Singapore: Project Finance Comparative Guide

1 Legal framework

1.1 Beyond general commercial and contract laws, what other specific laws and regulations govern project finance transactions in your jurisdiction?

To the best of our knowledge, there is no legislation governing project finance transactions as such. There are, however, various sector-specific laws and regulations which are pertinent to project finance transactions in these sectors.

Some of the more salient laws/regulations are the following primary legislation and the subsidiary legislation thereunder:

• the Environmental Protection and Management Act (Cap 94A);
• the Environmental Public Health Act (Cap 95);
• the Workplace Safety and Health Act (Cap 354A);
• the Fire Safety Act (Cap 109A);
• the Sewerage and Drainage Act (Cap 294);
• the Energy Conservation Act (Cap 92C); and
• the Resource Sustainability Act 2019 (29/ 2019).

1.2 Do any bilateral and/or multilateral international instruments have particular relevance for project finance transactions in your jurisdiction?

No, to the best of our knowledge.

1.3 Beyond normal governmental institutions, are there regulatory bodies that play a particular role in project finance in your jurisdiction? What powers do they have?

The Monetary Authority of Singapore (MAS) is Singapore's integrated financial regulator and oversees all financial institutions in Singapore. In light of Singapore's aim of "accelerating the development of green financing", MAS convened the Green Finance Industry Taskforce (GFIT), comprising representatives from corporations, financial institutions and non-governmental organisations, along with several financial industry associations as strategic partners. The GFIT has four key initiatives:

• developing a taxonomy;
• enhancing environmental risk management practices of financial institutions;
• improving disclosures; and
• fostering green finance solutions.

As of May 2021, the GFIT has published several initiatives in furtherance of these aims, including:

• a handbook guiding asset managers, banks and insurers on environmental risk management;
• a guide on the best practices in climate disclosure;
• a white paper on green finance solutions; and
• a public consultation on its proposed taxonomy to demarcate projects as green, transitioning to green or incompatible with a low carbon economy (to be used by financial institutions).

1.4 What is the government's general approach to project finance in your jurisdiction? Is PFI/PPP a preferred model in your jurisdiction?

Singapore has used PPPs for various projects in the past, including water treatment plants, waste disposal plants and education infrastructure. In 2004, the Ministry of Finance's PPP Handbook recommended that the model be considered for all state projects which require the development or redevelopment of capital assets costing more than S$50 million. This advice remains unchanged today, to the best of our knowledge.

2 Project finance market

2.1 How mature is the project finance market in your jurisdiction?

The project finance market in Singapore is well established and is primarily focused on PPP financing and traditional project financing. Singapore is also instrumental in organising financing for regional infrastructure projects, with 60% of project finance loans in Southeast Asia originating from banks in Singapore.

Singapore is home to a range of private and public sector organisations that cater to this industry, ranging from developers and construction companies to financial institutions and professional services firms. In 2018, Enterprise Singapore and the Monetary Authority of Singapore set up Infrastructure Asia, with the purpose of leveraging this extensive network to catalyse project development, financing and execution opportunities in Asia.

2.2 On what types of project and in which industries is project finance typically utilised?

Project finance is typically utilised in the same sectors as elsewhere in the world, such as power, transport, water and sanitation and renewable energy.

2.3 What significant project financings have commenced or concluded in your jurisdiction over the last 12 months?

In September 2020, the National Environment Agency and the Public Utilities Board (Singapore's national water agency) began the first phase of the construction of Tuas Nexus, Singapore's first integrated water and solid waste treatment facility.

In March 2021, Amazon announced its first renewable energy project in Singapore, which will see it purchase clean energy from Sunseap's 62 megawatt solar installation (awarded as part of JTC Corporation's SolarLand project), due to be completed in 2022. Once operational, the installation is expected to produce 80 gigawatt-hours of clean energy annually. Amazon has committed to purchasing all the energy generated by this project.

