Why the world's ultra rich are flocking into Singapore right now

•         Singapore’s average wealth per adult is currently US$282,000 (5^th in the world)
•         The number of High-Net-Worth (HNW) individuals rose 21.5% in 2012
•         HNW Individuals hold USD 857 billion in wealth
•         The number of HNW individuals in Singapore expected to rise 58% by 2017
•         HNW Individual wealth expected to surpass USD 1.38 trillion by 2017
•         Assets under management across Singapore hit a record high of USD 1.29 trillion

The degree of wealth shifting to Singapore is truly staggering so it is important to look at why wealthy individuals from across the globe are seeking to make Singapore their new home. Highlighted below are some of the key reasons we are seeking such rapid growth in the number of HNW individuals shifting to Singapore.

A shift from Switzerland to Singapore

There is great talk about Singapore becoming the new Switzerland and taking the title of being the global financial hub for the world’s wealthy. Switzerland’s main attraction has always been the secrecy offering by the banking sector which has become much less applicable over recent years and without this benefit, there is little keeping the funds in Switzerland.

The Singaporean Dollar

Monetary Policy in Singapore is expected to remain on track and the Singaporean Dollar is expected to continue to gradually appreciate against other major currencies. This provides a degree of currency stability for global investors looking for a ‘safe haven’ for their investments, particularly during these times of economic volatility.

Economic Growth

Merrill Lynch is forecasting economic growth for 2013 of 3.5% and 2.8% for 2014. The Central Bank here in Singapore has also highlighted that they do not expect any material difference in the economic growth rates between this year and next. This positive growth outlook also provides for a compelling investment case for global investors.

Tax Rates

The maximum personal income tax rate in Singapore is 20% which applies to income over S$320,000. To give you some reference, here are the top income tax rates in the home countries of many expats here:

•         Australia – 45%
•         UK – 50%
•         France – 45%
•         New Zealand – 45%

There is also no tax payable on capital gains made from buying and selling financial instruments such as shares.

Where else?

China: Chinese economic data continues to show a slow-down in the economy, despite growth rates still remaining high relative to other countries.

UK: The latest IMF report, whilst reporting an upgrade in their economic outlook expects output to remain well below potential output for “many years”.

Europe: European economic concerns continue globally. BNY Mellon chief economic is quite pessimistic about whether the recent economic growth that brought them out of recession is sustainable in future years. Debt levels remain a concern and we are yet to see a great deal of structural reform.

US: The US economy has performed relatively well and is showing signs of early economic growth, however the recent debacle regarding raising the US debt ceiling and resulting government shut-down highlights an instability HNW individuals do not want to be exposed to.

There is little doubt that the wealth will continue to pour into Singapore as the benefits of being based here continue to provide for a compelling case. As a result, the Singaporean economy will continue to prosper with new jobs being created, further infrastructure developments and a strengthening financial sector.

PLEASE NOTE: IPP Financial Advisers Pte Ltd is a licensed Financial Adviser and neither the company, nor its representatives are tax advisers. Any reference to tax, in any jurisdiction, is sourced from third party sources, which are deemed to be reliable and accurate at time of print, and professional tax advice should always be sought independently.

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