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Singapore has established itself as a thriving hub for innovation, attracting foreign investment from around the world. With its strategic location, strong infrastructure, and supportive business ecosystem, the city-state has been successful in fostering groundbreaking innovations across various sectors. In this article, we will explore some of the leading innovations in Singapore that have been instrumental in attracting foreign investment.
1. Smart Nation Initiative
At the forefront of Singapore’s innovation drive is the Smart Nation Initiative. This government-led initiative aims to harness technology and data to improve the quality of life for citizens and enhance the efficiency of various sectors. The development of smart infrastructure, digital services, and initiatives like the National Digital Identity and Smart Mobility have positioned Singapore as a global leader in smart city solutions. Foreign investors are drawn to the opportunities presented by Singapore’s advanced digital infrastructure and its potential for creating innovative solutions.
2. Biomedical Sciences and Healthcare
Singapore has made significant strides in the biomedical sciences and healthcare sector. The establishment of research institutes, biomedical parks, and partnerships with leading global pharmaceutical companies have created a conducive environment for innovation. The Biopolis and the upcoming Health City Novena serve as hubs for research, development, and commercialization of biomedical technologies. The availability of world-class research facilities, a strong talent pool, and supportive government policies have attracted foreign investors seeking to capitalize on Singapore’s expertise in precision medicine, medical technology, and digital health.
3. FinTech and Financial Services
Singapore has emerged as a prominent FinTech hub in Asia, attracting foreign investment in the financial services sector. The Monetary Authority of Singapore (MAS) has implemented progressive regulatory frameworks, including the FinTech Regulatory Sandbox, to facilitate experimentation and innovation in the financial industry. The establishment of innovation labs, accelerators, and FinTech-focused initiatives like the Singapore FinTech Festival have further bolstered the ecosystem. Foreign investors are enticed by the opportunity to tap into Singapore’s robust financial infrastructure, strong regulatory environment, and access to a diverse and tech-savvy consumer base.
4. Advanced Manufacturing and Robotics
Singapore has embraced advanced manufacturing and robotics as key drivers of economic growth. The development of initiatives like the Advanced Remanufacturing and Technology Centre (ARTC) and the Advanced Manufacturing Training Academy (AMTA) has fostered innovation in areas such as additive manufacturing, robotics, and automation. Singapore’s focus on research and development, coupled with its strong intellectual property protection, has attracted foreign investors looking to leverage the city-state’s expertise in manufacturing excellence and automation technologies.
5. Sustainable Solutions and Clean Energy
As sustainability becomes a global priority, Singapore has positioned itself as a hub for sustainable solutions and clean energy innovations. The Sustainable Singapore Blueprint and initiatives like the Singapore Green Plan 2030 demonstrate the city-state’s commitment to environmental sustainability. Singapore is investing in research and development of renewable energy technologies, waste management solutions, and sustainable urban planning. Foreign investors are drawn to Singapore’s commitment to sustainability, favorable regulatory environment, and opportunities for collaboration in developing innovative clean energy solutions.
Singapore’s leading innovations across various sectors have played a significant role in attracting foreign investment. The city-state’s commitment to creating a conducive environment for research and development, strong government support, and advanced infrastructure have positioned it as an attractive destination for innovation-driven enterprises. As Singapore continues to foster groundbreaking advancements in areas such as smart cities, healthcare, FinTech, advanced manufacturing, and sustainability, foreign investors can look forward to a wealth of opportunities to collaborate and grow their businesses in this innovation hub of Asia.
Singapore Tax Incentive Schemes for Fund and Fund Managers
Singapore’s status as a prominent Asian hub for fund management can be attributed, in part, to its comprehensive tax incentive schemes. Many global fund houses have recognized Singapore as an ideal regional hub, choosing to establish their portfolio management, trading, and research operations within the country.
To solidify its position as a leading Asian fund management and domiciliation hub, the Monetary Authority of Singapore (MAS) is strategically leveraging its external fund management program to enhance asset management capabilities within Singapore. Concurrently, MAS collaborates closely with industry stakeholders to position Singapore as a prominent regional hub for fund domiciliation, an objective facilitated by the implementation of the Singapore Variable Capital Company (VCC) framework. Moreover, Singapore’s attractive tax framework and incentives for funds and fund managers serve as key catalysts in these endeavors.
It is important to note that funds managed by Singapore-based fund managers may be subject to tax in Singapore due to the investment management activities performed within the country. The income and gains derived by these funds could be deemed Singapore-sourced and thus subject to taxation, contingent upon the onshore or offshore classification of the fund and its taxable presence in Singapore. However, Singapore’s tax incentives aim to alleviate such tax obligations, provided that specific conditions are met.