3 Finance structures

3.1 What project financing structures are most commonly used in your jurisdiction?

In countries such as India and Japan, build-own-operate structures are common; however, in jurisdictions such as Singapore, where the projects are (necessarily) considerably smaller in scale, recourse to the balance sheet is the norm. This is particularly true of the petrochemicals industry; outside of the oil and gas sector, however, large-scale capital investments are financed using non-recourse financing.

In comparison to the 1990s, non-recourse financing has fallen out of favour in Asia. According to Infrastructure Asia, "for many projects, the mode of financing infrastructure is changing from ‘project financing' to ‘financing projects'". Various types of credit enhancements and non-project collateral are used to enable financings.

Possible financing options may include:

• senior and mezzanine financing;
• fixed and floating rate instruments;
• asset-backed financing;
• acquisition financing; and
• loans and bonds.

An example of a novel structure is the S$458 million Bayfront Infrastructure Capital long-term loan facility established by Clifford Capital. Under this facility, institutional investors provide liquidity while being issued asset-backed securities in return. Bayfront provides this liquidity to lending banks in return for infrastructure loans, which are then repackaged into asset-backed securities, which are further divided into tranches and given credit ratings.

3.2 What are the advantages and disadvantages of these different types of structures?

Non-recourse financing entitles the lender to repayment only from the profits of the project it is funding; hence, for the borrower, the risk is limited to what was invested in the project, which is typically 70–75% of the capital costs. Most of the risk is therefore on the lenders.

3.3 What other factors should parties bear in mind when deciding on a project financing structure?

These factors are broad ranging and sector and project specific; therefore, parties should seek legal advice specific to their own project before deciding on a project financing structure.

4 Industry players and ownership requirements

4.1 Who are the key players in project financings in your jurisdiction? Do any restrictions apply in this regard (eg, foreign ownership)?

The key financial institutions with dedicated non-recourse teams in Singapore include DBS, Standard Chartered Bank and BNP Paribas. Banks such as United Overseas Bank and OCBC have also branched into the financing of infrastructure. American banks in Singapore, such as Bank of America, act more as industry players, bringing in non-recourse experts.

Generally, Singapore law does not restrict foreign ownership of Singapore-incorporated project companies, except in specific sectors such banking, media and broadcasting. The restrictions (if applicable) may be imposed by way of legislation or by the licensing requirements prescribed by the relevant regulatory body. For instance, a broadcasting licence will not be issued to a company that is controlled by foreign entities or if more than 49% of the shares of the company is held by foreign entities.

4.2 What role does the state play in project financings in your jurisdiction?

From a broad perspective, Temasek Holdings (a holding company owned by the government of Singapore) holds several infrastructure firms in its portfolio, such as Sembcorp, Keppel, Changi and PSA. These companies are commercially run, unlike some state-owned enterprises elsewhere. Consequently, the GLC ecosystem has a very significant presence in the infrastructure sector across different industries internationally.

As Ms Indranee Rajah – minister in the Prime Minister's Office and second minister of finance and education – has noted, Singapore is keen to "contribute to Asia's infrastructure and financing needs". It was with this aim in mind that Infrastructure Asia was set up in 2018, to bridge the gap between projects, project sponsors, industry players, private sector and multilateral development banks and government agencies, in order to improve access to infrastructure financing. She further noted that Infrastructure Asia and the Monetary Authority of Singapore were also working towards facilitating asset securitisation and take-out financing for infrastructure as an asset class in Asia.

4.3 Does your jurisdiction have nationalisation or expropriation laws in place? If so, what are the implications in the project finance context?

There are no specific nationalisation or expropriation laws in Singapore; however, certain legislation may be relevant in the project finance context. For instance, there is legislation which allows the government to compulsorily acquire land – as an example, the Land Acquisition Act (Cap 152) grants the government the power to acquire land for public and other specified purposes (with compensation for the same).

5 Regulatory and documentary requirements

5.1 What regulatory approvals are typically required for project financings in your jurisdiction? How are these typically obtained and what fees are payable?

To our knowledge, there are no regulatory approvals required for project financing as such in Singapore.

5.2 What licences are typically required for project financings in your jurisdiction? How are these typically obtained and what fees are payable?

