Today in asset owner history: Singapore tightens licence requirements

AsianInvestor launches its new weekly column titled 'This week in asset owner history', which looks back at past events and how they have unfolded today.
Today in asset owner history: Singapore tightens licence requirements

In early August 2012, Singapore tightened licensing requirements for asset managers, a move that analysts said would raise standards in the city-state and benefit independent wealth managers such as family offices.

At the time, the analysts compared Singapore with Hong Kong, stating that licensed fund managers in Singapore were less credible than those in Hong Kong because of tighter requirements in the latter.

Since then, the comparisons between the two territories have continued, and Singapore has continuously rolled out updates and new structures for investment funds. In 2020, it launched the Variable Capital Company (VCC) corporate structure that gave funds an alternative to existing structures such as limited partnerships, limited liability partnerships and companies.

By 2020, the total number of registered and licensed asset managers in Singapore had reached 895, an increase of 13.7% from the year before.

Assets under management have also risen to reach S$4.7 trillion ($3.4 trillion) as of 2020, a 17% rise from 2020, driven by inflows as well as valuation gains.

In April, the Monetary Authority of Singapore revealed tighter tax exemption measures for new family offices through applications under Sections 13O and 13U of the Income Tax Act. The number of single family offices registered in the country rose from 400 in 2020 to 700 in 2021, Tharman Shanmugaratnam, minister in charge of MAS, revealed in July parliamentary sitting.

However, he also said that MAS does not have authoritative data on the number of single family offices and their scale of operations, and that the numbers provided were estimates.

Wealth managers AsianInvestor spoke to said that numbers are likely higher, as some single family offices may not have sought the tax incentives that Sections 13O and 13U offer. The reasons for this are unclear, but could range from different objectives that the family offices have, to simply a lack of knowledge about the new schemes.

As the regulator continues to refine its rules and frameworks, the number of family offices is likely to continue its growth. Already, several large-scale property deals have emerged, indicating interest among tycoons from the region.

In February, Indonesian billionaire Sukanto Tanoto’s Royal Golden Eagle bought the landmark Tanglin Shopping Centre in the Orchard Road area for S$868 million. In June, an unnamed Chinese tycoon was revealed to have bought 20 units at luxury condominium Canninghill Piers, the redevelopment of Liang Court at Clarke Quay. The units were priced at between S$3.1 million and S$5.6 million.

The official property price index for private homes is expected to increase between 5% and 10% this year, with the second quarter’s having risen 3.9% from the last quarter of last year.

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