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Singapore targets more of world's billions in fund rule overhaul

Singapore's trade-reliant economy grew 0.8 percent in the fourth quarter to December, according to advance estimates by the trade ministry on January 2. (PHOTO: Roslan Rahman/AFP via Getty Images)

By Ishika Mookerjee and David Ramli

(Bloomberg) -- Singapore has made it easier for investment firms to register funds locally, as the city-state strives to increase its allure as a financial hub.

A new law, which came into effect Tuesday, encourages asset managers to domicile their funds in Singapore by allowing the creation of a single structure to hold a pool of assets and multiple sub-funds, and offering greater confidentiality.

While many asset managers have offices in Singapore, most of their funds are still registered in offshore jurisdictions. The new rules offer investors greater flexibility, and can be used for both traditional and alternative strategies.

The move is part of government efforts to build on Singapore’s traditional strength as a financial centre and reduce the economy’s reliance on more volatile sectors such as trade. The city’s asset-management industry grew more than 5% to S$3.4 trillion in 2018, according to the Monetary Authority of Singapore.

At the same time, the city-state is set to benefit from months of unrest in its long-time regional rival, with more Hong Kong-based asset managers inquiring about opening offices in Singapore.

The new law, known as the Variable Capital Companies Act, is “another salvo in the island republic’s efforts to further promote Singapore as both an asset-management and fund-domicile hub,” said Daniel Yong, a partner at law firm Withers KhattarWong LLP.

At the same time, the city-state is set to benefit from months of unrest in its long-time regional rival, with more Hong Kong-based asset managers inquiring about opening offices in Singapore.

There was about US$74 trillion of assets under management globally in 2018, according to Boston Consulting Group Inc.

The simplified fund structure has been launched alongside a pilot program involving 18 asset managers, who incorporated or re-domiciled 20 funds as variable capital companies on Wednesday.

Asset managers are allowed to hold multiple sub-funds under one company, a change from the current system where they typically need to incorporate special purpose vehicles for each fund.

That means just a single set of service providers, financial statements and board of directors are required for multiple sub-funds, substantially cutting costs. The company is treated as a single entity for tax purposes, and has access to Singapore’s network of 67 double-tax treaties.

The move may create more than 1,000 jobs for services such as legal and accounting firms and fund administrators over the next two years, according to Indranee Rajah, Singapore’s second minister for finance.

Gordian Capital Singapore Ltd., a fund platform that participated in the pilot program, has launched a sustainable investment fund in partnership with GoImpact Capital Partners this quarter, targeting $100 million in assets.

“Offshore jurisdictions in general are losing ground slowly by surely to onshore jurisdictions,” said Mark Voumard, Gordian’s chief executive officer.


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