Singapore is stepping up efforts to protect its position as a leading Asian asset management centre, unveiling tax incentives, a new funding programme for hedge funds and more flexible visa rules as competition for investment talent with Hong Kong intensifies, according to a report by the Financial Times.
The Monetary Authority of Singapore plans to remove tax paid by investment professionals on profits generated from fund management services, a measure that could have broader reach than Hong Kong’s recently announced reforms targeting carried interest.
The regulator also plans to establish an investment programme providing capital to hedge fund managers based in Singapore, while easing visa requirements for senior employees in the fund management industry.
The measures come as asset management centres including Singapore, Hong Kong, London, New York and Dubai compete for increasingly mobile investment professionals.
Hong Kong has intensified the regional competition with proposed changes that could allow asset managers to receive carried interest without paying tax.
The reforms have raised concerns in Singapore that highly paid investment professionals could relocate to Hong Kong to take advantage of the new regime.
The Alternative Investment Management Association has warned the MAS that some hedge fund and private equity members in Singapore were considering moving senior staff to Hong Kong. The industry body had urged the regulator to signal that it would introduce incentives to encourage managers to remain in Singapore.
Singapore’s proposed tax changes could ultimately apply to a wider group of investment professionals than the measures being introduced in Hong Kong, according to people familiar with the plans.
The MAS has not yet disclosed the size of the proposed hedge fund investment programme or the cost and precise scope of the tax measures. Further details on the tax changes are expected to be included in next year’s budget.
Singapore is also seeking to differentiate itself through its access to artificial intelligence technology.
The city-state believes its ability to access AI models developed in both China and the US could provide an advantage over Hong Kong, where access to some US-developed models is restricted.
The push comes as Singapore’s fund management industry has continued to expand. Assets under management have risen to almost S$7tn ($5.5tn), with the industry growing at an average annual rate of 7.5% over the past five years.
Fund management now accounts for about 15% of Singapore’s financial services sector output and 13% of employment.
