Data on Amounts and Sources of Wealth Inflows into Singapore

Singapore is a trusted, vibrant and well-regulated international financial centre in Asia, one of the fastest growing regions in the world. Naturally, this has attracted a wide range of investors, including global and regional institutional investors as well as individual investors. Family offices are one particular category of individual investment.

The Monetary Authority of Singapore (MAS) does not have comprehensive data on fund inflows into Singapore through family offices. Such detailed data is not necessary for MAS to carry out its functions of ensuring macroeconomic and financial stability. But let me share what we have.

Mr Louis Chua asked about wealth flows while Mr Leong Mun Wai asked about foreign funds inflow through family offices. I take their interest to be in investments made by high-end individual investors.

The investor type closest to high-end individual investors in MAS’ annual Asset Management Survey is the category called “non-retail individual clients”. This category includes family offices, clients of external asset managers, private trusts and high net worth individuals. Based on the survey, the Assets Under Management (AUM) of foreign non-retail individual clients managed by financial institutions in Singapore increased by about S$470 billion from 2017 to 2021. This makes up about 20% of the increase in total AUM by Singapore’s asset management industry from 2017 to 2021.

Also, the growth of assets from these high-end individual clients has been broadly similar to that for overall AUM. Let me explain. This, in other words, means that there has been a much broader pick-up of funds flowing into Singapore’s wealth management industry, but it is not peculiar to these high-end individual clients.

There is no breakdown for family offices in particular in MAS’ annual survey, which I cited. However, Singapore family offices (SFOs) that apply for and are granted tax incentives by MAS managed about S$90 billion of assets as at 2021. This is less than 2% of the S$5.4 trillion assets managed in Singapore as at 2021.

In short, the bulk of the increase in AUM in Singapore is attributable to institutional investors. Non-retail individual clients account for a small proportion, and family offices even less.

Mr Louis Chua and Mr Leong Mun Wai asked for a breakdown by source countries of wealth inflows, and for Mr Leong Mun Wai, specifically for family offices. Based on the Asset Management Survey, non-retail individual clients come from a wide range of places. The most granular breakdown of foreign sourced funds is available by regions, rather than by specific countries.

This is no different from surveys published by financial sector authorities or industry associations in major wealth management centres like London, Hong Kong and Switzerland. What we are providing on the regional breakdown for non-retail individual clients in fact goes beyond what these other jurisdictions publish as they do not put out data on specific categories of investors like individual investors.

The top-sourced foreign region for the increase in Singapore’s AUM for high-end individual investors from that period of 2017 to 2021 was the Asia Pacific, as is to be expected. This accounted for slightly over half of AUM sourced from high-end individual investors. Asia-Pacific was followed by Europe and the Americas.

Mr Leong asked how much SFOs that have applied for tax incentives since April 2022 have invested in local investments. We do not yet have the data as these SFOs have two years from their point of application to meet the local investments requirement that MAS just introduced in April 2022 – so, just one year ago. We are within the first two-year implementation period, so, data on the volume of assets is not currently available.

Members of the House should note, however, that while assets are managed in Singapore by entities based in Singapore, most of these assets are invested outside Singapore. And this is understandable as the investment universe is much larger outside Singapore and investors use Singapore as a financial centre to access investment opportunities in our region and beyond. But as these assets are managed from Singapore, they help to create jobs and valued-added in our financial industry. There are also positive spill-overs to other sectors as these investors often appoint tax and legal professionals for wealth planning and operational matters. So, it benefits our financial industry and beyond.

Mr Leong Mun Wai also asked about the impact of the inflow of foreign funds through family offices on our Official Foreign Reserves (OFRs), the private property market and inflation. Please allow me to set the context.

The bulk of the gross inflows into Singapore comprise flows by financial institutions and other non-financial corporates, not high-end individual investors; and even less so family offices which are only one category within the latter.

To reiterate, most of the funds managed here are invested in assets outside Singapore. Hence, they typically remain in foreign currencies – this is to the second point about the impact on OFRs. So, most funds are managed here, are invested outside and they also typically remain in foreign currencies and thus, have little or no effect on the Singapore dollar exchange rate or our OFRs. If some of these inflows do get converted into Singapore dollars, they would, just like all net capital flows into Singapore dollars, generate some appreciation pressure on the exchange rate. MAS addresses any such pressures, regardless of the source of funds, as part of its regular market operations to achieve its monetary policy objectives. We have not seen unusual surges of capital into the Singapore dollar that have required a pronounced response on MAS’ part, and certainly not from family offices which, to reiterate, would not form a significant portion of the total flow of funds for management out of Singapore.

