Looking Back: 2024 and Gazing Into: 2025
Looking Back: 2024
Singapore commits to achieving net zero emissions by 2050 and reducing emissions to 60 million tonnes of carbon dioxide equivalent (MtCO2e) in 2030 after peaking emissions earlier. Acknowledging our limitations in implementing alternative energy solutions to meet our climate goals, Singapore has actively pursued carbon credits collaborations in accordance with Article 6 of the Paris Agreement.
Article 6 of the Paris Agreement allows countries to voluntarily cooperate to achieve emission targets set out in their Nationally Determined Contribution. In line with these efforts, the Singapore Carbon Market Alliance was established to assist companies in accessing high-quality carbon credits aligned with Article 6 of the Paris Agreement. This initiative enables companies to achieve their corporate climate objectives while concurrently contributing towards Singapore’s Nationally Determined Contribution. Singapore businesses can also rely on a database of emission factors in the Singapore Emission Factors Registry to improve their emissions reporting.
In addition, the Singapore energy market regulatory framework has been updated to support Singapore’s decarbonisation journey.
In 2024, there is a notable increase in the adoption of generative artificial intelligence (“AI”) by employees in Singapore for content generation and automating tasks. However, the use of generative AI presents risks related to data privacy, security and the ethical use of AI. The following regulatory instruments were developed to address these concerns:
- the Model AI Governance Framework for Generative AI;
- the Guidelines on Securing AI Systems; and
- the Personal Data Protection Commission Advisory Guidelines on the Use of Personal Data in AI Recommendation and Decision Systems.
As generative AI becomes more widespread and commercial transactions shift to digital platforms, ensuring the security of our online activities is crucial. The following measures were implemented to deal with the proliferation of scams and malicious cyber activities:
- the Online Criminal Harms Act which requires designated online services providers to put in place systems and processes to counter scams and malicious cyber activities;
- the Shared Responsibility Framework that imposes anti-scam duties on financial institutions (“FIs“) and telecommunication operators (“Telcos“); and
- the National Operational Technology (“OT”) Cybersecurity Masterplan to tackle new cyber threats to OT systems.
The Significant Investments Review Act 2024 and the Transport Sector (Critical Firms) Act 2024 reflect Singapore’s proactive and adaptive approach to economic and security challenges, positioning the nation as a global leader in responsible and secure investment practices. It also follows the growing trend worldwide for governments to carefully screen foreign investments in sensitive sectors.
Key changes affecting the financial services industry include:
- The repeal of the regulatory regime for registered fund management companies aimed at enhancing the Monetary Authority of Singapore’s (“MAS“) regulatory oversight of fund managers and raising the standard of conduct across the fund management industry.
- Setting up a new electronic information sharing system named Collaborative Sharing of Money Laundering / Terrorism Financing Information & Cases (“COSMIC“) to enable the disclosure, publication and sharing of risk information between prescribed FIs to more effectively prevent and deter money laundering, terrorism financing and proliferation financing.
Further, click here for our Regional Employment Law Review 2024 to find out more about two significant developments in employment law relating to the introduction of the landmark legislation to deal with workplace fairness and the Platform Workers Act 2024 to distinguish platform workers from either employees or contractors.
Gazing Into: 2025
As we head into 2025, the global economy is confronting heightened geopolitical tensions and uncertainties stemming from the Trump’s “America first” agenda. The Association of Southeast Asian Nations (“ASEAN“) may act as a ‘bridge’ in relations between China and the US. The region’s stability and neutral perspective are expected to attract investors, with its semiconductor industry showing significant growth.
With a pro-business environment, robust and stable legal framework, talented workforce and an attractive tax system, Singapore serves as the ideal gateway to ASEAN. This is further augmented by these recently concluded trade agreements and negotiations:
- ASEAN-China Free Trade Area (“ACFTA”) 3.0 Upgrade negotiations;
- China-Singapore Free Trade Agreement Further Upgrade Protocol;
- United States (“US”)-Singapore Digital Economic Cooperation Roadmap;
- European Union (“EU”)-Singapore Digital Trade Agreement; and
- Johor-Singapore Special Economic Zone Agreement.
Generative artificial intelligence (“AI”) is now mainstream and is expected to continue increasing in prominence. Generative AI would increase the demand for semiconductor chips, the expansion of data centres, and to some degree the need for undersea cable bandwidth. On 27 September 2024, Singapore announced that it had endorsed principles for a shared global approach to ensure the security and resilience of undersea cable infrastructure. This precedes the announcement of the granting of subsea cable landing licence by the US to Singapore’s “Bitfrost” cable system, the world’s first subsea cable system that directly connects Singapore to the west coast of North America via Indonesia through the Java Sea and Celebes Sea.
While generative AI offers many benefits, it may also collect personal information from various online sources and potentially facilitate online criminal or malicious activities. The Singapore Government sought comments on proposals for quicker and straightforward protective measures to assist victims of activities such as impersonation and deepfake misuse. For some targets of ongoing online scams who refuse to believe that they are being scammed, there will be laws to empower the Police to issue Restriction Orders to banks to temporarily restrict the banking transactions of such persons.
The Cybersecurity Act 2018 will also be updated to, among other things, safeguard entities in charge of foundational digital infrastructure by increasing oversight over their cybersecurity and requiring compliance with minimum standards. Such entities may include cloud service providers and data centre operators.
In October 2024, the Monetary Authority of Singapore (“MAS“) launched the Global Finance & Technology Network (“GFTN“) to reinforce Singapore’s position as a global FinTech hub. The initial phase of FinTech development in Singapore involved experimentation and the implementation of key initiatives to utilise technology and innovation in the financial sector. These efforts included creating a regulatory sandbox framework, establishing cross-border payment linkages, testing digital assets and tokenisation, and encouraging the adoption of AI as part of MAS’ aim to develop Singapore into a Smart Financial Centre. GFTN will boost Singapore’s FinTech ecosystem, focusing on payments, asset tokenisation, and AI/quantum. MAS had announced plans to support the creation of industry standards and risk management frameworks to facilitate commercial deployment of tokenised capital markets products, and scale tokenised markets on an industry wide basis.
MAS anticipates continued growth in the number of single family offices (“SFOs”) being established in Singapore. In 2023, tax exemption schemes for SFOs were updated. MAS will implement incentives and requirements to encourage SFOs to allocate their funds towards initiatives that benefit Singapore, including efforts to address climate change and create employment opportunities for Singapore workers. To combat money laundering, from 1 October 2024, all new tax incentive applications for fund vehicles managed by family offices must include a screening report from a prescribed Screening Service Provider. New regulatory requirements will be implemented to better monitor SFOs operating in Singapore.
Other key developments in the pipeline that will impact on the financial services industry include:
- Mandatory climate-related disclosure for: (i) issuers listed on Singapore Exchange Securities Trading Limited (“SGX-ST“) from financial year (“FY“) 2025; and (ii) large non-listed companies limited by shares with annual revenue of at least S$1 billion and total assets of at least S$500 million (unless exempted) from FY 2027.
- New regulatory framework for virtual asset service providers under the Payment Services Act 2019.
- Implementation of the Multinational Enterprise Top-up Tax and the Domestic Top-up Tax that will impose a minimum effective tax rate of 15% on the profits of large multinational enterprise groups from FYs starting on or after 1 January 2025.
Employers in Singapore should be prepared for additional measures aimed at protecting employees, specifically in the areas of work injury compensation and guidelines regarding non-compete clauses in employment contracts. For more details, click here for our Regional Employment Law Review 2024.
Full Report
Click on the link below for the full report which provides summaries of the key legal developments related to the above areas.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice
