrum: Focuses on Asia-based (preferably Singapore), early stage
technology startups within digital media, internet and mobile consumer portals as
well as R&D-intensive information technology.
Azione Capital: An early stage venture capital investment company and startup
business incubator that focuses on digital media, mobile communications
(inclusive of the full spectrum of wireless technologies), energy and maritime
industry startups that operate primarily within Asia.
Enspire Capital: Invests at various stages of a company’s development, with a
typical initial investment of US$1 million to US$3 million across a wide range of
high tech industries, in Technology, Media and Telecommunications (TMT) and
Internet.
Springboard Harper: Invests in technology businesses that are in various stages of
development.
The Carlyle Group: Invests up-to US$25 million in early stage companies.
Adam Street Partners: Invests US$5-20 million in companies seeking venture
capital or growth equity to accelerate their businesses.
Fortune Venture: Focuses in high-tech investments, specifically in software,
information technology, and the Internet, areas which Singapore companies have
strong domain knowledge and core competency
GIZA Venture Capital: Invests in seed and early-stage technology companies
across industries such as ICT, cleantech, and life sciences.
Grove International Partners: Invests in companies whose underlying assets and
businesses are real estate or real estate related.
McLean Watson: Invests in a wide range of technology companies that address
large, changing or expanding new markets.
Tembusu Partners: Invests in entrepreneur-driven companies that exhibit strong
growth potential through scalability and the ownership of proprietary rights.
Focuses on industry sectors such as education, green technology, oil & gas,
resources and healthcare
Vertex Venture Holdings: Invests in companies at various stages of development,
be it seed or mezzanine investments, with deal size ranging from US$1 million to
US$30 million.
Singtel Innov8: SingTel Innov8 (Innov8), a wholly-owned subsidiary of the SingTel
Group, is a corporate venture capital fund that invests in companies in all stages
of development, from seed to early growth. SingTel Innov8 invests in ideas,
technologies, products and services that are related to the Group’s business
including those in adjacent spaces such as internet applications and new digital
media.
Some of the private financial institutions in Singapore include:
Citibank
Standard Chartered Bank
Hong Kong and Shanghai Banking Corporation
Development Bank of Singapore
Oversea Chinese Banking Corporation
United Overseas Bank
GE Commercial Financing Singapore
IFS Capital Limited
Hong Leong Finance Limited
Sing Investments and Finance Limited
Singapura Finance Limited
ON A FINAL NOTEPrivate investors are increasingly turning their attention towards the Asia-Pacific
and are relocating their offices, investing capital, and executing transactions in the
region. With Singapore’s ascendancy as Asia’s entrepreneurial hub, more and more
private equity investors are heading to the country in search of growth rates and
opportunities that are currently hard to come by in more developed economies.
Singapore government hopes to bring in angel investments to the tune of S$600
million by 2015. This is undoubtedly an advantage to start-ups that choose
Singapore as their operational base.
http://www.guidemesingapore.com/doing-business/finances/private-equity-financing-for-singapore-startups
Debt Financing Options for Singapore CompaniesRelated Links
Singapore Company Incorporation Guide
Private Equity Financing Guide
Government Assistance Schemes Guide
Debt financing is one of the options for first-time entrepreneurs who are looking for
small business loans or start-up capital in order to jump-start their business.
Unlike equity financing where investors take up equity stakes in the company, debt
financing helps entrepreneurs retail full control over their business including the
profits generated. In debt financing, you borrow the money and agree to pay it back
in a particular time frame at a set interest rate. You owe the money whether your
venture succeeds or not. Compared to equity financing, debt financing is far less
expensive if your company is successful, but far more expensive if it isn’t.
The primary source of debt financing for most start-up entrepreneurs is the close-
knit circle of their friends and family. However, capital loaned from personal sources
many not always suffice for a high-growth or capital intensive business. This is
where banks and finance companies can help. In recent times, Singapore banks
have witnessed a strong interest in their start-up loan offerings. According to a
news report, OCBC Bank said that its loans for start-ups rose 10% in the Q3 2011 as
compared the Q2 2011. Most banks and finance companies in Singapore offer
products and services that have been customized to meet the needs of small
enterprises. These range from working capital loans, factoring loans, to hire
purchase loans.
