Singapore Consolidates Position as “Switzerland of Asia”

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Singapore’s asset management sector is prospering rapidly, consolidating the country’s position as the “Switzerland of Asia”.

According to an article published by Bloomberg.com on October 5, from Singapore’s earliest years as an independent state, it’s aimed to be one of the key locales through which the world’s money flows. And as a haven for wealth and a hub for asset managers, the “Switzerland of Asia” has been notching up enough wins to shed any regional asterisk.

Citing data from the Monetary Authority of Singapore (MAS) – the central bank, the article informed that wealth overseen by the country’s asset management industry has doubled in just six years to about 4 trillion USD, and about 80% of that is foreign.

The US’s BlackRock Inc. and Canada’s Ontario Teachers’ Pension Plan are expanding in Singapore. Even Swiss banks are getting into the act as UBS Group AG’s offices dominate an entire city block in a prime shopping district, with a staff of 3,000, a private gym and a cappuccino bar. It’s now the firm’s largest operation in Asia.

The article mentioned that Switzerland’s crown as the leading home for globe-hopping wealth is safe for now. But Boston Consulting Group projects Singapore will see foreign wealth booked there grow by 9% over the next five years, three times faster than its Swiss competition.

Singapore boasts many of the attractions of Switzerland, including political stability and a highly educated workforce. It also features low income tax rates, zero levies on capital gains or inheritances and incentives for multinational firms to establish Asian headquarters. Singapore’s prime location in the middle of Southeast Asia makes it attractive to investment managers focused on the region, according to the article.

The rapid rise of money management is by design.

In 2020, the government introduced a new kind of legal structure called a variable capital company that provides tax and legal incentives for hedge funds, venture capital and private equity firms to set up in Singapore, similar to programmes in such offshore hubs as the Cayman Islands and Luxembourg. More than 600 companies had taken advantage of the new program as of last October.

Recent troubles in other financial hubs give Singapore an extra edge. Switzerland’s status was shaken this year by the ­collapse of Credit Suisse Group AG and its hastily arranged sale to next-door rival UBS. Credit Suisse has seen outflows of more than 100 billion Swiss francs (111 billion USD) as rich clients park their money elsewhere, including in Singapore.

In Hong Kong (China), bankers and investors are becoming increasingly uneasy about the situation here. Hong Kong just lost its five-decade-long position as the world’s freest economy to Singapore, according to the most recent ranking compiled by Canadian think tank Fraser Institute. Dwindling business from the mainland, which is suffering an economic slowdown and a real estate crisis, is prompting financial firms to cut jobs there.

Meanwhile, in the battle to be Asia’s top financial centre, the balance remains in favour of Hong Kong, according to the article.

The reality for global banks is that Hong Kong is hard to replace. But Singapore is benefiting from companies looking to diversify in the region or for a base for broader Asian operations beyond China.

Source : Vietnamplus