Singapore proposes simpler regulatory framework for VCs

The Committee on the Future Economy (CFE) – led by the minister for finance and the chairman of the Singapore Business Federation – said in its report that long-term capital is essential to helping local enterprises scale up. It advocates increasing efforts to encourage the private sector, specifically banks, venture capital and private equity, to provide more growth capital.

“The government should simplify the regulatory framework for VCs, in particular the authorization process for VC managers. We should also encourage more PE firms to be based here, so they can develop deeper knowledge of the opportunities in Singapore and the region,” the report said. It also recommends more partnerships between large and small enterprises, through mechanisms such as captive venture capital units.

The report added that the government should intervene where there are clear funding gaps and develop new forms of support, “while ensuring that risk decisions remain in the hands of the private sector.” It highlighted the role played by Clifford Capital, which was established in 2012 to provide – with government support – project finance, asset-backed and other structured debt financing solutions for companies in the infrastructure, offshore marine and shipping sectors.

Catalyzing private sector involvement in the development of Singapore’s innovation ecosystem is one of seven strategies recommended by the CFE to deliver sustained economic growth in changing global macro environment. The other strategies are: deepening and diversifying the country’s international ties; developing new skill sets; building strong digital capabilities; investing in infrastructure for a better-connected city state; implementing industry transformation maps; and bringing different stakeholders together in the pursuit of innovation and growth.

Several of these notions are already embraced in Singapore’s smart nation agenda. It was launched in 2014 as a broadly inclusive directive without formal budgets or timelines to incentivize various government departments and industries to pursue novel technologies that drive urban efficiencies. Financial support was announced in 2016 with S$19 billion ($14.1 billion) earmarked for R&D investment over five years.

Measures intended to encourage venture capital investment date back even further. In addition to supporting the creation of local incubators, capital has been allocated through the Early Stage Venture Fund (ESVF) initiative – whereby the government matches private investment in local start-ups on a 1:1 basis – in three tranches. The first two focused on independent VC firms while the third targets corporate venture funds.

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• Topics
• Southeast Asia
• Regulation
• Early-stage
• Expansion
• Technology
• Singapore
• Venture
• TMT