Wei Leng Tay | Bloomberg | Getty Images More and more wealthy Chinese are worried about keeping their money on the mainland, and some see Singapore as a safe haven. Ever since the protests disrupted the Hong Kong economy in 2019, wealthy Chinese have been looking for alternative places to store their wealth. Singapore has proved attractive due to the large Chinese-speaking Mandarin community and, unlike many countries, has no property tax. The trend seemed to be accelerating last year after Beijing’s sudden crackdown on the education sector and its emphasis on “common prosperity” – mediocre wealth for all, not just a few. This emerges from CNBC interviews with companies in Singapore that help wealthy Chinese transfer their assets to the city-state through the family office structure. The family office is a private company that manages investments and property management for a wealthy family. In Singapore, setting up a family office typically requires at least $ 5 million in assets. In the last 12 months, research into setting up a family office in Singapore has doubled to Jenga, a five-year-old accounting and corporate services company, according to founder Iris Xu. He said most of the questions came from people in China or immigrants from the country. [Wealthy Chinese] They believe that there are many opportunities to make a fortune in China, but they are not sure if it is safe for them to park money there. About 50 of her clients have opened family offices in Singapore – each with assets of at least $ 10 million, Xu said. China’s rapid economic growth has marked hundreds of billionaires in just a few decades. Many more have joined their ranks in the last year, according to Forbes. That brought the total number of billionaires in China to 626, second only to the 724 billionaires in the United States, the figures showed. But strict mainland China’s capital controls – an official limit of $ 50,000 a year in foreign exchange – limit these billionaires’ investment options and keeping their assets safe. Xu said its Chinese clients “believe there are many opportunities to make a fortune in China, but are not sure if it is safe for them to park money there,” according to a CNBC translation of the interview in Mandarin.
Concerns about “common well-being”.
New work related to the family office is disproportionately coming from Chinese clients, said Ryan Lin, director at Bayfront Law in Singapore. His company also has customers from India, Indonesia and parts of Europe. Although capital controls mean many Chinese customers are opening family offices with smaller amounts of capital, Lin said most businesses generate their own revenue outside the mainland.
Family office as a way of immigration
Covid-related restrictions on international travel have also spurred wealthy Chinese interest in setting up family offices in Singapore, Xu said. The country has a global investor program that allows adults who invest at least $ 2.5 million ($ 1.8 million) in Singapore to apply for permanent residency. Ever since the pandemic began, some Chinese citizens have noticed that the Chinese government could suspend the issuance of passports and renewal services for virus control purposes. Responding to an online question in August about the suspension of passports, China’s National Immigration Service said it would issue such documents only to those who have basic or extraordinary reasons for leaving the country.
The explosion of Singapore family offices
Many billionaires around the world have used family offices to manage their wealth. Another part of Singapore’s appeal is that its location gives investors proximity to other investment opportunities in Asia. As of late 2020, Bridgewater founder Ray Dalio and Google co-founder Sergey Brin have opened family offices in Singapore to take advantage of its friendly tax policy, according to Bloomberg reports.
How long can it last?
The ongoing war between Russia and Ukraine has brought uncertainty to Chinese citizens who want to open family offices in Singapore. China has said it opposes sanctions. Beijing has also refused to call Russia’s attack on Ukraine an invasion, and state media often blame the United States for the conflict. In contrast to China’s efforts to maintain a neutral stance on the war, Singapore joined the US and EU in imposing sanctions on Russia earlier this month, reportedly freezing local bank accounts held by Russian individuals and sanctioned entities. . Jenga Xu said the news of the asset freeze had prompted some potential Chinese customers to drop their plans to open a family office in Singapore.
