| Since the mid-nineties, the
Singapore Government has identified the investment
management industry as one of the key financial
sectors to develop. To this end, the Singapore
Government, through the Monetary Authority of
Singapore ("MAS"), has introduced various
incentives and reforms to encourage the growth
of the investment management industry.
Some of the key measures taken by the Singapore
Government include:
-
introduction of tax incentives which allow
qualifying fund management
companies to enjoy tax exemption or concessionary
tax rates for the fee income earned from providing
investment management or advisory services.
In addition, unit trusts and approved trustee
companies are also offered concessionary tax
rates;
-
relaxation of the minimum shareholders' fund
requirement for an Investment Adviser's licence
from S$500 million to S$100 million. The minimum
amount of global funds that the company must
manage was also lowered from S$5 billion to
S$1 billion. In addition, the MAS introduced
a streamlined licensing scheme aimed at admitting
more boutique fund management firms to add
greater depth to the fund management industry;
-
introduction of a new regulatory framework
to streamline and enhance the supervision
of the capital markets and financial advisory
industries;
-
allowing external fund managers to manage
a portion of the government funds and encouraging
statutory boards and government-linked companies
to place out their excess funds to external
fund managers;
- revamping of the Central Provident Fund ("CPF")
Investment Scheme to increase the number of
quality asset managers and products available
to CPF members.
The measures taken by the Government of Singapore
have been successful. As at 31 December 2002,
total reported assets managed by Singapore-based
financial institutions in Singapore amounted to
S$343.8 billion, as compared to only S$65.9 billion
in 1994.
The graph below illustrates the growth of the
asset management industry in Singapore over the
years.
In addition, in comparison to Hong Kong - Singapore's
close rival within the Asia-Pacific region as
fund management centres - the Singapore Government
incentives schemes seems to have encouraged more
financial institutions to set up their operations
in Singapore as compared to Hong Kong. This can
be illustrated by the rate of growth in asset
under management as shown in the table below.
Although, Hong Kong is a larger fund management
centre based on the numbers, Singapore has been
growing steadily over the years. This can be attributed
to the Singapore Government strategy to stimulate
the growth of the industry through a range of
incentives as opposed to Hong Kong which appears
to be largely market driven. In both countries,
however, the regulators have been active to provide
a regulatory framework for the industry to expand
further. With the relaxation and streamlining
of the licensing requirement, there are at present
92 licensed fund management
companies in Singapore. In addition to this, there
are also a large number of exempt fund managers
who provide services to only high-net worth individuals
and institutions.
Unit trusts have shown an even greater rate of growth,
from S$1.2 billion at the end of 1994 to S$14.1
billion at the end of December 2002. There are now
more than 380 locally domiciled unit trusts (including
sub-funds within each umbrella fund) being offered
for sale to the general public in Singapore. Since
the announcement of further liberalisation in unit
trusts sales in 2002 (i.e. allowing the offer of
fund domiciled in an offshore jurisdiction to the
general public in Singapore), more than 50 foreign-domiciled
collective investment schemes have been registered
for sale to the Singapore retail market in 2003.
Currently, the Government of Singapore and the
MAS are stepping up their efforts in attracting
hedge fund managers to set up operations in Singapore
through further liberalisation and incentives
as well as providing a conducive business environment
for fund managers.
The Government of Singapore is committed to positioning
Singapore as a major investment management centre
in Asia for Asian (ex-Japan) mandates of global
funds and the global mandates of Asian clients.
Quek Bin Hwee: Singapore
Tel : (65) 6236 3028
Email:
John Kwai: Singapore
Tel : (65) 6236 3022
Email:
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