The Hormuz Exodus: Structuring Gulf Wealth through Singapore

The regional war that intensified in March 2026 did what regional wars always do to capital: it made investors reconsider exactly how much of it should remain sitting in a jurisdiction within missile range.  Evidence of reallocation is already visible, even without a single consolidated official statistic to point to.  USDC's circulating supply approached US$80 billion in March 2026, a surge that analysts partly attribute to Middle East capital seeking dollar-denominated, jurisdiction-agnostic liquidity.  Brokerage reports and private trackers show spikes in enquiries to alternative wealth centres, and isolated large transfers rather than a systemic bank run, precisely the pattern flight-to-safety capital produces before it becomes a headline rather than after.

The real anecdote here is Dubai’s own property market, which has already told the story markets always tell before the official statistics catch up.  Dubai Land Department data showed weekly transaction value collapsing from AED20.7 billion the week before the March strikes to AED10.4 billion the week after, a 50% decline within days.  This is not a forecast.  This is capital voting with its feet in real time, and property markets are the slowest, most illiquid asset class to react to panic, which makes a 50% weekly collapse considerably more alarming than a single volatile trading session in equities would be.

Official growth projections, meanwhile, remain stubbornly optimistic.  The IMF and World Bank project roughly 5% real GDP growth for the UAE in 2026, and the Central Bank of the UAE has signalled figures closer to 5.6%, reflecting strong non-oil activity and genuine policy buffers.  These forecasts predate the March escalation and are under active reassessment, but they still indicate an economy with real underlying resilience, not a collapsing one.  Recession risk is elevated, not certain.  A short, contained episode points to recovery within six to twelve months.  A protracted conflict points toward eighteen months or more, and given the trajectory of the current conflict, the longer timeline currently looks more probable than the shorter one.

Bloomberg Intelligence has separately flagged the UAE as the most exposed economy in the region to potential deposit outflows, though UAE M2 stood at a genuinely substantial AED3,353.7 billion at the end of February 2026, confirming liquidity remains large even as it comes under active monitoring.  Port activity provides the clearest physical evidence of disruption: ship arrivals fell sharply in early March following the attacks, with Bloomberg reporting immediate drops in port throughput and rising trade friction, a concrete economic channel translating geopolitical risk directly into import costs and supply-chain delay.  Employer surveys and media reporting across finance and technology hubs describe elevated expatriate departures and rising voluntary turnover, a functional brain drain visible in hiring data well before it shows up in any official migration statistic.

The Next Two Months

The Central Bank of the UAE issued a Resilience Package on 17^th March 2026, providing liquidity support, capital buffer release, and classification flexibility to banks, explicitly designed to stabilise the system through the immediate shock.  This is not the first time Abu Dhabi has had to step in to stabilise a Gulf liquidity crisis.  In November 2009, Dubai World, the state-owned conglomerate carrying roughly US$60 billion in debt, requested a standstill on its obligations, sending shockwaves through global markets and forcing Abu Dhabi to extend a US$10 billion bailout the following month to prevent a genuine sovereign embarrassment.  The mechanism repeating itself in 2026, federal liquidity support stepping in to backstop Dubai-specific stress, is not a new playbook.  It is the same playbook, run again, with a sharper geopolitical trigger this time.

Shipping and port disruption is already raising working-capital pressure for corporates, increasing short-term foreign exchange and liquidity needs.  War-risk insurers and reinsurers have begun repricing marine and political-violence coverage, and capacity for Gulf exposures is narrowing, meaning clients should expect materially higher renewal costs.  The UAE has no general wealth tax and no publicly floated emergency levy, though fiscal measures remain politically costly options held in reserve rather than ruled out entirely.  Capital controls remain a low-to-moderate probability in the short term, since authorities clearly prefer liquidity tools and regulatory forbearance over blunt restriction, though targeted measures, enhanced reporting, and limits on large outbound transfers become considerably more likely under a severe deposit-flight scenario.  Heightened AML and PEP scrutiny will slow onboarding and raise operational costs for wealth managers regardless of which path authorities choose.