This guide provides an overview of the various private debt financing options for
start-ups in Singapore.
Sources of Private-Debt Finance: Commercial loansTypes of Loans
Most banks and finance companies in Singapore offer small business loans to start-
up enterprises. Small business finance is offered by way of business revolving lines
of credit, business overdrafts, factoring loans, etc. The most common types of small
business loans that most banks and financial institutions offer in Singapore include
the following:
Working Capital Loans: A working capital loan is short-term loan that is
typically used to finance the everyday business operations of a company. Working
capital loans usually help businesses to stay afloat until they begin generating
revenue. Working capital loans can either be secured (i.e loans on the basis of
collateral) or unsecured (no placement of collateral). Unsecured loans charge
higher rates of interest as compared to secured loans and are often granted to
only low-risk borrowers. Start-ups fall under the high-risk category and are
therefore more likely to obtain secured working capital loans. Working capital
loans serve to fund only short-term financing needs and are not suitable for long-
term projects. Working capital loans can take the form of:
o Factoring loans: Factoring loans refers to money this is lent on the basis of
trade debts. In other words it is the financing of account receivables. In effect,
you are selling the account receivables to the factoring agent i.e. the bank. The
bank will loan you an advance on the basis of the account receivables and your
customer will have to directly make the settlement with the bank. There is no
other collateral involved.Typically, banks offer loans of up-to 90% of the
accounts receivables or billed invoices. However, it must be noted that the bank
will charge a fee in the range of 1-15% of the gross invoice value or an annual
interest rate of 5-8%. The advantage of factoring loans is that you can get
immediate access to cash as soon as you issue an invoice. Moreover, you do not
have to follow up with customers for payments. The downside is that you do not
get 100% of the invoice value from the bank and some of your customers may
be averse to dealing with the banks directly.
o Short-term loans: Short-term loans are those that have a short maturity
period of one year or less. Some banks may require you to put up collateral
against the loan. Short-term loans are usually used for buying inventory, to
even out cash-flow, to pay bills or payroll, etc. Start-ups can avail of short-term
loans but will have to provide projected financial statements and demonstrate
their ability to pay up the loans.
o Overdraft: Overdraft is an instant extension of credit from a bank. By signing
up for an overdraft facility, businesses can overdraw their current account up to
a maximum amount agreed with the bank. Interest is paid only on what is
overdrawn and is usually charged at 1-2% above the bank’s prime rate. The
amount of credit allowed will depend upon the limit that has been set with the
bank. The advantage of the overdraft facility is that it is form of short-term
financing that allows for instant access to cash especially for activities such as
stock turnover or payment to creditors. Overdraft facility can either be secured
(on the basis of collateral) or unsecured (no collateral).
Hire Purchase Loans: Hire-purchase is a method of purchasing goods by making
installment payments over a fixed period of time. Hire purchase loans is an
arrangement where the bank finances the purchase of equipment, machinery, or
commercial vehicles for business operations. Hire purchase loans are usually used
to purchase assets that are non-cash convertible. Under hire purchase loans, the
bank will retain legal title to the financed asset, until the last installment is fully
paid-up. In other words, the buyer (hirer) purchases the goods (assets) by paying
a deposit and borrows a loan to make monthly installment payments to the seller
over a predetermined fixed financing period. The interest rate of such loans is
normally offered on a flat-rate basis (i.e a fixed rate on the full amount financed
for the entire hire purchase term). The financing period usually ranges between 4-
8 years depending upon whether the machinery/equipment purchased is new or
used. Usually, the loan amount is up-to 80-90% of the purchase price or market
value, whichever is lower.
Debt-Financing Products of Financial Institutions in Singapore
For this article we have chosen four major sources of debt financing for start-ups
(overdraft, factoring loan, term-loan, and hire purchase loan) and compared their
availability across three key local banks viz. Development Bank of Singapore (DBS),
United Overseas Bank (UOB) and Oversea Chinese Banking Corporation (OCBC);
three major international banks viz. Standard Chartered Bank, HSBC and Citibank;
and four major finance companies.
