Singapore Treasury Management Profile 2018 - Together we thrive - HSBC Group
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Singapore
Treasury Management
Profile 2018
Together we thrive
2 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 3
Contents Introduction and
Purpose
Introduction and Purpose 3 Singapore
This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory 6 snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation8 be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking13
document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments 14 at that time.
Payment Systems 18
Facts and Figures
Cash Management 20
Capital/Other major cities: Singapore National holidays: 2019 — 1 Jan, 5, 6 Feb, 19 Apr,
Electronic Banking 22 Source: www.goodbusinessday.com. 1, 20* May, 5 Jun*, 9, 12* Aug,
Area: 719.2km2
28 Oct*, 25 Dec
Trade Finance 24
Population: 5.6m
Stock exchange: Singapore Exchange (SGX)
Useful Websites 26 Languages: Mandarin, English, Malay, Tamil
Leading share index: FTSE Straits Times Index (STI)
Currency: Singapore dollar (SGD)
Sectoral distribution Agriculture 0%,
Country telephone code: 65 of GDP (% of GDP): Industry 26%,
Source: wdi.worldbank.org
Services 74%
Weekend: Saturday and Sunday
(2016 estimate)
National holidays: 2018 — 1 Jan, 16, 17 Feb, * The date shown may vary by plus or minus one day. These dates are derived
Source: www.goodbusinessday.com. 30 Mar, 1, 29* May, 15 Jun*, by converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the
9, 22* Aug, 7 Nov*, 25 Dec Gregorian calendar. Some of these dates cannot be determined in advance with
absolute accuracy, even by the governing authorities. In the case of Muslim dates
in particular, the feast days are determined by the sighting of a new/full moon.
Government Head of state
Legislature Halimah Yacob, president since 14 September 2017.
Parliamentary republic with a unicameral national legislature.
®® The elected president will hold office for a fixed term of six
®® Parliament: members are elected to serve five‑year terms. years. There are no term limits to the presidency.
At present there are 88 elected MPs.
Political leader
The next parliamentary elections are scheduled to be held by Lee Hsien Loong, prime minister since 12 August 2004.
15 January 2021.
4 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 5
Country credit rating
Fitch Ratings rates Singapore for issuer default as:
Term Issuer Default Rating
Short F1 +
Long AAA
Long-term rating outlook Stable
Source: www.fitchratings.com, January 2018.
Exchange rate & Interest rate (%) Consumer
Singapore inflation & GDP volume growth (%)
Economy Singapore
2016 2017 1.6 1.6 6 6
2011 2012 2013 2014 2015
Q4 Year Q1 Q2 Q3
Exchange rate* (SGD/USD)** 1.2578 1.2497 1.2513 1.2671 1.3748 1.4098 1.3815 1.4165 1.392 1.361 1.2 1.2 4 4
Interest rate (MMR) (%) 0.09 0.09 0.05 0.14 0.50 0.20 0.28 0.57 0.82 0.60
0.8 0.8 2 2
Unemployment (%) 1.9 1.8 1.7 1.7 1.7 2.7 3.0 NA NA NA
Consumer inflation*** (%) + 5.3 + 4.5 + 2.4 + 1.0 – 0.5 + 0.1 – 0.5 + 0.6 + 0.8 + 0.5 0.4 0.4 0 0
GDP volume growth*** (%) + 6.2 + 3.9 + 5.0 + 3.6 + 1.9 + 2.9 + 2.0 + 2.5 + 2.9 NA
0.0 0.0 -2 -2
GDP (SGD bn) 346 362 378 390 408 – 410 – – – 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
GDP (USD bn) 275 290 302 308 297 – 297 – – – Exchange rate (SGD/USD) Consumer inflation %
Interest rate (Local currency MMR) GDP volume growth %
GDP per capita (USD) 53,057 54,705 55,868 55,873 53,036 – 52,847 – – –
BoP (goods/services/income) as % GDP 24.1 20.4 20.0 19.4 21.5 – 22.7 – – –
*
Official rate. ** Period average. *** End period. Sources: IMF, International Financial Statistics, January 2018 and 2017 Yearbook. Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook.
6 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 7
Legal and Residents and non-residents may borrow freely
from abroad, although a WHT may be applied on
Regulatory the interest payable by non-residents. Borrowers
are subject to the regulation requirements of the
country from which the funds are borrowed.
Central bank There are no restrictions on the remittance of profits. There are Anti-money laundering/counter-terrorist financing1 Remittance licensees and money-changing licensees may not
The Monetary Authority of Singapore (MAS) is an autonomous no restrictions on the capital repatriation of funds in any currency Singapore has implemented anti-money laundering and counter- conduct significant business of an aggregate value exceeding
institution operating in accordance with Monetary Authority of and there are no restrictions on the repatriation of royalties or terrorist financing legislation. Notable legislation includes: SGD 5,000, unless they have obtained evidence of their
Singapore Act (Cap 186). other fees. customer’s identity.
