Set WEALTH wealth management as a "Starbow"
First time to get the latest delivery
Singapore has long been considered an ideal destination for family offices (“home”). According to statistics, as many as 1,400 homes had been established in Singapore by the end of 2022 [1]. As early as 2004, the Singapore Bureau of Economic Development had launched the Global Business Investor Initiative to encourage foreign investment to set up a home in Singapore.[2] The support of the Singapore Government for its policies was highly commendable. However, in March this year, the HKSAR Government issued a “Policy Declaration on the Operations of the Hong Kong Development Family Office”.[3] Two months later, Hong Kong ' s domestic tax relief policy was constitutionalised [4], which is a major step forward in Hong Kong ' s efforts to become a hub for Asia and the Pacific.
The aim of this paper is to explore and analyse the competitiveness of setting up a home in Hong Kong, China, and Singapore in terms of investment markets, legal and tax policies, quality of life and other complementary aspects.
01
Investment market
As a professional institution for wealth management, one of the objectives of home-based management is value added. Therefore, the maturity of a local investment market is an important consideration when considering where a home is established. As the two most important international financial centres in Asia, both Hong Kong and Singapore allowed for the free flow of capital and a developed economy, and offered diversified investment options. In terms of size, while the foreign exchange market is smaller than Singapore (as of April 2022, Singapore ' s foreign exchange and derivatives market averaged approximately $929 billion per day, higher than Hong Kong ' s $694 billion [5]), Hong Kong ' s stock market is larger than Singapore ' s. With regard to the stock market, as at 31 August 2023, the total market value of securities listed on Hong Kong's main board in Hong Kong was about HK$ 33.08 trillion [6], while Singapore's market value was NZ$ 809.676 billion (approximately 4.64 trillion) [8] [8]. Hong Kong ' s first public collection unit in the first half of 2023 totalled $2 billion, well above Singapore ' s $18.6 million [10]. In addition to this, the implementation of programs such as "Hong Kong" , "Deepport" , "Customs" and "Finance" in recent years has provided more investable products to businesses in Hong Kong so that they can achieve a more balanced asset allocation based on their needs and risk preferences. This is no doubt a great attraction for the family.
02
Legal and tax policy
Hong Kong and Singapore both have common law systems and an independent judiciary and a sound regulatory framework. It's worth mentioning that a family that serves a single family is not subject to financial market licensing in either place. 11] This represents no additional cost to apply for a licence to establish a single office in either location.
With respect to the tax system, both the Hong Kong and Singapore Governments have introduced single-family tax relief policies, with the exception of Hong Kong ' s tax relief arrangements, which are slightly more liberal than Singapore ' s:
First, Hong Kong does not have a pre-approval requirement, and the home control tools that are in place can inform the Tax Administration directly in writing of the choice of tax relief. Instead, the Financial Authority of Singapore requires that applications be submitted to certain control tools.
More importantly, Hong Kong ' s tax relief arrangements do not require any local investment of household control instruments, while Singapore has a number of requirements for local investment. As a result, the establishment of a family in Hong Kong would be more freely able to build a suitable portfolio. In addition, under this policy, some of the established, active and interested overseas businesses in Asia now have to move their home offices to Hong Kong without any adjustment to their current portfolio, and are entitled to tax exemptions from Hong Kong.
03
Potential for economic development in the Great Bay region
As two well-established financial centres, the economic development potential of Hong Kong and Singapore should be modest. However, since 2017, when the Australasia was positioned as a national strategy in Port-au-Prince, 12] Hong Kong has great potential as one of the priority development regions.
The construction of the Bay of Australasia in Port-au-Prince consists of three phases, the first of which is to be built by 2020; the second of which is to form a three-tier rule interface by 2022; and the third of which is to be fully completed by 2035. The current direction of development in the Bay region of Hong Kong includes the construction of the International Centre for Science, Technology and Innovation and the construction of a modern, internationally competitive industrial system [13]. With regard to the promotion of the science, technology and innovation sector, the China Foundation for Research and Research on Economic Reform, together with the Central Enterprise, the Science and Technology Leading Enterprise and local governments, established in 2021 an investment fund for the science, technology and innovation industry in the Bay of Australia, with a total of RMB 100 billion. According to the Global Innovation Index 2023, the Shenzhen-Hong Kong-Gangzhou Science and Technology Cluster has been in second place [14] globally for four years. This reflects the shared results of local governments in promoting the STI industry.
