A speech by a senior regulatory official says Singapore’s strong legal foundation provides a solid basis for expansion in Southeast Asia.
Singapore will do its best to promote growth in private credit markets by using its established legal system to promote the city-state as a regional gateway, according to Monetary Authority of Singapore executive director Lim Cheng Khai.
He was speaking in his capacity as a senior official in the financial markets development department at a private debt investor forum in the city-state earlier this week.
Khai noted that growth in private credit investments had grown strongly in Asia in recent years and had accelerated but that the overall market remained «relatively nascent», with regional private debt assets under management (AuM) comprising only 6 percent of the global total.
Local Expansion
This contrasts with Asia’s 30 percent share of global AuM even though in Singapore it is seeing a few alternative asset managers such as Apollo, Blackstone, HPS, and Oaktree expand their private credit capabilities.
He also indicated that the private debt market in Asia is more fragmented and challenging than the one in US and Europe and that the legal framework in parts of the region poses «additional risks or challenges to lenders and investors».
Talent is another potential issue given the need for skills in sourcing, structuring, modeling, and execution and also given the diverse cultures and languages throughout the region.
Trusted Legal System
Given the situation, the MAS was committed to supporting credit managers intent on expanding in Asia.
«As a global Asia gateway, the Singapore financial sector can connect global markets and support Asia’s development. Singapore has a trusted legal system that provide greater predictability and enhance enforceability to safeguard the interest of general and limited partners,» he said.
According to him, partners «can be confident» of the protection of creditor rights given the city-state’s highly developed contract laws, credit and security laws, agency and trust laws, and insolvency laws.
Dispute Resolution
«All parties can take comfort that potential disputes will be resolved expeditiously and through their preferred mode of dispute resolution,» he maintained.
According to him, Singapore was on par with London as the most popular seat to conduct international arbitration.
«We are valued for our neutrality in the region, and the Singapore International Arbitration Centre is the most preferred arbitral institution in Asia-Pacific in 2021,» Khai indicated.
