Singapore and China have agreed on new initiatives to further promote the international use of the Renminbi (RMB) through Singapore.
The agreement was reached at the 12th Joint Council for Bilateral Cooperation (JCBC), co-chaired by Singapore Deputy Prime Minister and Coordinating Minister for National Security, Mr Teo Chee Hean, and People’s Republic of China Vice Premier of the State Council, Mr Zhang Gaoli.
The new initiatives will broaden the cross-border RMB channels between Singapore and China.
The existing cross-border RMB initiatives between Singapore and the China-Singapore Suzhou Industrial Park (SIP) and Singapore-Sino Tianjin Eco-City (SSTEC)1 will be expanded to the cities of Suzhou and Tianjin.
This means that banks in Singapore will be able to lend RMB to corporates across Suzhou and Tianjin, and corporates in Suzhou and Tianjin will be able to issue RMB bonds in Singapore. This will give more financing options to Suzhou and Tianjin corporates as well as provide financial institutions and investors in Singapore additional avenues to deploy their growing RMB liquidity in Singapore.
Corporates in Suzhou and Tianjin will be allowed to repatriate 100% of the proceeds raised from bonds issued in Singapore. This greater flexibility will provide a stronger incentive for corporates in Suzhou and Tianjin to raise RMB funds in Singapore.
Corporates in SIP will be allowed to borrow from Singapore-based companies. This will facilitate SIP corporates’ overseas expansions through Singapore and provide them stronger incentive to set up Finance and Treasury Centres in Singapore.
Qualifying privately-owned banks in SSTEC will be allowed to borrow from Singapore-based banks. This will lend support to the development of privately-owned banks in SSTEC and allow such banks in SSTEC to establish commercial relationships with banks in Singapore.
Singapore supports the inclusion of the RMB in the International Monetary Fund’s (IMF) Special Drawing Rights’ basket of currencies. The use of the RMB for payments, trade settlement, and investments has grown rapidly in recent years.
Singapore and China also look forward to enhancing financial connectivity to support projects under the “One Belt One Road” initiative, in order to facilitate access by Chinese companies to ASEAN markets through Singapore.
MAS Managing Director, Mr Ravi Menon, said: “This has been a fruitful year for financial cooperation between Singapore and China. The initiatives announced today are a testament to the excellent relations between MAS and our counterparts in China. We look forward to strengthening these relations and forming new pathways as we grow our financial markets together.”
