Infra takes centre stage in Singapore’s 2018 budget

The Lion City will launch a $3.8bn rail infrastructure fund to expand its existing network by more than 100km and will open a new Infrastructure Office to facilitate investments in the sector.

The Singaporean government is planning to launch a new Rail Infrastructure Fund, designed to accrue savings for major rail line upgrades, the city’s finance minister Heng Swee Keat said in a speech presenting the budget for fiscal year 2018.

According to Heng, the government will inject S$5 billion ($3.78 billion; €3.07 billion) from this year’s budget, followed by potential top-ups in the future, as Singapore plans to spend more to develop new infrastructure over the next decade, including the expansion of its rail network by over 100 km.

This follows the creation of the Changi Airport Development Fund in 2015, which is used to save for Changi’s Terminal 5, currently under early-work construction. “We now have S$4 billion in the fund,” the finance minister said. The airport operator is reviewing proposals from consortia and is looking to appoint the master architect for T5 this year. The estimated cost of the new terminal has yet to be announced.

The government is also looking at borrowing by the Statutory Boards and government-owned companies which build infrastructure. The move is expected to help spread the cost of certain large investments in coming years, such as KL-Singapore High Speed Rail project and the JB-Singapore Rapid Transit System Link project.

“A Government guarantee will enhance the confidence of creditors,” Heng said during his speech. “This is another way to use the strength of our reserves to back our infrastructure projects, without directly drawing on the reserves,” he said.

The finance ministry is currently discussing the option of government guarantees with the President Halimah Yacob and the Council of Presidential Advisers.

The Lion City also intends to establish an Infrastructure Office to forge partnerships among businesses. The new entity will be led by government agency Enterprise Singapore and the Monetary Authority of Singapore.

Local and international firms across the value chain – from developers and institutional investors to legal, accounting and financial services providers – will be targeted to join the initiative, in a bid to provide a platform for information exchange and to facilitate infrastructure investments and financing.

A similar initiative was seen in Hong Kong, where the city’s foreign reserves manager, Hong Kong Monetary Authority, set up the Infrastructure Financing Facilitation Office in July 2016. The HK initiative is serving as a platform to gather key infrastructure players globally, including developers, banks, fund managers, institutional investors and advisors, and tap opportunities emerging from the China-led One Belt One Road policy. The latter aims to connect Eurasian countries by building infrastructure and promoting trade in the region.

Further details of the new Infrastructure Office and borrowing plans were not disclosed. Singapore’s finance ministry had not responded to queries seeking details by press time.