FAMILY OFFICES: Family offices under tax incentive schemes have hired 1,400 S’poreans and PRs

Single family offices (SFOs) that have applied for and received tax incentives under the Section 13O and 13U schemes employed about 1,400 Singaporeans and permanent residents (PRs) as at June 2022.

Senior Minister Tharman Shanmugaratnam was replying to two parliamentary questions on the contributions of family offices to Singapore’s economy on Thursday.

Mr Gan Thiam Poh (Ang Mo Kio GRC) had asked for details on the number of jobs that SFOs have created in the local economy and the salary range of the people employed by them.

Mr Tharman said that of the 1,400 jobs, about 900 were created in just the last three years.

“These are generally well-paying jobs,” he said, adding that two-thirds of those employed “earned more than $5,000 per month”. 

Of the rest, Mr Tharman said “more than 400 earned between $2,000 and $5,000 per month, and fewer than 50 earned less than $2,000 per month”.

Mr Tharman, who is also the outgoing chairman of the Monetary Authority of Singapore (MAS), said the data is based only on SFOs that have applied for and received tax incentives under Section 13O and 13U.

He said MAS does not have data on all SFOs because these offices manage the assets of their own families and are therefore not required to be licensed by MAS.

Ms Mariam Jaafar (Sembawang GRC) asked whether a study has been done to quantify the contributions of family offices set up in the past three years.

She wanted to know how these SFOs have contributed to the Singapore economy and how their contributions compare with those of other groups, including citizens and foreigners under employment passes.

Mr Tharman said the offices contribute to the local economy in two ways – by creating jobs directly when they hire individuals such as investment professionals; and indirectly when they generate revenue and help create jobs for other players in the SFO ecosystem, such as private banks, legal, custody, fund administration and tax firms.  

MAS intends to conduct surveys to gain a better understanding of SFOs’ contributions in these other areas – how they benefit the economy indirectly when they generate revenues for other businesses; and how SFOs are a source of capital – said Mr Tharman.

These changes are intended to encourage family offices to deploy capital “more purposefully to benefit Singapore and the region” by channelling more of the wealth they manage to local enterprises, blended finance structures aimed at supporting sustainable development, climate-related investments and charitable contributions.

Mr Tharman said: “MAS will continue to review the Section 13O and 13U tax incentive schemes to ensure SFOs continue to make meaningful contributions to Singapore.”

He clarified that “Section 13O and 13U do not accord PR or citizenship status” to foreign family office owners.

He pointed out that the Global Investor Programme, which is administered by the Economic Development Board, accords PR status to eligible international investors.

And, since 2020, Mr Tharman said about 30 SFO owners have been supported under the programme.

“Having high net worth and setting up SFOs in Singapore do not guarantee Singapore citizenship and PR. Each application is assessed based on a range of factors.

“These include the ability to contribute to Singapore, the number of jobs that the applicant and his/her businesses may be able to create in Singapore, special skills/education the applicant may possess, the applicant’s family ties to Singaporeans, the ability to integrate, and the commitment to sink roots in Singapore,” Mr Tharman added.