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| Singapore, a new home for riches The country, which has eased its banking laws, is touted as the next Switzerland. Its resort properties are luring wealthy foreigners. By John M. Glionna, Times Staff Writer November 11, 2006 SINGAPORE — Helmut Widdek is a gung-ho Austrian entrepreneur who for years has risked venture capital throughout Southeast Asia. He recently began looking for a haven in his semi-retirement — for both himself and his money. That's how he found Sentosa Cove, a resort-style residential development where he has nearly completed his dream home on an 8,500-square-foot plot of oceanfront property with commanding views that only a mega-millionaire can buy. For Widdek, Singapore's stable political, social and economic environment is no high-stakes gamble. "Singapore is clean and nice," said the 63-year-old, who owns a Hong Kong firm that makes leather shoe uppers. "I feel safe here. I want in." It's a match made in financial heaven because the island city-state is seeking to establish itself as Asia's newest private banking hub by luring the planet's super-wealthy — and their bank accounts — away from places such as Hong Kong and Switzerland. As an enticement, Singapore has strengthened bank secrecy laws and is allowing foreigners like Widdek who meet its wealth requirements to buy land and become permanent residents. The goal is to attract private wealth from across Asia, as well as riches that Europeans and other Westerners are moving out of Switzerland to avoid new tax and reporting laws there. Even many Swiss banks are beefing up their operations in Singapore to capitalize on the new business opportunities. The number of private banks operating in Singapore has nearly doubled, to 35, in the last six years, officials say. Authorities estimate that money managed by private banks in Singapore has grown 20% each year since 2000 to more than $200 billion today. "We're convinced that Singapore over the next five to 10 years will continue to be a very attractive place for private banking," said Roland Knecht, an executive at Swiss-owned Clariden Bank. "For a private bank like ours, operating on a global basis, expanding here is simply a must." One benefactor of the new foreign influx is Sentosa Cove, a 300-acre residential resort offering amenities such as two golf courses and a 200-berth marina, including 10 spots especially designed for mega-yachts. Designed to emulate idyllic waterfront resorts of the Caribbean and Mediterranean — but with 24-hour security — the resort has hosted various international yachting events. Singapore's only oceanfront residential development with quick access to downtown, Sentosa Cove is to eventually offer 2,500 homes with ocean, harbor and fairway views. There is also a marina village offering harbor-front shops and restaurants overlooking the marina and the sea. The resort is tucked into a corner of Sentosa Island, with its beaches, nature trails and theme parks. A casino is planned for the property in the next few years. By 2010, when the project is expected to be completed, 60% of the 10,000 Sentosa Cove residents will be foreigners, officials say. "We encourage people to move here, bring their businesses and set up headquarters," said Darrell Metzger, chief executive of Sentosa Leisure Group. "For families, the Singapore school system is one of the best in the world." Sentosa Cove is the only development in Singapore that allows international ownership, he said. He called the country a perfect base for those who wanted a secure environment while they invested in more volatile countries such as China or India. "Everything works here, from the subway system to the banking system to the airport," Metzger said. "It's stable and it's comfortable, from the politics to the infrastructure." Widdek is so content with Sentosa Cove that he wants other rich friends to join him. "People have called me about the place and I tell them 'Come on down,' " he said. "The world needs a second Switzerland. And that's what Singapore is." Singapore's foray into the wealth management business comes as new regulations are cutting into the holdings of longtime European banking customers. Under pressure from governments to discourage tax evasion, banks in Switzerland and other once-impenetrable financial havens — which for years have given foreign-government tax agents little cooperation — have begun withholding taxes on some accounts. Singapore's banking-friendly regulations are attracting wealthy foreigners looking for a new tax haven. Laws enacted in 2004 allow outsiders with assets of $13 million or more to become permanent residents if they deposit $3 million into a Singapore bank. Those seeking resident status can use as much as $1.25 million of those funds to build on exclusive Sentosa Cove, which has quickly filled with wealthy jet-setters from nearly 20 countries. "It's the best of both worlds," Widdek said. "I can invest my money into a property I really want. And get residency in a place I really want to live." But critics say that trying to become the new Switzerland has its risks. Singapore is taking a financial gamble in advertising an environment that is light on taxes and heavy on secrecy, some say. Because along with good money, they warn, could also come the bad: illicit funds from terrorist groups or crime syndicates. Singapore may have learned a lesson from another Asian economic powerhouse. In Japan, for example, financial regulators years ago pulled the private banking license of Citigroup Inc., the world's largest financial institution, in part for not scrutinizing private banking clients rigorously enough. Regulators in Singapore insist that the government is not seeking to attract tax evaders and stress that the country has strong laws to pursue terrorists and others who might try to park illegal funds there. In an e-mail, officials said they cooperated with foreign authorities investigating money laundering and terror financing. Some free trade advocates say that Singapore is not leaving itself vulnerable. Singapore has extensive anti-money laundering laws and has a clean bill of health from international monetary regulators, said Daniel Mitchell, a tax economist at the Heritage Foundation, a Washington-based public policy research group. "Those are not the characteristics of a rogue regime," he said. Widdek was among the first foreigners to express interest in bringing his wealth to Singapore, but back in 2004, he said, the atmosphere was not so welcoming. "They didn't have the laws they do today," he said. "I told them 'I want to invest honest money with you. I want permanent residency, like I have in Hong Kong. But I'm not building anything on a tourist visa.' Luckily, the laws soon changed." Three years earlier, Singapore passed laws that imposed stiff fines for breaching the confidentiality of bank customers. Still, Widdek said he had become convinced that Singapore would not just accept any millionaire into its fold. "They checked me out very thoroughly — they checked my balance sheets. They wanted to know how I came into our money. And we had to present very clear information about us," he said. He said officials were aware of the dangers of hyper-secret private banking. "I told them, 'You can easily attract corrupt people from mainland China or Russian mafia, or anyone else who is more trouble than they're worth,' " Widdek said. "But in reality, these people are very careful. They are doing their due diligence. And if you are fair and honest, they will leave you in peace." Clariden Bank has had a presence in Singapore since 1986, and it recently hired more staff, said Knecht. It also is developing a desk on which money managers speaking several languages serve foreign clients via by phone. By 2010, nearly a quarter of Clariden Bank's private banking funds in Singapore will be from Europeans, he said. "Singapore is certainly benefiting from the new tax regulations in Europe," Knecht said. "We're coming across more clients who are looking at Singapore — moving money from Switzerland and the European Union because of the withholding-tax issue." But there are reasons other than just beating the taxman, he said. "More than ever, Europeans want to invest in Asia," Knecht said. "And they want to have their money managed in the region by portfolio managers familiar with the region. Singapore has that." |
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