MAS introduces 3 new measures to strengthen S'pore's asset management industry

The Monetary Authority of Singapore (MAS) has unveiled three new initiatives to bolster Singapore's position as a leading asset management hub amid increasing international competition. These measures were announced on August 19 and include a tax exemption for profit-related returns, a Hedge Fund Investment Programme, and an Investment Management Track under the Overseas Networks & Expertise (ONE) Pass.

Asset management contributes to approximately 15% of the financial sector's output and 13% of its employment in Singapore. The industry has grown by an average of 7.5% annually over the past five years, reaching nearly S$7 trillion in size. It employs nearly 25,000 people, with over 80% being locals, in various roles such as portfolio management, investment research, client servicing, and risk management.

MAS Deputy Chairman Chee Hong Tat stated that these measures aim to attract leading asset managers, global capital, and top investment talent to Singapore. The tax exemption on profit-related returns for qualifying funds is expected to commence from the Year of Assessment 2027, with further details to be announced in Budget 2027. Funds meeting economic substance requirements, including minimum headcount, will be eligible for this exemption.

MAS will also establish a Hedge Fund Investment Programme to invest alongside hedge fund managers who commit to strengthening their presence in Singapore. This initiative aims to cultivate the hedge fund ecosystem, including ancillary service providers and prime brokerages. The specifics of this programme will be disclosed later.

Furthermore, MAS and the Ministry of Manpower intend to introduce an Investment Management Track under the ONE Pass framework. This track is designed for senior investment professionals and global leaders in the industry. It may adjust how salaries are evaluated, considering that a substantial portion of income in the industry is derived from returns linked to investment performance rather than a fixed monthly salary.

Chee Hong Tat addressed concerns about increased competition from Hong Kong, emphasizing that Singapore believes the region is large enough to accommodate both cities' growth as financial centers. He acknowledged the need to review Singapore's policies in response to global developments, recognizing that competitiveness extends beyond tax factors.

MAS must consider trust, stability, the regulatory framework, and access to talent as crucial elements in maintaining the industry's competitiveness. This requires a whole-of-government approach to uphold the financial services sector's competitiveness.