Singapore’s conducive regulatory environment, extensive array of service providers, and favorable tax incentives have collectively contributed to the sustained growth and attractiveness of its fund management industry. By offering these enticing features, Singapore continues to establish itself as a premier destination for fund management within the Asian region.
Singapore Tax Exposures for Funds:
Funds managed by a fund manager in Singapore may be subject to tax in the country due to their investment activities. The income and gains generated by these funds may be considered Singapore-sourced and taxable, depending on whether the fund is based onshore or offshore. However, Singapore offers tax incentives that can eliminate these tax liabilities if certain conditions are met.
Tax Incentive Schemes in Singapore for Funds:
All fund management companies in Singapore must be licensed and registered with the Monetary Authority of Singapore (MAS). This requirement is necessary to qualify for the tax incentive schemes.
Under these schemes, certain income derived from funds managed in Singapore by a fund manager is exempt from taxation. The investments covered under these schemes include stocks, company shares, bonds, notes, commercial papers, treasury bills, certificates of deposit, derivatives, and more. However, immovable property in Singapore is not eligible for these incentives.
MAS Announces Stricter Criteria for Singapore’s 13O and 13U Fund Management Tax Incentive Schemes
Singapore’s Monetary Authority of Singapore (MAS) recently announced significant changes to the criteria for the Section 13O and 13U fund management tax incentive schemes. These changes are targeted at fund vehicles managed by family offices. The new criteria will take effect from 18th April 2022, and it is important for potential applicants to be aware of these changes and consider their options promptly.
Cases Covered by the New Criteria
The new stricter criteria will apply to cases where the first “preliminary submission” is made from 18th April 2022. However, cases that have already been granted the Section 13O or 13U awards by MAS or are in the process of application will generally not be affected. It’s worth noting that if a pending application has been stagnant with no communication with MAS for six months or more, MAS may require the application to be restarted under the new criteria.
Enhancements to the Award Criteria
For Section 13O Cases
- The fund must now have a minimum fund size of S$10 million at the point of application and must commit to increasing its assets under management (AUM) to S$20 million within two years.
- The family office must have a minimum of two investment professionals (IPs), with a grace period of one year to employ the second IP.
- The absolute minimum total business spending annually remains at S$200,000, but this is subject to a new ‘tiered business spending framework’ pegged to AUM size.
For Section 13U Cases
- The existing minimum fund size of S$50 million at the point of application remains unchanged.
- The family office must have at least three IPs, with at least one IP being a non-family member. A grace period of one year may be given for the non-family member IP.
- The absolute minimum local business spending annually is raised to S$500,000 (from S$200,000) in any basis period, and is also subject to a new ‘tiered business spending framework’ pegged to AUM size.
Common Requirements for both Sections 13O and 13U
Both Section 13O and 13U cases now have a new requirement for the fund to make local investments. This must constitute at least 10% of the fund’s AUM or S$10 million, whichever is lower, at any given time. Local investments include equities listed on Singapore-licensed exchanges, qualifying debt securities, funds distributed by Singapore-licensed/registered fund managers, and private equity investments into non-listed Singapore-incorporated companies with operations in Singapore.
If you’d like to read the full article and get more insights into the changes announced by MAS, you can find it here.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Professional legal advice should be sought before making any decisions or taking any actions based on the contents of this article.
What requirements do i need to incorporate my company in Singapore?
Your company name needs to be approved before registration.
You need to appoint a minimum of one resident* director. An unlimited number of additional resident or non-resident directors can be appointed as well. Both resident and non-resident directors need to be at least 18 years old, not bankrupt, and free of any malpractice charges in the past.
You can have anywhere between 1-50 shareholders, which may or may not be directors. Shareholders can consist of both local and non-local individuals or companies, and 100% non-local shareholding is allowed. After a Singapore company is incorporated, shares can be freely issued or transferred at any time.
You need to appoint a qualified resident* company secretary within 6 months of your Singapore company’s registration. Sole directors and/or shareholders cannot act as the company secretary.
You need to possess a minimum of S$1 worth of paid-up capital (also known as share capital) to register your Singapore company. This amount can be increased any time after your company is incorporated.
You need to provide a local, physical Singapore address as the registered address of the company. The registered address can be either a residential or commercial address, but not a P.O. Box.
Singapore-registered companies enjoy attractive tax exemptions and incentives. Your company pays less than 9% for the first S$300,000 you make in annual profits, followed by a flat rate of 17% flat thereafter. Singapore companies do not have to pay capital gains or dividend taxes. For further information on taxes, refer to our Singapore corporate tax guide.
