Total Inflow of Foreign Funds into Singapore Broken Down by Source Country

This Parliamentary Question is related to the Member's earlier question on foreign fund inflows through family offices which was addressed in Parliament on 10 May 2023. [Please refer to "Data on Amounts and Sources of Wealth Inflows into Singapore", Official Report, 10 May 2023, Vol 95, Issue 104, Oral Answers to Questions section.]

The Member has now broadened the scope to all foreign fund inflows. I will focus my answer on this broadened scope. But Mr Leong should consider my response in totality with the explanation I had provided previously.

I had shared some data from MAS' annual Asset Management Survey pertaining to the category on "non-retail individual clients", which is closest to family offices. Broadening the coverage to all foreign investor types, that is, both non-retail individual and institutional clients, the survey shows that the total stock of Assets Under Management (AUM) of foreign clients managed by financial institutions in Singapore increased by about S$600 billion on average in 2020 and 2021 each.

Mr Leong asked for a breakdown by source countries for total foreign fund inflows. Investors come from a wide range of countries. The top-sourced foreign region for the increase in Singapore's AUM in 2020 and 2021 were the Americas, followed by Asia Pacific, then Europe.

Mr Leong also asked about the impact of the inflow of foreign funds on Singapore's Official Foreign Reserves, inflation and the private property market. As explained previously, most of the funds managed by Singapore's asset management industry are both sourced from and invested in assets outside of Singapore. Singapore acts as an intermediary for these fund flows, which typically remain in foreign currencies and, therefore, have little or no effect on the Singapore dollar exchange rate or Official Foreign Reserves (OFR).

The capital flows that are more relevant for the demand for Singapore dollars and OFR are the foreign currency inflows associated with inward foreign direct investments as well as Singapore's exports. As I had explained previously, the Monetary Authority of Singapore (MAS) intervenes in the foreign exchange market by purchasing US dollars for Singapore dollars to ensure that the trade-weighted exchange rate stays within MAS’ chosen monetary policy parameters. MAS thus accumulates OFR in the process1. The incipient expansion in base money caused by OFR accumulation is, in turn, sterilised through MAS' money market operations. This ensures there is no excessive growth in money supply.

I had also previously explained that inflation in Singapore is being driven by tight labour market conditions and has little to do with foreign fund or capital inflows. Likewise, purchases by foreigners have been a low share of all private residential property transaction volume over the last three years.