The Monetary Authority of Singapore (MAS) is working on ways to boost the asset management industry, said Senior Minister of State for Finance Indranee Rajah yesterday.
One initiative involves the MAS and the Accounting and Corporate Regulatory Authority setting up a new regulatory framework for what are called open-end investment companies (OEICs).
Ms Indranee told a fund management event that the OEIC framework for investment funds will encourage more asset managers to set up their funds' corporate base here "while continuing to ensure strong protection for investors".
OEICs are listed companies whose sole aim is to invest in securities issued by other entities, said HSBC. "Unlike an investment trust, there is no limitation on the number of shares that can be issued - and that gives it in an open-ended structure," it added.
Mr Tony Lewis, head of HSBC securities services of Singapore, said many global asset managers have operations here but their funds are likely to be based in other jurisdictions. As it is, a large percentage of investments in collective investment schemes here are in offshore funds.
A 2013 PwC survey said Singapore's regulatory framework allows investment funds to set up only as unit trusts - which means they get no privileges offered in double tax treaties - or as a corporation with various restrictions, "making it investor unfriendly".
Respondents also said the "current investment fund regime is not conducive to efficient operation of investment funds".
Common pitfalls include the lack of alternative financial statement reporting frameworks and the lack of investor privacy.
PwC also noted that Singapore lacks an investment fund platform catering to the specific needs of hedge funds or cross-border investment funds, for instance.
Ms Indranee said OEICs will improve and encourage the growth of service providers and infrastructure that support funds.
The asset management sector, which "provides about 10,000 good jobs", includes industries such as accounting and administration, legal and compliance.
Mr Nicholas Hadow, chairman of the Investment Management Association of Singapore, welcomed the news. "OEICs are flexible alternatives to the unit trust structure already well established in Britain and available in other financial centres, such as Luxembourg and Dublin," he said.
He added that this "will encourage the development of the asset servicing ecosystem here and further cement Singapore's position as a globally competitive asset management hub".