Boosting Competitiveness of Singapore as Aircraft Leasing Hub
Ministry of Trade and IndustrySpeakers
Summary
This question concerns Mr Dennis Tan Lip Fong’s inquiry on measures to enhance Singapore’s competitiveness as an aircraft leasing hub relative to competitors like Ireland and Hong Kong. Minister for Trade and Industry Chan Chun Sing highlighted Singapore’s 20% global market share, underpinned by over 80 double taxation agreements and the Aircraft Leasing Scheme’s concessionary tax rates. He emphasized the roles of the professional services and aerospace Industry Transformation Maps in driving innovation and strengthening the maintenance, repair, and overhaul sector. Additionally, the Minister pointed to Singapore’s robust financial ecosystem and strategic aviation infrastructure as critical factors for attracting global lessors, aiming to sustain an aviation ecosystem that generates economic spinoffs and quality jobs for Singaporeans.
Transcript
51 Mr Dennis Tan Lip Fong asked the Minister for Trade and Industry whether an update can be provided on measures to boost the competitiveness of Singapore as an aircraft leasing hub vis-à-vis countries like Hong Kong and Ireland.
Mr Chan Chun Sing: Currently, around 40% of commercial aircraft used by airlines are leased rather than directly purchased, and the size of the global aircraft leasing industry stands at US$261 billion. Driven by a burgeoning middle class and increasing air connectivity in the Asia Pacific region, the total number of commercial aircraft is expected to more than double by 2036. This represents a significant business opportunity for aircraft lessors.
Ireland has been a pioneer in aircraft leasing since the 1970s and continues to capture the largest global market share at 65%. Singapore is the top aircraft leasing hub in the Asia Pacific with 20% global market share. Today, we host operations for eight of the top 10 aircraft leasing companies. Nonetheless, we are keenly aware of the strong competition. Hong Kong, for instance, is stepping up in aircraft leasing, buoyed by the increase in air travel from China, and aspires to expand its market share to 18% in 20 years' time2.
Singapore's strong reputation as a major aircraft leasing hub is founded on several factors. First, we have an extensive network of Avoidance of Double Taxation Agreements (DTAs) with more than 80 jurisdictions, including growing Asian markets, such as China, India and Vietnam.
Second, Singapore's strong financial industry, together with our growing professional services ecosystem of law firms, banks and tax advisory firms, provide support and financing options to the aircraft leasing business, making us an attractive base for the top aircraft lessors in the world. Companies looking to develop aircraft leasing capabilities in Singapore may also avail of the Aircraft Leasing Scheme, which provides concessionary tax rates on qualifying income from leasing of aircraft or aircraft engines. The professional services Industry Transformation Map (ITM), launched in January this year, will further support various industries, including aircraft leasing, as we enhance capabilities and spur greater innovation in our professional services firms.
Third, our aircraft leasing industry is complemented by deep knowledge and strong support from our aviation and aerospace industries. Changi Airport is one of the busiest airports in the world, and we have an established base of aerospace companies and talent to provide quality maintenance, repair and overhaul (MRO) services to support key aviation players, including lessors. The aerospace ITM, also launched in January, will chart our efforts to transform our aerospace industry and strengthen our MRO sector.
Even as we are doing relatively well today, we need to continue to work with stakeholders to nurture a comprehensive aviation and aerospace ecosystem and a robust financial sector critical for aircraft leasing activities. By ensuring our competitiveness as Asia's aircraft leasing hub, the industry will continue to generate economic spinoffs and good jobs to benefit Singaporeans.