The AED’s fixed peg to the US dollar, at 3.6725 per dollar, means the UAE effectively imports US monetary policy wholesale.  Higher US CPI or Federal Reserve tightening transmits directly into UAE borrowing costs and price conditions, since the CBUAE has no independent interest rate lever to soften that transmission.  Strait of Hormuz disruption compounds this further, generating container surcharges and rerouting costs that feed directly into transport, food, and intermediate goods pricing.  Property has already absorbed the impact, with market trackers reporting price falls of roughly 7% from recent peaks across many segments since the March shock, concentrated in secondary and fringe locations while prime waterfront stock holds up considerably better.

Dubai’s own public debt, managed formally through its Public Debt Management Office, sits in the low hundreds of billions of dirhams, a debt-to-GDP ratio in the low twenties per cent, not an acute sovereign leverage crisis by international standards, though that figure excludes debt effectively underwritten by Abu Dhabi.  Dubai has come uncomfortably close to outright default twice before, in 2009 and again amid pandemic-era pressure in 2020, and investors with long memories treat the current stress as chapter three of a familiar story rather than an unprecedented one.  Fitch has affirmed the UAE’s sovereign rating at AA-minus with a stable outlook, reflecting Abu Dhabi’s genuinely strong net external asset position, a materially reassuring backstop even amid the current turbulence.

Insurance as a Flexible Asset

Cash surrender value is the mechanism worth understanding here, present only in permanent policies, whole life, universal, participating or endowment, never in term insurance.  Lenders accept collateral assignment of a policy as a standard, legally recognised security mechanism, meaning the lender is repaid from the death benefit or the surrender value directly if the borrower defaults.  Insurers typically advance 80% to 90% of CSV as a policy loan, with interest accruing against the death benefit if left unpaid, generally priced below unsecured lending rates but above central bank benchmarks.

Why this liquidity mechanism matters under the current Gulf conditions comes from history rather than speculation.  Walter Elias Disney and his wife Lillian took out a US$60,000 loan against his life insurance policy in 1954, at a moment every conventional bank had refused to finance the concept of Disneyland at all.  That loan is the documented reason Disneyland exists.  A Gulf-based client facing a sudden liquidity need during a genuine regional shock, unable or unwilling to liquidate property at a 7% discount into a falling market, faces Disney’s 1954 problem: an asset-rich, cash-poor position at the exact moment cash is what matters.  Borrowing against a policy, rather than surrendering it outright and eating years of surrender charges, keeps the underlying structure intact while solving the immediate liquidity gap.

The Monetary Authority of Singapore published revised AML/CFT Notices effective 1^st July 2025, bringing direct life and general insurers into scope, requiring documented risk assessments, proliferation-financing screening, and enhanced due diligence wherever risk indicators appear.  Standard retail applications, where basic KYC and source-of-funds checks suffice, remain genuinely straightforward.  The path narrows considerably the moment sums grow large, provenance grows complex, or risk flags appear, and UAE residency itself carries no automatic EDD trigger, since the UAE is not a sanctioned jurisdiction, unlike source-of-funds tied to Russia, North Korea, or comparable sanctioned states.

Singapore’s own 2023 money laundering case, involving roughly S$3 billion in seized cash, property, and luxury assets tied to a foreign crime syndicate, is the anecdote that explains why this scrutiny exists at all, and why MAS has tightened rather than loosened its posture since.  Multiple financial institutions had accepted those clients through standard rather than enhanced diligence.  The lesson MAS drew from that failure is the tightened 2025 framework now governing every insurer onboarding Gulf-origin wealth, a direct causal line from one high-profile enforcement failure to the compliance architecture every legitimate applicant now navigates.

Diversification of Bank Exposure

Singapore operates as a highly financially open economy, managing large, volatile capital flows through macroprudential tools rather than blanket capital controls, with no standing legal framework blocking outbound transfers under normal conditions.  Section 47 of the Banking Act imposes a statutory duty of customer confidentiality, disclosure permitted only under narrowly enumerated exceptions, a core reason Singapore banking is viewed as comparatively private and secure.  Life insurance and trust structures diversify wealth away from direct bank account exposure entirely, since a properly executed collateral assignment creates contractual priority for the assignee over policy proceeds, meaning the insurer pays according to the assignment rather than into a bank account potentially exposed to a lien or freeze.

