Singapore to launch new corporate structure for investment funds later this year: Ong Ye Kung

Education Minister Ong Ye Kung noted that while global growth is forecast to slowdown this year, Asia remains a bright spot for investments.
Education Minister Ong Ye Kung noted that while global growth is forecast to slowdown this year, Asia remains a bright spot for investments.ST PHOTO: ARIFFIN JAMAR

SINGAPORE - A new corporate structure for investments funds that will put Singapore in the same league as other global fund hubs will be launched later this year, said Education Minister Ong Ye Kung on Thursday (May 9).

The structure, known as the variable capital company or VCC, is aimed at enticing more fund managers to base their funds and run their fund management activities in the Republic.

"This will further deepen our fund servicing ecosystem, and create new business opportunities for a wide range of professions such as lawyers, accountants, tax advisers, fund administrators and custodians in Singapore," said Mr Ong at the annual Investment Management Association of Singapore (IMAS) conference.

A Bill to legalise the VCC structure was passed in October last year. The Government estimated then that the VCC framework could create over 1,000 new jobs for the fund management industry in the first two years of its introduction.

Mr Ong, who is also a board member of the Monetary Authority of Singapore (MAS), outlined how Singapore is well-poised to be a fund hub in Asia in a 15-minute keynote speech at the start of the conference.

He noted that while global growth is forecast to slow down this year, in part due to the ongoing trade tensions between the United States and China, Asia remains a bright spot for investments.

Assets under management in the Asia Pacific are expected to almost double from 2017 to about US$30 trillion (S$40.9 trillion) in 2025, he observed.

 
 
 

And Singapore is a beneficiary of this regional trend.

He pointed out that the investment management sector has grown 15 per cent year on year between 2012 and 2017 to reach a total asset under management of $3.3 trillion.

Other than being a popular base for fund managers and investors, fresh financing demands for regional infrastructure projects is also driving the growth of the industry in Singapore.

"Currently, more than 90 per cent of the infrastructure investment in Asia is financed by governments. There is now a strong realisation of the need to mobilise private capital," he said.

To this end, the Singapore government has set up an office called Infrastructure Asia to connect local and international participants in infrastructure development, and enable information exchange and access to various professional services.

Mr Ong noted that Singapore's strong support for technology and innovation, as well as its concerted efforts to develop skills and talents also adds up to helping the fund management industry thrive up to the medium term.

But beyond that, Mr Ong believes that Singapore's societal ethos of pursuing economic growth while improving the well-being of the people is what makes the country most attractive to investors.

"In Singapore, our people fundamentally wish businesses well, because we know all our jobs and incomes are at stake if businesses and industries fail."

"At the same time, I would say businesses in Singapore by and large also have a desire to contribute to society. This goes beyond the occasional corporate social responsibility projects, but embracing a larger concept of business success that is beyond investment returns and profits, and aligning business activities with social causes and concerns," he said.

Such social ethos, and the ability to hold investors, industry and people together, is what will bode well for Singapore in the long term, he concluded.