As Beijing pushes “common prosperity” and threatens political unrest in Hong Kong, Singapore has become a haven for some of the region’s richest tycoons and their families.
Facebook Facebook logo Sign up for Facebook to connect with Wei Long Tay Bloomberg | Getty Images
More and more wealthy Chinese are afraid to keep their money on the mainland and some see Singapore as a safe haven.
Since the protests disrupted Hong Kong’s economy in 2019, wealthy Chinese have sought alternative places to store their wealth. Singapore has proven attractive because of the large Mandarin Chinese-speaking community and, unlike many countries, it has no wealth tax.
The trend seemed to accelerate last year after Beijing’s sudden crackdown on the education sector and emphasis on “common prosperity” – moderate wealth for all, rather than a few.
That’s according to 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 oversees the investments and wealth management of a wealthy family. In Singapore, setting up a family office typically requires at least $ 5 million in assets.
In the past 12 months, questions have doubled about setting up the family’s Singapore office at Jenga, a five-year-old accounting and business services firm, according to its founder Iris Xu. He said most of the questions came from people in China or emigrants from the country.
About 50 of his clients have opened family offices in Singapore-each with at least $ 10 million in assets, Xu said.
China’s rapid economic growth has created hundreds of billionaires in just a few decades. Hundreds more joined their ranks last year, according to Forbes.
This brought the total number of billionaires in China to 626, just behind 724 billionaires in the United States, according to the data.
But tight capital controls in mainland China – an official limit of $ 50,000 in foreign currency per year – limit the investment options of these billionaires and the security of their wealth.
Xu said his Chinese clients “believe there are many opportunities to earn wealth in China, but they don’t know if it’s safe for them to deposit money there,” according to CNBC’s translation of the article. interview in Mandarin.
Concerns about “common prosperity”
New family office -related jobs are coming from Chinese clients, said Ryan Lin, director of Bayfront Law in Singapore. His company also has clients in India, Indonesia and some parts of Europe.
Although capital controls mean many Chinese clients open family offices with less capital, Lin said most have their own profitable businesses outside the mainland.
The family office as a means of immigration
Restrictions associated with Covid on international travel have also accelerated the interest of wealthy Chinese in establishing family offices in Singapore, Xu said. The country has a Global Investor Program that allows adult investors of at least S $ 2.5 million ($ 1.8 million) to apply for permanent residence.
Since the pandemic began, some Chinese citizens have discovered that the Chinese government may suspend the issuance of passport and renewal services for virus control reasons.
In response to a question in an online appeal in August about the passport suspension, China’s National Immigration Administration said it would only issue such documents to people with important or immediate reasons to leave the country.
The boom of family offices in Singapore
Many billionaires around the world use family offices to manage their wealth. Another part of Singapore’s appeal is that its location offers investors close proximity to other investment opportunities in Asia.
Since late 2020, Bridgewater founder Ray Dalio and Google co-founder Sergey Brin have opened family offices in Singapore to take advantage of its favorable tax policy, according to Bloomberg reports .
How long is it?
The ongoing war between Russia and Ukraine has created uncertainty among Chinese citizens who want to open family offices in Singapore.
China has said it opposes sanctions. Beijing has also refused to label Russia’s attack on Ukraine as an aggression, and state media often blames the United States for the fighting.
Contrary to China’s attempt to have a neutral stance on the war, Singapore joined the United States and the EU in imposing sanctions on Russia earlier this month, freezing local bank accounts held by the sanctions. individuals and entities of Russia.
Xu ni Jenga said the news of the asset freeze has given some potential Chinese clients a halt in their plans to open a family office in Singapore.