Silicon Valley Bank’s collapse in March 2023 remains the sharpest available anecdote for why concentration in a single banking relationship is dangerous regardless of jurisdiction.  The bank collapsed within 48 hours after concentrating its balance sheet in long-duration securities funded by short-duration, largely uninsured deposits that fled the moment depositors sensed weakness.  A Gulf client holding the bulk of his liquid wealth inside a single UAE banking relationship, during a period Bloomberg Intelligence has explicitly flagged for deposit outflow risk, is carrying the concentration exposure SVB depositors carried, and diversifying across bank accounts, trust structures, and insurance wrappers is the direct structural answer to that exposure.

Creating a Shari’ah-Compliant Financial Instrument

Under the classical Hanafi position, riba’ is usury, not the mere presence of interest, and insurance with an investment wrapper is not inherently haram unless the underlying investments sit in prohibited fields: gambling, alcohol production, pig farming.  Interest as riba’ applies specifically where the charge constitutes zhulm, oppressive and excessive exploitation, not a transparent, regulated, competitively priced return.  Husn azh-zhan, the presumption that a thing is halal unless proven otherwise, governs by default, and shari’ah certification is required only where a client explicitly requests it, given the proliferation of shari’ah boards willing to issue whichever ruling a paying client is shopping for.

Insurance itself avoids gharar, excessive uncertainty, provided contracts are clear on benefits, contributions, and claims, and avoids maysir, gambling, provided the structure is not simply a leveraged bet on a future event absent mutual guarantee.  Takaful applies this directly: participants contribute to a pooled tabarru’ fund, with the operator managing it as wakil, agent, for a fee, or as mudharib, under profit-sharing, removing the adversarial insurer-versus-policyholder framing entirely.  Shari’ah boards issue the governing fatawa and conduct ongoing audits, though the independence of boards established by the very institutions selling the certified products remains a genuine structural conflict, adding to distribution cost without necessarily adding to genuine compliance.

The Dana Gas case remains the anecdote that proves this scepticism is warranted rather than cynical.  In June 2017, Dana Gas PJSC unilaterally declared its own US$700 million sukuk non-shari’ah-compliant during a liquidity crunch, a claim the English High Court rejected outright.  If an issuer can dispute its own product’s shari’ah status the moment repayment becomes inconvenient, the certification was never the fixed, load-bearing guarantee clients assumed they were paying a premium for.  Contemporary jurists including Shaykh Nur ad-Din Abu ‘Ubadah ‘Ali ibn Juma’ah have argued modern insurance can be rendered fully permissible once riba’ and gharar are removed and mutual guarantee frameworks properly adopted, a jurisprudential opening that underpins the more credible end of the takaful market, distinct from the reskinned conventional products merely wearing Arabic labels.

Key Reasons to Invest: Political Stability, Regulation, Tax, and Currency

Singapore ranks among the World Bank’s top performers on political stability, rule of law, and government effectiveness, with Fitch and S&P both affirming AAA and Aaa sovereign ratings with stable outlooks, a direct contrast with a Gulf sovereign risk picture currently under active reassessment.  MAS supervises insurers with genuinely granular prudential and AML frameworks, reducing counterparty and operational risk in a way few regional competitors can currently match.  Singapore imposes no broad capital gains tax and no inheritance tax, materially improving after-tax outcomes on long-term insurance and investment-linked products.

Currency stability closes the case.  During the 1997 Asian Financial Crisis, Thailand’s central bank exhausted its reserves defending the baht’s dollar peg before finally floating the currency on 2^nd July 1997, triggering contagion across the region.  Singapore, running its exchange-rate-centred monetary policy through the Monetary Authority of Singapore’s managed band-and-crawl framework rather than a rigid peg, weathered that crisis without a comparable currency collapse, and continues to deliver low, predictable inflation nearly three decades later.  Singapore’s life insurance market reflects the confidence that stability has earned: the Life Insurance Association reported S$5.87 billion in weighted new business premiums for 2024, with strong demand specifically in investment-linked products, genuine evidence of product depth rather than a market merely coasting on reputation.

