With more than 20 years’ experience advising on the benefits of Singapore’s regional tax incentives and compliance, cross-border transactions, mergers and acquisitions and consulting and planning for local and multinational companies, there can be few better positioned to lead KPMG’s private enterprise team in the city-state than Chiu Wu Hong.
Having worked across a wide range of industries, including infrastructure, oil and gas, retail, real estate, hotels, construction, shipping, transportation and logistics, manufacturing and information technology, he is firmly focussed on expounding the virtues of the sovereign island country to ultra-high-net-worth investors looking to set up a South-East Asian family office hub.
Chiu Wu Hong talks to Campden FB about why Singapore’s status is on the rise, an increased focus on ESG and impact investment and some very attractive tax incentives…
As KPMG’s ASPAC private enterprise leader in Singapore, what can you tell us about your role?
I look after privately owned companies based in Singapore and help them to find holistic financial, strategy, tech or IT business solutions. Because we are a multi-disciplinary firm, we are able to help solve myriad problems for these companies. While I’m the private enterprise leader for KPMG in Singapore, we also have private enterprise leaders in other countries, so we work closely to support each other and to help clients in Singapore to connect and venture into other countries. With this ‘Network linkage’, we are able to provide consistent impactful and cost-saving solutions for individuals and family offices.
“Many factors render Singapore to be an ideal jurisdiction for a family office.”
Asia’s second wealthiest man, Mukesh Ambani, is among many others looking to further expand their reach by opening a new family office in Singapore. Why are so many family offices choosing to establish a presence there over other South-East Asian hubs?
Many factors render Singapore to be an ideal jurisdiction for a family office, but the most important is its stable political environment and resilient economy. Singapore is politically secure, financially solid and policies are introduced or changed after holistic consultations. Also, the tax regime is simple and robust. For business operations, rules and regulations are easy to understand and implement. For family offices, there is a very talented and capable workforce that is readily available. More importantly, Singapore is a recognised financial hub in the region with superb connectivity and infrastructure in place.
Singapore is a very easy country to live in. Any individual or nationality will be able to assimilate into the culture quite easily as Singapore started out as a cultural melting pot. Singapore is very open and a cosmopolitan society where people of different races live peacefully among themselves. Increasingly, foreign families also own Singapore properties and send their children to have a robust education system here. Also, Singaporeans know our neighbours in South-East Asian countries very well so, for foreign businesses and family offices that choose to base here, we are able to able to share, to connect and to support them in navigating and expanding into other parts of the region.
According to Campden Wealth’s 2021 Asia-Pacific Family Office report, 54% of family offices across the globe plan on increasing their investments in Asia-Pacific. Amongst ASPAC-based family offices, 77% plan on increasing their investments in the region. What do you think is the appeal of investing in Asia-Pacific interests?
With a population of about 680 million and its natural resources, the region has much to offer. There's a lot of confidence about the growth opportunities in Asia Pacific. I think in terms of the ASEAN (Association of Southeast Asian Nations) region, we're still seeing tremendous growth.And that increasing interest is focusing on sustainability and impact investing. There is an emerging trend of sustainability being accepted by the newer generation of family businesses and we are seeing the next gens taking a prime position to lead in this area. There's also a very optimistic view about the ASEAN region with populous countries like Indonesia, the Philippines and Vietnam, as these countries have a relatively young and technology savvy population. At the same time, there will be a large middle-class group coming from these populous countries, so the potential for growth in the ASEAN region is huge.
With a corporate tax rate of 17%, generally no capital gains tax, no dividends tax and comprehensive double tax agreements, there are clearly many financial benefits to establishing in Singapore…
Yes, the simple and transparent tax regime is a big draw. When you set up family offices, the fund exemption schemes applicable to family office structures provide the much desired certainty in tax treatment for these Singapore families when carrying on their investment activities. The currency itself is also relatively stable, so that attracts quite a fair bit of investment to Singapore. Also, the personal tax rate is relatively low and there is no estate duty tax, so a lot of family businesses and entrepreneurs would like to establish family offices here as part of their intergenerational wealth preservation strategy and legacy planning.
Part of Singapore’s appeal is that it is such a melting pot of cultures. Do you feel that, as more ultra-high-net-worth individuals and families come in, there’s a risk that it could become overly-exclusive?
Small is beautiful, right? It's amazing that we can have so many different races of people living and working harmoniously together on such a small island. It's a very fair and transparent way of living. Everywhere you go, you will encounter high efficiency and convenience coupled with amazing safety. With regard to the risk of Singapore being overly-exclusive, the government is always ahead of the game, monitoring the situation closely and introducing relevant policies where needed. There is always this emphasis on having an inclusive society in Singapore, yet always remaining open to attracting the best foreign talents to anchor themselves here.
“We are currently seeing a flush of interest in foreign family offices looking to establish a presence in Singapore.”
In March 2019, the Monetary Authority of Singapore (MAS) and the Singapore Economic Board (EDB) jointly established the Family Office Development Team (FODT). How have these authorities enhanced Singapore’s competitiveness as a global wealth management and family office hub?
Yes, the FODT was formed as a strategic partnership between EDB and MAS to lead and coordinate initiatives to enhance Singapore’s position as the Global Family office hub in Asia. The set-up has been relatively successful. By enhancing the ecosystem of service providers, attracting global FOs and building a connected family office community in Singapore, developing capabilities among our financial and professional services industry amid a trusted business location with high living standards, it has resulted in having 700 family offices established here as of 2021. For the past few years, many family offices have been set up here, so it's a very encouraging sign. We are currently seeing a flush of interest in foreign family offices looking to establish a presence in Singapore.
Campden Wealth’s 2021 report found that family offices in Asia-Pacific generated a solid 15% average return on investments despite the upheavals caused by the COVID-19 pandemic. How is the investment landscape looking post-pandemic and are there asset classes that are particular points of interest?
Sustainability and ESG investing is something that we've seen a fair bit of interest in. There’s a lot of emphasis in this area, not just from family offices. We also see FO increasing focus on investing in traditional industries like real estate and health care with proven business modes that generate positive cash flow.
For more information on KPMG’s private enterprise offering in Singapore, click here.