*Refers to a Singapore Citizen, Permanent Resident, or holders of Singapore work visas (EntrePass or Employment Pass)
If you are not a Singapore resident and would like to incorporate a Singapore company, what requirements do you need?
You must engage a professional firm to register your Singapore company – under Singaporean law, non-resident individuals or entities cannot self-register a company.
You are not required to obtain a Singapore work visa to incorporate a private limited company if you are operating your company from overseas. You can visit Singapore on a visitor visa when you need to attend to company matters on a short-term basis. However, in such cases, you will need to find a local director to fulfil the minimum one resident director requirement. We can elect a nominee local resident director on your behalf – visit our services page to find out more.
All Singapore company registration and work permit formalities can be handled without you having to physically visit Singapore – unless you intend to open a bank account at a Singapore-based bank.
What documents are required to register my Singapore company?
To register your company in Singapore, you’ll need to provide the following documents:
Brief description of business activities
Company secretary particulars
If you are engaging the services of a professional service firm, they will typically require these documents from you in order to prepare the necessary paperwork:
For non-residents: Copy of passport, proof of overseas residential address, as well as other Know-Your-Client (KYC) information such as bank reference letters, personal and business profiles, etc.
For Singapore residents: Copy of Singapore identity card For corporate entity shareholder(s): Copy of registration documents, such as a Certificate of Incorporation and Constitution
Do note that officially-endorsed translated versions must be provided for any non-English documents.
The Singapore’s (VCC)
Variable Capital Company
The VCC is a new corporate structure that can be used for a wide range of investment funds and provides fund managers greater operational flexibility and cost savings. Fund managers will have greater flexibility in share issuance/redemption and the payment of dividends. Managers will also be able to incorporate multiple funds in a single VCC and achieve cost efficiencies. It will encourage more funds to be domiciled in Singapore and enhance value as an international fund management centre.
Fund managers will be able to constitute investment funds as VCCs across both traditional and alternative strategies, and as open-ended or closed-end funds. Fund managers may also incorporate new VCCs or re-domicile their existing investment funds with comparable structures by transferring their registration to Singapore as VCCs. This can be done via ACRA’s online application form at www.vcc.bizfile.gov.sg .
A VCC must appoint a fund manager that is regulated by MAS to manage its investments. For further details on the eligibility of fund managers to manage a VCC, please refer to the Explanatory Brief on the Variable Capital Companies Bill on 10 September 2018, available on the MAS website.
A group of 18 fund managers participated in a VCC Pilot Programme that was initiated by MAS and ACRA in September last year. All of these fund managers have today incorporated or re-domiciled a total of 20 investment funds as VCCs. These investment funds comprise venture capital, private equity, hedge fund and Environmental, Social, and Governance (ESG) strategies, demonstrating the viability of the VCC framework across diverse use cases.
WHAT IS VCC?
It is a new legal entity form/structure for investment funds administered by ACRA with AML obligations of VCC under MAS guidelines
WHAT CAN IT BE USED FOR ?
Traditional and alternative fund strategies (both open-ended and close-ended)
HOW CAN IT BE SET UP ?
As a stand-alone or as an umbrella entity with multiple sub-funds
CAN A FOREIGN FUND
BE RE-DOMICILED ?
Foreign corporate entities can re-domiciled to Singapore as VCCs
WHAT DO YOU NEED ?
• Local registered filing agent Corporate secretary
• Singapore based fund administrator ( If 13R or 13X application is considered )
• VCC must be managed by Fund Manager regulated by MAS
WHAT ARE THE BENEFITS?
• Enhanced safeguard by segregation of assets and liabilities in each sub-fund
• Financial statements are not required to be made public
• VCC registar members private but need to be provided upon request to certain persons such as public authorities, VCC manager and custodian
• Improved operational and tax efficiency
• Greater flexibility in issuance and redeeming shares, payment of dividends out of capital
REQUIREMENTS OF A VCC?
• The capital of a VCC will always be equal to its net assets, thereby providing flexibility in the distribution and reduction of capital
• All VCC must be managed by a Permissable Fund Manager. It will require a Singapore-based licensed or regulated fund manager (unless exempted under the regulation*)
• Existing Securities and Futures Act (SFA) requirements for investment funds will apply to VCCs
• It must have at least one Singapore resident director and at least one director (may be the same as resident director) who is either a director or qualified rep of the VCC fund manager. For non-autorised scheme and at least 3 directors for authorised scheme
• A VCC must have its registered office in Singapore and must appoint a Singapore-based company secretary. A VCC must have at least one shareholder
• It must be subject to audit by a Singapore-based auditor and must present its financial statements as per IFRS, Singapore FRS, US GAAP, or RAP 7
* Currently, fund managers exempt from regulations – real estate, single family offices, and related party exemption – cannot use VCC. This list may be intended to expand in future.
