Singapore still an asset management centre despite AUM drop

Strategic location and regulatory framework bolster Singapore's appeal

Singapore has emerged as a beacon for asset managers and investors alike, drawn by its strategic positioning and a regulatory environment conducive to growth. 

Jonathan Lee, a Partner at Allen & Gledhill, said that Singapore continues to attract a substantial inflow of global capital, positioning itself as a central node in the asset management ecosystem.

"Singapore's strategic location in the heart of the Asia Pacific region, coupled with its open and politically neutral stance, makes it a natural launchpad for asset managers," Lee said.

This advantage is further underscored by projections from the International Monetary Fund, which anticipate "emerging and developing Asia" to outpace global growth rates significantly in the coming years.

According to Lee, "About 76% of Singapore's Assets Under Management (AUM) is sourced from outside Singapore, with 88% being invested in assets outside Singapore as well." This statistic underlines the global trust in Singapore's asset management capabilities and its function as a conduit for international capital flow into Asia.

He said that the Monetary Authority of Singapore (MAS) has introduced a variety of fund structures, such as the Variable Capital Company (VCC) and limited partnerships, aligning with internationally recognized jurisdictions. 

“They've also been giving grants and incentives to grow these sectors. So, to me, it is this confluence of factors, which I think has contributed to Singapore's growing sectors as a key Asian fund,” he said.

These initiatives are complemented by tax incentive schemes and a broad network of around 100 double tax agreements, enhancing Singapore's competitiveness on the global stage.

However, Lee pointed out that fund management is a regulated activity under the Securities and Futures Act, necessitating a capital market services licence for new fund managers. Furthermore, the need for a physical office and locally resident professionals imposes substantive operational requirements, ensuring that only the most competent and committed players enter the market.

Despite these, he said that Singapore's position as a key Asian fund domicile continues to strengthen. The increasing acceptance of Singapore domiciled funds by international investors signals a growing confidence in the city-state's financial services sector. 

Lee observed, "Singapore is genuinely an easy place to set up shop and do business," highlighting the ease of incorporation and the proactive government support that has bolstered Singapore's growth as a fund hub.