The Pitch

Confirm client objectives first: capital preservation, succession planning, creditor protection, liquidity needs, preferred payout currency.  Establish risk appetite, foreign exchange tolerance between SGD and USD exposure, and CRS or FATCA reporting obligations.  Determine delivery mode, face-to-face or non-face-to-face, and clarify tax residency, available source-of-wealth documentation, PEP status, desired policy currency, and appetite for trustee fees.

The process itself runs in sequence: a bespoke illustration and suitability assessment; full KYC and AML documentation, including certified identification, proof of address, source-of-wealth evidence, and CRS or FATCA self-certification, with PEP and sanctions screening throughout; non-face-to-face onboarding using liveness checks, geolocation signals, and secure e-signatures with a retained audit trail; financial and, where required, medical underwriting; policy inception once premium clears; assignment to a trustee where requested, executed so the trustee can sue and give discharge in its own right; and, where a trust structure is used, ongoing governance covering claims administration, CRS and FATCA reporting, and annual compliance attestation.

Singapore does not tax life policy payouts directly, though beneficiary tax treatment still depends on the beneficiary’s own residence, US persons in particular facing their own reporting obligations regardless of where the policy sits.  Singapore’s legal and regulatory risk remains genuinely low.  The political exposure that matters sits squarely in the client’s home jurisdiction, where capital-movement rules can shift with considerably less warning than Singapore’s own framework ever has.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

The Basel Dividend: Insurance as Capital Relief

Brent crude rose above US$100 a barrel between April and May 2026, trading between US$105 and US$115 in early May, driven by tensions in the Strait of Hormuz.  Drone and missile strikes hit Fujairah and nearby facilities, causing refinery fires, a temporary suspension of oil loading, and port halts.  The Habshan-Fujairah pipeline, with a capacity of 1.5 million barrels per day, became a critical bypass route overnight.  Multiple inbound flights diverted to Muscat while authorities assessed airspace safety.

Dubai’s Liquidity Test

Dubai Land Department data shows total transaction value falling from AED20.7 billion the week before the strikes to AED10.4 billion the week after, a 50% weekly collapse.  Ready-sale transaction volumes fell around 37% year-on-year.  Anecdotal estimates put almost one in eight British residents leaving the UAE in the immediate weeks following the strikes.  Mortgage-backed registrations stayed comparatively stable.  This was marginal, discretionary cash buyers pulling out first, the segment that panics fastest and returns last.

Capital Controls and Their Limits

CBUAE imposed capital controls to prevent disorderly outflows, limiting fund movements while exempting vendor payments, debt servicing, and credit line settlements.  Expect enhanced due diligence from every global bank touching Gulf-linked flows from here forward.  That friction does not disappear when the missiles stop.  It becomes permanent institutional memory.

First Abu Dhabi Bank P.J.S.C. holds MAS licensing in Singapore, appearing on the MAS Financial Institutions Directory with Wholesale Bank and Exempt Capital Markets Services activities.  That licence enables ledger-to-ledger transfers, internal accounting entries moving value between accounts, branches, or legal entities within the same banking group without an immediate external payment leg.  It is exactly the plumbing that lets a Gulf private bank preserve a client relationship while quietly moving economic exposure into a jurisdiction not currently absorbing missile strikes.

The Basel Mechanism

The Basel III final reforms, including the 72.5% output floor, materially raise capital requirements for internationally active banks.  Higher capital costs make loans, premium financing, and on-balance-sheet credit exposures considerably more expensive to hold.  Banks are offloading credit risk through insurance-backed mechanisms, unfunded credit protection, synthetic securitisations, and Master Risk Participation Agreement structures, achieving RWA reductions industry white papers cite at between 15% and 80%, depending on structure and insurer credit quality.

As premium financing and direct credit exposure become costlier to carry, banks increasingly prefer referring clients into insurance products, unit-linked, participating, whole-of-life, rather than fund guarantees directly on their own books.  Insurers must absorb larger inflows while managing tightening disclosure regimes under IFRS 17 and SFRS(I) 17.

Singapore’s Numbers

Total Weighted New Business Premiums in Singapore reached S$6.53 billion in 2025, up 11.3% year-on-year, with investment-linked policies and annual premium products leading that growth.  MAS’s implementation timeline for final Basel III reforms phases output-floor increases through 2029.

