Asia is seeing a steady increase in the number of family offices, thanks to the rapid growth of private wealth in the region. At the forefront of the market are Singapore and Hong Kong — two tiny states, both economic powerhouses that have been attracting more and more family offices over the years.
Over 59 per cent of family offices in Asia are set up in Singapore. The next big country is Hong Kong, with over 14 per cent of family offices structured there as of 2023. Let’s look at the reasons why high-net-worth individuals are choosing these countries to manage and preserve their private wealth.
Singapore family offices
In 2021, Singapore family offices managed approximately SG$90 billion in assets. By the end of 2022, about 700 family offices were structured in Singapore for families across Asia, Europe and America. The primary reasons high-net-worth families go to Singapore for wealth management and family office setup are:
- Political stability;
- Robust regulatory environment;
- Friendly tax rates; and
- Transparency and economic substance
The Singapore government also proactively takes measures to make the city-state a very attractive destination for those looking to set up family offices. Just recently, the Monetary Authority of Singapore (MAS) announced ‘enhancements’ to its tax incentive schemes for family offices in the Lion City. According to the MAS, this move aims to encourage family offices to invest “more purposefully” in the country and region.
Under the scheme, the MAS now recognises the following as eligible investments/spending:
- Donations to Singapore charities;
- Grants to blended finance structures;
- Climate-related investments;
- Blended finance; and
- Singapore-listed equities and deeply concessional capital in blended finance structures (recognised 2x)
Hong Kong family offices
Currently, there are 400 family offices located in Hong Kong. According to the Financial Secretary of Hong Kong, Paul Chan Mo-po, the government plans to attract up to 200 more family offices to set up in the special administrative region by 2025.
Like Singapore, Hong Kong also offers certain advantages to high-net-worth families, as well as managers. For instance, Hong Kong has consistently been ranked by the Fraser Institute as the world’s freest economy. In addition, Hong Kong has:
- No sales tax, VAT, capital gains tax, estate tax, withholding tax and tax on dividends;
- An independent judiciary;
- Broad local and international legal and finance workforce; and
- Robust regulatory framework aligned with international standards
In March this year, Hong Kong invited over 100 key decision-makers from family offices over the world to unveil the measures the region will undertake to make it a more attractive destination for financial services. These measures include:
New Capital Investment Entrant Scheme: Under this scheme, applicants owning permissible assets such as Hong Kong-listed equities, Hong Kong company-issued debts and eligible collective investment schemes can reside in Hong Kong with their spouse and dependent children who are unmarried.
Tax concessions: A concessionary rate of 0 per cent will apply to family-owned investment holding vehicles for the year 2022/23. The concessionary rate of 0 per cent will only apply to the trading receipts of FIHVs that are from qualifying transactions and incidental transactions, up to a maximum of 5 per cent of the total trading receipts of the FIHV.
New Hong Kong Academy for Wealth Legacy: Under this, a new academy will be established and funded by the government to offer development solutions to next-generation wealth owners and industry practitioners.
New Network of Family Office Service Providers: Through a team called FamilyOfficeHK, the government will structure a network of family office service providers in the country for an easier two-way communication channel between the government and industry stakeholders regarding latest regulatory developments.
Establishment of art storage facilities at the airport.
Development of Hong Kong as a centre of philanthropy.
Both Singapore and Hong Kong are leading financial centres, not only in Asia but globally, as well. With their tax-friendly policies and business-friendly regulatory frameworks, it’s no wonder corporations, entrepreneurs and private (U)HNWIs go to these countries to do business or manage their wealth.
Whether you are looking to structure a family office in Singapore or Hong Kong or strategising to preserve your private wealth or legacy, it is wise to seek assistance or work with a trusted private wealth service provider.
Bolder Group, which has been providing private wealth solutions in Hong Kong and Singapore for over four decades, can help families and managers in structuring family offices in these financial centres, maintaining its vehicles and funds and providing expert guidance on governance and compliance matters.