As a matter of fact, the current strength of the Australasia Bay region in Port-au-Prince is no longer negligible. In comparison to the San Francisco Bay, the New York metropolitan area and the Tokyo Bay region in 2021, the Bay of Hong Kong comprises 56,098 square kilometres of land and 86,622 million people as the top four Bay areas. In terms of gross domestic product (GDP), the Bay region of Port-au-Prince is ahead of the San Francisco Bay region and the metropolitan area of New York at $1.958 billion.[15] However, it is now only the second of the three phases of the Great Bay region. Hong Kong and the rest of the Australawan region will continue to move steadily towards the goal of “building an international first-class Bay area and a world-class urban cluster”, as mentioned by the National Chairman. [16] There is no doubt that the investment opportunities arising from the development of the Bay of Hong Kong are unique to any home-builder.
04
Education and training
The aim of the establishment of the family is to achieve a smooth inheritance of wealth. Before the next generation takes over the family ' s assets, family managers tend to arrange for the next generation to receive the highest-quality education and training to ensure that they have sufficient property management capacity. As a result, the quality of education and employment opportunities offered by the place where the home is established are important in the selection process. It is well known that Hong Kong and Singapore are not short of top schools.
With regard to training and employment, the increased mobility of the population and the further growth of the economy, driven by the continued development of the Bay region, together with the establishment of investment and commercial banks, insurance companies, consultancy firms, accountants and large multinational enterprises in Hong Kong, will make it possible to provide more jobs in the financial sector so that future generations of family members can gain enough experience to take over family assets in the future.
05
Entry visa arrangements
Since families may have their place of residence at home, the arrangement of entry visas in one place is one of the factors to be taken into account when selecting a home. There is a slight difference between Hong Kong and Singapore in maintaining permanent resident status. In Singapore, permanent local residents are required to apply [17] for re-entry permits upon departure, which may otherwise result in loss of local permanent residence[19]. In Hong Kong, permanent residents are not required to apply for a similar re-entry permit [20]. It is also worth noting that in Hong Kong, any Chinese citizen holding a permanent resident status and valid permanent resident ' s identity card is eligible to apply for a local passport if he or she has obtained permanent residence status in Hong Kong for seven consecutive years [21]. In Singapore, a person holding permanent resident status must become a citizen of Singapore before he or she can apply for a Singapore passport. According to the Singapore Immigration and Immigration Board website [22], when processing applications from Singaporean citizens, the authorities consider whether the applicant has a family relationship with the local population, his or her financial contribution, seniority, age, family profile and length of residence to determine whether the application is accepted.
06
Transportation support
In terms of education, employment and investment, families with high net assets do not want to be limited by region, but rather look to the world as far as possible. It is therefore essential that a well-established transport network be established to connect the world ' s major cities. The Hong Kong International Airport and Singapore ' s Sakai Airport are connected to all parts of the world, both of which are of world-class standard and are also known for the comfort and ease with which passengers travel. More importantly, Hong Kong has a natural geographical advantage, making its access to the Great Bay region easier than Singapore. An hour-long life circle with Hong Kong as its centre has been shaped with the opening of the Hong Kong Joao Bridge and the continued development of a wide-deep Hong Kong high-speed train and other transport networks to the Mainland. In the case of high iron, for example, it took only 14 minutes to travel from the West Kowloon station in Hong Kong to the Shenzhen Fukuda station and approximately 47 minutes to the South station in Guangzhou [23]. In the case of the Hong Kong Joo-au Bridge, it takes 45 minutes to travel overland to Hong Kong, Pearl Sea and Macao. The number of ports connecting Hong Kong to the Mainland has increased to as many as 15[24] with the opening of the Chanwon Roundup Control Station in February this year. In Hong Kong, one hour of life brings flexibility and convenience to life, communication and work in the Bay.
