28 June 2006

Singapore, 28 June 2006- The Maritime and Port Authority of Singapore (MPA) has released the details of the Maritime Finance Incentive (MFI) scheme, developed after consultation with the maritime and finance industries.

Among the many attractive tax benefits of the scheme, a particularly generous feature is tax exemption on qualifying income for the entire life of any vessel acquired by an Approved Ship Investment Vehicle (ASIV) within its incentive period. For instance, if an ASIV acquires a vessel, charters it for 20 years and disposes of it thereafter, lease income on the charter will enjoy tax exemption for the entire 20 years. The tax certainty provided by this unique feature will increase the attractiveness of such investments to potential investors and spur ship investment management companies to set up such investments in Singapore.

Growing Opportunities in Ship Financing

Ship financing is a fast growing sector, driven by an estimated US$300 billion worth of financing for new buildings and second-hand acquisitions. This growth has fuelled demand for a suite of financing instruments to meet the different needs of the shipping sector. Such financing instruments may range from traditional financing to more sophisticated structures, which tap on funds from the market (institutional investors as well as the general investing public) instead of relying only on owners' equity and debt financing.

In response to this market need, the MFI scheme was announced by the Prime Minister and Minister for Finance during Budget 2006. The objective of the MFI is to tap on Singapore's world-class financial infrastructure and expertise to maximise the growing opportunities created by the changing needs of the shipping community. The scheme provides for:

(a) Concessionary tax rate of 10% on qualifying management-related income for Approved Ship Investment Managers (ASIM) for a period of 10 years; and

(b) Tax exemption on qualifying income (from both finance and operating leases) derived by Approved Ship Investment Vehicles (ASIV) from:

(i) Ship leasing activities to non-tax residents of Singapore;

(ii) Leasing of vessels registered with the Singapore Registry of Ships (SRS);

(iii) Leasing of foreign-flagged vessels operated by companies under the Approved International Shipping Enterprise Scheme (AIS).

The target audience for the MFI scheme are ship leasing companies, shipping funds or shipping business trusts that provide financing for all types of vessels, including those used for the offshore oil and gas sector.

BG(NS) Tay Lim Heng, Chief Executive, MPA said: "In recent years, local and overseas financial institutions have been showing increasing interest in financing the maritime sector through Singapore. The MFI scheme is therefore a timely initiative for private and public equity searching for new products, as well as for shipping companies seeking alternative means to finance their growth. By further encouraging the development of ship financing activity, the MFI scheme will enhance the breadth and depth of maritime ancillary services that Singapore offers as an International Maritime Centre."

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About Maritime and Port Authority of Singapore

The Maritime and Port Authority of Singapore (MPA) was established on 2 February 1996 as a statutory board under the Ministry of Transport with the key functions of developing and promoting Singapore as a premier global hub port and an international maritime centre, and to safeguard Singapore's strategic maritime interests. As the designated 'Champion Agency', the MPA is tasked with expanding the Singapore maritime sector by developing a strong and attractive cluster of ancillary services. These range from, among others, ship broking/management, marine insurance/finance, maritime legal/arbitration services, R&D initiatives, and manpower expertise.

For more information, please visit www.mpa.gov.sg