Speech by Ms Indranee Rajah Minister in the Prime Minister’s Office, Second Minister for Finance and National Development at Withers Khattarwong’s 50th Anniversary Celebrations, Thursday, 18 July 2024
19 Jul 2024Ladies and Gentlemen,
INTRODUCTION
1 Thank you very much for the warm welcome. It is a great pleasure to join all of you today at Withers KhattarWong’s 50th Anniversary celebrations.
2 50 years is a significant milestone. It is not possible to achieve such a milestone without consistent strength, depth and quality of legal services and achieving this shows a ringing endorsement by your clients. Congratulations!
3 The firm’s growth over the years is truly impressive. I can still recall my first dealings back in the 1980s when I was a young lawyer. At that time, it was Khattar Wong and it was led by Mr Satpal Khattar and Mr David Wong. Since then, firm has grown exponentially and is now a global partnership and part of Withers Worldwide.
4 I understand that Deborah has handed over the baton of managing partner. As we celebrate the firm’s 50-year milestone, it is timely to acknowledge Deborah’s excellent stewardship. In any transition, it is every leader’s goal to be able to hand over the organisation in better shape than when you took over and this has been more than fulfilled in Deborah’s case. Under Deborah’s stewardship, Withers KhattarWong has grown from strength to strength, expanded its practice areas and networks, navigated challenges and achieved milestones that will shape the firm’s legacy.
5 To Shashi and Daniel, congratulations on your new roles as joint managing partners. I am confident that the firm will continue to grow and achieve new heights under your leadership, and continue its prominence in the legal landscape.
6 I am also delighted about the pro bono initiative launched by the firm. By pledging 1,000 hours of pro bono legal services your firm is not only giving back to the community but also providing crucial access to justice for those in need. I also commend the establishment of an award for future female leaders in partnership with the Singapore Management University, reflecting the dedication to inclusivity and support for the professional growth of women in the legal industry.
7 Today, even as we look back over your last 50 years, I thought it pertinent to look to the future. Maybe not as far as the next 50 years, but certainly the next 5 to 10. I will touch on 4 topics which may be relevant to the audience here: sustainable finance, family offices, tax and legal technology.
SINGAPORE AS A LEADING SUSTAINABLE FINANCE HUB
8 Singapore is a global financial centre. As part of this, Singapore aims to be a leading sustainable finance hub for Asia.
a. MAS launched the Finance for Net Zero Action Plan (FiNZ) which mobilises financing to drive Asia’s transition to net zero.
b. In the power sector, this includes the scaling up of renewable energy deployment and credibly phasing out coal-powered plants.
9 FiNZ has several key priorities.
10 First, developing innovative solutions including blended finance. Blended finance volumes in Asia are low despite significant financing needs. The reasons for low volume include lack of bankability of sustainable infrastructure projects and risk tolerant capital.
11 One of the initiatives that MAS has introduced to support the scaling up of blended finance is FAST-P, which targets three key areas of green and transition investments that are most pertinent in the Asian region.
a. The Energy Transition Acceleration theme will cover transition projects, such as the managed phase-out of coal together with renewable energy replacement, and grid modernisation and development projects.
b. The Green Investments theme will invest in marginally bankable sustainable projects in the renewable energy, electric mobility, water and waste, and circular economy sectors.
c. We are also evaluating investment opportunities within hard-to-abate sectors, to support industries, such as steel, cement, aviation and maritime, move to more carbon-efficient processes or solutions.
d. Financiers and investors will form partnerships, managed by an asset manager, with dedicated investment and impact objectives for each investment theme.
e. We have formed partnerships with like-minded players for two of the three investment themes. MAS has signed a MOU with Allied Climate Partners, the International Finance Corporation (IFC), and Temasek Holdings on the Green Investments Partnership. MAS has entered into an MOU with the Asian Development Bank (ADB) and Global Energy Alliance for People and Planet (GEAPP), which is backed by The Rockefeller Foundation, Bezos Earth Fund, and IKEA Foundation, on the Energy Transition Acceleration Partnership.
12 Singapore has also established infrastructure platforms that has employed blended finance to crowd-in private capital.
a. Clifford Capital, whose borrowings are guaranteed by the Singapore Government, provides financing to crowd-in commercial investments for infrastructure projects. Bayfront Infrastructure Management, which has support from the Singapore Government, mobilises capital from institutional investors, by acquiring infrastructure loans from banks, repacking these into notes, and selling them to investors. To date, Bayfront has issued four notes amounting to more than US$1bn. Sustainability tranches of more than US$300m have also been incorporated in the last three issuances.
b. Pentagreen, a partnership between HSBC and Temasek Holdings, aims to deploy blended finance at scale to unlock marginally bankable projects in Southeast Asia.
13 MAS is also seeking to improve the economic viability of the phase-out of coal through developing transition credits, which are generated from the emissions reduced through retiring a coal-powered plant and replacing with cleaner energy sources. A Transition Credits Coalition (TRACTION) has been set up to develop initiatives that will support the viability and scalability of transition credits.
14 Second, improving disclosures to reduce green washing and improve definitions to align financial institutions and real economy sectors on what activities can be classified as environmentally sustainable or ‘green’ or transitioning towards green etc.
15 The MAS, together with the industry, established Singapore Sustainable Finance Association ("SSFA"). The SSFA has identified five priority areas – carbon markets, blended finance, transition finance, taxonomy and natural capital. I encourage all of you to get involved in these activities.
TAX DEVELOPMENTS AND LAWYERS’ ROLE
16 Next, let me just touch a little bit on tax developments and the lawyers’ role because this platform has a very strong tax practice. The international tax landscape is undergoing significant transformation with BEPS 2.0 and the implementation of Pillar 2 by major jurisdictions across the globe.
17 In line with international developments, we announced in Budget 2024 that we will be implementing the Domestic Top-up Tax (DTT) and Income Inclusion Rule (IIR) from the financial year starting on or after 1 January 2025.
18 We are currently preparing for the implementation. We have just concluded the public consultation on the draft legislation for the DTT and IIR, and we will incorporate the feedback we have received from businesses, before tabling the relevant Bill in Parliament.
19 We are mindful that the new international tax rules can be complex, and we will support businesses as they navigate this transition.
a. We have designed the rules with close reference to the GloBE Model Rules, to minimise the additional tax compliance burdens on affected companies.
20 We hope to be able to work with firms like yourselves to be able to get the word out and to help clients understand what the changes would be.
SINGAPORE IS A GLOBAL-ASIA FAMILY OFFICE HUB
21 Singapore is a Global-Asia Family Office Hub, with a stable and well-developed ecosystem for top global families to access quality investments and a thriving innovation ecosystem.
22 For families looking for a trusted location to manage wealth, Singapore offers a stable, neutral and business-friendly operating environment – as a reputable financial hub with strong law and order. Our ready pool of talent helps families meet their unique needs.
a. We have well-regulated and deep financial markets with regulations aligned to global standards, and a low corporate tax rate of 17%.
b. We also have the full range of professional services, including wealth and asset management, legal and tax advisory, trust services, and governance, that family offices need and value.
i. We have strong expertise in investments, with over 1,200 registered licensed fund managers and 400 PE/VC managers. Collectively these have over $5.4 trillion worth of assets under management.
ii. To deepen our Family Office professionals’ expertise, MAS and the Institute of Banking and Finance launched skills maps for both entry and management-level Family Office professionals under the Skills Framework for Financial Services in 2020 and 2021. The skills maps form a comprehensive suite of skills and competencies which family office professionals should possess including family governance and philanthropy advisory. These skills maps include specific competencies and technical training for family governance and philanthropy advisory.
c. The key to success as a wealth management hub is trust. Singapore works hard at this. We have zero tolerance for illicit funds. We take a strong stance against those who seek to exploit our pro-business environment for illicit purposes and will not hesitate to take enforcement action, as we have recently demonstrated. This is how we have enabled legitimate business families to create value and manage their wealth. Our reputation as a clean and trusted business hub is hard earned and we will continue to maintain this approach.
23 Increasingly Family Offices want to drive impact deals that balance profit and purpose. Singapore is the best place in Southeast Asia for families to do good through innovative impact investing and philanthropy.
a. For example, Silverstrand Capital, a Family Office in Singapore, created a Biodiversity Accelerator+ programme to scale market solutions in conservation and biodiversity regeneration. Gunung Capital, another Family Office, has committed S$500m to ESG assets like clean energy infrastructure and carbon mitigation.
b. Please do tell your clients about the Philanthropy Tax Incentive Scheme. It was opened for applications earlier this year, and it was a Scheme for family offices which seeks to encourage greater philanthropic giving and provides qualifying donors with a 100% tax deduction for their overseas donations made through qualifying local intermediaries. MAS has since published the first batch of such approved intermediaries in June 2024.
HARNESSING GENERATIVE AI FOR THE LEGAL PROFESSION
24 Digitalisation has already changed the nature of legal tasks and the way legal professionals work. Generative AI is now set to revolutionize it. It will also mean that areas that were exclusively the preserve of lawyers will increasingly be explored by others. For example, clients will use generative AI tools to find quick answers and obtain a second opinion. On the flip side, however, AI can also be of immense help to lawyers, augmenting research, discovery, analysis and drafting and allowing lawyers to save time, costs and effort.
25 AI will not replace lawyers. But the lawyers who are able to use AI and use it well, will have a clear advantage and do better than those who can’t. So, it is in the interest of the profession to get a grip on AI as soon as possible.
26 On our side, to support Singapore law firms in harnessing generative AI for their legal work, the Ministry of Law, together with IMDA and EnterpriseSG, has recently expanded the Productivity Solutions Grant for the Legal Sector, to include legal tech tools powered by generative AI. These include online legal research tools, document review software, document assembly software and e-discovery software. Singapore law firms can enjoy a 70% grant for these pre-approved tools for up to two years, if they apply by 31 March 2025.
CONCLUSION
27 In conclusion, the legal industry has changed profoundly over the last 50 years.
28 Through it all, Withers KhattarWong has continued to redefine itself and capitalise on new opportunities that changes have presented, and has grown from strength to strength.
29 Congratulations once again!