Singapore’s star rises
As the private wealth industry is witnessing a marked rise in interest and relocation to Singapore, Citywealth interviews private wealth experts to understand what is bringing business to the city-state and what can be envisaged for 2023.
A focus on Singapore legal system, trade agreements and tech
Apart from low taxes and a high standard of living and stability, there are several factors which are bringing business to Singapore. Nick Dingemans, partner at Penningtons Manches Cooper’s Singapore office comments: “The legal and regulatory structures are designed to encourage firms to do business in or from Singapore. It has also an extensive network of double tax treaties and investment agreements in addition to witnessing many bilateral and multilateral free trade agreements. For example, in the last 12 months Singapore and the UK have entered into a Digital Economy Agreement and a separate Green Economy Framework Agreement. Both these cross-border agreements are designed to encourage bilateral trade in the digital economy and separately in green investment (including sustainability and clean tech).”
Florence Chau, Head of PW&FO (private wealth & family office) Singapore for TMF Group explains: “Singapore has worked hard to enhance its competitiveness to multinationals as well as wealthy families looking for a hub to invest into the region. The jurisdiction is recognised for having a trusted legal system, efficient infrastructure, providing global connectivity and a gateway to the region for MNCs and fast-growing start-ups. Besides, Singapore also has a deep pool of multi-lingual talent to hire from. Recently, The Monetary Authority of Singapore along with the Institute for Banking and Finance Singapore launched Singapore’s Skills Framework for Financial Services as it recognises the importance of having the necessary skills to support the investment in the region. This, combined with its stable socio-political environment and an excellent educational system, helps position Singapore as a less complex country to invest and operate in, as our annual Global Business Complexity Index highlights. This means that it’s a popular option for those looking for a career in financial services, technology and global businesses who are establishing themselves in Singapore.
Singapore prides itself with its strong business friendly reputation globally, attracting foreign investments especially in the technology sector (e.g., ByteDance and PayPal). Dyson is an excellent example of Singapore’s quest to be the tech hub of APAC. Dyson relocated to the Island in 2018 and since then has been investing heavily in Singapore with estimates of over $1billion over the course of four years. It has over 1,400 staff in the country, including scientists and engineers.”
Alessandro Belluzzo, barrister and founding partner of Belluzzo International Partners with several offices in Italy, London and Singapore (and winner of the “Boutique law firm of the year – BRONZE” award at the IFC Awards 2023), adds: “Singapore’s success in attracting businesses is due to many key factors. Firstly, its strategic location at the crossroads of major shipping routes makes it an ideal location for companies engaged in international business. Additionally, the Singapore government has created a pro-business environment by reducing bureaucracy, providing grants and incentives, and supporting the development of industries essential for economic growth. Singapore also has a highly skilled workforce that is well-educated and proficient in English, the primary language of business. Its world-class infrastructure, including modern airports, seaports, and telecommunication systems, makes it easy for companies to connect with their customers and suppliers worldwide. Singapore has a stable political environment, with a government committed to creating a favourable business climate and supporting economic growth. Finally, Singapore’s strong focus on innovation and technology has led to the development of new industries and the growth of existing ones. Its unique location, business-friendly environment, skilled workforce, excellent infrastructure, political stability, and focus on innovation and technology has made it a desirable destination for businesses.”
Clifford Ng, partner at Zhong Lun Law Firm, in Hong Kong (and winner of the “Advisor of the year – Succession planning/trusts – SILVER” award at the IFC Awards 2023), summarises: “Places like Singapore have four characteristics that make them attractive for UHNW clients and investors: low taxes, freedom of movement of people and capital and a strong infrastructure of professionals. The freedom of movement of people and capital and policy stability reinforce each other.”
Singapore vs Hong Kong
Is increased pressure and competition from Hong Kong damaging Singapore? Why should private wealth firms choose Singapore over Hong Kong? Nick Dingemans thinks that “the history of Singapore and Hong Kong as ‘competing’ against one another goes back decades and well into the colonial era. Hong Kong has been seen to hold the lead for some time. However, the combination of the Hong Kong security law, China’s long COVID lockdown, geopolitical tensions and the perceived change in the rule of law in Hong Kong makes Singapore a more attractive option to many investors. This is especially the case for UHNW individuals, investment funds and private equity investors.