Singapore is the regulated, MAS-supervised booking centre a Gulf client should have moved to eighteen months ago and is only now moving to under duress.  Lead with liquidity and portability, partial withdrawal mechanics and short surrender penalties.  Position the product suite around genuine client anxiety: single-premium participating variants for capital preservation with access, investment-linked structures with guaranteed minimum riders, and multi-currency wrappers with FX-hedging add-ons for Gulf clients whose liabilities sit in USD or AED.

The uncomfortable truth for every complacent private banker still treating insurance as the boring cousin of proper wealth management: Basel made this trade for you, years before Fujairah’s refineries caught fire.  The missiles just made the client finally return your call.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Capital Flight From Dubai: Why Singapore is Not Just the Beneficiary, but the Better Structural Choice

Dubai spent the better part of a decade selling itself as the untouchable safe haven for global wealth.  By late 2024, Dubai’s family offices were managing over US$1.2 trillion in assets, and the UAE stood as the world’s top destination for relocating millionaires.  Then the Iran war began on 28^th February 2026.  Dubai took direct hits.  Dubai International Airport sustained damage.  Property transaction volumes halved within weeks.  The safe haven narrative Dubai had spent years constructing collapsed in a matter of days, and it collapsed for the most obvious reason imaginable: a safe haven that gets hit by missiles has stopped being one.

The Current Picture, without Exaggeration

Reuters reported that within days of Iranian retaliatory strikes reaching Dubai, two India-based entrepreneurs attempted to transfer over US$100,000 each out of local bank accounts to Singapore, purely as a risk-hedging manoeuvre.  A Singapore-based private wealth lawyer, Ryan Lin, disclosed that seven of his twenty Dubai-based clients, averaging US$50 million in assets each, had already reached out with concrete plans to transfer assets to Singapore.  Iris Xu, a principal at Anderson Global, a corporate and fund services provider, received enquiries from ten to twenty family offices within a single week about relocating.  Grace Tang, CEO of Phillip Private Equity, reported ten to twenty of her predominantly Asian clients making similar enquiries.

This is not yet a mass exodus, and I will not pretend otherwise, because the data does not support that framing.  Dhruba Jyoti Sengupta, CEO of WRISE Private Middle East in Dubai, has publicly stated his firm has observed no serious capital flight discussions, describing his clients as sophisticated investors who remain committed to the UAE’s long-term growth story.  Both things are true simultaneously.  A meaningful number of enquiries and early-stage transfers are underway, while the majority of capital has not yet moved.  This is flight-to-safety positioning, not panic liquidation, and treating it as anything more dramatic than that would be dishonest.

On Currency Controls: Watch the Direction of Travel, Not the Current Absence of Action

The Central Bank of the UAE has not announced broad capital controls.  It has instead emphasised resilience measures, its digital-dirham initiative, and regulatory updates intended to reinforce confidence in the banking system.  That is the correct posture for a central bank trying to prevent a self-fulfilling panic.  It is also the posture every central bank adopts in the weeks before it stops being able to maintain it.  CBUAE notices need active monitoring, not passive assumption of continuity. 

Why Singapore is the Structurally Superior Destination, Not Merely the Geographically Convenient One

Singapore’s advantage was not manufactured by this crisis.  It was already compounding before the first missile struck Dubai.  MAS data shows over 1,400 single family offices established in Singapore as of 2025, up from fewer than 400 in 2020, a 250% increase in five years, with some industry estimates placing the figure above 2,000 by the end of 2024.  Singapore has displaced both Switzerland and Hong Kong as the preferred domicile for ultra-high-net-worth Asian families over that period, for reasons that have nothing to do with regional security incidents: rule of law, mature trustee services, a deep private banking ecosystem, and clearly codified family office incentives under Sections 13O and 13U of the Income Tax Act.

Dubai offers speed and tax simplicity.  Singapore offers permanence and governance.  For a client whose priority is legal certainty and trustee substance, that is not a close contest, and it was not a close contest before the war either.  The war has simply forced clients who were previously choosing speed over permanence to confront what they were actually trading away.