VCC – FUND STRUCTURE AND TAX TREATMENT
Stand-Alone (Single Fund) VCC
VCCs may be set up as a single fund VCC (commonly referred to a Standalone VCC).
The tax treatment of a stand-alone VCC will remain the same as that of a Singapore company
The Enhanced Tier Fund (”ETF”) Scheme(13X) and Singapore Resident Fund (”SRF’)(13R) Scheme under the Income Tax Act will apply to a stand-alone VCC similar to a Singapore company as accordingly
Umbrella (Multiple Sub Fund) VCC
The VCC can also be set up with multiple Sub Funds ( Commonly referred to as an Umbrella VCC )
Summary of key features and conditions of tax incentives schemes in Singapore for funds
OTHER TAX RELATED KEY ELEMENTS
The current GST remission will be made available to VCCs approved under the ETF and SRF schemes.
Certificate Of Residence (“COR”)
A Singapore COR is available for the VCC subject to the VCC establishing that it is controlled and managed from Singapore.
In the case of an umbrella VCC, the COR will be issued on the VCC master umbrella level, with the names of the sub-funds receiving the same nature of income from the same treaty country included in the COR
Withholding Tax Exemption
The current withholding tax exemption available to funds approved under the ETF and SRF schemes will be available to VCCs approved under the ETF and SRF schemes.
Incentive Scheme For Fund Managers
The 10% concessionary tax rate under the Financial Sector Incentive – Fund Management Scheme will be extended to approved fund managers managing incentivised VCCs.
Investment Objective Condition
One of the current conditions of the ETF and SRF scheme is that once the funds has been approved under either schemes, the funds will not be permitted to change unless permitted or approved by authorities. This is applicable to all sub funds.
Addition Of New Sub Funds
There is no need to seek approval from or inform the authorities if there are new sub-funds added to a VCC. However, where the investment scope has changed with the addition of a new sub-fund, an approval will be needed from the authorities to expand the investment scope. Further, if there is an announcement of termination of the ETF and SRF schemes, then additions of sub-funds will not be allowed.
VCC Grant Scheme to Accelerate Industry Adoption
To further encourage industry adoption of the VCC framework in Singapore, MAS has also launched a Variable Capital Companies Grant Scheme. The grant scheme will help defray costs involved in incorporating or registering a VCC by co-funding up to 70% of eligible expenses paid to Singapore-based service providers. The grant is capped at S$150,000 for each application, with a maximum of three VCCs per fund manager.
The grant scheme will be funded by the Financial Sector Development Fund (FSDF) and take effect today for a period of up to three years. Interested applicants can write to email@example.com for more information.
Qualifying Fund Managers  that have incorporated a VCC or have successfully re-domiciled a foreign corporate entity to Singapore as a VCC, and have obtained a notice of incorporation or transfer of registration from ACRA.
This grant is open to Qualifying Fund Managers that have incorporated VCCs or re-domiciled a foreign corporate entity to Singapore as a VCC. The following conditions apply:
• The set up of the VCC cannot be simultaneously funded by other government grants/incentives with respect to the same set of qualifying costs and commitments
• Each applicant may only apply for the VCCGS for work done in relation to a maximum of three (3) VCCs that have been successfully incorporated or re-domiciled
• Qualifying expenses must be paid to Singapore-based service providers for work done in Singapore in relation to the incorporation and registration of VCCs and their sub funds
• A Qualifying Fund Manager may not claim co-funding under the grant scheme solely for registration of sub-funds (without the accompanying incorporation or transfer of registration of a VCC). However, a Qualifying Fund Manager may claim qualifying set up costs incurred for the registration of sub-funds as part of the set up of an umbrella VCC and
• Applicants should formally submit their applications within three (3) months from the date on the notice of incorporation or notice of transfer of registration issued by ACRA (for a newly incorporated VCC) or within three (3) months from the date of ACRA’s approval of the VCC’s evidence of de-registration (for a foreign corporate entity re-domiciled to Singapore as a VCC).
70% co-funding of qualifying expenses listed below, capped at $150,000 per VCC.
• Legal services
• Tax services
• Administration or regulatory compliance services
Please refer to the downloadable VCCGS factsheet for full details on qualifying expenses:
VCC Grant Scheme Factsheet (139.8 KB)
Minimum Operational Period
A VCC which has been awarded a grant under the VCCGS is required to remain operational for at least one year from the Registration Date. This means that the VCC cannot be wound up within the first year from the Registration Date. In the event that the VCC is wound up within the first year from the Registration Date, the Qualifying Fund Manager is to inform MAS promptly and no later by the end of one week from the date of the application for the winding up or passing of resolution for a voluntary winding up. MAS reserves the right to claw back the grant awarded if the VCC is wound up within the first year from the Registration Date and/or if the recipient fails to inform MAS of the winding up of the VCC within one week from the date of the winding up.
