SINGAPORE: the new SWITZERLAND of CHINESE millionaires?

If I mention Switzerland, I’m sure many of you automatically think of things like banking, fine jewelry and safes. The mother of all tax havens. The country where money never sleeps. The place where bank accounts are soooo much more important than food itself. Am I wrong? I’m sure I’m not. And things have changed a lot lately. Yes, it’s true, Switzerland is not what it used to be. In order to gain access to the European common market, the Swiss Confederation has had to make a lot of concessions. For example, the legislation on banking secrecy had to be

completely changed. Reforms that, naturally, have had consequences. Switzerland has been progressively losing positions in some of the rankings that serve to determine the degree of economic freedom of a country. Yes, Switzerland still has very low taxes and is still the second country in the world in terms of economic freedom according to the Heritage Foundation ranking, but if we look at the regulations, it is no longer such a “paradise” destination. In fact, the country has been falling progressively in the World Bank’s Doing Business ranking, to reach the 36th place it currently occupies. To put this in

context, it was ranked 19th in 2008. But let’s make no mistake. The Swiss continue to have – and to offer the rest of the world – one of the best legal

safety nets in the world for investments, savings or simply for depositing wealth. And I’m not just talking about money. That is to say, Switzerland is a skiing paradise, an industrial power and an important technological center, but, above all, it is a gigantic safe: money, works of art, jewels… Practically everything. Without going any further, here on VisualPolitik we made a video about Switzerland and the art

industry. And what can I say? Everyone trusts the Swiss Franc, we have already explained why on our sister channel, VisualEconomik. However, as I have already said, a lot has changed in recent years. Not only because Switzerland is no longer exactly the country we all imagine it to be, but also because competition has emerged. Today, there are other countries in the world that can even boast that they are gaining ground in the favorite activity of the Swiss: being the meeting place for millionaires and billionaires from all over the world. In fact, we can find one country

that not only already surpasses Switzerland in many financial fields, but also, thanks to its geographical location, could become the new refuge of the world’s largest fortunes. Any idea what country we’re talking about? 3, 2, 1… Exactly! Singapore. Even without the thumbnail, I’m sure, certain, that many of you would have guessed it. Well, take a look. (Swiss financial center faces growing global pressure. Hong Kong will “probably” overtake Switzerland – “ending a run of more than 200 years of Swiss dominance” in the private cross-border wealth management sector, BCG wrote. Singapore will even come close to ousting Switzerland

from second place in the coming years. – Swissinfo) Yes, I know, the news highlights Hong Kong, but there is a bit of a catch. Hong Kong is a very significant financial center… Specializing mainly in China. That is to say, its position has a lot to do with being the financial gateway to and from the Asian giant. So it has an advantage. But let’s not get sidetracked, the fact is that Switzerland has been a haven for the wealth of the great fortunes for the last two centuries or so, coinciding with the time when the West was

the only really rich, thriving and prosperous area on the entire planet. Well, for some time now, Singapore has been developing into something very, very similar in Asia: an open, safe and sound business, savings and investment environment. And, don’t forget, we are not only talking about China and the great fortunes of this country, but also about economies with amazing projections for the coming decades such as Indonesia, Malaysia and Vietnam. All of them are just a stone’s throw away from this city-State. And if that were not enough, established heavyweights such as Japan and South Korea, as well

as China, are also relatively close. So, the question is, could we say that this unusual Southeast Asian city-State is set to become the next Switzerland? Where does all the wealth coming into Singapore come from and what exactly are the reasons why people choose this place to park their cash? Well, we’re going to answer these and other questions in this video, but, hold up, before we get ahead of ourselves, let’s talk about a serious matter. Are you doing anything to stop your personal information from being sold on the internet without your knowledge? According to the Identity