Insurance Assigned to Trusts: The Mechanics That Make This More Than a Banking Relocation

Assigning a life policy to a Singapore trust is a well-established estate planning pattern, and it deserves to be central to any capital relocation conversation, not an afterthought bolted on at the end.  The policy is assigned to the trustee, proceeds are paid into the trust, and the trustees control distribution according to the trust deed.  Properly documented and properly notified to the insurer, this structure delivers liquidity, probate avoidance, and creditor protection simultaneously.  The critical legal step, and the one clients most often skip under time pressure, is recording the assignment formally with the insurer and maintaining genuine trustee substance rather than a nominal trustee relationship that will not survive scrutiny.

For HNW clients moving capital into this structure, the relevant instruments typically include investment-linked policies, single-premium participating or savings wrappers, policy loan facilities, and riders engineered specifically for liquidity or legacy planning.  These can be structured to sit behind a trust, and paired with premium financing or currency hedging where the client’s underlying asset base warrants it.  None of this is exotic.  It is standard architecture, deployed with more urgency than usual given the current environment. 

The Exposures, and the Solutions, without Pretending Any of Them are Optional Extras

Currency exposure exists wherever the client’s domicile currency and the Singapore dollar diverge.  Foreign exchange hedges, multi-currency account structures, or SGD-hedged underlying funds address this directly.  Tax exposure runs through BEPS Pillar Two and the GloBE rules, which now apply real teeth to cross-border assignments that were previously treated as administrative formalities.  GloBE modelling, formal legal opinions, and properly documented commercial rationale and substance are not defensive paperwork.  They are the difference between a structure that survives an audit and one that does not.

Political exposure is the lesson Dubai has just taught the entire wealth management industry in real time.  Perceived safety can evaporate within a single news cycle.  Diversifying custody, using Singapore trustees rather than a single-jurisdiction concentration, and keeping operational functions onshore are not paranoid overengineering.  They are what a Dubai-based client wishes; this month, they had already done last year. 

The Practical Complications Nobody Mentions until They Hit One

Rapid transfers of this nature trigger AML and KYC friction, and Singapore’s private banks, still calibrated by the aftermath of the 2023 S$3 billion money laundering case, will apply real scrutiny to sudden large inflows from the Gulf.  Pre-clearing source of funds, staging transfers rather than moving everything at once, and routing through established private banking corridors materially reduces friction.

Pillar Two top-up tax and recharacterisation risk is a live issue for any cross-border assignment structured hastily under crisis conditions.  Contemporaneous transfer pricing documentation and tax memoranda, modelled against realistic top-up tax scenarios, need to exist before the transfer, not as a retrospective justification after a regulator asks questions. 

Insurer acceptance of assignments across jurisdictions is the detail that derails more of these structures than any other single factor.  Written confirmation from the insurer, and trust language drafted under Singapore law rather than adapted awkwardly from a UAE-law precedent, is not a nicety.  It is the entire foundation the rest of the structure sits on. 

The Conclusion is Not Complicated, Even If the Execution Requires Genuine Discipline

Dubai’s safe haven premium was always partly psychological, and psychological premiums evaporate the moment the psychology changes, which is what has happened since 28^th February 2026.  Singapore’s advantage was never psychological.  It was structural, built over years through trustee law, regulatory codification, and a deep, boring, reliable private banking ecosystem that does not make headlines precisely because it does not need to survive a missile strike to prove itself.  Clients moving now are not fleeing to safety.  They are finally arriving at the destination the structural argument always pointed to.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

COP28 Goals & Agenda

From the 30^th November 2023 to the 12^th December 2023, the United Nations Climate Change 28^th Conference of Partners (COP28) will convene at Dubai.  Red Sycamore will be attending.  As President of the Board, and Chief Executive Officer of Equinox GEMTZ, I will be chairing a panel on “Carbon Credits: the Next Financial Instrument”.  Ng Kin Foong, Chief Executive Officer of Red Sycamore, will chair the panel on “ESG & Startups”.  The panels will be in the Green Zone, under IEEE. 

Hopefully, this event will be a milestone and address the contentions raised in previous iterations of this event.  We are past the point of “climate change”, and we should call it what it is: a climate crisis.  We are not meeting our climate goals, and this is the time for us to come together, get on track, and invest in coastal communities, ocean initiatives, and blue carbon.  The Red Sycamore position is that investing in blue carbon credits addresses many other issues such as preserving biodiversity, securing food security, and mitigating salination of water tables.  Blue carbon refers to the carbon stored in coastal and marine ecosystems. 

