Singapore looking for a new niche

Singapore looking for a new niche

Posted online: Saturday, April 28, 2007 at 0000 hours IST




This affluent city-state of 4.5 million people is aiming to be a sanctuary for the world’s wealthy and their money, Asia’s answer to Geneva and Zurich. Singapore, with its reputation for authoritarian order and safety, has long relied on luring multinational corporations for manufacturing jobs and economic growth. But with China’s rise as an industrial powerhouse, it started chasing a succession of economic fads—from technology to pharmaceuticals to stem-cell research—in search of a fresh elixir.
Now Singapore, a tiny enclave at the tip of the Malay peninsula, is trying to carve out a new niche for itself in the global economy by bolstering banking secrecy laws and offering generous tax incentives. “I can’t think of any other place where private banking is growing so much as in Singapore,” said Henrik T. Mikkelsen, a private banker at Commerzbank in Singapore. “We want to be the Switzerland of Asia.”


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It may lack the stunning Alpine scenery, but officials here hope that luring the wealthy and their bankers will not only diversify the economy but also help offset a declining birth rate and increase Singapore’s stagnant population with what is known here as “foreign talent.” “It creates jobs, it builds a service industry, it generates income and, on the immigration issue, it also supplements our shortfall in fertility,” said Vivian Balakrishnan, Singapore’s minister for community development, youth and sports.

Almost 40 private banks now have regional operations in Singapore, including Swiss stalwarts like Bank Julius Baer. Citigroup’s headquarters for all private banking outside the United States is now in Singapore, as is the global banking headquarters of Standard Chartered Bank of Britain. The estimated $150 billion in private wealth they manage here is still just a sliver of the $1.7 trillion managed by Swiss bankers. But by all accounts it is growing quickly, fed by new wealth pouring in from Asia’s fast-growing economies, Middle Eastern oil money, and Japanese and Europeans fleeing new efforts to tax their offshore earnings.

This port enclave has long served as a refuge for wealthy ethnic Chinese from Malaysia and Indonesia. While the latest influx of wealthy foreigners is pushing costs up, property prices are still low compared with London or New York. Tax rates are low as well.

Singapore does not tax capital gains or interest income. Its top income tax rate is 20 percent, and it does not tax income earned outside Singapore.

—NY Times / Wayne Arnold