07
Charitable contributions
Both Hong Kong and Singapore have in recent years introduced policies that take into account the need for home-based philanthropy. Under Hong Kong ' s tax policy, an accredited charity may hold up to 25 per cent of the beneficial interest in a controlled tool without affecting the tax exemption of the controlled instrument.[25] On the Singapore side, under the Singapore Finance Authority ' s Charitable Tax Incentive Scheme, 100 per cent tax relief[26],[27] is granted to the home ' s portion of overseas contributions from 1 January 2024, subject to the relevant conditions.
In the case of charitable associations, the number of registered charities exempted from paying taxes at the Hong Kong Revenue Authority as of 2020 was about 9,200 [.. 28] About four times more than Singapore ' s 2,321 charities [29]. This, together with the simplification of the application process by the Hong Kong Revenue Service in June of this year for charities that are exempt from tax, is believed to be a further gap in the future.
08
Wine and art - Lifestyle and Business Opportunities
In addition to meeting the family ' s need for value-added in wealth, the home needs to take into account the family ' s quest for quality of life. In terms of the main quality of life (including life expectancy and per capita income, etc.), Hong Kong and Singapore are among the top globally: Hong Kong ranks 4 and Singapore 12[30] in the Human Development Index in Human Development Report 2021/2022. Thus, the quality of life in both Singapore and Hong Kong is not compatible with other aspects.
Another unique feature of Hong Kong is its mature market for wine and art. Following the abolition of the wine tax in Hong Kong in February 2008, the volume of wine imports increased from 30.4 million litres to 60.9 million litres in just 10 years, while the amount of imports rose from HK$2.86 billion to between HK$318 and HK$11.95 billion at a high level [31]. With regard to the art auction market, in 2021, the median expenditure of Mainland buyers on Hong Kong art works and antiques was as high as $475,000 (approximately HK$ 3.71 million [32]) and far more developed places were high. [33] As of 2021, Hong Kong was the second largest art auction market worldwide for two consecutive years [34]. In addition, the HKSAR Government is actively planning to set up a collection of art and treasures[35] at Hong Kong International Airport. These unique Hong Kong advantages are believed to be very attractive to people with a quality of life or an interest in investing in the wine or art market.
Concluding remarks
As the Hong Kong, China, and Singapore governments have stepped up their efforts in recent years to introduce policies and measures to attract families, they are now the ideal places to establish them. However, there would be some appeal for tax exemptions without local investment requirements in Hong Kong for some of the home offices that have been established abroad and have a portfolio. In addition, the wine and art-related industries in Hong Kong may be uniquely attractive to some of the households. On the other hand, Hong Kong has unique conditions [36] for attracting people from the Mainland: for example, more familiar language, culture and living habits, a more convenient geographical location and close to the Great Bay region, which has flourished in recent years. These factors undoubtedly make the establishment of a home in Hong Kong an ideal option.
* Any reference to “Hong Kong” should be interpreted as “Hong Kong Special Administrative Region of the People's Republic of China”.
Move View Down
Footnote:
[1] Joint Morning Post - Last year the number of local offices was double or twice as high as the previous year, and this year the material has increased further: https://www.zaobao.com/finance/singapore/story20230113-1352896
[2] Economic Development Board of Singapore - Changes to Global Investment Programme will provide more generate more pin-offs for the Singapore economy: https://www.edb.gov.sg/content/dam/edb-en/about-edb/media-releases/news/changes-to-global-invest-programe-will-gender-more-pin-offs-for-the-singapore-economy/Media%20Release%20-%20Changes%20to%20GIP%20Programme.pdf
[3] Policy declaration on the operations of the Hong Kong Development Family Office: https://gia.info.gov.hk/general/203/24/P202303030716_415643_1_167958358364.pdf
[4] Tax (Amendment) Regulations, 2023 (Taxes relief for family investment control instruments), Regulation No. 8 of 2023: https://www.legco.gov.hk/yr2023/chinese/ord/203ord008-c.pdf
[5] Hong Kong Financial Authority (Bank Supervisory Department) - Hong Kong Foreign Exchange and Derivatives Market: https://www.hkma.gov.hk/media/chi/publications-and-research/quarterly-bulletin/qb202212/fa1.pdf
[6] Hong Kong Exchange - Monthly market profile of the Hong Kong Exchange: https://sc.hkex.com.hk/TuniS/www.hkex.com.hk/market-data/statistics/consolidated-reports/securitys-statistics-archive/market_capitulation?sc_lang=zh-cn#select1=0
[7] At the exchange rate of $NZ 1: HK$ 5.73.