Theft Resource Center’s annual report on data breaches, there were 68% more breaches in 2021 than the previous year – yikes! But don’t throw in the towel just yet. You have the right to protect your privacy by asking data brokers to remove your information. The only downside is that doing it manually would take longer than a political debate! Thankfully, our sponsor, Incogni, is here to help. Their three-step solution will have you covered. First, create an account and enter your details. Second, grant them the right to go to work for you. They will contact the data brokers

on your behalf to request the removal of your personal data. And third, Relax and watch them work. They will handle any objections from the data brokers and keep you informed of their progress every step of the way. And best of all, the first 100 of you who use the code POLITIKEN via the link below will get 20% off at Incogni. Don’t let this opportunity pass you by! (THE KEEPER OF THE MONEY) Switzerland remains a major haven for global wealth. According to Deloitte, in 2020 the country’s financial industry managed $2.6 trillion, with a capital T, in

international assets. In total, their financial assets exceeded $4.1 trillion in 2021. To give you an idea, this is almost 40% more than the entire size of the financial system of a country like Spain, a country whose population is 5.5 times larger than that of Switzerland. Well, Singapore is still a long way behind, in total, according to the Basel International Bank for Settlements, its financial system manages just over $2 trillion in assets, about half that of the Swiss system, but it is growing much more rapidly. Singapore is fast becoming a major wealth management center in Asia

and threatens to overtake Hong Kong itself. This is something we have talked about on several occasions here on VisualPolitik, Xi Jinping’s assault on Hong Kong, traditionally the epicenter, the financial heart of Asia, has left the former British colony with a very unflattering reputation. You know the story, basically, the legal certainty that existed before the Chinese authorities came to the table, bypassed international agreements and took over the city, no longer exists, or at least, it is fast disappearing… Not surprisingly, this is something that scares away international capital and investors. Having your money under the control of

Xi Jinping’s People’s Republic of China? Would you trust them to never get their hands on it? Exactly… No thanks. Logically, this is something that affects international investors… But also the large Chinese portfolios that until now have used Hong Kong as an escape route, as a safe deposit box out of the reach of the Chinese Communist Party. Because of what could happen. But since that is no longer a solution… Or at best it is no longer completely guaranteed, it is time to seek refuge elsewhere. And guess what? This is exactly why the financial industry in Singapore

is having a rebirth. Everything indicates that in a few years Singapore will not only surpass Hong Kong as the main financial center, but it will be to the Asian continent what Switzerland is to the rest of the world. Take a look. According to Deloitte, Hong Kong’s international market volume, that is, the number of transactions in equities, deposits, indices or other investments, grew faster than Singapore’s between 2010 and 2016. However, from then on things started to change and from 2016 onwards it fell below Singapore’s growth between 2017 and 2020. And the forecast is that things will

only get worse. Yes, Hong Kong’s financial sector is still growing, but its dynamism is no longer the same. Meanwhile, Singapore is growing steadily. Now, financial investments are not the only thing Singapore is taking off in. Not at all. Huge amounts of foreign money are also coming in in the form of direct investments, such as setting up companies or buying real estate. And, naturally, as you can imagine, one of the biggest players in this whole process is Chinese capital. The pandemic accelerated this process, but we are talking about an underlying trend. For example, according to the

Financial Times, the number of family offices, – that is, funds or investment platforms dedicated to managing the large estates of individual families – grew by 1,400 percent in Singapore between 2018 and the end of 2021. The number of funds has grown from about 50 to more than 700. And it is estimated that by the end of 2022 that figure could be around 1,500. Of these, 40% would be in capital originating from mainland China. Likewise, as many as 500 Chinese companies were registered in Singapore in 2022 alone. From there they will direct investments into countries such

as India, and many other booming places in the region. And if anyone thought that with the end of the COVID-zero policy in China things were going to calm down, well, everything indicates that exactly the opposite is happening. (27 February 2023: As China Reopens, Flight of Wealthy Chinese to Singapore Set to Accelerate – The Wall Street Journal) And look, according to the consulting firm Henley & Partners, which advises high net worth individuals on obtaining residences abroad, Singapore received about 2,800 new rich in 2022. It thus became the third most popular destination worldwide after the United Arab

