Why the world's ultra-rich are parking their money in S'pore, explained

[Bigbird]

Why the world's ultra-rich are parking their money in S'pore, explained

MS Explains: In the past few years, we've seen Google co-founder Sergey Brin, British entrepreneur James Dyson, and Haidilao co-founder Zhang Hanzhi begin financial activities here. Why?

Andrew Koay | May 04, 2021, 02:57 PM

 

Observers of financial and business news in Singapore might have noticed a trend in recent times — the world's wealthiest individuals are increasingly setting up shop on our tiny island.

 

 

In the past few years, we've seen Google co-founder Sergey Brin, British inventor and entrepreneur James Dyson, and son of Haidilao founders Zhang Hanzhi setting up family offices, and buying property here.

 

Observers of financial and business news in Singapore might have noticed a trend in recent times — the world's wealthiest individuals are increasingly setting up shop on our tiny island.

 

In the past few years, we've seen Google co-founder Sergey Brin, British inventor and entrepreneur James Dyson, and son of Haidilao founders Zhang Hanzhi setting up family offices, and buying property here.

 

What are "family offices"?

 

Family offices are described by Investopedia as being advisory firms that manage the finances or investments of an affluent individual or family.

In other words, if you're a rich person with lots of money that you want to preserve for your lifetime and the next few generations, you might set up one of these offices to help you do that.

In response to a parliamentary question on the topic, Minister for Trade and Industry Chan Chun Sing said on Apr. 4, 2021 that about 400 family offices had been operating here since the end of 2020.

This is double the number given by Senior Minister Tharman Shanmugaratnam in October 2020, just six months prior.

At the time, Tharman also cited research estimating that each family office typically managed assets in excess of US$100 million (S$132.77 million).

If that figure still holds true, the total assets managed by family offices in Singapore would be at least S$54.4 billion today.

So if we take the proliferation of family offices here as evidence of the the ultra rich parking their money in Singapore, the next question to ask would be: Why?

 

 

 

A safe place to operate

 

The most obvious reason why the ultra-rich are fond of Singapore is that it is a rather safe place for a wealthy person to park their money.

An indication of this is the fact that our country receives top marks for its sovereign credit rating.

In fact, Singapore is one of the few countries in the world to currently hold the highest possible score of an AAA rating from the three most influential agencies handing out these ratings — Moody's, Fitch, and Standard and Poor's.

Those looking to establish a family office might be interested in specific factors such as political and economic stability, as well as the strength and transparency of its legal system, which all count toward a stronger credit rating.

For example, if a country's government or judiciary is known to have high levels of corruption, a wealthy individual may choose not to operate there over concerns about how they may treated, should they be unable to get into the good books of those in power.

Or maybe a country's politics may be so unstable that there is a risk of the government collapsing into chaos, or even just changing its corporate tax policy, for example, after every election. This too would understandably be a turn off for someone looking for a location to headquarter their financial activities.

Yet, safety and stability can't be the only things making Singapore attractive to the rich.

After all, countries like Sweden, Denmark, and Switzerland have also received AAA ratings across the board; Canada, the United States, the United Kingdom, and Australia also rate highly.

So while safety and stability are basic requirements, something else is needed to really draw the money of the world's wealthiest to Singapore.

Here are a few of them:

 

Read more

https://mothership.sg/2021/05/ultra-rich-singapore-explainer/

 

 

Edited May 4, 2021 by Bigbird