Project financings in Singapore typically do not require licences. However, licences may be required for certain activities undertaken in the project itself, such as for the ownership of land, the operation of pipelines and so on. Examples of the authorities that issue such licences in various sectors include the following:

• building and construction – the Building and Construction Authority and the Urban Redevelopment Authority;
• transportation – the Land Transport Authority;
• energy – the Energy Market Authority;
• water and sanitation – the Public Utilities Board; and
• telecommunications – Infocomm and the Media Development Authority of Singapore.

The applicable fees for the relevant licences will depend on the needs of the project itself, as set by each body from time to time.

5.3 What documentation is typically involved in a project financing in your jurisdiction?

The documentation in a project financing can be grouped very broadly as follows:

• shareholder/sponsor arrangements (eg, shareholders' agreement/joint venture agreement;
• loan and security documents (eg, project loan agreement, security documents); and
• project documents (eg, construction agreements).

The project agreements drive the negotiations over risk allocation, construction and fuel lease agreements, maintenance contracts and so on. The credit documents focus on the conditions precedent, warranties, covenants, events of default and more, which relate back to the project documents.

In a non-recourse financing structure, the lenders rely exclusively on the project assets as collateral; consequently, it is imperative that the risk allocation is properly negotiated and handled.

5.4 What registration or filing requirements apply for project financing documents to be valid and enforceable?

Typically, project financing documents need not be submitted for approvals in Singapore. However, there may be specific registration requirements for specific types of security, as enumerated in question 6.2.

5.5 Is force majeure understood as a legal concept in your jurisdiction?

Yes, force majeure is accepted as a legal concept and is enforceable in Singapore law if it is expressly provided for contractually.

Unlike in civil law jurisdictions, force majeure clauses must be present in a particular contract or agreement before the concept is recognised and applied by a court in a particular dispute.

The Singapore courts tend to uphold the sanctity and freedom of parties' right to contract. Accordingly, the parties are free to decide the exact scope of each force majeure clause and the courts will generally give effect to the parties' intentions.

6 Security/guarantees

6.1 What types of security interests and guarantees are available in your jurisdiction? Which are most commonly used and which are recommended (if different)? In particular, is the concept of a security trustee recognised (and if not, how are guarantees or security taken for multiple lenders)?

There are various types of security interests available in Singapore:

• mortgages (legal and equitable);
• charges (fixed and floating, legal and equitable);
• statutory assignment;
• contractual assignment (eg, conditional/on demand performance bonds, guarantees from related entities); and
• pledge (legal and equitable).

The concept of a security trustee, which holds the security for the benefit of a group of lenders and, after enforcement, applies the enforcement proceeds, is recognised in Singapore.

6.2 What are the formal, documentary and procedural requirements for perfecting these different types of security interests?

Some of the main requirements are as follows:

• Legal mortgage of registered land: Registration with the Singapore Land Authority (SLA) Land Titles Registry;
• Charge: Registration with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) within 30 days (if executed in Singapore) or 37 days (if executed outside Singapore) of the date of creation of the charge; and
• Charge over intellectual property: Registration with the Intellectual Property Office Singapore (IPOS).

6.3 Can security be taken over property, plant and equipment in your jurisdiction? If so, how?

Security can be taken over all real property by either a legal mortgage or an equitable mortgage. However, government consent may be required before such security can be taken out over real property where the lessor is a governmental authority in Singapore.

Plant, machinery and equipment which constitute fixtures to a piece of land may be secured by any mortgage over the piece of land.

Plant, machinery and equipment which do not constitute fixtures to a piece of land (ie, chattels) may be secured by a fixed or floating charge, or by a pledge.

6.4 Can security be taken over cash (including bank accounts generally) and receivables in your jurisdiction? If so, how? In particular what types of notice and control (if any) are required?

Security over cash in a bank account can be taken by a general security agreement or by a standalone security agreement. If the bank where the account is held is not the lender bank, a notice of assignment may be submitted to the bank where the account is held in order to ensure priority.

Security can also be taken over receivables and secured by a general security agreement or a standalone security agreement, in the form of a charge.

