Financial

HubS I N G A P O R E

Page 2SocGen Extends ItsCapabilities In Singapore

Page 3Legg Mason Group OpensSingapore Office

Page 4Deutsche AssetManagement Awarded EFMStatus

Page 5Merrill Lynch MercuryAchieves EFM Status

Page 6Zurich Scudder InvestmentsOpens Singapore Office

Page 7Gerling Global Re, HSBCInsurance, and Swiss ReAwarded AMI Status

Page 8Singapore Further LiberalisesDebt Market

Page 10AIG International OpensTrading Centre In Singapore

Page 11United Parcel Service (UPS)Gets Bullish In Asia Pacific

Page 12General Electric - One Of TheOldest FTCs In Singapore

New Retirement SchemeOpens Doors for InvestmentOpportunities

Page 13Singapore Budget Hands OutGenerous Tax Cuts

Page 14Setting Up A Business InSingapore - How Much DoesIt Cost?

Back pageWhat’s Buzzing in FinancialHub Singapore?

Issue i-01 April 2001

MAS Announces NewInitiatives for EnhancingFinancial Sector Expertise

The Monetary Authority Singapore (MAS) announced in January that it will be establishing a

framework of strategies to enhance financial sector expertise in Singapore. This involves:

(i) setting up a Financial Network for Excellence in Training (F-NExT); and

(ii) establishing a S$0.5 billion Financial Sector Development Fund (FSDF).

In announcing the initiatives, MAS managing director Tharman Shanmugaratnam said, “As

Singapore extends its financial catchment beyond the region, the competition we face in skills

and talent vis-à-vis other major centres will sharpen. The quickening pace of innovation in

global financial services will also demand a more rapid and continuous infusion and upgrading

of skills. What ultimately defines us as a successful financial centre will be the infrastructure

of rules, networks and capabilities that encourages Singapore-based players to seize new

business opportunities.”

Financial Network for Excellence in Training (F-NExT)

A Financial Network for Excellence in Training will be set up by the middle of this year, bringing

together local institutions of higher learning and renowned international training providers.

F-NExT will help to identify skills and training needs, facilitate collaboration to ensure the

matching of training demands, encourage synergies in the supply of training resources, and act

as a platform for discussions on standards of professional competence amongst financial sector

professionals. Seven institutions have already expressed interest in joining F-NExT, including:

France’s INSEAD, the University of Chicago, the New York Institute of Finance and the

Singapore College of Insurance.

Financial Sector Development Fund (FSDF)

MAS has also set up a new fund to enhance the expertise and skills of financial sector

professionals. Amounting to S$0.5 billion, FSDF supports 3 manpower development schemes:

(i) Executive Development scheme;

(ii) Global Enrichment Initiative; and

(iii) Training Infrastructure Enhancement Scheme.

Keeping in touch withdevelopments in the SingaporeFinancial Sector

Published by Financial SectorPromotion Department,Monetary Authority of Singapore

[ More on FSDF on page 15 ]

2

Already a key player in the Singapore financial sector,

Societe Generale (SG) further reinforced its

commitments in Singapore, when its corporate and

investment banking arm was awarded the Operational

Headquarters (OHQ) status in January last year.

As an OHQ, SG serves as a regional control centre,

providing IT and other supporting services to

subsidiaries and branches throughout the Asia Pacific.

There are also plans to change the core IT

applications system of SG branches in Asia, to enable

Singapore to become the regional data processing

centre for the region within three years.

Prior to its award of OHQ status, SG also received a

Restricted Bank license from MAS in October 1999.

The license was part of the government’s efforts to

liberalise Singapore’s banking sector. “We are

delighted to be granted extended capabilities,” said

SG Singapore’s CEO Daniel Molle. “Thanks to the

extension of our capacities in Singapore Dollar

financing, our clients will enjoy additional services in

the areas of project finance, syndication and foreign

exchange such as swap products.”

SG Asia was also awarded the “Approved Bond

Intermediary” status from MAS last year. This enables

the company to increase its activities in Singapore’s

debt market. SG’s debt capital markets activities focus

on syndication finance, including origination, distribution

of syndicated loans in primary and secondary markets,

project finance syndication and other bond activities.

SG first opened in Singapore in 1989, offering

commercial and capital market services. Today, its

services span a range of corporate and investment

banking services. Its Asian equity arm offers

corporate, economic and strategy research

capabilities. The Societe Generale Group is one of

the world’s top 20 banks, with total assets of US$447

billion. Its services range from corporate banking to

debt, advisory and equity services.