 Refers to: (i) a licensed fund management company, i.e., a holder of a capital markets services license for fund management under section 86 of the Securities and Futures Act (Cap. 289) (“SFA”); (ii) a registered fund management company, i.e. a corporation which is exempted from holding a capital markets services licence under paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations; or (iii) a financial institution exempted under sections 99(1)(a), (b), (c) or (d) of the SFA from the requirement to hold a capital markets services licence to carry on business in fund management, i.e., a bank licensed under the Banking Act (Cap. 19), a merchant bank approved under the MAS Act (Cap. 186), a finance company licensed under the Finance Companies Act (Cap. 108) or a company or co-operative society licensed under the Insurance Act (Cap. 142).
“The VCC marks a significant chapter in the development of Singapore as a full-service international fund management and domiciliation hub. The VCC framework provides fund managers with a greater choice of investment fund vehicles in Singapore that caters to the needs of global investment funds and investors. Fund managers will also be able to extract cost savings from centralising their fund management and domiciliation activities in Singapore and structuring their funds more efficiently. The VCC framework also creates new opportunities for Singapore-based fund service providers such as legal and tax advisors, accountants, fund administrators and fund custodians, as we expect more fund managers to use the VCC to structure their investment funds.”
Mr Benny Chey,
Assistant Managing Director
(Development and International),
“The fund managers’ response for VCC applications in the VCC Pilot Programme is heartening. The diverse spread of fund managers and the use of VCC across different fund strategies demonstrate the use of VCC as a viable investment fund structure.”
Mr Andy Sim,
Assistant Chief Executive
(Legal Services & Compliance),
A family office is an organization created to manage the wealth and investments of a high net worth family or individual. It provides a range of services such as investment management, tax planning, philanthropy, and estate planning. Singapore is an attractive location to set up a family office due to its stable economy, favorable tax policies, and business-friendly environment.
The following is a step-by-step guide to setting up a family office in Singapore:
Step 1 : Define your objectives
Before setting up a family office, it is important to determine the objectives of the office. This includes identifying the family’s current and future financial needs, goals, and priorities. This will help in determining the type of services required from the family office.
Step 2: Choose the right structure
The next step is to choose the right structure for the family office. The most common structures are a single-family office, which is created for a single family, or a multi-family office, which serves multiple families. Other options include a private trust company or a corporate entity. Each structure has its own advantages and disadvantages, so it is important to choose the one that best fits the family’s objectives.
Step 3: Determine the regulatory requirements
Family offices in Singapore are regulated by the Monetary Authority of Singapore (MAS). The regulatory requirements will vary depending on the structure of the family office. For example, a single-family office may not be required to be licensed by the MAS, while a multi-family office will require a capital market services license. It is important to seek professional advice to ensure compliance with the regulatory requirements.
Step 4: Choose the right service providers
Once the structure has been determined and regulatory requirements have been met, the family office will require the services of various professionals such as lawyers, administrators, accountants, and investment managers. It is important to choose service providers who are experienced in working with family offices and have a good understanding of the family’s objectives.
Step 5: Implement the family office
Once all the steps above have been completed, the family office can be implemented. This include establishing policies and procedures, hiring staff, and setting up systems for investment management, accounting, and reporting. It is important to ensure that the family office is structured in a way that is flexible and can adapt to changing circumstances.
In conclusion, setting up a family office in Singapore can be a complex process, but with proper planning and guidance, it can be accomplished efficiently. It is important to define the family’s objectives, choose the right structure, determine the regulatory requirements, choose the right service providers, and implement the family office. Seeking professional advice is essential to ensure compliance with regulatory requirements and the successful implementation of the family office.
Artificial Intelligence (AI) is rapidly changing the way people invest. AI technologies are now capable of analyzing vast amounts of financial data, spotting patterns, and predicting market trends with a high degree of accuracy. This technology is transforming the investment industry, making it more efficient, and providing investors with new opportunities. However, like any new technology, AI also comes with potential drawbacks that need to be addressed.
Pros of AI in Investing
- Improved Decision Making: AI can analyze large amounts of data much faster than humans, which can lead to better decision-making. With AI, investors can process a vast amount of data and make more informed investment decisions.
- Cost Savings: AI technology can save money for investors by automating many of the tasks that were previously done by humans. This can lead to lower fees and increased efficiency.