6.5 Is it possible to take security over major licences (particularly in the extractive industry sector)?

As there is no mining sector industry in Singapore, this is a somewhat academic consideration.

The two primary licences are the industry allocation approval and the wholesale generator's licence. These are relevant only to the operating plant, making it easier to ensure that the licences remain valid if the lender ever decides to exercise its remedies on the stock pledge that would take over the project company.

Usually, the focus is on creating a security interest over specific assets/classes of assets. This has two benefits for the lender, allowing it:

• to block another creditor from realising the asset; and
• to gain control over the assets (and even the project) in the event that matters become contentious between the lender and the borrower.

6.6 What charges, fees and taxes (including notary and similar fees) arise from the perfection of a security interest or the taking of a guarantee?

A legal mortgage for registered land must be registered with the SLA Land Titles Registry. Fees as prescribed from time to time are payable for the same.

Certain forms of security interests – such as receivables, land, shares in subsidiaries and chattels – may have to be registered with ACRA within 30 days (if executed in Singapore) or 37 days (if executed outside Singapore) of the creation of the security. A fee as prescribed from time to time is payable to ACRA for the same. Furthermore, a stamp duty of an amount as prescribed from time to time is payable on security over shares of Singapore-incorporated companies or immovable property in Singapore.

A grant or assignment of security in intellectual property such as trademarks or patents must be registered with IPOS for a fee as prescribed from time to time.

6.7 What are the respective obligations and liabilities of the parties under security documents?

In general, the obligations and liabilities of the parties will depend on the terms of the security documents. The typical parties to security documents are as follows:

• Lenders: It is crucial for lenders to ensure that valid and effective security interests are taken over all the project assets through the security documents.
• Security trustee/agent: The security trustee/agent holds the security on trust for the lenders and manages the cash flow to the various accounts, such as the revenue, reserve, debt reserve and borrower's account. The lenders typically have very little discretion over how the cash flow is managed.
• Facility agent: In syndicated loans, one of the lenders will be appointed facility agent for the purpose of administering the loan on behalf of the syndicate.

6.8 In the event of default, what options are available to enforce a security interest or guarantee? Is self-help available in your jurisdiction in connection with the enforcement of security or must enforcement action be pursued through the courts?

A project lender that is a secured creditor will be able to enforce its security through ‘self-help remedies' if they are expressly contracted for in the security documents.

Most enforcement action is pursued through the Singapore courts or such arbitral processes as are agreed by parties. In the event of default, and subject to the terms of the security documents, the following remedies may be available (note that these are cumulative and not mutually exclusive):

• Possession: A legal mortgagee is conferred with an unqualified right to possession, even in the absence of default. An equitable mortgagee needs a court order for possession in order to exercise the right of possession.
• Sale: A mortgagee has a statutory power of sale if the mortgage is made by deed or registered under the Land Titles Act; even otherwise, the power of sale may be provided for in the mortgage documents.
• Receivership: The mortgagee can appoint a receiver either when the mortgage is due or in circumstances outlined in the security document.
• Foreclosure: The right to foreclose may be contractual, statutory or under the common law.

6.9 What other considerations should be borne in mind when perfecting a security interest or taking the benefit of a guarantee in your jurisdiction?

As a preliminary point of caution, parties should be mindful of the governing law of the security interests. It is possible for the governing law of the project agreement itself to be that of a ‘neutral' jurisdiction (eg, New York or England) rather than the jurisdiction where the project is located; however, the governing law of the security interests should be that of the country where the underlying project assets are being held.

As a rather basic overview, the ‘governing law' of an asset is typically determined to be the law of the country where the asset is deemed to be held – for example:

• the governing law of land or buildings would be where those buildings are located;
• the governing law of registered assets such as ships, shares and patents would be the country of registration; and
• the governing law for the benefits of a contract (including receivables) would be the same as the law governing the contract itself.

In Singapore, a security over an asset is typically perfected either by:

• registering the security in a public register (eg, a mortgage or registrable charge);
• taking possession of the asset underlying the security; or
• giving actual notice to the relevant parties (eg, pledges and liens).

