4 FAQs on Revitalising Singapore’s Capital Markets: KPMG’s Viewpoint

Singapore has long been a key player in global finance. Budget 2025 introduces measures to address challenges like low market liquidity and regional competition while seizing new opportunities. These policies aim to strengthen Singapore’s capital markets and solidify its position as a top destination for companies to list and raise capital. Here are 4 FAQs exploring the strategies to achieve this.

Singapore’s tax incentives are a significant step forward in enhancing the attractiveness of its capital markets. Initiatives such as the Corporate Income Tax (CIT) rebate of 10 and 20 percent provide financial relief to companies, encouraging them to raise capital within the country. Furthermore, the concessionary 5 percent tax rate for listed fund managers under the Finance Section Initiative – Fund Management (FSI-FM) scheme positions Singapore as a prime location for fund managers seeking to scale investment activities through public fundraising.

Additionally, the Singapore Government’s S$5 billion Equity Market Development Programme demonstrates a clear commitment to revitalising Singapore-listed equities. While these measures may boost listings in the short term, their long-term impact would depend on better market valuations and higher liquidity.

A comprehensive strategy that goes beyond fiscal incentives will be necessary to position Singapore's stock market as a global leader. Streamlining Initial Public Offering (IPO) processes, tailoring regulations for small and mid-cap companies and creating a dedicated exchange segment with more relaxed requirements for high-growth firms can improve market vibrancy. 

 While the CIT Listing Rebate helps offset listing costs for larger firms, extending incentives to high-growth private companies at early stages of their growth journeys could unlock significant potential. By providing dedicated support, such as grants or co-funding schemes, Singapore can empower small enterprises to scale and prepare for public listing. Inclusive measures like these will encourage diversification within Singapore’s public equities market, fostering a dynamic ecosystem for companies of all sizes and growth phases—thereby strengthening the overall capital markets infrastructure. 

Revitalising Singapore's public equities market should be viewed as part of a broader strategy to enhance the nation's overall financial ecosystem. Recent initiatives, such as tax incentives to attract more companies and fund managers to list on the Singapore Stock Market, are commendable steps in this direction. 

 However, focusing exclusively on the equities market may fall short in addressing deeper, systemic challenges. Feedback from industry stakeholders highlights concerns about the potentially limited effect of tax incentives if they are not reinforced by other strategic measures.

 Therefore, 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, Singapore can bolster its position as a leading financial hub, working towards sustainable growth and resilience within its financial markets.

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

To address these shifts, Singapore has strategically pivoted toward non-tax measures. Initiatives like 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, are part of a focused effort to foster innovation and support high-value economic activities. 

Despite these efforts, competition for investments is intensifying across the region. Neighbouring countries are deploying targeted cash grants, subsidies and other direct support mechanisms, further increasing the need for Singapore to differentiate itself. 

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.