®® The Corruption, Drug Trafficking and other Serious Crimes
Bank supervision Residents and non-residents may borrow freely from abroad, (Confiscation of Benefits) Act (Cap 65A); and Financial institutions in the broadest sense must record and
MAS administers the various statutes pertaining to money, although a withholding tax may be applied on the interest ®® The Terrorism (Suppression of Financing ) Act (Cap 325). report suspicious transactions, including attempted transactions
banking, insurance, securities and the financial sector in general. payable by non-residents. Borrowers would also be subject to the that were not completed, to the STRO.
regulation requirements or restrictions of the country from which MAS issues all anti-money laundering regulations and monitors
Resident/non-resident status the funds are borrowed. financial institutions’ compliance. MAS has issued a number of Individuals entering or leaving Singapore must report to the
A company is considered resident in Singapore if it has a Notices to various financial sectors setting out their anti-money customs authorities cash and bearer-negotiable instruments
permanent or registered address in Singapore and maintains its Non-resident financial entities (NRFI) may borrow up to laundering obligations. exceeding SGD 20,000. Individuals who move cash exceeding the
place of effective management in Singapore. SGD 5 million in local currency. The following restrictions apply prescribed amount into or out of Singapore, through cargo, post
when borrowing in excess of SGD 5 million: A Financial Action Task Force (FATF) member, Singapore observes or other means, are required to give a report to the STRO.
Bank accounts most of the FATF+49 standards. Singapore is also a member
Resident ®® If the proceeds in SGD are to be used outside Singapore, of the Asia/Pacific Group on Money Laundering (APG) and the
Foreign exchange accounts and domestic currency (SGD) banks must ensure that they are swapped or converted to Group of International Finance Centre Supervisors (GIFCS).
accounts can be held by residents both domestically and abroad. foreign currency on drawdown.
Resident domestic currency accounts are freely convertible into ®® Banks are not allowed to extend SGD credit facilities to NRFI, The Suspicious Transaction Reporting Office (STRO), the country’s
foreign currency, but subject to the restrictions/limitations of that if there is a reason to believe the SGD proceeds may be used financial intelligence unit, is a member of the Egmont Group.
particular currency. for SGD currency speculation purpose.
Account opening procedures require formal identification of the
Non-resident customer and beneficial owners. The identity of legal entities and
Such restrictions do not apply to the lending of SGD to individuals
Non-resident bank accounts are permitted in both foreign and individuals representing them must be established with reference
and non-financial institutions (including corporate treasury
domestic currency. Non-resident domestic currency accounts are to their formation documentation and authorisation letters
centres).
freely convertible into foreign currency. respectively. Where a third party conducts transactions on behalf
A bilateral SGD/CNY currency swap agreement worth of a principal, both individuals must be identified. Ongoing due
Interest can be offered on current and demand deposit accounts. diligence must be conducted.
SGD 60 billion was renewed by MAS with the People’s Bank of
Overdraft facilities are available to residents and non‑residents.
China as of 7 March 2016.
Financial institutions have to identify occasional customers (i.e.
Exchange controls customers who have not otherwise established business relations
A bilateral SGD/JPY currency swap agreement worth
The Singapore dollar (SGD) is Singapore’s official currency. with the bank) for all transactions exceeding SGD 20,000, or its
SGD 15 billion was signed by MAS with the Bank of Japan as of
November 2016. foreign currency equivalent, and for domestic/cross-border wire
Singapore imposes no exchange control formalities or approvals transfers that exceed SGD 1,500.
for any form of payment or capital transfer.
As a member of the Association of Southeast Asian Nations
(ASEAN), Singapore is a participant in the ASEAN Swap Financial institutions must identify individuals making both
The SGD and Brunei dollar (BND) are freely interchangeable at domestic and cross-border wire transfers and transactions must
Arrangement and the Bilateral Swap Arrangements under
par without charge. The currencies are customary tender in each be recorded.
ASEAN+3.
country.
Foreign exchange can be traded by banks on a forward basis.
1.
Data as at May 2017.
8 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 9
Taxation
1/2
Resident/non-resident Corporate taxation
Withholding tax (subject to tax treaties)
A company is resident in Singapore if the control and Singapore taxes on a territorial basis. Resident and non-resident
management of its business is exercised in Singapore. In general companies are subject to tax on income accruing in or derived Rental of Technical service/
terms, control and management of a company’s business is from Singapore and foreign income remitted or deemed remitted Payments to: Dividends Interest movable Royalties* management fee Branch remittances
vested in its board of directors, so the place of residence of the to Singapore, including: gains or profits from a trade, business, property income
company is where the directors meet. profession or vocation; dividends, interest or discounts; pensions,
Resident companies None None None None None NA
charges or annuities; rents, royalties, premiums and other profit
Tax authority arising from property; and gains or profits of an income nature Non-resident companies None 15% **
15% **
10% **
17% None
Inland Revenue Authority of Singapore (IRAS). not falling within the above. *
Excluding certain literary and artistic copyright royalties, approved invention or innovation royalties.
**
The withholding tax at 15% (or 10% for royalties) on the gross payment is a final tax. It applies provided that the income is not derived by the non-resident through its operations
Tax year/filing Foreign income remittances in the form of dividends, branch carried out in or from Singapore. Operations carried out in or from Singapore will continue to be taxed at the prevailing corporate tax rate on their chargeable income.
The tax year generally is the calendar year, although a company profits and services income to resident companies are exempt
is required to file its tax return based on the results of its financial from tax, provided:
year. A private company may be exempt from tax on the first General gains tax
®® The income is received from a foreign jurisdiction with a
SGD 100,000 and on 50% of the next SGD 200,000 of chargeable Singapore has a general anti-avoidance provision.
Each tax year is referred as the ‘year of assessment’. Income is headline tax of at least 15% in the year the income is received,
income for its first three consecutive years of assessment, subject
subject to tax in Singapore on a preceding year basis (e.g. income or deemed to be received in Singapore; Capital gains tax
to certain conditions. There is no surtax or alternative minimum
earned in the financial year ended in 2015 will be taxed in the ®® The income has been subject to tax in the foreign jurisdiction; There is no capital gains tax in Singapore.
tax.