Debt-financing products offered by banks
DBS UOB OCBC SCB HSBC CITI
Overdraft
Yes
Yes
Yes
Yes Yes
Yes
Factoring loan
Yes
Yes
Yes
Yes Yes
Yes
Term loan
Yes
Yes
Yes
Yes Yes
Yes
Hire-Purchase loan
Yes
Yes
Yes
Yes
Yes* No
* Commercial auto loans only
Debt-financing products offered by finance companies
ORIX LEASING
IFS CAPITAL
HONG LEONG FINANCE
SING INVESTMENTS & FINANCE
Overdraft No No No No
Factoring loan No Yes Yes Yes
Term loan Yes Yes Yes Yes
Hire Purchase loan Yes Yes Yes Yes
Securing a Start-up Loan: Tips and Guidance
Securing a business loan from banks in Singapore is dependent upon several factors
including:
A sound business plan: A financially sound business plan that demonstrates
successful economic outcomes is likely to work in your favor.
Sales Revenue: Higher the turnover, greater the chances of securing a larger loan
quantum.
Projected net profit: Based on your expected net profits, banks will decide if they
can lend you short-term working capital loans.
Paid-up capital: A higher paid-up capital increases the chances of obtaining a
bank loan as it demonstrates the shareholders’ and directors’ commitment to the
business.
Inventory: An inventory that reflects a smaller number of finished goods is likely
to win the favor of banks as it doesn’t indicate locked-up capital.
Start-up owner’s character and credibility: Your integrity in business dealings,
credit history, and reputation go a long way in securing finance from banks.
Collateral: Availability of collateral and your repayment capability will affect the
bank’s decision in granting you a loan.
Economic conditions: The outlook for the business-sector which your start-up
belongs to, general economic outlook, entry barriers, currency risks, susceptibility
of the business to changes in the external environment play a role in determining
the chances of your loan application.
Debt-equity ratio: Most banks will assess the debt-to-equity ratio of start-ups. In
other words, the amount of money that you are borrowing should be realistic in
comparison to the amount of money that you have invested into the business.
The loan requested should be a fraction of the capital that has already been
invested.
Loan application: The loan application is a very important document in the
process of acquiring a business loan. The loan application must include details of
the loan that you are seeking including: the type of loan you are applying for, the
loan quantum, the purpose of the loan, how you plan to repay the loan, and the
importance of the loan to your start-up. It is also necessary to include business
details such as: Description of proposed business activities, details about the
management team, market information, financial projections,and information
about potential collaterals.
Sources of Private-Debt Finance: Friendship Loans The most common and primary source of private debt financing for start-up
entrepreneurs are loans borrowed from friends and family.
The advantage of friendship loans is that:
o There is no collateral required although this may vary depending upon the nature
of the relationships involved;
o The loan terms are flexible;
o The loan period, repayment schedule, and other factors are open to negotiation
and are mutually agreed upon by both parties.
Although the loan arrangement is based on trust and verbal assurances, it is
advisable to draw up a loan agreement that clearly spells out all terms and
conditions to help prevent future misunderstanding and also provide a basis for a
business relationship.
It is important to keep lenders informed about the progress of the business.
Providing a business plan at the outset of the loan and sending regular progress
updates will be much appreciated by the lenders.
A number of successful Singapore start-ups have been initially funded by capital
borrowed from friends and family.
On A Final Note
If you can demonstrate that your company has the ability to repay the business
capital loans in a timely manner, most banks and finance companies will offer you a
business loan with very good terms. You are strongly advised to approach banks
and finance companies well ahead in time as they normally take a few weeks to
review your loan application. You must remember that most banks are wary of
start-ups as they are a high-risk profile client given their limited cash-flow and small
capital. You are therefore advised to prudently shop around for banks and carefully
prepare your loan application to minimize chances of rejection.
http://www.guidemesingapore.com/doing-business/finances/private-debt-financing-for-singapore-startups
rganisation
Singapore Deposit Insurance Corporation Limited (SDIC) administers the Deposit Insurance Scheme and Policy
Owners' Protection Scheme (PPF Scheme) in Singapore. SDIC is a company limited by guarantee under the
Companies Act. The board of directors is accountable to the Minister in charge of the Monetary Authority of
Singapore (MAS).
The main functions of SDIC under the Deposit Insurance Scheme (DI Scheme) are to collect premium contributions
from DI Scheme members, manage the Deposit Insurance Fund, compensate insured depositors and educate the
public on the DI Scheme. In respect of the PPF Scheme, the main functions of SDIC are to collect levies from PPF
Scheme members, manage the Policy Owners' Protection Life Fund and the Policy Owners' Protection General Fund,
make compensation payments and educate the public on the PPF Scheme.
