A sustainable and smart Singapore


Building sustainable infrastructure for the long run

Budget 2019 focuses on the criticality of long-term infrastructure for Singapore’s growth and the need to develop in a sustainable manner from both environmental and financing perspectives. Pending the upcoming Urban Redevelopment Authority (URA) Master Plan 2019 which will guide our urban development over the next 10 to 15 years, and the Ministry of National Development’s sharing of more details in the Committee of Supply, some of the key themes covered in Budget 2019 include:

  • Use of debt instead of direct funding by the Government for infrastructure projects; and
  • Use of capital markets to fund infrastructure projects as in the case of Changi Airport Terminal 5, with bonds guaranteed by the Government.

Shared costs, enhanced accountability

Given the long-term nature of infrastructure projects, it is fair that costs be shared across generations. This is achieved by issuance of long-term debt to fund infrastructure projects.

The use of Government debt is also important in driving greater accountability by respective project owners.

Furthering public trust, catalysing debt capital markets

As more statutory boards raise funds to finance projects, these boards will need to strengthen systems and processes such as risk management, reporting and treasury.

Bond issuances by statutory boards is a welcome move as it will catalyse the debt capital markets and offer more avenues for infrastructure and institutional funds to participate in Singapore’s infrastructure growth. This would further enhance public trust through increased accountability and transparency.

We’ll have to keep building

Given the importance of the Belt and Road Initiative and Singapore’s potential role as a key regional hub, Budget 2019 has fallen short of coming up with a financing programme – the creation of a project development fund, for instance, to further strengthen the Infrastructure Office (Infrastructure Asia) created in last year’s Budget.

More could also have been done to incentivise the issuance of green bonds and attract alternate sources of capital into Singapore and the region.

In addition, the private sector’s role in Singapore’s infrastructure delivery could be further prioritised.

The Budget also highlighted the need to incorporate environmental factors such as air quality, climate change and waste management into the longer term Singapore urban development plan. Such factors will contribute to the eventual evolution of Singapore’s taxation system, changes in tax base and design of tax incentives. The immediate visible effect of this is the carbon tax system which is aimed at mitigating the impact of climate change and achieving better air quality. To better promote the greening of infrastructure, measures could have also included granting of tax exemption on income derived from qualifying lending, and double tax deduction of financing expenses incurred on qualifying projects.


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