The intent is for our conversation to build on the developments of the Kunming-Montreal Global Biodiversity Framework.  The Kunming-Montreal Global Biodiversity Framework is a document that was adopted by almost 200 countries at the 15^th Conference of Parties to the UN Convention on Biological Diversity in December 2022.  It is a plan to protect and restore nature by 2050.  The framework includes targets for reducing threats to biodiversity, ensuring that ecosystems are resilient, and enhancing the benefits derived from biodiversity and ecosystems.  It also emphasises the importance of mainstreaming biodiversity across government and society, and the need for adequate financial resources, capacity-building, and technology transfer to implement the framework.  This should be addressed in tandem with the agreement on a new UN High Seas Treaty. 

COP28 is especially significant because we will have our first Global Stocktake (GST).  The GST is a critical process under the Paris Agreement that aims to assess the state of our planet and chart a better course for the future.  It is an inventory of everything related to where the world stands on climate action and support, identifying the gaps, and working together to agree on solutions pathways to 2030 and beyond.  The GST is intended to evaluate progress on climate action at the global level — not the national level — and identify overall gaps to achieve the Paris Agreement as well as opportunities to bridge them.  The first stocktake got underway at COP26 and will conclude at this COP28.  Each stocktake is a two-year process that happens every five years. 

The initial findings of the GST are that there has been limited progress on our climate goals, and significantly more financing, more action, and most importantly more political will, is needed if the world is to meet its Paris targets.  We are so far behind.  COP28 will also look to adopt a framework to implement the Global Goal on Adaptation.  The desire to see progress in the development of funding mechanisms and commitments for addressing Loss and Damage.  The Loss and Damage Fund is a significant focus at COP28.  This fund is intended to compensate vulnerable countries for natural disasters caused by climate change.  The concept of “loss and damage” broadly refers to economic or other losses caused by climate change that go beyond a country’s ability to adapt.  This could include sudden damage caused by extreme weather linked to climate change, or longer-term consequences of sea level rise.  We are hoping to see countries adopt a consensus proposal reached by negotiators earlier, but any country could choose to reopen the issue.  The current consensus relies on compromises on several issues that have divided developed and developing countries. 

The Loss and Damage Fund will be administered at first by the World Bank, and will draw on funding sources including large developing countries as well as the US, the EU, and the UK.  No firm target has been set for how much money the fund will disburse, but countries most affected by the climate crisis hope it will reach hundreds of billions of dollars within a few years.  Regardless, this is still inadequate when projections are that the cost will be in the trillions.  According to the Swiss Re Institute, the impact of climate change could wipe off up to 18% of the GDP of the worldwide economy by 2050, if global temperatures rise by 3.2°C.  The global economy could lose 10% of its total economic value by 2050 due to climate change.  The impact of climate change has been forecasted to be the hardest hit for Asian economies, with a 5.5% impact to GDP in the best-case scenario, and 26.5% impact in a severe scenario.  These projections are based on current trajectories and could change if more aggressive climate action is taken.  It is a reminder of the urgent need for countries around the world to take decisive action to mitigate the impacts of climate change. 

In light of these alarming figures, Red Sycamore wants to use its platform at COP28 to push for the prioritisation of blue carbon solutions, supported by concrete financial commitments and pathways.  There should be significantly scaling of finance commitments and an acceleration of climate finance initiatives to fund mitigation and adaptation actions that support the preservation and restoration of coastal areas within national jurisdictions. 

We also want to advocate for government commitments to new and more ambitious Nationally Determined Contributions (NDCs) and national climate action plans that include the rights of coastal communities.  We need to support these communities in helping to restore the maritime capacity to sequester and store blue carbon.  Seagrasses are marine plants that form dense underwater meadows in coastal areas around the world.  These ecosystems play a crucial role in sequestering carbon and providing various ecological benefits.  Seagrasses are considered one of the most effective blue carbon reservoirs.  Seagrasses, along with mangroves and salt marshes, are important contributors to blue carbon storage. Seagrasses sequesters carbon dioxide (CO²) from the atmosphere and store it in their biomass and in the sediments where they grow.  The carbon sequestration capacity of seagrasses is relatively high compared to other ecosystems.  Seagrasses capture and store carbon in their above-ground and below-ground biomass. The below-ground structures, such as rhizomes and roots, trap organic carbon in the sediment, preventing its release into the atmosphere.  The organic matter produced by seagrasses contributes to the accumulation of carbon in coastal sediments.  This stored carbon can remain locked away for extended periods, acting as a long-term carbon sink. 