[8] SGX - Market statistics report: https://api2.sgx.com/sites/default/files/203-09/SGX_Monthly%20Statistics%20Report%20Update%202028For%20the%20month%20of%20Aug%20202023%29_D5.pdf
[9] Hong Kong Exchange - Why Hong Kong Exchange? https://www.hkex.com.hk/Join-Our-Market/IPO/Listing-with-HKEX?sc_lang=zh-HK
[10] Econom - Bloomberg: Hong Kong Singapore Financial Center’s Fighting, the Mainland factor sustains Hong Kong’s advantage: https://www.etnet.com.hk/mobile/tc/common/popnews.php?newsid=ETS3308034343
[11] Securities and Futures Inspection Committee - A simple reference guide to the licensing provisions: https://www.sfc.hk/TC/Regulatory-finances/Intermediaries/Licensing/Quick-licensing-guide/Family-Offices; https://www.mas.gov.sg/-/media/mas/regulations-and-financial-stability/regulations-guidance-and-licensing/security-futures-and-fund-manage/regulations-guidance-and-licensing/faqs/sfa--faqs-on-the-licensing-and-registration-of-fund-manage-companies-1-jun-2023.pdf
[12] HKTDC RESEARCH Economic and Trade Research — Challenges and Implications for Australasia: https://research.hktdc.com/tc/article/NDY0ODc0Nzk0
[13] Central People ' s Government of the People ' s Republic of China - Central Government of the Communist Republic of China https://www.gov.cn/zhenge019-02/18/content_5366593.htm#1
[14] Xinhua Network – Hong Kong continues to maintain its global innovation advantage and has continued to contribute to the development of the Great Bay ' s Genesis: http://www.news.cn/2023-09/27/c_112980088.htm
[15] HKTDC RESEARCH Economic and Trade Research – Statistics for the Bay of Australia: https://research.hktdc.com/tc/article/MzyzMDE5NzQ5
[16] Xinhua Network – Review by some delegations participating in the National People's Congress, respectively: http://www.xinhuanet.com/policys/2018lh/2018-03/07/c_1122503168.htm
[17] Ministry of Foreign Affairs of Singapore - Renewal of Singapore Re-Entry Permit: https://www.mfa.gov.sg/Overseas-mission/Kuala-Lumpur/Consular-Services/Renewal-of-Singapore-Re-Entry-Permit
[18] The Ministry of Foreign Affairs of Singapore - Application for an updated or transferred re-entry permit: https://www.mfa.gov.sg/Overseas-mission/Beijing/CN/Beijing-CN/Consular-Services/entry_permit
[19] Singapore Immigration and Customs Board - Request/renewal of re-entry permit: https://www.ica.gov.sg/reside/PR/apply-REP
[20] Hong Kong Immigration Service - Loss of permanent resident status in Hong Kong: https://www.immd.gov.hk/hkt/services/roa/loss.html
[21] Hong Kong Immigration Department - Application for Hong Kong Special Administrative Region passport: https://www.immd.gov.hk/hks/service/trade_document/apply_for_hksar_passport.html
[22] Singapore Immigration and Customs Service — become a citizen of Singapore: https://www.ica.gov.sg/reside/citizenship/apply; Ministry of Foreign Affairs of Singapore — Application for Singapore Passport: https://www.mfa.gov.sg/Overseas-mission/Canberra/Consular-Services/Application-for-Singapore-International-Passport
[23] Visible News Network - Official operation of the Hong Kong section of the Guang Dynasty Port: Take to Hong Kong high iron with you: http://news.ctv.com/2018/09/23/ARTIV3S8EX2zi9pnm5dBdHP2180923.shtml
[24] Hong Kong Customs – Hong Kong border control station at Shanwon: https://www.customs.gov.hk/tc/publications-useful-information/useful-information/HYWBCP/index.html
[25] Tax (Amendment) Regulations, 2023 (Tax relief for family investment control instruments), Regulation No. 8 of 2023: https://www.legco.gov.hk/yr2023/chinese/ord/2023ord008-c.pdf
[26] Singapore Financial Authority - Family Office Charitable Tax Incentive Scheme: https://www.mas.gov.sg/chemes-and-initiatives/philanthropy-tax-incentive-scheme-for-family-offices
[27] Channel Times – Singapore adjusts tabs for family offices which must also do more to Boost local hires: https://www.straitstimes.com/business/singapore-adjusts-tax-incentives-for-family-offices-which-must-also-do-more-to-boost-local-hires
[28] Legislative Council - Regulatory measures for charitable misconduct: https://www.legco.gov.hk/research-publications/chinese/medias-2021ise06-regulation-of-malpractical-of-charitable-organizations.htm
[29] Joint Morning Paper – Local charities received over $3.2 billion in fiscal year 2019: https://www.zaobao.com/realtime/singapore/story20211014-120342
[30] United Nations Development Programme - Human Development Report 2021/202: https://hdr.undp.org/system/files/documents/global-report-documents/hdr2021-22pdf_1.pdf
[31] – Hong Kong: Asian wine capital: https://www.investthk.gov.hk/sites/default/files/2019.02-wine-tc.pdf
[32] Based on the exchange rate of US$ 1: HK$ 7.81.
