This article provides an overview of why Singapore is considered one of the most eco-friendly cities in Asia and describes the government's green incentives available for businesses having a presence in or expanding into Singapore.
Singapore as an eco-friendly city
Singapore has set a target to achieve net zero emissions by 2050. This is by no means an easy target for the island nation which has limited land and natural resources. At the forefront of Singapore's sustainability efforts is the Singapore Green Plan 2030 which charts out concrete sustainable targets over the next 10 years. The Green Plan's key targets 1 include reducing the amount of waste-to-landfill per capita per day by 20 percent by 2026, increasing solar energy deployment, and greening 80 percent of Singapore's buildings by 2030. With a strong commitment to sustainability, Singapore is attracting eco-friendly businesses for the reasons that follow.
Sustainable Ecosystem
Singapore, known to be a "Green City," boasts a well-developed infrastructure for eco-conscious businesses. With lush vegetation and natural green landscapes, Singapore is actively scaling up construction of green buildings, adoption of clean energy and reduction of waste. Singapore targets to build the best-in-class green buildings by 2030 and this is projected to achieve an 80 percent improvement in energy efficiency over 2005 levels. In Singapore, eco-friendly businesses can choose from a plethora of green options and be supported by a sustainable ecosystem in line with their sustainability values.
Thriving Green Tech Industry
Singapore is constantly striving to achieve the best energy efficiency through green technologies due to its inherent limited resources. The government's Research, Innovation and Enterprise Plan (RIE2025) actively aids businesses in adopting sustainable practices, using technologies like additive manufacturing that minimize waste. Together with a vibrant green startup scene and world-class research institutions, the city nation offers a wealth of resources for businesses developing sustainable solutions. Enterprises can tap into cutting-edge expertise through strategic collaborations with like-minded businesses, academia or government, thereby further promoting the thriving green tech industry.
Strong Talent Pool for the Green Economy
Leading sustainable development in the region, Singapore recognizes the importance of a skilled workforce for a sustainable future. Educational institutions are expanding their course offerings on sustainability to equip graduates with the necessary skills for these future jobs. More sustainability-related education and training courses are also being offered to help prepare working adults for emerging green jobs. These include courses on transferable green skills such as carbon footprint management, green engineering solutions, green finance, and environmental sciences. Eco-friendly businesses will have access to a pool of talented professionals equipped with the right knowledge and skillsets to support and achieve their sustainability goals.
Government Incentives for Green Projects
While Singapore is at the forefront of the sustainability journey, the net zero emissions target remains an ambitious one. To further accelerate the nation's green transition, the government has unveiled generous incentives in the form of tax benefits and cash grants for businesses undertaking sustainability projects.
Tax Benefits
One of the major announcements made during Singapore's Budget 2024 is the introduction of the Refundable Investment Credit (RIC) for sizeable investments, including projects with decarbonization objectives. The RIC benefit is in the form of a tax credit which can be offset against corporate income tax payable. It is awarded on qualifying expenditures such as capital expenditures, manpower costs, intangible asset costs, and freight and logistics costs. An interesting feature of this benefit is that any unutilized tax credits will be refunded to the company as cash within four years.
Cash Grants and Financing Schemes
To support businesses embarking on their sustainability journey, cash grants are given by various government agencies to help defray relevant business expenditures. For example, the Resource Efficiency Grant for Emissions (REG(E)) helps to co-fund expenditures for industrial facility projects which result in measurable and verifiable carbon abatement of at least 500 tonnes per annum, capped at 50 percent of qualifying costs, and the Sustainability Reporting Grant helps to cover a portion of the expenditure incurred by companies in preparing their first sustainability report in Singapore to meet mandatory climate-related disclosures.
The REG(E) was first introduced in 2022 for local companies in the food services, food manufacturing and retail sectors. In the 2024 Budget, it was announced that the scheme will be expanded to include companies in more sectors, including construction and maritime, as well as data centers and their users. The Sustainability Reporting Grant will help companies with annual revenue of at least S$100 million in the preparation of their first sustainability report to meet mandatory climate-related disclosures by defraying up to 30 percent of qualifying costs, capped at S$150,000 per company. A new program will also be launched to help SMEs develop their first sustainability reports. The program will defray 70 percent of eligible costs for the first year, and 50 percent of costs for the next two years.
For businesses facing difficulty with financing their sustainability projects, the Enterprise Financing Scheme – Green provides financing loans of up to S$50 million to Singapore companies adopting green projects.
What does this mean for your company?
Sustainability efforts often require up-front investments in new technologies, materials or processes and can be resource-consuming for businesses. While there may not be immediate savings in costs, businesses should be cognizant that sustainable practices do translate to increased profitability in the long run due to brand reputation enhancement, increased energy efficiency and better compliance with environmental regulations.
For businesses embarking on the sustainability journey in Singapore, the government measures present a compelling opportunity to:
- Maximize cost efficiency: Benefit from grants and tax credits on expenditures associated with adopting sustainable practices.
- Secure funding: Leverage the Enterprise Financing Scheme to support upcoming green projects.
- Gain a competitive edge: Position your company as a leader in the green economy and attract eco-conscious consumers and investors.
Footnote
1. http://greenplan.gov.sg/targets/
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.