With the aim of creating a regional gas trader in Singapore, the government has been initiating measures to invite investments from abroad with tax breaks and concessions.
The news published on Herald Tribune reported an offer for tax breaks on profits generated by liquefied natural gas and carbon emission transactions by Singapore - the largest oil trading center in Asia. The intention is to lure overseas companies to make investments in the city-state.
The govt. is going to levy a special tax rate of 5 percent on income from LNG trading, immediately, for a period of ten years. Singapore’s tax concessions will also be valid for greenhouse gas emissions trading. Herald Tribune published news that quoted trade and industry minister Lim Hng Kiang saying “In conjunction with our plans to build a LNG terminal, we see enormous potential in LNG trading. To establish Singapore as Asia's emissions trading hub, we are attracting emissions trading activities, as well as supporting industries such as carbon-related consultancies, verifiers and fund managers.”
Singapore’s aim in its promotion of using natural gas is to diversify energy sources away from oil and it has been initiating measures to turning the economy into a regional gas trader. The initial target for the economy is set for an increase in the share of natural gas in the electricity generation mix to 60 percent by 2012.
Being a city-state with a population of 4.5 million, Singapore lacks energy resources compelling dependence on gas for 70 percent of its power. There is a need for the city to diversify its energy sources so as to avoid over-dependence on a single source for its energy needs. A decision has been reached by the city-state for LNG imports for meeting future energy demand and a planned terminal by 2012.
Opportunities in emissions trading did not escape the attention of Singapore. A majority of carbon dioxide (CO2) emissions credit deals involving buyers from Japan and Europe with sellers in China and other countries are carried out on an opaque bilateral basis.
A research analyst at RNCOS points out that over 200 companies including Hong Kong-based Li & Fung Ltd. And Brazil’s Petroleo Brasileiro SA have the benefit of concessionary tax rates on qualifying product, due to a government program responsible for the creation of an international trading center in Singapore. The business expenditure of these companies surpassed S$5 billion ($3.3 billion) in 2006.
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