KPMG: Competition for investments intensify for Singapore

With Singapore being a key player in global finance, challenges for its capital market are to be addressed, with competition for investments intensifying in the region, KPMG says.

According to KPMG, the introduction of the global minimum effective tax rate of 15% under BEPS Pillar 2 poses challenges to the effectiveness of traditional tax-based incentives in attracting capital. 

To address these shifts, KPMG tips that Singapore has strategically pivoted toward non-tax measures, with initiatives such as the Refundable Investment Credit (RIC) scheme and incentivised tax rates for intellectual property management, alongside the newly introduced 15 percent tax rate for financial institutions, being part of a focused effort to foster innovation and support high-value economic activities. 

With competition arising as neighbouring countries are deploying targeted cash grants, subsidies and other direct support mechanisms, further increase the need for Singapore to differentiate itself. 

KPMG says agility and innovation remain critical. By balancing forward-looking policy adjustments with non-tax incentives, Singapore is well-placed to maintain its standing as a premier destination for capital markets activity amidst growing global tax reforms. 

KPMG suggests that Singapore should aim for a comprehensive approach that includes:  

• Improving Liquidity and Market Depth: Introducing measures to boost trading volumes and diversifying investment products to attract a broader range of investors.
• Regulatory Incentives: Simplifying listing requirements and reducing compliance costs to enhance SGX’s appeal to potential listers.
• Investor Engagement and Education: Building stronger retail investor participation and fostering relationships with institutional investors to provide a reliable support base for listed companies.
• Promoting Market Visibility: Enhancing the branding and visibility of listed companies locally and internationally to attract greater investment. Encouraging the adoption of environmental, social, and governance (ESG) criteria can also appeal to ethical investors.
• Digital Transformation: Leveraging technology to lower listing costs and exploring opportunities in digital assets and tokenised securities to modernise market operations.

By adopting this multifaceted strategy, KPMG says Singapore can bolster its position as a leading financial hub, working towards sustainable growth and resilience within its financial markets.