2016 assessment year). and
®® The IRAS is satisfied that the tax exemption would be Various incentives are available for pioneer and expanding Withholding tax (subject to tax treaties)
Companies must submit an estimated chargeable income to the A non-resident is liable to pay income tax on Singaporean-
beneficial to the person resident in Singapore. companies, headquarter activities, financial services, asset
IRAS within three months from the end of their financial year- sourced income. Generally, withholding tax is applicable to
securitisation, fund managers, international maritime activities,
end. Tax returns are required to be filed by 30 November of the certain payments made to non‑residents unless otherwise exempt
Foreign income that has been exempt from tax in the foreign international trading and R&D.
assessment year for income earned in the preceding accounting under administrative concessions by the IRAS, provisions of the
jurisdiction as a direct result of a tax incentive granted for
year. Losses and unabsorbed capital allowances may be carried Singapore Income Tax Act, or a relevant double tax treaty. Such
substantive business operations carried out in that jurisdiction will
be considered as having met the ‘subject-to-tax’ test. forward indefinitely, subject to compliance with a shareholding payments broadly include interest, royalties, technical assistance
Consolidated returns are not permitted; each company is required
test. Unutilised capital allowances carried forward are subject to fees, management fees, directors’ remunerations and rental of
to file a separate return. However, a loss transfer system of
A company is taxed at a flat rate on its chargeable income; the both the shareholding test and a same business test. movable property.
group relief allows current year unutilised losses, unutilised
corporate tax rate is 17%. A partial tax exemption is given to
capital allowances and unutilised donations from one qualifying Losses and unutilised capital allowances may be carried back Generally, a withholding tax of 15% on the gross amount
companies on chargeable income of up to SGD 300,000, which is
company to be offset against the taxable profits of another for one year, subject to a cap of SGD 100,000 and compliance is levied on interest, commission, fees or other payments
taxed at the normal corporate tax rate, as follows:
qualifying company within the same group. To qualify, companies with the shareholding test. When current year unutilised capital in connection with any loan or indebtedness or with any
must be incorporated in Singapore and be at least 75% owned by ®® 75% exemption on the first SGD 10,000 of chargeable income; allowances are carried back, the same business test also must arrangement, management, guarantee or service relating to any
another company in the group that is incorporated in Singapore, and be satisfied. loan or indebtedness paid to non-resident companies. However,
and must have the same accounting year end. withholding tax would not apply to:
®® 50% exemption on the next SGD 290,000 of chargeable
income. Advance tax ruling availability
Advance tax ruling is available for interpretation of application of ®® Any arrangement, management or service relating to any
Singapore income tax and goods and services tax laws. loan or indebtedness where the arrangement, management
1.
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and
Deloitte Highlight, 2017.
2.
More information available at www.iras.gov.sg.10 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 11
or service is performed outside Singapore by a non- in Singapore or have a PE in Singapore; or who does carry on Transfer pricing stock exchange, however, is not subject to stamp duty. Stamp
resident person who, in the event, is not an individual, is not a business in Singapore and has a PE in Singapore, but the The Singapore Income Tax Act includes provisions to enforce the duty relief is available in a number of cases, subject to conditions.
incorporated, formed or registered in Singapore, does not carry rendering of the technical and management services is not arm’s‑length principle and to provide the IRAS with legislative Entities eligible for the relief are companies, limited liability
on a business in Singapore or have a permanent establishment performed through that business or PE in Singapore. powers to address non‑arm’s‑length dealings. Companies must partnerships (LLP), statutory bodies and registered business trust
(PE) in Singapore or, does carry on a business and have a PE in ensure that their intercompany transactions are at arm’s length, (RBT).
Singapore, but the arrangement, management or service is not Non-resident companies may also qualify for a reduction of, or and should prepare adequate documentation to avoid any
performed through that business or PE in Singapore. exemption from, withholding tax on interest and royalties if the potential tax adjustments by the IRAS. Real property taxes
non-resident beneficial owner is able to benefit from a reduced Property tax, levied on all immovable property in Singapore,
®® Any guarantee related to any loan or indebtedness, where
rate under a double tax treaty. Guidance issued by the IRAS in 2017 provides its interpretation is payable annually by the owner at the beginning of the year.
the guarantee is provided by a guarantor who is a non-
of the provisions of the Singapore Income Tax Act affecting the Immovable property includes Housing Development Board flats,
resident person who, in the event, is not an individual, is not
Tax treaties/tax information exchange agreements (TIEAs) pricing of cross-border related‑party dealings. The guidance houses, offices, factories, shops and land.
incorporated, formed or registered in Singapore, does not
Singapore has exchange of information relationships with includes detailed chapters on the application of the arm’s-
carry on a business in Singapore or have a PE in Singapore The annual property tax is calculated based on a percentage
multiple jurisdictions through double tax treaties and international length principle, documentation requirements, advance pricing
or, does carry on a business in Singapore and has a PE in of the gross annual value of the property, as determined by the
tax compliance agreements. arrangements (APAs) and requests to invoke the mutual
Singapore, but the giving of the guarantee is not effectively property tax department. The rates are progressive, and range
agreement procedure under the tax treaties.
connected to that business or PE in Singapore. Singapore, as part of the OECD/G20 Base Erosion and Profit Shift from 0% to 16% for owner-occupied residential property; from
(BEPS) initiative, has signed a multilateral cooperation agreement, Stamp duty 10% to 20% for non-owner-occupied residential property; and
Interest paid to a Singapore branch of a non-resident bank is
the Multilateral Competent Authority Agreement (MCAA). Under Stamp duty applies only to financial instruments relating to stock a 10% rate applies for non-residential property. A property tax
not subject to withholding tax in Singapore. Withholding tax
this multilateral agreement, information will be exchanged and shares and immovable property. These include the sale of exemption may be granted for land under development in certain
exemption will be granted on interest and other qualifying
between tax administrations, giving them a single, global picture a mortgage of immovable property and shares and a lease of cases.
payments made to all non-resident persons by bank, finance
on some key indicators of economic activity within multinational immovable property. An ad valorem stamp duty is chargeable on
company or approved financial institution, subject to certain Cash pooling
enterprises (MNE). a lease or agreement for a lease of any immovable property with
conditions being met. However, the Singaporean PEs will need to Singapore has no specific tax rules for cash pooling
annual rent exceeding SGD 1,000. Leases with annual rent not
declare these payments in the annual tax returns and be assessed With country-by-country reporting, the tax authorities of arrangements.
exceeding SGD 1,000 are exempt.
for tax (unless specifically exempt). jurisdictions where a company operates will have aggregate
information annually relating to the global allocation of income Buyer’s stamp duty on the acquisition of all property is 1% for Goods and services tax (GST)
Interest derived by a non-resident company without a GST is imposed on the supply of goods and services in
and taxes paid, together with other indicators of the location of the first SGD 180,000, 2% for the next SGD 180,000 and 3%
Singaporean PE, from qualifying debt securities, deposits in an Singapore and on the importation of goods into Singapore.
economic activity within the MNE group. The reports will also thereafter. Additional buyer’s stamp duty is payable by certain
approved bank in Singapore and approved Asian Dollar Bonds, is GST is similar to an European-style VAT.
cover information about which entities do business in a particular groups that purchase or acquire residential property (including
also exempt from withholding tax if the interest is not derived by
jurisdiction and the business activities each entity engages in. residential land). The additional buyer’s stamp duty is 5% to 15%,
the non-resident company through its operations carried out in or The standard rate is 7%, but the export of goods and the supply
The information will be collected by the MNE group’s country depending on the category of the buyer, and is computed on
from Singapore. A similar exemption applies to amounts derived of international services is zero rated. The provision of financial
of residence, and will be exchanged through exchange of the higher of the purchase price or market value of the property.
from Islamic debt securities issued during specified periods. services in general and the sale or lease of residential properties
information supported by such agreements as the MCAA. The Seller’s stamp duty of 15% and 16% applies to industrial and
first exchanges under the MCAA will begin in 2017–18 based on residential property respectively. From 11 March 2017 onwards, are exempt from GST.
Singapore withholding tax is not applicable as payments for
technical and management fees in Singapore if such services 2016 information. seller’s stamp duty for residential property for a holding period of
Only GST-registered businesses may reclaim the GST (input
are provided outside Singapore by a non-resident person who, up to one year will be 12%, from 16%.
Thin capitalisation tax) paid on their business purchases. However, input tax that
in the event, is not an individual, is not incorporated, formed is directly attributable to exempt supplies cannot be reclaimed.
There are no thin capitalisation rules. The buyer’s stamp duty on the acquisition of stock and shares is
or registered in Singapore, and does not carry on a business Consequently, financial institutions would normally have to
0.2% of the market value or value of consideration, whichever is
higher. The transfer of scripless shares listed on the Singapore attribute their input tax such that a certain amount may not12 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 13
Banking
be reclaimed and hence is a cost. Under an administrative
concession made by the IRAS, certain financial institutions are To encourage Islamic Overview
There are 128 commercial banks operating in Singapore, of which
Major banks
allowed to use a fixed input tax recovery rate to determine the 123 are foreign banks and four are local banks. There are 41 Total assets (USD billions)
banking in Singapore,
Bank
amount of claimable input tax. These fixed input tax recovery representative offices of foreign banks and 30 merchant banks 30 September 2017
rates are subject to yearly review. providing investment banking services1.
DBS Bank Ltd 374,238
For financial institutions in a GST group, the fixed input tax
recovery rate applicable for the whole group will be based on the
the GST treatment of Singapore’s commercial banking sector is dominated by three
banks – DBS Bank Ltd, Oversea-Chinese Banking Corporation
Oversea-Chinese Banking
Corporation Ltd
323,197
qualifying financial
lowest rate applicable to any one of the group members. Ltd (OCBC) and United Overseas Bank Ltd. In 2016, these
three banks controlled approximately 42%, 35.7% and 30% United Overseas Bank Ltd 261,014
A person is required to be registered if the total annual value of respectively of the commercial banking sector’s total assets. Source: www.accuity.com, January 2018.
taxable supplies exceeds SGD 1 million in a 12-month period.
Companies may apply for voluntary registration even if turnover is products based on Foreign banks play an active role in the country’s financial sector.
less than SGD 1 million. However, once registered voluntarily, the They operate as full banks i.e. providing a full range of banking
taxpayer must remain registered for at least two years.
Sharia-compliant services, wholesale banks (which do not provide SGD retail
banking services) or offshore banks.
from taking control of local banks. The majority of bank board
members must be Singapore citizens and permanent residents.
