SINGAPORE: The move to scrap one avenue for rich
foreigners to fast-track their permanent residency applications by
parking large sums of money here will have little impact on the
Republic's economy, analysts noted.
In fact, an analyst went as far as to describe the
Financial Investor Scheme (FIS) - started in 2004 - as having
"outlived its usefulness".
Under the FIS, high net worth individuals from
overseas with net personal assets of S$20 million - and at least
S$10 million of assets held in Singapore for five years - can, via
the Monetary Authority of Singapore (MAS), expedite their PR
application through private banks or other financial
institutions.
Up to S$2 million of the S$10 million these foreigners park here
can be used to buy private residential property.
"The scheme has outlived its usefulness and its scrapping will have
no impact on the economy as Singapore can now stand on its own
merit and it won't hurt Singapore's attractiveness to foreigners,"
Chesterton Suntec international head of consultancy & research
Colin Tan told Today.
On Wednesday, the Business Times reported that the FIS will be
scrapped by the end of this month.
On why the FIS was being scrapped, the MAS explained that the
scheme and the Global Investor Programme (GIP) - which is run by
the Economic Development Board - have become similar and it would
be more efficient to have just one investor scheme for PRs.
The MAS reiterated that Singapore continued to welcome quality
individuals who are keen to contribute to the Republic economically
and private banks can continue to direct their clients to the GIP
facility.
The GIP is targeted at entrepreneurs with a track record and who
can boost employment here.
Under the GIP, foreigners have to invest S$2.5 million in a new
company or to expand an existing business in Singapore and the
company should have an annual revenue of at least S$30
million.
Citi economist Kit Wei Zheng felt the government's rationale to
scrap the FIS was to "ensure that (foreigners) who have obtained
their PR via these schemes are able to contribute productively to
the real economy via job creation, and not merely through financial
investments that drive up asset prices".
Barclays Capital economist Leong Waiho added: "Even among wealthy
PR applicants, we favour long-term strategic investors who are
prepared to sink roots in Singapore and who can create economic
value (create jobs for Singaporeans).
"This sets them apart from the more opportunistic crowd, who park
money here to take punts in our asset markets, and who expect to
gain PRs along the way."
Mr Kit noted that it was impossible to "come up with precise
numbers about just how much investments or PRs into Singapore was
due directly to the FIS" - given that the figures are not made
public. But he pointed out that since the inception of the FIS, the
share of PRs in property sales has risen from 10.7 per cent in 2004
to 13.5 per cent as of last year. "Obviously not all new PR buyers
came under the FIS, but it would be reasonable to assume it had
some impact," he said.
Separately, real estate consultancy CBRE said on Wednesday in a
report that despite lower sales volume in the first three months of
this year, regional private investors are expected to remain active
in the property market here.
According to CBRE, the total investment sales hit S$4 billion in
the first quarter, down 53 per cent on-year and 49 per cent
on-quarter.
It attributed the slower private investment sales to the weak
global capital market sentiment and the introduction of cooling
measures such as the Additional Buyer's Stamp Duty.
Nevertheless, it noted that mass market projects remained popular,
prompting developers - especially from China and Malaysia - to
place more aggressive bids for land tenders.
-- TODAY