The third question by Mr Leong Mun Wai is on the impact on inflation. As for inflation, it has little to do with foreign fund inflows into Singapore, let alone the portion due to family offices. The step-up in core inflation since late-2021 was primarily due to the sharp increases in global energy, imported food prices and stronger domestic wage growth. These cost increases fed through to higher electricity and gas, food and essential services prices, accounting for nearly 75% of MAS' Core Inflation in 2022.

And now, the impact on the private property market. Some foreign funds do flow into the private property market. However, purchases by foreigners have been relatively low, at about 4% of all private residential property purchases on average over the past three years. More specific to Mr Leong’s question, family offices themselves have had virtually no impact on our private housing market as there was no residential property transaction attributable to family offices over the last six years.

I thank the Minister of State for his very comprehensive replies. Just two quick supplementary questions. The first is in relation to my Parliamentary Question (PQ). I understand the Minister of State's point about the level of granularity provided, but I was just wondering in relation to the 14 April press release by MAS, it did state that the source of overall inflows into Singapore is diversified. So, I was just wondering if there is any further granularity that the Minister of State can provide to assure the public of the level of dispersion or concentration risks of any particular source country?

Second, in relation to the PQ which was filed by Mr Leong Mun Wai, I also understand that at this point in time, because they are not at the two-year mark as mentioned by the Minister of State, we do not yet have that data. In terms of the level of local investment requirement, I recognise that this is indeed a good thing, but given that, as the Minister of State mentioned, most of it would presumably be invested in overseas markets, in overseas assets. Is there a push by the Government or MAS to, over time, nudge some of these companies to invest in local companies a little bit more, especially in the last category, when it comes to non-listed Singapore-incorporated companies, since these tend to give a greater multiplier effect —

I thank the Member the Member for his supplementary questions. I think I will talk about the first supplementary question which is effectively on source country breakdown.

I had mentioned earlier on that, in fact, the source region is the Asia Pacific region, followed by Europe and Americas. We have given more details because, as I mentioned earlier on, of those centres that publish surveys quite similar to our MAS survey that I mentioned, none of the surveys published source country details. Some also do not even publish regional breakdowns. We have done so. I think that would suffice in terms of source country breakdown.

With regard to the second question, I think I had responded to one of the Member's questions with regard to the requirements for SFO. We are still within the two-year period, so I encourage the Member and other Members of this House to ask again after the two-year period.

Yes, yes. Thank you for the clarification. The Minister of State's answer mainly centred on the family office. Of course, I mean that is how I had phrased the question as well. So, I do not know whether it is fair to ask him now to answer one supplementary question on what is the impact of the total foreign inflow on our OFRs? On top of the family office, everything, for the last two to three years.

Sir, just two points. The first is that we have every intention of answering those questions. The Member has reached out to me also. And specifically, the Member did not put it in time for it to be rolled over and so it was converted to Written PQs. And the team had very specifically noted that we wanted to answer both questions by Mr Louis Chua as well as Mr Leong Mun Wai as comprehensively as possible, which I had done so.

The Member's questions on foreign funds inflow, it was specific to SFOs. So, if you wanted an answer to a broader question with regards to overall foreign funds inflow, may I ask the Member to file a separate PQ, which we will be happy to take at another Sitting.

Thank you, Mr Deputy Speaker, just a narrow clarification for the Minister of State. If I heard him correctly, he said that foreigners accounted for 4% of private property transactions in the last three years. Can I clarify – does that classify Permanent Residents (PRs) as foreigners? And up until what point is this data available? I mean, is it as at the end of last year and we are counting the last three years from the end of last year backwards or so on? Just wanted to clarify that.

I thank the Member for this supplementary question. Maybe, just let me give the Member a broader view. The foreigners' share of private housing purchase has dropped from about 20% in 2011 to about a low of about 3% to 4% over the past few years. Coming out of the pandemic, the share has remained limited – about 7% in the first quarter of 2023.

Again, the Member wanted more questions, I would ask the Member to file a separate PQ on foreign housing.