To encourage Islamic banking in Singapore, the GST treatment of MAS approval must be sought by any foreign bank wishing to
qualifying financial products based on Sharia-compliant concepts
(e.g. murabaha and ijara wa igtina) has been harmonised with
concepts has been Of the 29 full foreign banks operating in Singapore, ten have
been awarded Qualifying Full Bank (QFB) privileges. QFBs
increase the number of shares it holds in local banks.
In 2016, MAS shut down two Swiss banks, Falcon Private Bank
harmonised with
that of conventional financial products. Which particular sharia are permitted to operate at a total of 25 places of business,
concept is used will determine whether the consideration including ten branches, to share ATM networks and to relocate and BSI Bank, for failures in AML controls. They were the first
received by the bank is exempt, and therefore whether any their places of business freely, subject to regulatory approval. banks to be shut down by MAS for 33 years.
GST is claimable by the bank in relation to the asset acquired.
In practice, it may be prudent to seek a ruling from the IRAS to that of conventional QFBs, subject to regulatory approval, may also partner with local
banks to provide clients with access to the local banks’ ATM and
Digitalisation of banking services, from mobile banking to
opening accounts virtually, is transforming the country’s banking
clarify the GST treatment. EFTPOS networks.
Financial transactions/banking services tax
financial products. To encourage foreign banks’ participation in the domestic bank
sector, as banks reduce branch networks and move customers on
to their digital platforms. The push for greater digitalisation in the
There are no specific financial transactions/business services sector in a way that strengthens Singapore’s financial stability, country is not bank-led alone. MAS is promoting Singapore as a
taxes in Singapore. MAS requires some foreign banks with QFB status to incorporate Smart Financial Centre integral to which is the use of technology
their retail operations domestically. The Banking (Amendment) Bill within the financial sector.
Central provident fund (CPF) 2016 requires all foreign banks with a significant retail banking
There is no payroll tax payable by employers. Employers have In 2017, Singapore’s government extended bank access to
presence to be classified as a Domestic Systemically Important
to make mandatory Central Provident Fund (CPF) contributions MyInfo, a government-led digital vault that stores the personal
Bank and create a subsidiary. The Bill also gives MAS powers
in respect of every Singaporean citizen or permanent resident data of all Singapore’s citizens. In May 2017, four banks,
to make banks incorporate locally all or part of their banking
(immigration status) employee who is exercising employment in OCBC, United Overseas Bank Ltd, DBS Bank Ltd and Standard
business, thereby subjecting them to Singapore’s capital and
Singapore. The employer’s contribution is 17% for all Singaporean Chartered, began a pilot scheme to completely digitalise the
corporate governance standards.
citizens or Singaporean permanent residents aged 55 and below. process of opening bank accounts, by using information stored
CPF is paid monthly on the first SGD 6,000 of monthly ordinary While encouraging foreign bank participation in the domestic on MyInfo.
wages. banking sector, MAS has actively discouraged foreign investors
1.
As at 12 December 2017, Monetary Authority of Singapore.14 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 15
Payment
Instruments
Payment statistics
Cash remains an important payment medium in
Millions of transactions % change Traffic (SGD billions) % change
2014 2015 2015/2014 2015 2016 2015/2014 Singapore, particularly for low‑value retail
transactions. A 2016 report by KPMG revealed
Cheques 68.9 65.9 – 4.3 686.8 673.4 – 1.9
Debit cards 258.2 301.9 16.9 30.8 32.6 5.8
Credit cards
Direct debits
251.1
57.2
311.4
57.0
24.01
– 0.3
45.5
91.6
48.0
97.1
5.5
6.0
that 60% of consumer transactions were
Credit transfers 98 118 20.4 334.9 392.8 17.3
conducted using cash.
Card-based electronic money 3,138 3,233 3.0 2.6 2.7 3.8
Total 3,871.4 4,087.2 5.6 1,192.3 1,246.6 4.5
Source: CPSS–Red Book statistical update, September 2016.
Cash computer, smartphone or tablet. Nineteen banks currently a value of SGD 623.2 billion. For the same period, 903,000 via ATMs. Contactless card technology for both credit and debit
Cash remains an important payment medium in Singapore, participate in the service which is operated by the Banking USD-denominated cheques were processed, with a value of cards is being developed and trialled.
particularly for low‑value retail transactions. A 2016 report Computer Service. In 2016, FAST processed 27 million USD 69.01 billion2.
by KPMG revealed that 60% of consumer transactions were payments, with a total value of SGD 54.1 billion3. Visa, MasterCard, American Express and Diners Club credit cards
conducted using cash1. ®® Paper-based credit transfers are used to initiate standing order SGD and USD cheques are processed via the SCHA, which are available. Debit card payments are processed via NETS on
payments and, in some instances, payroll payments. operates an SGD and USD cheque clearing system. Funds are a same‑day basis. Credit card payments are processed by the
Credit transfers available to beneficiaries on a next-day basis. Final settlement respective issuing and acquiring banks and various international
Credit transfers in Singapore can be paper based and automated. Direct debits is via MEPS+. card schemes.