Emirates and Australia. [As a side note, Switzerland ranks fifth in this ranking with 2,200 arrivals of wealthy foreigners]. So although Singapore does not publish the nationality of the new residents, it is estimated that most of them are Chinese. In other words, many wealthy Chinese saw the writing on the wall during COVID and now that they can move freely they are betting on fleeing. And yes, the danger is Xi Jinping, in case that’s what you were wondering. In addition, many of these large Chinese fortunes fear that Beijing’s tolerance of letting big money and companies out of

the country may soon end… They may even begin to restrict such movements, so many believe that if they don’t do so now, they may never be able to put their wealth in safekeeping again. (“This is representative of the COVID policies, and the Chinese Communist Party’s regard to limit people’s lives and freedoms. So, in preparation for the likely worst, they must cast their safety net overseas.” – Joseph Fan, professor specializing in finance and governance at University of Queensland) In addition, another major reason why the choice of many large Chinese fortunes has been Singapore has to do

with the Russian invasion of Ukraine. Yes, that’s what I said, with Ukraine. But… What on earth does Ukraine have to do with Singapore? Well, you see, … Let me explain, the distrust towards Xi Jinping’s increasingly nationalistic vision generates fear and doubts that he may ultimately end up taking some serious action in Taiwan, which could push the West to impose sanctions against China. That is why many Chinese are opting for places that could be more neutral rather than taking their wealth only to Europe or the United States, and Singapore, well, it meets all those requirements. Obviously

all this also has consequences at the local level. For example, housing prices in Singapore grew by 8.6% in 2022 alone and according to market analysts, Chinese buyers bought the most condominiums out of all foreign buyers. And, keep in mind that we are talking about a micro-State of only 5.6 million inhabitants in an area barely larger than the city of Madrid, almost half of which is mountains or protected areas. So as you can imagine, it’s not as easy as simply building more and more housing to accommodate the huge demand. This is, in fact, one of the

major problems of the city. But we are not going to go into more details about this issue because we already talked about the housing problem in Singapore in a past video that we’ll link for you in the description. Now, aside from this matter, what exactly is Singapore offering the Chinese that so many are suddenly choosing to seek refuge there from Xi’s growing authoritarianism? You see, this city-State is particularly attractive to the Chinese. Well, it is close to Hong Kong and mainland China, and three quarters of the local population are ethnic Chinese. As a result, Mandarin

is widely spoken in addition to English, so the language and cultural barriers are very small. Singapore also has some of the best schools and universities in the world. This is a factor particularly valued by Chinese families. Naturally, the city also has a well-developed wealth management industry. And to top it off, the large presence of Chinese companies in the country is making it possible to weave a whole Chinese business cluster. For example, ByteDance, the Chinese company that owns the popular TikTok app, has a major office in Singapore. And in fact it is betting on increasing its

presence until it becomes practically a sort of second headquarters. (TikTok owner ByteDance to invest billions in Singapore over three years: source plans to invest billions of dollars and recruit hundreds of employees in Singapore after opting to base its Southeast Asia regional headquarters there . – Reuters) This is just one example amongst dozens and dozens that we could list. Because the truth is that Singapore is also becoming a major hub for technology companies, especially for those oriented towards finance. And, of course, let’s see, this city has first-class technological infrastructure, a top-rate educational system that is very

oriented to information technologies, regulations that are not too dense and a lot of financial companies. In other words, Fintechs are in their element here. In fact, this is perhaps one of the most thriving sectors in Singapore, but it is not the only one. Do you want to know how the future of the Singaporean economy is shaping up for this kind of rebirth? Do you want to know how Singapore aspires to become nothing less than the richest country in the world? Well, let’s take a look. (THE SINGAPORE OF THE FUTURE) Singapore has been on a roll

