Why Family Offices Are Moving To Singapore
The answer lies in what Singapore can offer as a country, the avant garde initiatives of its government, and its advanced wealth management ecosystem.
There are two categories of family offices moving to Singapore: (1) redomiciled, (2) new foreign entities. The process for domiciliation and redomiciliation has been made very simple for both this year.
Even before then Singapore has seen a 5-fold increase in the number of family offices from 2017 to 2019. According to Senior Minister Tharman Shanmugaratnam, there are about 200 single family offices in Singapore managing an estimated US$20B assets in total.
Singapore’s political and economic stability
According to statistics from the World Bank, Singapore ranked third in the world for political stability in 2018. It is no surprise that political stability plays a major role in providing fertile ground for economic stability.
As quoted by the World Economic Forum in an article in July 2019, Singapore ranked first for infrastructure and held top rank for the world’s most competitive global economies. The article also mentioned that Singapore scored well in the report due to its financial system, macroeconomic stability and market efficiency.
Singapore also has one of the lowest crime rates in the world which makes it an ideal place for HNW and UHNW families to stay and retire. English and Mandarin are national languages, and they are widely spoken, making the transition to life here easier for foreigners.
The many benefits of the VCC
A more recent magnet for the movement of family offices to Singapore is the Variable Capital Companies Act 2018 launched in January 2020 by both the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (ACRA). The VCC Act 2018 outlines the legal boundaries from which an investment fund structure can operate.
It provides for the incorporation, operation and regulation of a corporate body called Variable Capital Company (VCC) as well as other related matters. This new corporate structure can be used for a wide range of investment funds: close-ended fund, umbrella fund, standalone fund, master fund or feeder fund.
During the launch, up to 20 investment funds, including those from new Family Offices, were domiciled as VCCs. Just 8 months after the launch the figure grew to more than 120 VCCs as of mid-September 2020.
Here is a summary of what the Variable Capital Company Act can offer corporations registered as a VCC:
- Segregation of assets and liabilities
- No solvency test to make redemptions
- Privacy for shareholders
- Tax incentives for all assets and funds
- Economies of scale
- Flexibility and simplicity
- Cost savings
- Fast re-domiciliation of offshore funds
To make the VCC even more attractive, the MAS also launched the VCC Grant Scheme (VCCGS) which co-funds applicants of the VCC up to 70% of qualifying expenses capped at S$150,000 per VCC.
The VCCGS is valid until 15 January 2023. Qualifying expenses include legal services, tax services, and administration or regulatory compliance services.
The basic requirements of a VCC are:
- Have at least one director who is ordinarily resident in Singapore who must be either a Director or Qualified Representative of the fund manager
- Appoint a Singapore regulated and licensed Fund Manager (the entity cannot be self-managed)
- Have a registered office in Singapore
- Appoint a Singapore-based company secretary and Singapore-based auditor
Family offices that are registered as VCCs may also enjoy tax benefits from the Enhanced Tier Fund (ETF) Scheme and Singapore Resident Fund (SRF) Scheme if they fulfill the criteria of the schemes.
What also makes the VCC more competitive compared with other fund structures is that investors can benefit from over 80 Double Taxation Agreements (DTAs) between the Singapore government and other jurisdictions. This agreement eliminates double taxation arising from cross-border trade and investment activities.
Singapore’s flexible financial system
Key to the openness and flexibility of the country’s financial system is due to the supportive and forward looking governing body, Monetary Authority of Singapore (MAS). The MAS is pivotal in that it plays an active role in ensuring the best regulatory framework and non-physical infrastructure to support the wealth management industry.
Apart from the VCC, there are earlier initiatives such as the Industry Transformation Map (ITM) for financial services released in October 2017. Drawn up in close consultation with the financial industry and Ministry of Education (Higher Education and Skills), the ITM has outlined growth strategies by business lines and programmes for upgrading skills.
An agenda was also outlined for continuous innovation and technology adoption, the first of which was the Fintech Regulatory Sandbox.
The Sandbox is a passport for financial institutions and FinTech players to experiment with innovative financial products or services in a live yet controlled environment. It is very attractive for its participants as it allows them to test their ideas “without having to apply for a [full] license or a permit”.
