A Well-Rounded Financial Center
Singapore’s financial prowess, ranked third in the 2022 Global Financial Center Index, closely follows New York and London. It has recently outperformed Hong Kong due to the latter’s changing landscape. In particular, Singapore excels in foreign exchange, ranking third in turnover according to the Bank for International Settlements. The city also boasts the fourth-highest number of ultra-wealthy residents and is recognised as the third most financially discreet jurisdiction by the Tax Justice Network.
Findexable ranks Singapore tenth in fintech development, highlighting its commitment to financial innovation. With a corporate tax rate of 17%, Singapore has a competitive advantage over the US. It also boasts the region’s largest Real Estate Investment Trust (REIT) market after Japan, offering diverse real estate investment opportunities.
Singapore’s Competitive Edge
Singapore’s competitive advantage as a financial centre is attributed to several factors. First, its strategic location as an entrepot between the Straits of Malacca and the South China Sea has historically given it a unique advantage in facilitating trade and attracting investment. The city-state’s well-developed infrastructure and world-class airport further enhance its connectivity and accessibility for businesses and travellers.
Second, Singapore’s government has been proactive in creating an attractive environment for financial activities. In recent years, Singapore has introduced the Variable Capital Company (VCC), a new investment fund structure aimed at enhancing its attractiveness as a domicile for alternative funds. The VCC offers investors greater flexibility, cost savings, and tax advantages, positioning Singapore as a potential competitor to well-established fund domiciles such as the Cayman Islands.
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Singapore has also made efforts to attract high-net-worth clients by offering favourable trust laws that provide confidentiality to settlors and beneficiaries, as well as tax exemptions. This has led to an increase in the number of trust companies operating in Singapore, including international firms that did not previously have a presence in the city-state.