[33] Legislative Council Secretariat Data Study Group - Data Perspective: https://www.legco.gov.hk/research-publications/cn/20222issh27-art-sector-in-hong-kong-2022107-c.pdf
[34] Ibid.
[35] Policy Declaration on the Operations of the Hong Kong Development Family Office: https://gia.info.gov.hk/general/203/23/24/P202303030716_415643_1_167958358364.pdf
[36] As of March 2023, Hong Kong was the largest offshore market in the world. See: Legislative Council - Director General of Financial Affairs and Treasury, opening statement on the bill for Members of Parliament on "Strengthening and building on Hong Kong's strengths as the largest offshore operational centre of the renminbi": https://www.info.gov.hk/gia/general/203/23/22/P202332200437.htm
Author
Liu Jung Fu
Partner
Hong Kong Office
ricky.lioe@hk.kwm.com
Operational areas: M & As by listed companies and private companies, joint venture transactions, asset transfer transactions, business finance, capital market transactions (including acquisition/sale of shares of listed companies, all-round acquisitions, shares of listed companies, various types of transactions under Hong Kong's listing rules, rebranding of listed companies, etc.), Hong Kong's public companies compliance, general legal compliance matters, general business matters (including employment and employee visas, labour compliance, application for permanent residence status in Hong Kong, etc.) and family wealth planning and management.
Lawyers Liu has extensive experience in the field of family wealth management, as well as in various matters related to business and business-related law, particularly in the real estate field. On behalf of a large number of enterprises, including private and public enterprises, and private and venture funds, Liu has dealt with the acquisition or sale of high-value real estate projects in Hong Kong and mainland China through the transfer of shares of companies.
Yum Yum.
Senior Adviser
Hong Kong Office
@hk.kwm.com
Area of operations: Extensive experience in dealing with legal matters related to business and investment funds, participation in strategic investment projects by Hong Kong and Mainland companies to private companies with listing potential, as well as the listing of a large number of enterprises on exchanges in Hong Kong, Shanghai and the United States, and provision of legal advice and services to listed companies in Hong Kong on compliance with the main and start-up listing rules and other regulations on business and securities
In addition to providing professional legal advice on the day-to-day affairs of enterprises and on securities matters, including general regulations and compliance with the securities and futures regulations, counsel is involved in the establishment of investment funds and in processing their applications for approval to the Securities and Futures Supervisory Commission. Lawyers also have considerable experience in the acquisition of mergers and shares by private and public companies, including compliance with the Hong Kong Code of Conduct on Corporate Acquisitions and Mergers, business restructuring in Mainland and Hong Kong, company acquisitions and management acquisitions.
An article issued by [a disclaimer], which represents the author's personal opinion and does not represent this public position, does not constitute an invitation to bid, bid, offer or offer for the said product or service, does not constitute a recommendation for the purchase, sale or cooperation of any investment instrument, or a financial, legal, tax, investment advice, investment advice or other opinion. It shall not be liable for any consequences or losses resulting from the direct or indirect use of the information and content to which it relates or from the investment made accordingly.
Original articles
Industry reports
WEALTH AAPAC
Previous List