of late, and its strong growth as a financial center and a haven for high net worth individuals is making it possible for the government to set new economic goals. For example, at the end of 2022, the strategy up until 2030 was established. And the question is, what exactly does Singapore hope to become? Well you see, we start from the assumption that some of the most developed sectors in the country are currently fintechs, biotechnology and medical tourism. To give you an idea, of the 100 local companies with the fastest growth between 2018 and 2021, 10 are

fintech, 8 are in logistics and transportation, and 7 are in energy and utilities. In fact, there were 1,002 fintechs registered in Singapore alone as of June 2022. Although, naturally, you may not know offhand whether this is a lot or a little. Well, if we compare it with the just under 10,000 that exist in the United States – and keep in mind, it is the world leader – we quickly realize that there are a lot of them in Singapore. The United States, the world leader in this field, has only 10 times more Fintech companies despite having

59 times more inhabitants! But… We are not only talking about the digital world. What if I told you that one of the sectors that has been growing the most lately in this micro-country is, precisely, manufacturing? What if I told you that this sector is the top priority of the 2030 plan? Yes, despite the fact that Singapore is a very small place, the manufacturing sector accounts for 22% of its GDP. To give you an idea, in Spain, France and the United Kingdom this sector accounts for 13%, 10% and 9% respectively. In fact, one out of every

eight jobs in Singapore is in manufacturing. As you can see, it’s not all big skyscrapers of banks and insurance companies. There is a lot more to Singapore. However, if you are thinking of shoe or toy factories, you can put that out of your mind. Singapore specializes in highly advanced, high value-added manufacturing, such as electronics. This includes semiconductors, precision engineering, chemicals and also the production of components for the aerospace industry. In total, advanced industries account for around 80% of all production. Just as Switzerland has succeeded in creating highly specialized and sophisticated industries, such as the biomedical

industry, Singapore is doing exactly the same. But now the government intends to go much further, and has created a plan in which robotics and artificial intelligence play a key role. The goal is to eventually reduce local, low value-added jobs to an absolute minimum. The idea is not only that low value-added jobs will be reduced in number, but that those who work them will commute daily from the border Malaysian state of Johor. And the truth is that they are on the right track. To give you an idea, in the five-year period 2017-2021, manufacturing labor productivity grew

by an average of 11.9% per year. Now, why do Singaporeans believe that they have to strengthen manufacturing instead of, for example, specializing completely in the services sector at full throttle? Well, you see, just like the Swiss did, instead of discarding any kind of gamble on anything beyond banks, insurance companies or, I don’t know, the investment industry, the government wants to promote a strong local industry that is not so exposed to global economic ups and downs. In other words, diversification with a capital D, but in fields of very high added value. We also told you here

on VisualPolitik how Singapore is doing something similar with the primary sector. The government is promoting the creation of hi-tech farms all over the country. We’ll also link that video in the description. All things considered, the fact is that to achieve all these objectives, Singapore apparently has all the necessary ingredients: A huge number of highly qualified professionals, a huge amount of capital ready to invest in all kinds of projects, a lot of legal security, low taxes, top infrastructure and communications and a long list of professionals and investors willing to move there. So, you see, Singapore really

does seem to be on the verge of becoming the new Switzerland with a very similar formula for success, albeit updated to both the current era and its regional context. As you can see, the Swiss are still richer… But that may change very soon.But now… It’s your turn, do you think that Singapore’s model for attracting high net worth individuals is replicable in other countries? Leave us your opinion below, in the comments. And, if you liked this video, don’t forget to like it and subscribe to our channel so you don’t miss any news. And remember, if you

like what we do you can support us to keep creating more and better content by joining our community on Patreon. In return you will receive a lot of extra content. We’ll leave you the link below, in the description. Once again, thank you for watching. All the best and see you next time.

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