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Global Investor Program (GIP) in Singapore: Increased applications and new rules

The recent tightening of rules for family offices in Singapore does not seem to have deterred wealthy investors, with more of them choosing this route to permanent residency after the Global Investor Program (GIP) scheme was expanded in 2020.

Ultra-high net worth families looking to move their assets here make up the largest category of investors under the expanded Global Investor Program.

The Economic Development Board, which administers the scheme, did not provide application data. But the Monetary Authority of Singapore said there were about 400 single family offices in Singapore at the end of 2020, double the number from a year earlier.

The Economic Development Board expanded the list of applicants for the Global Investor Program in March 2020 to include next-generation business owners, founders of high-growth companies and family office managers. Previously, investors had to invest at least S$2.5 million in a new or expanding business or fund invested in Singapore-based companies.

Lee Woon Shiu, group head of wealth planning, family offices and insurance solutions at DBS Private Bank, also said that since 2020, total applications "have shown strong double-digit growth."

Zach Lucas, an international private equity lawyer, said the main interest is in family offices as wealthy families seek to professionalize and restructure white family funds.

Lee Woon Shiu, DBS, commented, "The pandemic was a wake-up call for many ultra-income families, showing the need to have a Plan B to manage their most important asset."

Drew & Napier director of tax and private client services Ong Sim Ho said that in addition to being included in the Global Investor Program scheme, family offices are increasingly being used to boost applications for the program as a whole, with investors setting them up to demonstrate their long-term loyalty to Singapore.

Observers told BT that clients come from a variety of countries: mostly from North and South Asia, but also from Southeast Asia, such as Indonesia and Malaysia.

Recently, they have also seen an increase in the number of investors leaving Hong Kong and mainland China and preferring Singapore.

According to Batul Achur, global immigration manager at London-based immigration law firm Hudson McKenzie, interest in Singapore's PR status was even higher during the pandemic because of "global pressure in the respective countries of residence and mobility planning."

She cited the recent unrest in Hong Kong and the promotion of a "shared prosperity" program in mainland China as other factors spurring interest in moving to Singapore.

Another factor in Singapore's favor may be Europe's ongoing fight against so-called "golden visas" or "golden passports," Lucas said.

In the wake of recent sanctions against Russian oligarchs and their families, the European Commission has called on member states to tighten their offers of residence permits for investments.

Although the Monetary Authority of Singapore recently raised the threshold at which family offices can qualify for tax breaks, the bar for the Global Investor Program is still higher than under the latest changes to the current Income Tax Act.

Family office funds regulated under the law must now have a minimum fund size of S$10 million at the time of application and must increase the value of assets under management to S$20 million within 2 years.

Funds of S$100 million and above must also incur commercial expenses of at least S$1 million, among other changes effective April 18, 2022.

By comparison, family office managers under the Global Investor Program must have at least S$200 million in net investable assets, excluding real estate. Family offices must also employ 10 or more employees, including at least 5 Singaporeans, and incur annual business expenses of at least S$2 million.

Hudson McKenzie's Achur added that the success of the applications depends not so much on the dollar value of the investment, but "how much investors can contribute" over five to 10 years.

Singapore, which has been offering accommodation for investments since 1960, introduced the Global Investor Program in 2004.

The government previously reported that as of mid-2017, about 1,800 applicants had been granted PR status under the scheme, and business spending from 2011 to 2016 amounted to S$1.8 billion. When BT contacted the Economic Development Board in 2020 and 2022, updated data was not available.

Source: The Business Times