Singapore increasingly a gateway to SE Asia for China firms

SINGAPORE - Singapore is well positioned to help Chinese companies invest overseas and this can be seen by the increasing numbers of Chinese corporates and financial institutions based here.

China comes to Singapore not only to do business in Singapore, it also uses Singapore as a launch-pad to do business in South-east Asia, said Ravi Menon, managing director of the Monetary Authority of Singapore.

In recent years, Chinese corporates and financial institutions have been rapidly growing their operations and investments in South-east Asia, he said on Tuesday at the 2nd RMB Internationalisation Summit. "Singapore offers an effective gateway for their expansion into the region."

There are some 6,500 Chinese companies in Singapore. Many of them, such as Lenovo, have set up regional finance and treasury centres here to take advantage of Singapore's banking and capital markets to finance their regional expansion, he said.

The seven Chinese banks in Singapore are also expanding their presence here to provide funding support for the activities of Chinese and regional corporates.

Singapore-based financial institutions have extensive networks in the individual ASEAN countries and, have proven to be trusted partners for Chinese entities venturing abroad, he said.

He cited China Minsheng Investment Corporation, one of the largest private investment firms in China, which set up an office in Singapore with the mandate to invest in companies in South-east Asia and North America. One of its first projects is the construction of an industrial park in Indonesia.

Other Chinese companies, such as Baosteel, New Hope and Huaneng, have invested in Vietnam and the region through their Singapore subsidiaries, with financing support from local banks such as DBS, said Mr Menon.

Looking ahead, the China-Singapore financial partnership will be more broad-based to provide greater support to China's growing connectivity with South-east Asia.

Four areas of partnership are capital management, risk management, infrastructure financing and asset management, said Mr Menon.

In capital management, Chinese companies are already tapping Singapore's bond market. For instance, China Oilfields Services Limited raised US$1 billion in Singapore last year, including a 10-year medium-term note of US$500 million.

Chinese corporates with income-producing real estate and infrastructure assets could recycle their capital by securitising these assets through a trust vehicle, he said.

The Singapore Exchange saw its first China real estate investment trust or Reit last year, with Beijing Hualian Group raising close to S$400 million through a Reit.

As for risk management, Singapore offers Chinese corporates effective forex hedging solutions to manage their risk exposures, he said.

This article was first published on June 08, 2016.
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