Seagrass meadows help stabilise coastal sediments, providing protection against erosion.  This stabilisation helps to maintain the integrity of the carbon-rich sediments and prevents the release of stored carbon into the water.  Seagrass ecosystems are rich in biodiversity, providing habitats for various marine organisms.  The diverse community of organisms in seagrass meadows contributes to the cycling of nutrients and the overall health of the ecosystem.  Although seagrass meadows cover only a small percentage of the ocean floor, they are estimated to be responsible for a disproportionately large share of carbon sequestration in coastal areas.  Seagrass meadows are under threat from various human activities, including coastal development, pollution, and climate change.  When seagrasses are degraded or destroyed, the stored carbon can be released back into the environment.  Recognising the importance of seagrass ecosystems in carbon sequestration, conservation efforts are underway to protect and restore seagrass habitats. These efforts involve sustainable coastal management practices and the establishment of marine protected areas. 

Seagrasses are vital contributors to blue carbon storage, playing a crucial role in mitigating climate change by sequestering carbon in their biomass and sediments.  Protecting and restoring seagrass ecosystems is not only important for carbon sequestration but also for the overall health and resilience of coastal environments.  We need to ensure that the role of coastal blue carbon ecosystems is recognised.  That is why we are pushing for more ESG startups in this area, and the pivot towards the compliance market for the trading of what will eventually be fungible blue carbon credits.  For this to happen, these discussions need to be integrated across UNFCCC negotiations for the mitigation, adaptation, and growth of these initiatives.  This includes a bolstered understanding of financing options for restoration of coastal ecosystem, including through Article 6 of the COP, Article 6 which regulates voluntary cooperation among countries to achieve their NDCs to reducing emissions.  This Article incorporates market mechanisms and non-market approaches, including cooperation in areas such as finance, technology transfer and capacity building.  As an extension for preserving the ocean, we support a moratorium on deep-seabed mining, pending further study on their effects on the environment and the carbon footprint caused from releasing CO₂ sequestered in the seabed. 

In summary, there is much work to be done.  There is much riding on this panel discussion, and how we shape this conversation, and bring it back to Singapore.  To address this climate crisis, to advocate for true sustainability, it is necessary for us to save the oceans, because that is the key to our continued quality of life.

Quora Answer: Why is the GDP of Dubai Less Than Singapore?

The following is my answer to a Quora question: “Why is the GDP of Dubai less than Singapore?” 

GDP is tied to population, and manufacturing base.  Dubai’s population just over 3 million.  Singapore’s population is around 7 million, of which 5.5 million are citizens.  That is more than twice what Dubai has.  We must also consider the demographics, not just numbers.  Dubai has a larger percentage of low wage workers, most of them imported from the Indian subcontinent, meaning that their contribution to GDP is significantly less. 

When it comes to industry, Singapore is a major international port, in addition to being an air hub, and a financial centre.  Dubai does not have a port close to what Singapore has due to the limitations of geography.  Dubai does not sit along a major sea route, while Singapore does.  Dubai is also an air hub.  While it is a financial centre, it serves a region with significantly lower GDP and political stability.  Singapore is in East Asia.  While Dubai has diversified from the oil sector, it was into the services and tourism sector.  Singapore has manufacturing facilities for electronics, wafer fabrication, and other products.  This is in addition to tourism and services. 

All in all, it is no surprise that based on these factors, Singapore’s GDP is three times that of Dubai, despite its smaller size.  When we consider PPP, Singapore’s GDP is much more than that, since the Singapore dollar is not pegged to the US dollar.  Singapore has a lower debt to GDP ratios as well, meaning that is has a healthier economy.  Dubai has focused a bit too much on the spectacular, and lags behind in civic development by at least a decade.