However, the liquidity and depth of Hong Kong’s capital markets when compared to Singapore does give Hong Kong an advantage in some respects. The perception from Singapore is that Hong Kong is about Greater China and Singapore is about the rest of the Indo-Pacific.”
Alessandro Belluzzo dwells on the reasons why the private wealth industry is choosing Singapore: “Several factors indicate that private wealth firms are increasingly choosing Singapore over Hong Kong. First, given Hong Kong’s political uncertainty and growing dependence from China, Singapore’s independence from the latter has made it a preferred destination for private wealth firms. Second, Singapore’s stable and reliable financial hub status has attracted private wealth firms seeking a secure and predictable environment. Singapore’s favourable legislation for family offices has been another significant draw, providing a streamlined process for family offices to obtain licenses and operate in the country. In addition, the Monetary Authority of Singapore (MAS) provides guidance and facilitates their operations in the country. Additionally, Singapore has established itself as an attractive hub for sustainable and socially responsible investing, with the government promoting ESG-friendly practices. The country has also set up schemes, such as the Sustainability Bond Grant Scheme and the Green and Sustainability-Linked Loan Grant Scheme, encouraging companies to issue sustainable bonds and loans, not mentioning all the tax incentives to promote investments in social and sustainable initiatives.”
Striking a balance within the eternal fight between Singapore and Hong Kong, Clifford Ng comments: “The media likes to play up the supposed competition between Hong Kong and Singapore. They are fundamentally different and offer different advantages. Hong Kong is part of China and should develop policies that take advantage of that. Singapore isn’t and should take a different path. Some UHNW clients choose one or the other but there are many UHNW clients that need to be in both jurisdictions to get the different benefits from these markets.”
Florence Chau adds: “We have long since had a presence in both Singapore and Hong Kong and indeed in mainland China, Malaysia, Thailand, Vietnam, and worked closely with our clients in those countries to help them navigate local complexity so they can operate effectively. For many of our clients, Hong Kong remains an important jurisdiction and, as business, we expect our APAC business to be an engine of growth in the coming years.”
Predictions for 2023? Our experts think that…
… Singapore is very much the hub for the Indo-Pacific region. It brings together lawyers, accountants, consultants, bankers and other advisors all in one place with a government that is actively looking to make Singapore an attractive and safe place to do business. We expect further growth, particularly on the advisory and services side of the business. This will be necessary to service the multiple new family offices setting up in Singapore under the Single Family office incentive schemes. Nick Dingemans, Penningtons Manches Cooper
… with its growing financial hub, strong regulatory framework, pro-business policies and its continued investment into technology, we expect Singapore to continue to be a jurisdiction of choice. Research carried out by Bain has projected investment of $70bn in South East Asia private equity alone in 2023 and Singapore is very well placed to be a recipient of that. Additionally, we observe a trend in the market where many asset managers are recalibrating their investment strategies. In some instances, this trend has been accelerated by Hong Kong’s new Foreign-sourced Income Exemption regime which will improve its relationship with the OECD but has generated a degree of uncertainty among some investors. As a result, while Hong Kong remains a powerhouse, several new and existing investments are favouring Singapore where we see an increase of SPVs structures both via VCC and LLC. This, coupled with an unprecedented transfer of wealth also taking place APAC, is predicted to be the wealthiest region in the world within the next five years. It’s no surprise that Wealth Managers are investing in talent in the region to services, businesses and individuals. Florence Chau, TMF Group
… strong growth for both Singapore and Hong Kong is anticipated in 2023. Both will benefit from the post-covid reopening in Asia and the relative calm and high growth in this region. Obviously, Hong Kong is restarting from a lower base so nominal numbers will look better. Clifford Ng, Zhong Lun Law Firm
… Singapore’s Variable Capital Company (VCC) structure has been a game-changer for asset managers, offering greater flexibility and lower costs than traditional structures. Singapore’s independence from China, favourable legislation for family offices, social investing and ESG-friendly environment, and the VCC structure, have made it an attractive location for private wealth firms globally, not only compared to Hong Kong. Alessandro Belluzzo, Belluzzo International Partners
Learn more about the Citywealth International Financial Centre Awards: IFC Awards 2024