Debated in Parliament on 23 Feb 2023.
Mr Yip Hon Weng asked the Deputy Prime Minister and Minister for Finance regarding the recent surge of wealth from foreign investors establishing family offices in Singapore (a) what is the projected impact on our income gap; (b) whether there are any ongoing assessments of inequality and the widening income gap in Singapore; and (c) how does the Government plan to strike a balance between staying attractive to wealthy foreigners looking to invest in and relocate to Singapore, and ensuring that low-income Singaporeans have access to opportunities for social mobility and benefit from these investments.
Family offices are set up primarily to invest their own families’ funds. They have come to Singapore to access investment opportunities in the broader Asian region, not unlike other asset management entities such as institutional fund managers, sovereign wealth funds and pension funds. Family offices therefore add to Singapore’s role as a regional asset and wealth management centre, and enhance our attractiveness as a destination for foreign investments. Such offices together with other asset management entities contribute to Singapore’s economic growth and create more good jobs for our people. Ultimately, our economic strategies are guided by the key imperative to advance the well-being and improve the lives of Singaporeans.
The Government monitors and tracks income inequality closely. We have not seen evidence of the growth of family offices having an impact on income inequality in Singapore. Over the past decade, income inequality in Singapore as measured by the Gini coefficient has been steadily declining. The Gini coefficient declined from 0.478 in 2012 to 0.437 in 2022. If we include the effects of redistribution through taxes and transfers, our Gini coefficient in 2022 would further decline to 0.378, down from 0.432 in 2012.
Income growth at the 20th percentile has also been rising faster than median income. The real annualised income growth for full-time employed resident workers at the 20th percentile was 3.5% per annum from 2012 to 2022, higher than the income growth at the median, which was 2.6% per annum.
This means maximising opportunities for every citizen to realise their full potential, and investing in the continual re-skilling and up-skilling of workers to help them access good jobs and earn higher wages. Through initiatives like Workfare and the Progressive Wage Model, we are also uplifting the incomes of lower-wage workers and further narrowing our wage gap.
The Government will also ensure that our overall system of taxes and transfers remains fair and progressive. Everyone contributes something, but those who are better off will contribute more. Likewise, everyone benefits from the State’s spending, but the vulnerable will benefit more. This is how we strengthen our social compact, and move forward together as one people.
PAPERCUTS