- Increased Accuracy: AI can help investors identify patterns and trends that may not be apparent to humans. By analyzing vast amounts of data, AI can detect anomalies and provide insights that can help investors make better investment decisions.
- Personalization: AI can be used to create personalized investment strategies for individuals. By analyzing an individual’s financial data and investment preferences, AI can provide recommendations that are tailored to their specific needs.
Cons of AI in Investing
- Bias: AI algorithms can be biased, and the data used to train these algorithms can reflect historical biases. This can lead to biased investment decisions, which can negatively impact investment outcomes.
- Lack of Human Oversight: AI can be programmed to make decisions based on specific rules and parameters. However, it may lack the ability to adapt to unexpected market events or changes in investment strategies.
- Over-Reliance: Investors may become over-reliant on AI technology and fail to consider other factors that may impact investment decisions.
- Complexity: AI technology can be complex, and not all investors may understand how it works. This can lead to a lack of trust in the technology and reluctance to use it.
Impact of AI on Investing in the Future
The impact of AI on investing in the future is likely to be significant. AI will continue to transform the investment industry, making it more efficient and providing investors with new opportunities. AI technologies such as machine learning, natural language processing, and predictive analytics will enable investors to analyze large amounts of data and make more informed investment decisions.
AI will also create new investment opportunities, such as investing in AI companies or investing in AI-driven investment strategies. However, there are also potential drawbacks that need to be addressed, such as bias, lack of human oversight, over-reliance, and complexity.
In conclusion, AI has the potential to transform the investment industry, making it more efficient and providing investors with new opportunities. However, investors need to be aware of the potential drawbacks of AI technology and ensure that they have appropriate safeguards in place to address these risks. By doing so, investors can take advantage of the benefits of AI while mitigating potential risks.
Fund management is the process of managing a pool of money, often called a fund, on behalf of investors. The goal of fund management is to achieve a specific investment objective, such as capital appreciation, income generation, or risk mitigation. Fund management can be done through various investment vehicles, including mutual funds, exchange-traded funds (ETFs), hedge funds, and private equity funds.
The Fund Management Process
The fund management process typically involves several stages, including:
- Investment Policy: The investment policy sets out the fund’s investment objectives, risk tolerance, and investment restrictions. The investment policy is typically developed by the fund manager in consultation with the fund’s trustees or directors.
- Asset Allocation: Asset allocation involves determining the percentage of the fund’s assets to invest in various asset classes, such as equities, fixed income, and alternative investments. The asset allocation decision is based on the fund’s investment policy, risk tolerance, and market conditions.
- Investment Selection: Investment selection involves choosing specific investments that fit within the fund’s asset allocation and investment restrictions. The investment selection process involves researching potential investments, analyzing their financial and economic fundamentals, and evaluating their potential risks and rewards.
- Portfolio Management: Portfolio management involves actively managing the fund’s investments to achieve the fund’s investment objectives. Portfolio management includes monitoring the performance of the fund’s investments, making investment decisions, and rebalancing the portfolio as necessary.
- Risk Management: Risk management involves identifying and mitigating potential risks that could impact the fund’s investments. Risk management includes diversifying the fund’s investments, monitoring market trends and events, and implementing risk mitigation strategies.
- Reporting and Communication: Reporting and communication involve providing regular updates to investors on the fund’s performance, investment decisions, and market trends. Reporting and communication also include responding to investor inquiries and addressing any concerns or issues that may arise.
The Role of the Fund Manager
The fund manager plays a critical role in the fund management process. The fund manager is responsible for developing the investment policy, selecting investments, and managing the portfolio. The fund manager is also responsible for implementing risk management strategies, monitoring market trends and events, and providing regular updates to investors.
The fund manager’s performance is measured by the fund’s investment returns, risk-adjusted returns, and adherence to the investment policy and restrictions. The fund manager’s compensation is typically tied to the fund’s performance, with fees based on a percentage of the fund’s assets under management.
Fund management is typically regulated by financial authorities, such as the Securities and Exchange Commission (SEC) in the United States. The regulatory oversight is designed to protect investors by ensuring that funds adhere to investment guidelines, provide transparent and accurate information, and operate in a fair and ethical manner.
Fund management is a complex and dynamic process that involves managing a pool of money on behalf of investors. The fund management process includes developing the investment policy, asset allocation, investment selection, portfolio management, risk management, reporting, and communication. The fund manager plays a critical role in the fund management process, and regulatory oversight is designed to protect investors by ensuring that funds operate in a fair and ethical manner. Fund management is an important part of the financial industry, providing investors with access to a diverse range of investment opportunities and helping to drive economic growth and development.
Transforming a small sovereign country in Asia into a financial powerhouse
The Singaporean Variable Capital Company Act, or VCC Act, is one of the most significant developments in Asian finance to occur in recent years.
Administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA), this legislation opens an entirely new world for foreign and domestic funds seeking to incorporate Asian investment instruments into their portfolios.
Offering a highly flexible fund structure, the VCC is poised to solidify Singapore’s position as the de facto financial and investment capital of Asia. First piloted in 2019 with the inclusion of 18 fund managers, the VCC Act officially went live on January 15th, 2020. Launching or redomiciling a VCC in Singapore is a straightforward process that is doable via the ACRA website. To ease the financial burden of registration, the Monetary Authority of Singapore (MAS) has launched a Variable Capital Companies Grand Scheme program.
This program will co-fund up to 70% of incorporation or registering expenses, so long as they are paid to a Singapore-based service provider.
One of the most attractive benefits of using the VCC structure is the ability to issue a fund as a stand-alone entity or an umbrella entity. The former is comprised of a single investment portfolio and is a relatively traditional format for a fund. A VCC umbrella fund is much more dynamic and allows investors to issue various segregated sub-funds, all held under the same umbrella investment fund. Part 4, Subsection 29 of the VCC Act, is one of the essential sections of the Act that touches on umbrella funds.
This section states that the segregation of sub-funds means that the liabilities are self-contained to each specific sub-fund. If one sub-fund goes under, the other sub-funds within the same umbrella fund are not affected.
Both open and closed funds are available for registration under the new VCC Act. Open-ended funds can issue an unlimited number of shares, which are generally priced daily based on the fund’s net asset value (NAV). Open-ended funds are usually more liquid and hold diversified portfolios. Close-ended funds raise a fixed amount of capital and publicly trade on secondary markets. This fund style generally entails higher yields than their open-ended counterparts and are priced more frequently than once per day. Each of these fund styles has relative pros and cons, and Singapore’s VCC Act allows investors exposure to both types.
The United States represents a significant portion of the investment world. With portfolios becoming increasingly globalized, any legal framework is well-advised to consider how to incorporate US investors with relative ease. Bringing previously off-shore capital into on-shore funds is often best accomplished using the “check the box” rules associated with IRS Form 8832. These rules allow entities to be treated by the US as “pass-through” entities, offering US investors an enticing level of inclusion. While the legislation is still young, Singapore’s VCC Act allows US investors to take advantage of this attractive election opportunity.
Investors may wish to make the permanent move and redomicile in Singapore, given its emerging status as the de facto entry point to Asian financial markets. If a company is already doing business in Singapore, redomiciling allows for complete business continuity and confers many tax benefits. It is important to note that redomiciling in Singapore is irrevocable as there are currently no provisions for entities incorporated in Singapore to redomicile overseas.
While this means redomiciling is a permanent decision, the VCC Act demonstrates that the city state’s financial environment is further liberalizing, conferring both business and legal benefits for any entities that decide to redomicile in Singapore.
If a company is already doing business in Singapore, redomiciling allows for complete business continuity confers many tax benefits.
The subject of taxation naturally entails bilateral and multilateral trade agreements, of which Singapore has many. Singapore beats out most other nations in terms of tax treaties with 86 in its jurisdiction. This amount compares to 83 tax treaties in Luxembourg, 74 in Ireland, and 37 in Hong Kong. Any potential investor must consider the tax treaty benefits conferred by incorporating or redomiciling in Singapore as a second-order benefit. The OECD’s Base Erosion of Profit Shifting (BEPS) initiative focuses on eradicating predatory tax rate shopping by international corporations, and Singapore is a dedicated signer of this initiative. Notwithstanding this further demonstrates the veracity of the VCC Act and Singapore’s earnest approach to confidently stepping up to the plate as the new financial doorway to Asia.
The VCC Act takes the best aspects of other tax havens’ financial frameworks and optimizes them Singapore’s unique situation. This Act comes at a near-perfect time as the city-state is poised to receive massive investment from off-shore funds seeking to redomicile as on-shore entities due to geopolitical uncertainties. Many considerations must be taken into account before a company decides to expand into a new legal jurisdiction.
However, with Singapore’s dedication to Common Law, near-perfect position in the Strait of Malacca, and increasing economic liberalization, one would be hard-pressed to find a better candidate for foreign investment.
A most promising area of growth is sustainable finance where singapore aspire to support Asia’s transition to a low carbon economy.
- The task of reducing emissions is urgent, as pointed out by the most recent report of the United Nations Intergovernmental Panel on Climate Change.
- All sectors of the economy need to achieve progressive and deep emission reductions.
- Some US$2 trillion in infrastructure investments will be needed over the next decade to enable Southeast Asia’s transition towards sustainability
Bain & Company, Microsoft and Temasek, Southeast Asia’s Green Economy: Opportunities on the Road to Net Zero, 2021..
