SINGPORE - Tan Gim Chong spent most of the past nine years in Singapore's Navy working on a submarine beneath the South China Sea. Now he is preparing to manage money for the world's richest people in the fastest-growing centre for private banking.
Tan, 32, is studying for a masters
degree in wealth management at Singapore Management University, his tuition paid by Citigroup. He plans to join Citigroup, one of more than 100 recruits the US bank is adding in Singapore to serve private clients with at least US$10 million to invest.
Faster economic growth in India and China and record oil prices are creating a bigger group of millionaires drawn to Singapore, where taxes are among Asia's lowest.
Roman Scott, a Singapore-based partner at Boston Consulting Group, said assets managed for overseas clients by private banks in Singapore climbed about 25 per cent last year, the world's biggest gain.
Roland Knecht, Asia head at Zurich-based Clariden Bank, said: "Singapore will be the fastest-growing offshore private banking centre in the next five years." He plans to increase staff in Singapore to 50 by the end of this year from 32 when the office opened last year.
Switzerland, the world's biggest offshore banking centre, still dwarfs Singapore. Data shows private banking clients held 1.38 trillion Swiss francs ($1.7 trillion) there in 2004.
Singapore ranked No 6 worldwide as an offshore private banking centre last year. The Caribbean islands ranked second, then Luxembourg, the US and the Channel Islands off the coast of northern France.
Singapore is the world's fastest-growing market for millionaires. The 2005 World Wealth Report by Merrill Lynch and Cap Gemini shows the city-state of 4.35 million had 48,500 people with assets of more than US$1 million at the end of 2004, up 22 per cent from a year earlier. That was the biggest jump of 16 countries worldwide tracked by the survey.
Credit Suisse last year added 150 staff in Singapore to cater to clients with US$1 million or more, bringing the total to 450.
Spokeswoman Tye Wai Mun said Singapore was the bank's biggest private banking hub outside its Zurich headquarters. The Monetary Authority of Singapore's figures show individuals had S$154.6 billion in assets under management in Singapore at the end of 2004, up 40 per cent from a year earlier.
That was more than double Hong Kong's 19 per cent increase to HK$132 billion in 2004. Hong Kong has US$379 billion in overall assets under management, including those held by institutions, more than Singapore's US$350.8 billion.
Scott said Singapore's offshore private banking assets rose by about a quarter last year to S$200 billion, beating an estimated 20 per cent gain in Hong Kong and a 5 per cent increase in Switzerland.
Kong Eng Huat, 50, managing director of Merrill Lynch's private banking unit, said: "With China and India in the region, Singapore will be used, to a large extent, as the Switzerland in Asia."
Daniel Truchi, head of Societe Generale's Asian wealth management branch, believes some money that used to go to Swiss banks will flow to Singapore after a 15 per cent withholding tax on interest income on Swiss deposits took effect last year.
The Swiss tax, part of a European Union directive aimed at stamping out tax evasion in overseas deposits, will rise to 35 per cent in 2015. Swiss deposits were previously tax-free.
Singapore amended its tax laws in 2004 to attract more overseas wealth. Residents don't pay tax on income they earn overseas and non-residents can apply for residency if they place S$5 million in a financial institution registered with Singapore's central bank. Investment gains earned in Singapore from stocks and other financial instruments are also tax-exempt.
Renato de Guzman, who heads the Asian private banking unit of ING, says communist China's potential influence over Hong Kong makes Singapore safer for wealthy investors, even though both cities have comparable tax laws.
"Hong Kong, being part of China, has many untested rules," he said. "Europeans moving their money to Asia would have a cloud of doubt if we book them in Hong Kong rather than Singapore."
THE TOP 6
* Switzerland.
* The Caribbean islands.
* Luxembourg.
* The United States.
* The Channel Islands.
* Singapore.
- BLOOMBERG
Singapore banks on being Switzerland
SINGPORE - Tan Gim Chong spent most of the past nine years in Singapore's Navy working on a submarine beneath the South China Sea. Now he is preparing to manage money for the world's richest people in the fastest-growing centre for private banking.
Tan, 32, is studying for a masters
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