Care should be taken to follow the appropriate procedure within any such timelines as may be stipulated for the relevant security interest.

Care should further be taken to ensure that the security is perfected in accordance with the stipulated procedure and that any timelines set must be followed.

Parties are advised to seek advice from a security lending banking lawyer, who can provide more specific advice tailored to their circumstances, and who will be better able to advise on any risks that are not apparent at first blush.

6.10 What other protections are available to a lender to safeguard its position in connection with security or guarantees?

This will depend on the specifics of the project and the security taken by the lender over the project assets. The lender is advised to seek legal advice tailored to its needs.

6.11 Are direct agreements with contractual counterparties well understood in your jurisdiction?

Direct agreements are not well understood unless dealing with third parties such as equipment suppliers, which might not understand the recourse financing industry. However, a ‘sponsor' spearheading the project may be able to educate the counterparties on the usage of direct agreements, particularly as the channel through which a party can request amendments to project documents.

Anecdotal evidence suggests that contractual warranties are more commonly used than direct agreements, especially between lenders and contractors. Even then, contractual warranties are not considered mandatory where the lenders hold step-in rights.

Warranties under construction contracts are embedded in construction agreements; there must be a direct agreement and collateral assignment with non-recourse financing unless the counterparty is completely immaterial (eg, in cleaning contracts).

7 Bankruptcy

7.1 How (if at all) do bankruptcy proceedings impact on the enforcement of security by a creditor?

Once a project company institutes winding up proceedings under the Insolvency, Restructuring and Dissolution Act (IRDA) (save with the leave of court, where applicable), a creditor may not proceed with the enforcement of a security for the duration of the moratorium on legal proceedings (save with the leave of court, where applicable).

The IRDA also provides for an automatic internal moratorium to take effect where the project company makes an application for judicial management, or for a scheme of arrangement, from the date on which such application is made. Such a moratorium prevents legal action from being taken against the project company, such as:

• for the winding up of the project company (save with leave of the court, where applicable);
• for the enforcement of security, including the repossession of goods under hire-purchase agreements, leases for chattel or retention of title agreements (save with leave of the court, where applicable);
• for the commencement or continuation of any legal proceedings against the project company (save with leave of the court, where applicable); or
• for the commencement or continuation of any execution or other legal processes against the company or its property (save with leave of the court, where applicable).

However, the IRDA expressly exempts certain classes of contracts and companies from this rule.

7.2 In what circumstances can antecedent transactions be unwound for preference? What other similar measures apply in this regard?

Generally, a liquidator/judicial manager can take steps to challenge or set aside transactions that were entered into by a company before winding-up or before entering into judicial management.

A court may, on application, make an order to restore the company to what it would have been if the company had not entered into a transaction at an undervalue.

Pursuant to the IRDA, a transaction is considered at an undervalue if:

• the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration; or
• the company enters into a transaction with that person for a consideration whose value, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the company.

8 Project contracts

8.1 Are project contracts in your jurisdiction typically governed by local law?

This is a matter of contractual negotiation between the parties, which are free to stipulate their choice of law. We have not come across empirical studies that highlight any preferred choice of law, although anecdotal evidence suggests that Singapore and English law may be contenders for the most common choice of law.

8.2 What remedies are available to a project company for breach of the project contract?

Examples of remedies that are available to a project company for breach of the project contract include damages, termination of contract and specific performance.

8.3 Are liquidated damages provisions in project contracts enforceable?

The recent Singapore Court of Appeal decision of Denka Advantech Pte Ltd v Seraya Energy Pte Ltd [2020] SGCA 119 confirmed that liquidated damages provisions are enforceable if they are a genuine pre-estimate of the damage, but are unenforceable if they seek to act as a ‘penalty'.

In Singapore, the legal test for a penalty remains that as articulated in Dunlop Pneumatic Tyre Company Ltd v New Garage and Motor Company Ltd [1915] AC 79: "if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach."

Hence, a liquidated damages provision in project contracts will be enforceable under Singapore law, unless the courts are persuaded that the provision in question is extravagant and unconscionable, which is a very high threshold.