MAS stepped up its agenda in August 2019 when it launched Sandbox Express – an improved version of Sandbox with a shorter approval process and longer period for experiments to be run.
Singapore’s developed capital market and ecosystem
Singapore proudly holds the title of being the third largest financial exchange centre in the world and is considered one of the top developed capital markets within the ASEAN and Pan-Asian regions. Evidence of that is in its diverse base of more than 900 traditional and alternative fund managers other than the total size of assets under management.
Supporting this market is a whole range of capital market entities to provide financial services including:
- fund managers,
- financial advisers,
- REIT managers,
- corporate finance advisers,
- credit rating agencies and
The government provides full support by offering attractive incentives to venture capital managers and leaders. It is also quick to align with investor trends in the APAC region, such as the demand for more Environmental, Social, and Governance (ESG) and Socially Responsible Investing (SRI) products. To cater to this demand, Singapore recently produced the first international green bond, among other strategies.
Full suite of wealth management services
Supporting the wealth management (WM) industry is a comprehensive pool of resources from the financial services industry. There are countless local and international banks.
These are some of the WM services offered in Singapore:
- Trust services
- Special situations
- Family governance
- Debt management
- Tax planning
- Estate planning
- Business planning
- Education planning
- Succession planning
- Retirement planning
- Investment planning
- Philanthropy advisory
- Income protection and asset preservation
The wealth management players available include asset management firms, trust companies, philanthropy organisations, family offices and ancillary service providers such as tax, legal advisors, consultants and technology platform providers.
Congregation of world-class professionals
The quality of financial services and WM services would not be at world class standards without the crème de la crème chosen for these two fields. Competition is very keen among both WM players and financial services. Inadvertently, this makes Singapore the most preferred offshore wealth hub among industry professionals, as revealed in the Asian Private Banker survey.
The MAS also plays a critical role in outlining regulations to uphold high professional standards. It has in place the Private Banking Code of Conduct which further ensures the competency of private banking professionals and fosters high market conduct standards.
The evolution of financial products in Singapore is so fast that its internal manpower resources must be kept abreast. Fintech, for instance, has blurred the lines between the financial services (FS) industry and the technology, media and telecommunications (TMT) industries used.
The Global Fintech Report 2019 by PwC states that 48% of FS firms have embedded fintech fully into their strategic operating model. Meanwhile, 44% of TMT and 37% of FS organisations have incorporated emerging technologies into the products and services they sell.
The merge creates new commercial possibilities, products and strategies. Constant support is allocated for professional development to Singaporeans to equip them with new skills and competencies.
Examples of support in the form of programmes and schemes offered by the MAS and the Institute of Banking and Finance (IBF) are:
- Asset Management Trainee Programme was recently launched on 15 September 2020 to accelerate the training and development of aspiring asset managers so that they are equipped to handle evolving growth areas
- Technology in Finance Immersion Programme (TFIP) which helps individuals gain experience in new technology areas – Artificial Intelligence, Cloud Computing, Cybersecurity, Data Analytics and Full Stack Development – within the financial services sector;
- Financial Specialist Scholarship (FSS) that helps develop specialist leaders in a variety of fields in Singapore’s financial services sector;
- SkillsFuture Study Award for the Financial Services Sector for professionals to develop and deepen their skills through a wide range of programmes;
- Professional Conversion Programmes that re-skill mid-career professionals, managers, executives and technicians.
According to the Singapore Asset Management Survey 2019 conducted by the MAS in 2020, Singapore’s Assets Under Management grew in tandem with the global trend, rising by 15.7% in 2019 to reach US$2.9 trillion. Of the total AUM 76% originated from outside of Singapore and 69% was invested into the Asia Pacific region. The numbers speak for themselves.
Co-Founder, Managing Director
John has over 20 years of experience in providing multi-tiered services in the areas of fiduciary, tax, accounting, trust and asset management. His network includes ultra-high net worth individuals and families, corporations and conglomerates from ASEAN countries.
As a trained lawyer, John has been intimately involved in the set-up and implementation of his clients’ structures, often being able to value add beyond the original mandate.
John’s pride is seeing many working relationships with clients transforming into close friendships. Sharing the same vision with his partners and teammates, he aims to bring safe investments with good alpha returns to investors.