Singapore: Cash course
5 August 2013 | By Yun Kriegler
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The city-state is working hard to become a global wealth management hub, and law firms are gearing up for a prosperous new world
Singapore has just celebrated its 48th birthday as a republic. The young nation has a lot of achievements to be proud of, among them its growing reputation as Asia’s premier wealth management hub, offering investors a plethora of regional investment opportunities.
The latest set of statistics released by the Monetary Authority of Singapore (MAS) illustrates the strength of the city-state’s funds management industry. The central bank says funds managed during 2012 saw a 22 per cent jump, to S$1.63trn (£838.7bn) from S$1.24trn the previous year.
The fast-growing market has attracted a large number of global funds houses and managers, and international law firms are also tapping into the sector. In the past year firms such as Simmons & Simmons, Lawrence Graham, Withers and Stephenson Harwood have launched in Singapore with an eye on the asset management and investment funds sectors.
In October 2012 Taylor Wessing relocated London partner Ryan Myint to its Singapore arm, RHTLaw Taylor Wessing, to spearhead its international private client business in the South East Asian region. Myint now co-heads the Singapore office’s private wealth practice group with local partner Tan Choon Leng.
“Private wealth is a focus for us and an area that has seen strong growth,” confirms Tan Chong Huat, managing partner of RHTLaw Taylor Wessing. “Its importance is reflected in the number of funds we’ve helped set up and the complexity of the work we’ve handled. There’s a broad spectrum of practice areas and services that clients in this sector need.”
Tan says services demanded by fund managers, wealthy individuals and families can range from fund formation, tax and trust, and governance issues to business succession, investment strategies and disputes resolution.
“Also, the market is very international as the funds and capital parked here come from all over Asia and around the world,” Tan adds.
According to MAS, around 80 per cent of assets under management are sourced from outside Singapore, while more than 70 per cent of total assets are invested in the Asia Pacific region. The ability to service international clients from the fund formation stage in Singapore has become a sought-after commodity among international law firms.
Sidley Austin, one of only four foreign firms to win a Qualifying Foreign Law Practice (QFLP) licence in February, has decided to incorporate investment funds into its regional strategy. The first lateral hire the firm made after receiving its licence was Singapore-qualified international funds partner Han Ming Ho, who joined from Clifford Chance’s Singapore office.
“There’s a huge and growing demand for investment in the infrastructure and energy sector in the region,” says Matthew Sheridan, Sidley Austin’s co-head of international corporate finance in Asia. “Financing for these projects will increasingly be provided by investment funds and this coincides with Singapore’s effort to attract global investment funds.
“Some of the world’s largest funds are setting up here and this is where QFLP fits into our strategy. It allows us to advise our international investment funds clients to set up in Singapore, and continue to assist them when they invest in regional infrastructure and energy projects.”
The multiplying number of funds managers and investment products available encourages Asian wealth to be managed out of Singapore and an incentive for Western funds to transfer a proportion of their assets there.
“We’ve seen many serious Asian family trusts set up in Singapore to be close to professional managers,” says Lee Suet-Fern, senior partner and founder of Singapore firm Stamford Law. “Although these trusts don’t invest directly, their wealth is managed by fund managers who have exposure to the fast-growing sectors in the region.”
While Singapore enjoys a reputation for its stable legal environment and friendly tax and business policies, it has also joined the global crackdown on tax evasion and illicit funds. It recently rolled out measures aimed at curbing tax evasion, shedding its image as a tax haven. For example, in early July it tightened its laws to make tax evasion a money-laundering offence for banks that help tax evaders hide their funds.
Will these changes jeopardise Singapore’s thriving wealth management industry? Many observers think not.
“Many funds and private wealth players are in Singapore to participate in the growth Asia offers, and are also attracted by its sound legal environment and stable currency,” says Lee. “The wealth management sector and its role as a reputable financial centre will continue to rise. Also, more regulation is no bad thing for lawyers.”
This confidence seems justified. Singapore’s government tends to take an innovative approach to achieve its objectives, including implementing high standards of financial integrity while staying strong as a centre for managing wealth.