8.4 Are there any public policy considerations which need to be taken into account when assessing the enforceability of project contracts?

The efficiency of the judicial system will be a serious consideration when assessing the enforceability of the project contract. In a biomass project, for instance, where the primary fuel for the plant to run is dependent on agricultural waste supplied by the local farmers, the parties to the project contract must be able to ensure that they can specifically enforce the farmers' obligations to supply such waste quickly and efficiently.

9 Project risk

9.1 What risks typically arise in project financings in your jurisdiction and how are these best mitigated?

The typical risks in project financings include financial risks, market risks, construction and operation risks and legal and regulatory risks.

These are best mitigated by:

• conducting due diligence;
• negotiating provisions for time, cost, liability and risk allocation for common risks; and
• including a force majeure clause in the contracts.

9.2 How significant is political risk in project financings in your jurisdiction? How is this best mitigated?

Singapore is considered to be politically stable and as such any political risk is minimal.

10 Insurance

10.1 What types of insurance arrangements are typically put in place for project financings in your jurisdiction?

Typically, insurance will be arranged for various aspects of the project itself, and can be broadly categorised as compulsory and non-compulsory insurance:

• Compulsory insurance: The Work Injury Compensation Act requires that work injury compensation insurance be maintained for all workers earning less than S$1,600 a month.
• Non-compulsory insurance can include:
• • work injury compensation insurance for all employees;
  • contractor's all risk insurance – this covers damage caused to property and injuries to workers (including claims for the same by third parties); and
  • professional indemnity insurance for professionals such as architects and surveyors.

Other insurance pertaining to financing risks does not lend itself easily to a neat classification.

10.2 If local insurance is required, can local insurers assign offshore reinsurance contracts in your jurisdiction?

The Insurance Act (Cap 142) imposes restrictions on the carrying out of insurance business, reinsurance and solicitation of insurance business. It does not have specific provisions pertaining to the assignability of offshore reinsurance contracts.

10.3 What other forms of insurance feature in the project finance market in your jurisdiction?

To the best of our knowledge, there are no specific forms of insurance which feature particularly prominently in the Singapore project finance market.

11 Tax

11.1 What taxes, royalties and similar charges are levied in the project finance context in your jurisdiction?

The import of goods into Singapore is subject to:

• the Customs Act (Cap 70);
• the Goods and Services Tax Act (Cap 117A); and
• the Regulation of Imports and Exports Act (Cap 272A).

11.2 Are any exemptions or incentives available to encourage project finance in your jurisdiction?

There are some incentives available in Singapore. For instance, the Approved Foreign Loan Incentive allows a company to apply to the minister of finance for withholding tax rates on interest payments to be reduced or exempted for a loan of less than S$20 million, subject to the prescribed conditions.

Furthermore, sustainable financing initiatives are being made available in Singapore, in light of the government's aims to promote green and sustainable financing. An example of this is the Green and Sustainability-Linked Loan Scheme (GSLS) launched by the Monetary Authority of Singapore earlier this year – the first of its kind in the world. The GSLS covers the costs of engaging sustainability advisory and assessment providers to validate the green and sustainability requirements of the loan, in order to incentivise corporates of all sizes to benefit from sustainability financing.

11.3 What strategies might parties consider to mitigate their tax liabilities in the project finance context?

While certain projects in other jurisdictions are divided into onshore and offshore components to mitigate tax liability, anecdotal evidence suggests that this appears to be unusual in Singapore.

12 Governing law and jurisdiction

12.1 What law typically governs project finance agreements in your jurisdiction? Do any specific requirements apply in this regard?

This is a matter of contractual negotiation between the parties, which are free to stipulate their choice of law. However, anecdotal evidence suggests that Singapore and English law may be contenders for the most common choice of law governing project finance agreements in Singapore.

12.2 Is a choice of foreign law or jurisdiction valid and enforceable? In the case of a choice of foreign law of jurisdiction, will any provisions of local law have mandatory application? Are submission to jurisdiction provisions that operate in favour of one party only enforceable?