Direct debits are available in Singapore for low‑value recurring
®® High-value and urgent interbank transfers are cleared and payments such as utility bills. They are processed through the IBG Card payments There were 2,804 ATMs and 172,119 EFTPOS terminals in
settled via MEPS+, the national RTGS system, on a same-day and settled on a next‑day basis. Payment cards are a popular method of payment in Singapore. Singapore at the end of 20152. There are three main ATM
basis. Credit and debit cards accounted for 7.6% and 7.3% of the networks: the proprietary DBS-POSB network, the ATM 5
®® Low-value, non-urgent and high-volume electronic credit Direct debits accounted for 7.8% of the value of all cashless volume of all cashless payments respectively in 2015; the value network, which is used by seven foreign banks, and the
transfers are processed via the IBG on a same-day basis. Low- payments in 2015, but just 1.3% of the volume2. of credit and debit card transactions over the same period was NETS network, which is operated by MasterCard and used by
value electronic credit transfers include salary and supplier 3.8% and 2.6% respectively2. United Overseas Bank Ltd and OCBC. The networks are not
payments. The IBG processed 41.97 million credit transfers Cheques interoperable.
in 2015, with a value of SGD 258.6 billion, a 2% and 6.2% The cheque is a popular cashless payment instrument for both There were 18.2 million payment cards in circulation at the
increase on 2014 figures respectively2. retail and commercial payments. end of 2016, according to MAS. Of these, 56.6% were debit The Asian Payment Network (APN) initiative currently allows
cards. All cards issued are EMV-compliant. PIN and signature- ATM card holders in Singapore to perform cash withdrawals
®® Low-value (SGD 50,000 or less) electronic payments can
Cheques can be denominated in SGD or USD. In 2015, based identity verification systems are both used. PIN-based at the ATMs of participating banks in each member country
also be processed via FAST (Fast And Secure Transfers)
64.8 million SGD‑denominated cheques were processed, with cards can be used to make payments from deposit accounts (Australia, China, Japan, Indonesia, New Zealand, the Philippines,
on a near real-time basis. Payments can be made via16 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 17
Singapore, South Korea, Thailand and Vietnam), through a linked
% volume of all cashless
ATM network. The APN’s aim is to become a settlement network payments 2015
for a range of retail payments across Asia. In Singapore, the
initiative is operated by NETS.
Electronic wallets
Electronic money schemes are available in the form of reloadable Credit Transfers 2.9%
pre-paid cards. Direct Debits 1.4%
Debit Cards 7.3%
There are two types of stored value card: Credit Cards 7.6%
Cheques 1.6%
®® Single-purpose stored value cards (SPSVC), which can only be Card Based E-Money 79%
used to pay for services provided by the card issuer, such as
mobile telephone credit; and
®® Multipurpose stored value cards (MPSVC), which can be
used to make a range of payments. There are approximately % value of all cashless
34.7 million MPSVCs in circulation, and 167,032 payment payments 2015
terminals2.
A widely used MPSVC is the NETS CashCard, which can store
up to SGD 500 at any one time. The CashCard can also be used
to make retail payments and, with the use of a reader, online Credit Transfers 31.5%
payments. CashCards can be topped up at ATMs, EFTPOS Direct Debits 7.8%
terminals, by mobile phone and over the internet. Debit Cards 2.6%
Credit Cards 3.8%
The EZ-Link card is another popular MPSVC. It is accepted at a Cheques 54%
range of retail units, as well as on Singapore’s public transport Card Based E-Money 0.2%
system. The NETS FlashPay card is also used.
Source: CPSS–Red Book statistical update, September 2016.
In 2016 Stored Value payment instruments accounted for 3.4
billion transactions, with a value of SGD 2.8 billion3.
Mobile wallet payment apps are widely available, including
Singtel Dash and PayLah!, offered by DBS Bank Ltd. Apple Pay,
Samsung Pay and Android Pay are also available.
All e-money transactions are cleared via NETS on a next-day
basis. There were 3.2 billion e-money transactions in 2015, with a
total value of SGD 2.7 billion2.
1.
KPMG, Singapore Payments Roadmap, 2016.
2.
CPSS–Red Book statistical update, September 2016.
3.
Monetary Authority of Singapore, Retail Payment Statistics.18 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 19
Payment
Systems
MEPS+, the national Domestic
MEPS+ (MAS Electronic Payment System), Singapore’s national
Transaction types processed
MEPS+ processes high-value and urgent SGD-denominated
SGDCTS
Cheques are truncated into electronic items before being cleared
real-time gross settlement (RTGS) system, is owned and operated interbank transfers. In addition, MEPS+ effects the final via the SGDCTS. The SGDCTS operates two daily clearing cycles.
RTGS system, by MAS. settlement of participants’ net balances originating from
Singapore’s other clearing houses via a link with the SCHA. ®® 12:00 SGT: cut-off time for return cheques.
®® MEPS+ processed 5.44 million transactions in 2016, with ®® 17:30 SGT: cut-off time for normal cheques.
processes high- a value of SGD 17.2 trillion, an increase of 2.3% and 7.2%
respectively on 2015 figures.
The IBG processes low-value and bulk electronic credit and debit
transfers on a same-day basis.
®® 14:00 T+1: funds released to beneficiaries.
value and urgent
Final settlement takes place across participants’ accounts held at
The ACH (Automated Clearing House), operated by the The SGDCTS processes SGD-denominated cheques on a next- the MAS via MEPS+.
Singapore Clearing House Association (SCHA), is divided into day basis. There is no value threshold.
SGD-denominated three subsystems:
The USDCTS processes USD-denominated cheques drawn on
USDCTS
Cheques are truncated into electronic items before being cleared
®® The IBG (Interbank Giro system): a deferred multilateral net banks in Singapore on a next-day basis if the remitting bank is a via the USDCTS.
transfers. settlement system for bulk electronic payments;
®® The SGDCTS (Singapore Dollar Cheque Truncation System):
direct member of the USDCTS. There is no value threshold.
®® 12:00 SGT: cut-off time for return cheques.