Developing strategies to build a comprehensive ecosystem for green and transition financing.
- Aligning financing efforts with credible sectoral transition plans, that provide clarity about transition pathways and carbon emission targets. This in turn generates investor confidence and catalyses greater sustainable finance flows.
- Promoting blended finance solutions, where targeted risk sharing by governments or multilateral development banks can crowd in private capital more effectively.
- Stepping up efforts to enhance collection of emissions data, develop credible transition taxonomies, and implement consistent climate-related reporting and disclosure standards.
- One key initiative which MAS has embarked on with the industry is Project Greenprint, which comprises common utility platforms.
- These platforms will harness technology to address the financial sector’s sustainability data needs, and enable a more transparent, trusted and efficient ESG ecosystem that can catalyse green and sustainable finance.
One of the most encouraging aspects of the strong growth of the financial sector is the number of good jobs that are being created.
- MAS estimates that there will be more than 9,400 new hiring opportunities for permanent roles in the financial sector in 2022
MAS-IBF Employment Outlook Survey 2022..
- More than 3,000 jobs will be in technology.
- Software developers and engineers continue to have the highest demand, with more than 700 opportunities.
- They support a wide range of exciting activities, such as designing and developing digital finance services; applying blockchain technology in trade finance; and using artificial intelligence to detect fraud and money laundering.
- There will also be interesting new roles in sustainable finance.
- These range from execution of ESG transactions to advisory services and product development.
- Many of these jobs will draw on traditional finance expertise such as product structuring, risk management, reporting and pricing, but layered and infused with new knowledge on sustainability.
Climate change is a global existential challenge. Singapore, being a low-lying city state, is particularly vulnerable to the effects of climate change.
Singapore is fully committed to the global climate action, and will play its part as a responsible member of the international community.
In 2021, Singapore launched the Singapore Green Plan 2030 (“Green Plan”), a whole- of-nation movement to advance the national agenda on sustainable development. The Green Plan charts concrete targets over the next 10 years, strengthens Singapore’s commitments under the United Nations’ 2030 Sustainable Development Agenda and Paris Agreement, and positions us to achieve our long-term aspiration of net zero emissions.
The green transition will be a new engine for jobs creation and growth across the economy. This includes the greening of traditional sectors such as aviation, energy, and tourism, as well as the emergence of new sectors such as green finance, carbon services and low-carbon technologies. The Government will work in partnership with the private sector to provide an enabling environment for businesses and workers to take advantage of these new growth opportunities.
To support Singapore’s decarbonisation efforts and deepen Singapore’s green finance market, the Government announced at Budget 2022 that the public sector will take the lead by issuing up to S$35 billion of green bonds by 2030. This will include bonds issued by the Government as well as Statutory Boards.
These public sector green bond issuances will serve as reference for the corporate green bond market, deepen market liquidity for green bonds, and attract green issuers, capital, and investors. This paves the way for greater private sector green finance activity.
The Government has published a national Green Bond Framework (“Framework”), which lays the foundation for the issuance of green bonds by the Government under the Significant Infrastructure Government Loan Act 2021 (“SINGA”), and serves as a reference for Statutory Boards’ respective green bond frameworks.
Singapore Sovereign Green Bonds,
also known as Green Singapore Government Securities (“SGS”) (Infrastructure), will be used to finance major, long-term green infrastructure in Singapore that qualify under the Framework. Borrowing for such infrastructure spreads the costs across the generations that would benefit from these projects.
Examples of eligible green SINGA projects include the upcoming Cross Island Line and Jurong Region Line. Our rail network expansion will enhance connectivity and encourage more commuters to take mass public transport, which together with walking and cycling, are the greenest ways to move.
The Singapore Government will borrow prudently and adhere to stringent safeguards.
(a) In order to qualify for financing via Green SGS (Infrastructure), infrastructure projects will need to meet the high bar to qualify as nationally significant under SINGA, as well as the green eligibility criteria stated in the Framework.
(b) The issuance of such green bonds will be subject to the overall legislative gross borrowing limit and the annual effective interest cost limit under SINGA.
The gross borrowing limit of S$90 billion and annual effective interest cost threshold of S$5 billion apply to the overall SINGA programme, which comprises the issuance of both Green SGS (Infrastructure) and SGS (Infrastructure).
Overview of Singapore Government Borrowings Details on how Green SGS (Infrastructure) fits within the Singapore Government’s existing suite of borrowings.
Bonds & Bills – Monetary Authority of Singapore Details on Green SGS (Infrastructure) such as the issuance calendar, auction updates and bond return calculator.