Deposit Insurance: Overview
Singapore consumers enjoy the benefits of a sound banking system. Banks and finance companies licensed in
Singapore are supervised by the Monetary Authority of Singapore (MAS). It is MAS’ aim to ensure the stability of the
banking system in Singapore and to require financial institutions to have sound risk management systems and
adequate internal controls.
However, MAS does not guarantee the soundness of individual financial institutions. Therefore, a Deposit Insurance
Scheme has been set up to protect the core savings of small depositors in Singapore in the event a full bank or
finance company fails.
Policy Owners’ Protection Scheme: Overview
Singapore consumers enjoy the benefits of a sound financial system. Insurers licensed in Singapore are supervised
by the Monetary Authority of Singapore (MAS). It is MAS’ aim to ensure the stability of the financial system in
Singapore and to require financial institutions to have sound risk management systems and adequate internal
controls.
However, MAS does not guarantee the soundness of individual financial institutions. Therefore, a Policy Owners’
Protection Scheme (PPF Scheme) has been set up to protect policy owners in the event of failure of a life or general
insurer which is a PPF Scheme member.
Scope of DI Coverage
Types of depositors covered
SDIC covers individuals and other non-bank depositors with insured deposits placed with a DI Scheme member.
Other non-bank depositors include sole proprietorships, partnerships, companies and unincorporated entities like
associations and societies.
Types of deposit products covered
SDIC insures Singapore dollar denominated deposits placed with a DI Scheme member in any of its branches in
Singapore. These include:
A deposit held in a savings account
A deposit held in a fixed deposit account
A deposit in a current account
Any monies placed under the CPF Investment Scheme
Any monies placed under the CPF Minimum Sum Scheme
Any monies placed under the Supplementary Retirement Scheme
Murabaha, as prescribed by the Authority
Each DI Scheme member maintains a register of insured deposits it offers. To find out if a deposit account offered by
your bank or finance company is insured, you can refer to the institution’s register of insured deposits.
Types of deposit products not covered
Financial products that are not insured by SDIC include
Foreign currency deposits
Structured deposits
Investment products such as unit trusts, shares and other securities
Scope of PPF Scheme Coverage
Types of policy owners protected
Protection is for policy owners of life or general insurance policies covered under the PPF Scheme and issued by life
or general insurers which are PPF Scheme members. The policy owners may be individuals or non-individuals, such
as companies.
Types of life insurance policies covered
The PPF Scheme protects all life insurance policies (including riders) issued by registered life insurers which are PPF
Scheme members. This would include policies issued to non-Singapore residents (offshore policies), but not policies
issued by overseas branches of a registered life insurer incorporated in Singapore. Examples of life insurance
policies include the following:
Individual term policies
Individual whole life policies
Individual endowment policies
Individual annuities
Individual short-term or long-term accident & health (A&H) policies (e.g. Hospital cash, Medical
Expense, Personal Accident, Disability Income, Long-term Care)
Group term policies
Group whole life policies
Group endowment policies
Group annuities
Group short-term and long-term accident & health (A&H) policies
Any accumulated values, including interest accrued on such values, of coupon deposits, advance premium payments
and unclaimed moneys under all insured policies are also covered. Each PPF Scheme member maintains a register
of insured policies it offers. To find out if a policy offered by your insurer is covered, you can refer to the institution's
register of insured policies.
Types of general insurance policies covered
The PPF Scheme protects all compulsory insurance policies under the Motor Vehicles (Third Party Risks and
Compensation) Act and Work Injury Compensation Act and Singapore policies of specified lines issued by registered
direct general insurers which are PPF Scheme members. A Singapore policy insures risks arising in Singapore or
where the insured is a Singapore resident or has a permanent establishment in Singapore. The types of specified
lines covered are:
Personal motor insurance policies
Personal travel insurance policies
Personal property (structure and contents) insurance policies
Foreign domestic maid insurance policies
Individual and group short- term A&H policies
Each PPF Scheme member maintains a register of insured policies it offers. To find out if a policy offered by your
insurer is covered, you can refer to the institution's register of insured policies.