NETS processes payments transacted through ATMs, EFTPOS ®® 17:30 SGT: cut-off time for normal cheques.
a deferred multilateral net settlement system for SGD-
terminals and by CashCard. ®® 14:00 T+1: funds released to beneficiaries.
denominated cheques; and
®® The USDCTS (US Dollar Cheque Truncation System): Operating hours Final settlement takes place across participants’ accounts held at
a deferred multilateral net settlement system for USD- MEPS+ operates from 06:00 to 20:00 SGT (Singapore Time), the USDCTS’s settlement bank, Citibank.
denominated cheques. The USDCTS settlement bank is Monday to Friday.
Citibank.
The IBG operates from 08:00 to 18:45 SGT, Monday to Friday.
NETS (Network for Electronic Transfers), owned and operated by Currency centre holidays
Singapore’s three largest banks, DBS Bank Ltd, OCBC and United The SGDCTS operates from 08:30 to 23:00 SGT, Monday to
Overseas Bank Ltd, processes payments initiated through ATMs, Friday. 2018 1 Jan, 16, 17 Feb, 30 Mar, 1, 29* May,
EFTPOS terminals and all CashCard payments. 15 Jun*, 9, 22* Aug, 7 Nov*, 25 Dec
The USDCTS operates from 11:00 to 23:00 SGT, Monday to
Participants Friday.
2019 1 Jan, 5, 6 Feb, 19 Apr, 1, 20* May,
MEPS+ has 77 participants.
Clearing cycle details 5 Jun*, 9, 12* Aug, 28 Oct*, 25 Dec
The IBG has 45 participants.
MEPS+ * The date shown may vary by plus or minus one day. These dates are derived by
The SGDCTS has 61 participants, of which 34 are direct MEPS+ settles transactions in real time and with immediate converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian
finality. Payment instructions are submitted using SWIFT calendar. Some of these dates cannot be determined in advance with absolute
participants.
accuracy, even by the governing authorities. In the case of Muslim dates in particular,
messages. the feast days are determined by the sighting of a new/full moon.
The USDCTS has 48 participants, of which 32 are direct
participants. ®® 19:00 SGT: cut-off time for same-day settlement. Source: www.goodbusinessday.com.
Final settlement takes place across the participant banks’
correspondent accounts at the MAS.20 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 21
Cash
Management
Domestic The People’s Bank of China has signed an RMB clearing
Notional pooling arrangement with the Singapore branch of the Industrial &
Notional pooling is permitted between resident and non-resident Commercial Bank of China to process clients’ cross-border
companies in SGD and USD-denominated accounts. One or more RMB settlements through the RMB clearing bank, in addition to
legal entities may be included if they operate within the same the correspondent bank channel.
beneficial group.
Lifting fees
Non-residents may have to pay a withholding tax on interest Fees may be applied on funds transfers between resident and
payments if they are not participants in an Approved Finance and non-resident accounts.
Treasury Unit (see Additional comments).
Additional comments
Cross-guarantees need to be established if intercompany loans Singapore is a popular location for regional and global cash
are made. concentration header accounts. Regional treasury centres
established under the terms of Singapore’s Approved Finance
Cash concentration and Treasury Centre policy benefit from a concessionary 8% tax
Cash concentration is permitted between resident and non- on qualifying income from overseas-related companies.
resident companies in SGD and USD-denominated accounts.
Non-residents may have to pay a withholding tax on interest Short-term investments
payments if they are not participants in an Approved Finance ®® Interest can be earned on resident and non-resident current ®® Money market funds are offered by a number of financial All trades executed on the SGX are required to be settled on T+3,
and Treasury Unit. accounts. Accounts are available in SGD and foreign institutions as part of their short-term investment product with each trade settling on a gross basis during an end-of-day
currency. range. settlement run.
Resident and non-resident companies are permitted to participate ®® Time deposits are available in SGD or major
in cross‑border sweep structures located in Singapore. Non- foreign currencies. Maturities range from one week to one Custody and securities settlement1 MAS is the central depository for government securities,
residents may have to pay a withholding tax on interest payments year. A minimum deposit between SGD 5,000 and SGD Depository for which regular trades settle on T+1 and cash trades on T.
if they are not participants in an Approved Finance and Treasury 10,000 is often required. ®® Central Depository Pte Ltd (CDP). Settlement occurs through MEPS+, with securities and cash
Unit. ®® Monetary Authority of Singapore (MAS). settling on a gross basis.
®® Certificates of deposit (CDs) are offered by commercial
banks in SGD or major foreign currencies. For SGD-
Resident companies are permitted to participate in cross-border The CDP, a wholly owned subsidiary of Singapore Exchange BIS Model
denominated CDs, maturities range between three
sweep structures located outside Singapore. These structures Ltd (SGX), provides clearing, settlement, book entry, central ®® Model 1
months and five years. The minimum investment amount
must be denominated in a foreign currency. registration and depository facilities for equities and fixed income
is SGD 100,000. For USD-denominated CDs, maturities Settlement cycle
range between one month and five years. The minimum instruments.
Collections ®® T+3 for equities.
Lockbox services are available, as are regular cash and cheque investment amount is SGD 100,000.
The CDP principally serves the Singapore market, but has links ®® T+3 for listed corporate bonds.
collection services via courier companies and security service ®® Treasury bills are auctioned by MAS on a discounted basis. with other central securities depositories in China, Japan and the ®® T+5 generally, but negotiable for unlisted corporate bonds.
providers. Three-month bills are auctioned weekly. One-year bills are USA to support settlement of cross-border trades. ®® T+1 for government bonds.
offered twice a year. The minimum investment amount is
Cross-border SGD 1,000. Longer-term government bonds are also issued, ®® T+1/T+0 for secondary market government bonds.
