Friday, July 27, 2012

Life after the Financial Investor Scheme


Business Times: Thu, Jul 26

THE Financial Investor Scheme (FIS) was introduced by the Monetary Authority of Singapore (MAS) as a means to attract high net worth (HNW) foreign families to Singapore, combining the attractions of utilising Singapore as a private banking hub together with its high standard of living and quality of life.

In its most recent format, the scheme allowed a HNW foreign family to place $10 million with an approved financial institution in Singapore of which up to $2 million could represent equity in real estate, and in exchange the investor and immediate family could obtain permanent residency status in Singapore.

The FIS helped to support the growth in the private banking industry and attracted HNW families to book their assets at Singapore-based financial institutions and reside in the country with the associated ancillary benefits to the country.

However, in our experience, we noted that some investors would obtain the status but not actually reside here or contribute actively to the economy. At the end of April 2012, the FIS was removed by the MAS.

The end of the FIS scheme, whilst disappointing to many foreign investors seeking to take advantage of this route to residency, nevertheless represents a positive step in the continuing development of Singapore as a stable long-term platform for both its citizens, residents and investors. On the one hand it reflects the priority that the government is placing on protecting the interests of its own citizens and existing residents, who are currently concerned with the rapid pace of growth and subsequent squeeze in prices and resources, whilst on the other hand it reflects a confidence in the exceptionally sound banking industry that has evolved in Singapore.

From a private banking perspective, Singapore has evolved into one of the most attractive locations globally into which to book personal and corporate assets, and ensuring the continued stability of that platform ensures the long-term growth and success which will be associated with it. Most clients, who would wish to have taken advantage of the FIS, will in any event wish to consider utilising Singapore as a booking platform for their assets - there are many more reasons other than the FIS to have one's assets booked and managed in Singapore.

That being said, our message to clients is that permanent residence status under the FIS is only one of a number of doors to establishing residency (permanent or otherwise) in Singapore, and failing a client's ability to meet Singapore's requirements, there are alternatives available. Whilst one door is closed other doors remain open, the essential message from the Singapore government appears to be that you are most welcome to come but a more direct contribution to the economy is now expected. To this end there are a number of methods to reside in Singapore, and these might include:

For the ultra-high net worth families, consider establishing their family office in Singapore to manage their global family wealth, and be employed as directors - this being an area of development that the government is keen to promote.
If you are an entrepreneur with a sound business plan for the creation of a business in Singapore, the government will entertain such a plan through the Economic Development Board (EDB), and will provide an EntrePass to the successful applicant and immediate family for two years. If the business succeeds, extensions can be obtained and in due course application for permanent residence status made.
Business persons seeking to internationalise their existing businesses can consider taking advantage of the Global Investor Programme run by the EDB . Under this scheme, an investment of $2.5 million into a new or existing business is required in order to obtain permanent residence status (in addition to other criteria which have recently been enhanced).
Bring one's special skill set to Singapore and obtain employment with an established company, obtain employment with an Employment Pass, and then in due course apply for permanent residence status.
The common denominator of the methods now available to HNW foreigners to obtain residence in Singapore is the intention to show a clear and direct connection (physical presence) and contribution to the economy, ideally through the establishment and development of a Singapore-based business that leads to job creation and a fiscal contribution to the economy.

For those HNW families seeking permanent residence outside their main country of domicile, and who do not meet the requirements of Singapore, other alternatives exist, and Singapore can still play a role by providing a safe, secure and sophisticated platform for the custody and management of investors' assets as they implement and execute their plans. This can take the form of the booking, execution and advisory platforms provided by the private banking sector, in addition to which the fiduciary services sector represented by Singapore's licensed trustees and fiduciary services companies can provide and administer fiduciary structures which ensure that families' long-term asset holding and succession objectives are achieved.

In conclusion, in our view, the end of FIS illustrates both the success of Singapore and the intentions of the government to ensure that this success and the stability of the platform on which it is built is maintained in the long term. The message to HNW international families is twofold; whilst the qualifications to reside in Singapore have been increased, there are a number of doors which remain open, and in the meantime the prudent actions of the government are indicative of its intention to build a stable and sustainable long-term platform for the holding and management of their wealth, whether they reside here or not.

The writer is head of Wealth Management Solutions, Asia-Pacific, Deutsche Bank Private Wealth Management

  
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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