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Business trends

Crazy rich Asians look to Singapore to manage wealth

City state readies tax incentives to lure family offices away from Hong Kong

Singapore began attracting more wealth as a safe haven even before the Hong Kong protests started in June. (Photo by Mayuko Tani)

SINGAPORE -- Wealthy individuals in Asia are increasingly choosing Singapore as a place to set up companies dedicated to managing their family assets as the prospects for protest-rocked Hong Kong look less certain.

Most family wealth management companies in Asia, called family offices, are located in major financial hubs like Hong Kong and Singapore, with the former leading the latter at a ratio of 6 to 4, according to Swiss financial giant UBS.

But the drawn-out protests in the city are taking a toll on investor sentiment in the Special Administrative Region. Up to $4 billion in deposits flowed out of Hong Kong between June and August, Goldman Sachs estimates. A senior official in one of Singapore's top-tier family offices said that "more than ever," Chinese money is flowing into the asset-safe haven of the nation-state.

Even before the protests started in June, Singapore began to lure more wealth to its shores. Family offices quadrupled in the Lion City between 2016 to 2018 as business owners who amassed wealth on Asia's rapid economic growth opted to set up such operations. In a bid to attract more money into Singapore's asset management sector, the government increased tax incentives in the 2019 budget.

Singapore's financial institutions are eager to cash in on growing demand. In August, DBS Bank invited about 100 high-net-worth individuals from Southeast Asia to attend its first family offices forum, during which there were detailed discussions about financial products, regulations and tax incentives. DBS Bank launched a section specializing in family office operations by March 2019.

According to the U.K.'s Campden Research, family offices in Asia-Pacific accounted for 1,300 in the world's 7,300 total, with their growth since 2017 reaching 44%.

More affluent individuals from western nations are building family offices in Asia as well. James Dyson, the chairman and founder of British consumer appliance company bearing the family name, has also set up a family office in Singapore.

The Rockefellers were the first to create a family office designed to ensure the continuity of its wealth for generations. Such offices hire external specialists responsible for managing family assets, tax payments and inheritance. They carry out investments and philanthropic activities tailored to individual family values and manage children's overseas educational expenses. In other words, family offices operate as an advanced version of private banking.

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