Singapore Country Feature: Singapore is still weighing up Islamic finance
By Muhammad Ridhwaan Radzi and Ustaz Aminuddin Abu Bakar
This article was first published in IFN Volume 20 Issue 27 dated the 5th July 2023.
Much can be said about Singapore when it comes to the world stage. Despite being a tiny country surrounded by resource-rich countries, the little red dot remains at the forefront in almost every aspect of business and finance. With rising uncertainty over the global economy as well as tensions in the geopolitical arena, it is no surprise that affluent families and wealth managers are looking at Singapore as a haven. In March 2023, Farro Capital amassed SG$1.35 billion in assets under management (AUM) despite only being launched for four months.
But attracting wealth is not the only thing on the agenda; Singapore is also working on sustainable efforts while increasing collaboration with other countries, most notably in Africa.
Here are some Singapore highlights from January 2023 to the end of June 2023:
Sustainability
- Singapore appointed its first Chief Sustainability Officer, a coordinator across local government ministries, agencies and companies to reach its 2030 Green Plan and eventually achieve a net zero emission by 2050.
- The Monetary Authority of Singapore (MAS) launched consultations to manage the phasing out of coal-fired power plants in the local taxonomy.
- As part of an initiative to strengthen access to climate transition-related data of Singapore-listed companies, the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) will link ESGenome, their digital platform that allows listed companies to disclose their ESG information to the Climate Data Steering Committee’s (CDSC) Net Zero Data Public Utility (NZDPU), a global repository of climate transition-related data.
Central Bank
- MAS became the most significant single buyer of gold in quarter 1 of 2023 after adding 69 tonnes of gold to its reserves. The current gold reserves in Singapore amount to 222 tonnes, a 45% increase from the end of 2022.
- Singapore gradually replaced the Swap offer rate, also known as SOR, with the Singapore Overnight Rate Average (SORA) with 60% higher transactions in May 2023 than in June last year. This follows policymakers’ trend to introduce a new gauge over Libor.
Singapore globally
- Deputy Prime Minister, Lawrence Wong, met Chinese Premier Li Qiang in May, exchanging views on how both could enhance cooperation and people-to-people exchanges.
- Singapore’s Prime Minister encouraged Singapore companies to explore the opportunity and potential in Africa, mentioning the continent as “young and dynamic” with multiple business opportunities.
- Singapore and Australia have set aside A$20 million to encourage co-innovation between small and medium enterprises (SMEs) from both countries, especially in green products and services.
Wealth management
- From 2017 to 2021, assets under the management of non-retail individual clients grew by SG$470 billion based on MAS’ annual survey. Single-family offices account for SG$90 billion of these assets, roughly 2% of the SG$5.4 trillion in assets managed in Singapore.
Singapore politics
- The Singapore government will have a new president this September as the outgoing Singapore president, Mdm Halimah Yacob, steps down after serving for six years. During her term, she approved the government’s request to tap into its reserves amounting to SG$ 52 billion between FY2020 and FY2022.
Islamic Finance
Maybank
- Speaking at the Maybank Invest Asian Press Conference 2023, Group President & CEO Dato’ Khairussaleh Ramli mentioned that Maybank would be investing RM4.5 billion for five years to increase capability developments, especially in technology and talent (Source: Berita Harian)
ZaynFi
- In January 2023, ZaynFi raised a US$600,000 pre-seed round led by renowned early-stage investors 500 Global and Islamic Finance Guru UK’s Cur8 Capital to build an ecosystem of Shariah-compliant Decentralised Finance (DeFi) products for the global Muslim market. ZaynFi is co-founded by former Wahed & Fasset execs Syakir Hashim & Aziz Zainuddin. Through their prior roles, they have deep experiences in the global Islamic fintech space, Digital Assets & DeFi. ZaynFi received Amanie Advisor’s Shariah-compliant certification on its stablecoin yield generation platform in May 2023. Following this, ZaynFi launched its private beta product at the end of May 2023 to a select group of early users.
CGS-CIMB
- Committed to offering more Shariah investment solutions to clients following the successful launch of iCash, the first Shariah-compliant trading account in Singapore.
Kapital Boost
- Kapital Boost launched its Android app in early 2023 and is gearing up to launch its iOS app in the coming weeks. The company continues to prioritise improving and innovating its P2P platform, focusing on providing users with a seamless experience and increased opportunities for SME investment and social giving.
Prudential
- Prudential recently launched PRULink Islamic Global Equity Index Fund, an investment-linked policy with the underlying fund: HSBC Global Islamic Equity Index Fund.
Islamic Finance Singapore (IFSG)
- The first Rizq Symposium was held in Singapore, gathering finance professionals and multiple organisations to discuss relevant Islamic finance and wealth management.
- The Regional Shariah Scholars’ Dialogue (Muzakarah Cendekiawan Shariah Nusantara) in Singapore after nearly a decade since the event was held at the Lion City. This year’s theme touched on both fintech and sustainability.
CIMB Bank Berhad, Singapore Branch
- CIMB Singapore offers Singapore’s 1st Shariah-compliant Green Renovation-i financing for home renovation. To qualify for the Green Renovation-i financing, customers must fulfil 5 out of the 14 requirements in the Green Renovation checklist.
- CIMB Singapore also offers its customers a Shariah-compliant Green Trade Financing facility, allowing clients to use this financing product to finance their purchase of Shariah-compliant goods on an open account or advance payment basis. This facility is based on the Shariah principle of Commodity Murabahah.
Ethis
- Strong recent demand from retail and institutional investors for alternative investment and opportunities saw Ethis launch new investment products and programs for investors in Singapore in 2022.
- HASAN – the Halal Startup Angel Network aims to attract experienced and new angel investors to pool capital and knowledge to invest in impactful and Shariah-compliant tech firms, startups and other innovative growth-focused opportunities.
- EthisX, a global platform regulated in Oman, allows investors to invest in financing projects, equity in private companies and managed funds. It focuses on opportunities in Asia and MENA, including Singapore.
Ascent Islamic
- Ascent Islamic has served 5,000 Muslim families by providing Islamic Financial Planning services. They have started our regular free Islamic financial planning walk-in clinic with Masjid Anggulia. We also conducted a well-received Muslimah financial workshop with Masjid Anggulia.
While developments in the local Islamic finance space can be said to be organic as compared to other countries in the region where governments play an integral role, work is still in the way to develop more Islamic financial products, particularly in the areas of:
- Insurance
- Credit cards
- Home Mortgage
- Investments
The local Islamic finance players hope that the government can do more to push the Islamic finance narrative in Singapore for the future.
Muhammad Ridhwaan is the co-founder and managing director of Islamic Finance Singapore. He can be contacted at ridhwaan@islamicfinancesg.com.
Ustaz Aminuddin Abu Bakar, is the principal consultant of S Tradition, a boutique local Shariah advisory firm. He can be contacted at aminuddin@s-tradition.com.
