It’s not surprising why Singapore, also known as Asia’s financial hub, is the preferred location for the world’s most successful family offices. Being the world’s most open economy, the third least corrupt, and the most pro-business, Singapore has seen a high rise in family offices with many Singaporean families and foreign millionaires & billionaires extensively investing in the region.
According to recent reports, there are around 200 SFOs in Singapore and each SFO typically manages assets of more than $100 million. The beginning of 2021 has seen 229 family offices being registered in the Singaporean jurisdiction since 2020. It is just the beginning; the coming post-pandemic years will see many more family offices stationed in Singapore.
So, what makes Singapore the most preferred choice for family businesses? This blog will help you understand why Singapore has the world’s most successful family offices.
Let’s First Start by Understanding the Role Of Family Businesses
A family office can be looked upon as a private wealth management advisory firm that wealthy business families set up for overseeing the daily administration and strategic management of the family’s investments and assets. The goal behind setting up family offices involves responsible preservation, growth and wealth transfer on the next and further generations to come.
The family office also works with other specialists for gaining valuable advice on tax advisory, property & estate management, legal advisory, risk management, philanthropy and more.
Now, let’s take a look at the reasons behind Singapore having the most successful family offices.
1. Stable And Pro-Business Environment
Singapore proves to be an exceptionally politically stable region, consistently adapting several pro-business stances in its policies. The last decade has witnessed Singapore emerge as one of the easiest countries in the world to do business in. Singapore has also been ranked as the most liveable city in Asia, further increasing its business value. Organizations like the United Nations and the World Health Organisation have ranked Singapore as one of the top healthcare systems.
The Singapore government aims at simplifying business working and procedures. The government is keen on attracting foreign investors to its shores. The Economic Development Board (EDB) and The Monetary Authority Of Singapore (MAS) actively look for an endless drawing of wealthy investors to the country.
2. Gateway To Asia
Singapore proves to be the perfect gateway to Asia for a plethora of reasons. With a vast network of over 20 implemented Free Trade Agreements (FTA) with more than 30 trading partners globally, this city-state has solidified its position as a significant financial, transport and logistics hub.
Singapore’s major trade partners include Asian countries like China, India, and other powerful economies such as the United States Of America. It allows for the easy facilitation of investments and trade.
3. Strategic Growth
Singapore offers businesses a strategic growth channel owing to its forward-thinking mindset, transparency, tenacity, financial strength and political & regulatory stability. The ongoing pandemic has made these strengths more powerful and valuable. It holds for HNW and UHNW families, specifically those from China and other Southeast Asian countries.
The new Variable Capital Company (VCC) regime was introduced in 2020 and added enhancements to the option ‘C’ for the Global Investor Programme from the Economic Development Board. (EDB) focusing on qualifying new and upcoming entrepreneurs are strong evidence that the government agencies are focusing on continuous enhancement of the Singapore Legal & Regulatory framework.
4. Plenty Of Incentives
One of the key reasons why Singapore has the world’s most successful family offices is the plenty of tax incentives it offers. Tax incentives are offered to revolve around funds managed by family offices for both offshore and onshore vehicles. It simply means that these funds do not need to pay Singapore tax on specified gains or Income received from designated investments after the MAS’s approval.
Singapore also boasts a comprehensive network of 100+ Double Taxation Agreements (DTA), including India, China and Indonesia. The DTA ensures that only a specific type of Income will be taxed less or exempted. It proves to be lucrative and attractive for families with the cross-border family business enterprise.
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