Securities are immobilised at the CDP where ownership is
Cross-border payment instructions are routed via SWIFT and with maturities ranging from two years to 20 years. transferred via book entry. The physical certificates of immobilised
settled through accounts held with correspondent banks abroad. ®® Singapore has an established repurchase agreements instruments are safe kept with a CDP‑nominated custodian bank.
Cross-border transfers can also be made via telegraphic transfers. market. 1.
Data as at May 2017.22 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 23
Electronic
Banking
There were Electronic banking is available in Singapore. There is no bank-
independent electronic banking standard; each bank offers its
own proprietary system for corporate banking purposes.
2.4 million registered Internet and mobile banking is offered by the major banks in
Singapore for both corporate and retail purposes.
mobile banking There were 2.4 million registered mobile banking users among
users among the
the large retail banks in Singapore in 2016. In its 2016 Annual
Report, DBS Bank Ltd, the country’s largest bank, reported that
it had 2.5 million online banking users and 1.245 million mobile
large retail banks in banking users. In the same year, United Overseas Bank Ltd
saw 88% online banking penetration, of which 45% of users
accessed financial services via mobile; online penetration for
Singapore in 2016. corporates was 52%. OCBC reported that the total value of its
internet banking transactions rose 17% in 2016; the total value
of mobile banking transactions rose 89%.
Singapore had an internet penetration rate of 82% in January
20171. Mobile penetration was 149.8%2.
1.
We Are Social: Digital in 2017: Southeast Asia.
2.
Data.gov.sg.24 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 25
Trade
Finance
Key import partners Imports It is also a member of the Trans-Pacific Strategic Economic Exports
Documents Partnership Agreement (TPSEP). The TPSEP comprises Brunei, Documents
In order to import goods into Singapore, a commercial invoice Chile, Singapore and New Zealand. Tariffs on trade between In order to export goods from Singapore, a commercial invoice,
(including a full description of the imported goods), bill of lading TPSEP member states were phased out by end-2017. bill of lading and customs declaration form are required.
and customs declaration are required.
China 12.1% Singapore and ten other Pacific Rim countries have agreed to Licences
Malaysia 10.7% Licences proceed with the Trans‑Pacific Partnership Agreement (TPP), Export licences are required for some items, such as rubber, as
USA 10.3% Import licences are required for some products under the terms renamed the Comprehensive and Progressive Agreement for well as for any item that damages the ozone layer. Export licences
South Korea 5.9% of international agreements and also for the importation of some Trans‑Pacific Partnership (CPTPP), despite the withdrawal of the with quotas are required for mahogany and certain pine woods.
Japan 5.5% goods for health, safety, environmental or national security USA from negotiations of the TPP. The new agreement can take
Indonesia 5.1% grounds. force 60 days after at least six signatories complete domestic Taxes/tariffs and other fees
UAE 4.2% procedures. No taxes are charged on exports from Singapore.
Saudi Arabia 4% Taxes/tariffs and other fees
Singapore is a member of the Association of Southeast Asian Singapore has over 21 regional and bilateral free-trade Prohibited exports
Nations (ASEAN) and the ASEAN Free Trade Area (AFTA). agreements with 31 different trading partners. A negative list (of products that may not be exported) is in
operation.
As a member of ASEAN and AFTA, Singapore has committed Few import taxes are applied. The importation of beer, stout,
Key export partners samsoo and medical samsoo are all subject to customs duties. Financing imports and exports
to lower inter‑regional tariffs of between 0% and 5% through
the Common Effective Preferential Tariff (CEPT) scheme. Certain Imports
goods such as sensitive agricultural products are exempt from There are eight free trade zones in Singapore. There are no financing requirements for imports.
this.
Prohibited imports Exports
China 12.6% A negative list (of products that may not be imported) is There are no financing requirements for exports.
Tariffs on 99% of the products in the inclusion list of the ASEAN-6
Malaysia 12% in operation.
(Brunei Darussalam, Indonesia, Malaysia, the Philippines,
Hong Kong 11%
Singapore and Thailand) have been reduced to no more than 5%.
Indonesia 9.4%
More than 60% of these products have zero tariffs.
USA 5.9%
Japan
South Korea
4.1%
4.1%
The ASEAN-China free trade area eliminates 90% of tariff and
investment barriers between China and ASEAN member states. Singapore is a member of the TPSEP which
Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017
(https://www.cia.gov/library/publications/resources/the-world-factbook/index.html).
ASEAN has established free trade agreements with Australia,
India, Japan, New Zealand and South Korea and is negotiating a
comprises Brunei, Chile, Singapore and
New Zealand. Tariffs on trade between TPSEP
free trade agreement with the EU.
Singapore is a member of the 21-member Asia-Pacific Economic
member states were phased out by end-2017.
Cooperation (APEC) forum, which intends to lift all trade and
investment barriers in the region.26 HSBC Treasury Management Profile 2018 | Singapore HSBC Treasury Management Profile 2018 | Singapore 27
Useful
Websites
Monetary Authority of Singapore www.mas.gov.sg
Association of Corporate Treasurers www.act.org.sg
Association of Banks in Singapore www.abs.org.sg
The Institute of Banking and Finance www.ibf.org.sg
ASEAN Bankers’ Association www.aseanbankers.org Disclaimer
Ministry of Finance www.mof.gov.sg
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