Yes, choice of foreign jurisdiction agreements are valid and enforceable, except where:

• the Singapore courts have compulsory jurisdiction over a dispute;
• Singapore is judged to be a more appropriate forum for the dispute; or
• the Singapore court exercises its residual jurisdiction to decide the matter.

If a foreign court is chosen under an exclusive choice of court agreement, and the Hague Convention on Choice of Court Agreements (which Singapore entered into on 30 June 2005) is in force in the country of the chosen court, then under the Choice of Court Agreement Act (Cap 39A), the Singapore court must generally stay or dismiss any proceedings falling within the terms of the agreement, subject to the exceptions enumerated in the act.

An asymmetric jurisdiction clause, which operates in favour of one party only, is enforceable in Singapore if it was entered into freely by the parties, as noted by the Singapore High Court in Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm).

A choice of foreign law agreement is valid and enforceable, subject to:

• any rule in the forum which is considered ‘mandatory' in the international sense;
• any overriding rules of public policy; and
• the Unfair Contract Terms Act.

12.3 Are waivers of immunity enforceable in your jurisdiction?

Yes, Singapore courts will generally uphold waivers of immunity.

12.4 Will foreign judgments or arbitral awards be enforced in your jurisdiction? If so, how?

Foreign judgments: Foreign judgments can be recognised and enforced in Singapore under the statutory schemes or by the common law rules.

Anyone that has obtained a judgment in a foreign jurisdiction that falls within the ambit of the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264 1985 Rev Ed) (RECJA) and the Reciprocal Enforcement of Foreign Judgments Act (Cap 265 2001 Rev Ed) (REFJA), and that wishes to enforce this judgment in Singapore, must register the judgment in the High Court of Singapore. Once the foreign judgment has been registered, the applicant must serve notice of the registration of the foreign judgment on the defendant/debtor before it can be enforced.

A party that has obtained a judgment in a foreign jurisdiction to which the RECJA and REFJA do not apply may still commence a common law action for the judgment debt.

Arbitral awards: The Singapore High Court has shown an inclination to grant enforcement of foreign arbitral awards, subject to certain procedural requirements.

As Singapore is a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, if the arbitral award is made in a state party to the New York Convention, the Singapore High Court will refuse enforcement only on limited grounds as set out in Article V of the New York Convention.

If the arbitral award is made in a state that is not party to the New York Convention, the Singapore High Court has discretion as to whether to enforce the arbitral award, but will consider similar factors as if that state were party to the New York Convention.

13 Foreign investment

13.1 What taxes and other charges are levied on foreign investors in the project finance context in your jurisdiction?

Any transaction involving goods of services will be subject to a goods and services tax, while property tax is also payable on land.

The creation of a security over shares in a Singapore-incorporated company or immovable property in Singapore is also subject to stamp duty.

13.2 Are any incentives available to encourage foreign investment in the project finance context?

In general, there are no ‘announced' tax or other incentives available to foreign investors in infrastructure, regardless of the sector. However, certain government agencies or affiliated organisations (eg, the Economic Development Board and JTC Corporation) retain the power to negotiate financial or non-financial incentives on a case-by-case basis.

For incentives to encourage project finance in Singapore, please see question 11.2.

13.3 What restrictions and requirements apply with regard to the remission of foreign exchange? Are local companies permitted to maintain offshore bank accounts?

There are generally no restrictions and requirements with regard to the remission of foreign exchange. Local companies are not prohibited from maintaining offshore bank accounts.

13.4 What restrictions and requirements apply with regard to the import of plant and machinery?

The import of goods is governed by:

• the Customs Act (Cap 70);
• the Goods and Services Tax Act (Cap 117A); and
• the Regulation of Imports and Exports Act (Cap 272A).

The importer must have a customs account, and must appoint or hire a declaring agent to apply for customs permits on behalf of the importer. It is also prudent to first check whether the plant/machinery in question is a controlled good. If yes, the importer may be required to obtain other licences from the relevant authorities.

