Singapore Is Attracting More Family Offices From Around the Globe
As vice-chairman of Indorama Corporation, Mr Amit Lohia helps run a multi-billion-dollar business founded by his father that has industrial plants in nine countries and is a leading manufacturer of many products ranging from fertilisers to textiles. His family could have set up its family office anywhere in the world, but chose Singapore due to the city-state’s strong financial and legal infrastructure as well as high quality of life.Earlier this year, the Lohias shifted their family office from Dubai to Singapore. Bank of Singapore provided guidance and support, in collaboration with tax and legal professionals, to facilitate the move.
Besides single-family offices such as the Lohias’ Indorama Capital Holdings, Singapore is also home to multi-family offices that look after the wealth of several families and satellite offices of family offices headquartered in other countries. Mr Lohia, who was born in India and grew up in Jakarta, currently splits most of his time between Singapore and London, attesting to the multinational characteristics of many wealthy families.
Privately held family offices manage the wealth of affluent families. Many also handle other issues and objectives such as tax, legal, succession, philanthropy as well as environmental, social and governance (ESG). Bank of Singapore, which discusses and journeys with families on their interest and set-up of their family offices, says Singapore’s advantages include business and political stability, strong corporate and trust laws, a ready pool of experienced wealth management professionals, and a clear and transparent tax regime. If the family office manages the wealth of one family, it can apply to be exempt from the onerous capital market license requirement for professional fund managers who manage the wealth of multiple families.
Supportive Regulators
Singapore is continuously developing knowledge and expertise to enhance the family office ecosystem through partnerships with the public and private sector. For instance, the Monetary Authority of Singapore (MAS) and the Economic Development Board (EDB) have set up a Family Office Development Team to lead and coordinate initiatives that will enhance Singapore’s position as Asia’s premier base for family offices.
MAS has also set up a Family Office Circle for family offices to get together, network, share their thoughts on common areas of interest and participate in co-investment opportunities.
In addition, organisations such as the Institute of Banking and Finance and Wealth Management Institute provide regular training courses to develop talent for the sector.
Diverse Fund Management Industry
Sitting at the centre of South-east Asia, Singapore is also well connected to the different economies of the Asia-Pacific region and the rest of the world.
According to the Singapore Asset Management Survey conducted by MAS, Singapore-based fund managers managed some $4.7 trillion last year, an increase of 17 per cent over 2019. This growth was mainly driven by the alternatives sector.
“The wealth management industry is very well developed with many private banks, funds and investment firms having a large presence and offering a wide range of investment products and solutions,” Mr Lohia says.
He adds that Indorama Capital Holdings is keen on thematic investments involving the circular economy, technology and clean energy, areas that are relatively well developed in Singapore.
Family offices that are interested in innovative and fast-growing companies will benefit from Singapore’s thriving start-up network of incubators and accelerators.
To support the increasing needs of family offices to integrate ESG principles in their investment and business, Bank of Singapore has collaborated with relevant organisations to engage clients and raise resources and contributions to support ESG initiatives.
As Singapore ratchets up plans to become the region’s carbon services and green finance hub, family offices can look forward to new exciting opportunities in sustainability.
Preserving a Family’s Wealth
“Besides managing investments, setting up a family office can also protect a family’s wealth,” says Ms Lim Li Li, head of Global Investors and Family Offices at Bank of Singapore.
Through a family constitution, the family can make clear distribution policies and how disputes will be resolved amicably in future. Integrating philanthropy in the family office can help create a common purpose among family members and develop stewardship in family wealth.
Many far-sighted families such as the Lohias have taken steps to articulate how their wealth should be managed to align with deeply held values and shared purposes, building a legacy that will benefit future generations.
The sad reality is that wealth can destroy relationships. Ms Lim has seen many families being torn apart because they failed to plan ahead, ignoring potential conflict wealth may create.
“There are too many examples of how family members have taken undesirable measures that have caused harm and destroyed value, at times just to protect their self-interests, thereby missing the opportunity to preserve the legacy of the family founders.”
There is an old saying that the family that eats together stays together.
Family offices can help keep family members together, creating bonds that ensure their legacies last beyond the current generation.
Benefits of a Family Office
Sitting at the centre of South-east Asia, Singapore is also well connected to the different economies of the Asia-Pacific region and the rest of the world.
According to the Singapore Asset Management Survey conducted by MAS, Singapore-based fund managers managed some $4.7 trillion last year, an increase of 17 per cent over 2019. This growth was mainly driven by the alternatives sector.
“The wealth management industry is very well developed with many private banks, funds and investment firms having a large presence and offering a wide range of investment products and solutions,” Mr Lohia says.
He adds that Indorama Capital Holdings is keen on thematic investments involving the circular economy, technology and clean energy, areas that are relatively well developed in Singapore.
Family offices that are interested in innovative and fast-growing companies will benefit from Singapore’s thriving start-up network of incubators and accelerators.
To support the increasing needs of family offices to integrate ESG principles in their investment and business, Bank of Singapore has collaborated with relevant organisations to engage clients and raise resources and contributions to support ESG initiatives.
As Singapore ratchets up plans to become the region’s carbon services and green finance hub, family offices can look forward to new exciting opportunities in sustainability.
Advantages of Setting up a Family Office
- Provides a structured approach to managing and preserving the family’s wealth
- Facilitates discussions on topics such as succession planning and inheritance
- Enables better risk management
- Helps younger family members learn about investing
- Creates a formal structure for philanthropy, ESG and impact investing
Bank of Singapore has established a dedicated Family Office Advisory team to discuss and journey with families on their interest in and setting up of their family offices, integrating their family and investment needs and pursuing their wealth purposes.
A part of the Oversea-Chinese Banking Corp (OCBC) Group, Bank of Singapore is headquartered in Singapore with a presence in Hong Kong, Manila, Kuala Lumpur, Dubai, Luxembourg and London.
In addition, Bank of Singapore has a well-established trust company, BOS Trustee Limited, which can act as a trustee for the family’s investment fund vehicle. BOS Trustee Limited has been serving clients from around the world since 1938 when it was incorporated as Chinese Bankers Trust Company Limited.
Referring to the Chinese saying “Wealth does not last beyond three generations”, Ms Ng says setting up a family office – with help from experienced professionals who understand Asia and the nuances relating to its cultures – can be a powerful tool to beat the third-generation curse.