13.5 What restrictions and requirements apply with regard to foreign workers and experts?

Under the Employment of Foreign Manpower Act (Cap 91A), a foreign employee must have a valid work pass before he or she can be employed to work in Singapore. The types of work passes that will be issued to an individual will depend on various factors, such as:

• how skilled the worker is;
• the salary that he or she will be receiving; and
• his or her qualifications.

Foreign workers must:

• be from an approved country; and
• be between 18 and 50 years old (the upper limit is 58 for Malaysian workers) when hired (all workers can work up to age 60 only).

Certain quotas and levies may also be applicable. For example:

• there can only be seven work pass holders for every local employee who earns a local qualifying salary;
• there is an additional ‘man-year entitlement' quota for workers from specific countries; and
• 10% of the work permit holders must hold a ‘Higher-Skilled' recognition before more ‘Basic Skill' workers can be hired/have their work pass renewed.

In view of the current COVID-19 situation, there are further restrictions driven by public health considerations that change from time to time, which must be noted.

13.6 Is your jurisdiction party to bilateral investment and withholding tax treaties which might facilitate foreign investment?

Yes, Singapore is a party to several bilateral investment treaties (and free trade agreements with investment chapters), both within the Association of Southeast Asian Nations and with nations across Asia, Europe, the Middle East, Africa and North America.

Singapore is also party to several avoidance of double taxation agreements, under which a Singapore company may be entitled not to pay tax or else to pay a reduced tax on foreign income received in Singapore.

14 Environmental, social and ethical issues

14.1 What is the applicable environmental regime in your jurisdiction and what specific implications does this have for project financings?

There are several environmental laws in place which may be applicable to a project, depending on whether it involves the use, import, manufacture or sale of hazardous substances. These primary laws are further supplanted by regulations. Some of the salient statutes are listed below:

• The Environmental Protection and Management Act (Cap 94A):
• • regulates the discharge of trade effluent;
  • regulates the importation, manufacture and sale of hazardous substances; and
  • regulates air impurities.
• The Environmental Public Health Act (Cap 95) relates to environmental health and the disposal and treatment of industrial waste.
• The Resource Sustainability Act (29/2019) regulates the collection and treatment of certain types of waste.
• The Carbon Pricing Act 2018 regulates the calculation of carbon emissions, carbon taxes and tax relief.
• The Hazardous Waste (Control of Export, Import and Transit) Act (Cap 122A) regulates the grant of import, export and transit permits for hazardous waste.
• The Transboundary Haze Pollution Act 2014 (24/2014) penalises sources of haze pollution in Singapore.

14.2 What is the applicable health and safety regime in your jurisdiction and what specific implications does this have for project financings?

There are several health and safety laws in place which may be applicable to a project. These primary laws are further supplanted by regulations. Some of the salient statutes are listed below:

• The Fire Safety Act (Cap 109A) regulates fire safety measures and controls fire safety works.
• The Sewage and Drainage Act (Cap 294) regulates sanitary, drainage and sewage systems in premises.
• The Workplace Safety and Health Act (Cap 354A) imposes duties on employers and various persons to ensure the adequacy of workplace safety measures, workplace training and supervision and procedures for workplace emergencies.

14.3 What social and ethical issues should be borne in mind in the project finance context?

Singapore takes a strong stance against crimes such as corruption and money laundering. The following statutes should be borne in mind when engaging in project financing in Singapore:

• Anti-bribery and anti-corruption legislation:
• • the Prevention of Corruption Act;
  • the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act; and
• Anti-money laundering legislation: the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act.

15 Trends and predictions

15.1 How would you describe the current project finance landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Sustainable development will be at the forefront of government efforts, as announced by Minister of Finance Heng Swee Keat in a speech outlining Singapore's financial policy for 2021–22 (Singapore Budget 2021). There will also be an emphasis on the development of water and energy sources, as well as technology infrastructure.

16 Tips and traps

16.1 What are your top tips for the smooth conclusion of a project financing in your jurisdiction and what potential sticking points would you highlight?

Rigorous management and organisation are crucial to any deal: have proper milestone targets with a project manager that keeps track of every development in the negotiations, to ensure that no risks or sticking points are inadvertently overlooked or forgotten.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.