Societe Generale Extends ItsCapabilities In Singapore

“Thanks to the extension of our capacities in Singapore Dollarfinancing, our clients will enjoy additional services in the areas ofproject finance, syndication and foreign exchange such asswap products.”

Daniel Molle,CEO, SocGen Singapore

MAS’s Operational Headquarters (OHQ) scheme is aimed at encouraging reputable financial institutions with substantialinternational operations to set up Operational Headquarters in Singapore. Under the scheme, an OHQ enjoysconcessionary tax rates from providing qualifying headquarter services to its regional network companies.

3

Legg Mason Asset Management Group, an arm of

Legg Mason, Inc, a publicly-owned, US investment

firm with assets of over US$200 billion, recently

opened its Singapore office to oversee South Asian

operations. The new office is a joint initiative of Legg

Mason with Western Asset Management Company,

one of the world’s premier fixed income managers,

and Batterymarch Financial Management Inc, a

pioneering leader in intelligent quantitative equity

management. The joint group is spearheading Legg

Mason’s activities in Asia.

“I have been very impressed withSingapore’s commitment to the financialsector, as supported by the high qualityof its professional community and itsoverall infrastructure,”

Raymond A. Mason,Chairman and CEO, Legg Mason, Inc.

“We believe this will enable us to build a durable

and mutually beneficial relationship among our

established investment organizations and this new

initiative in Singapore.”

The new hub comprises Legg Mason Asset

Management (Asia) Pte Ltd, Western Asset

Management Company (Asia) Pte Ltd, Western

Asset Management Company (Asia) Pte Ltd and

Batterymarch Financial Management (Asia) Pte

Ltd. The new offices are headed by Grant W.

Schick, Lye Thiam Wooi and Margaret Ang, who

have been appointed to represent LMAM (Asia),

Legg Mason Asset ManagementGroup Opens Singapore Office

Western Asset, and Batterymarch, respectively.

Mr. Lye’s and Ms. Ang’s considerable knowledge

and experience in the Asian marketplace are well

known to local market participants, having recently

returned to Singapore after completing their

proprietary training in the United States and

London. Mr. Schick is being transferred to

Singapore from Legg Mason’s US offices.

Legg Mason Asset Management Group is the

umbrella organization that includes all the

institutional money managers and mutual fund

distribution entities of Legg Mason Inc. The group

has approximately US$130 billion of institutional

assets under management, including approximately

US$30 billion in proprietary mutual funds . These are

managed by Group members and distributed to

individual and institutional investors worldwide.

All smiles for the Legg Mason Asset Management group in Singapore.

4

The Singapore arm of Deutsche Asset Management

was awarded the Enhanced Fund Manager Status last

year, allowing it to enjoy a five-year tax break on

revenues. Choy Peng Wah, Chief Executive Officer of

Deutsche Asset Management (Asia) Ltd (DeAM) said:

“With fund management activities in Asia poised for

further growth, this tax advantage will encourage us

to relocate more of our operations here rather than to

other centers.”

DeAM serves as the regional hub for the group’s

Asian equity and bond investments, ex-Japan. In

addition to managing the group’s Asian client funds,

the office also handles the Asian assets of Deutsche

Asset Management’s overseas institutional funds; the

Asian portion of the group’s global emerging market

portfolios; and global small company portfolios.

DeAM is also the Asian regional headquarters

responsible for compliance, administration,

accounting and IT services. The office also oversees

marketing and sourcing of new assets into its Asian

and global investment products.

Deutsche Asset Management AwardedEnhanced Fund Manager Status

In recent months, DeAm has expanded aggressively in

the region, with new offices set up or planned for

China, Hong Kong, Taiwan and India. The new offices

will provide research coverage of these markets,

as well as introduce new investment products in

those areas.

First opened in Singapore in 1987, DeAM was one of

the first foreign fund managers to set up local

operations. It now has 70 staff based in the Republic,

with another 11 staff in other Asian cities. The parent

group Deutsche Asset Management is one of the

world’s largest fund managers, with more than 400

investment professionals managing more than

S$1.1 trillion in assets. In the last twelve years,

its acquisition of Morgan Grenfell and Bankers

Trust has enabled the group to rapidly expand its

global network.

“With fund management activities in Asia

poised for further growth, this tax

advantage will encourage us to relocate

more of our operations here rather than to

other centers.”Choy Peng Wah,

CEO, Deutsche Asset Management (Asia) Ltd.

CEO of Deutsche Asset Management, Choy Peng Wah,with CIO Graham Muirhead.

5

As a sign of its growing presence in Singapore,

Merrill Lynch Mercury Asset Management (MLM) was

awarded the Enhanced Fund Manager status by the

MAS last year. The new status, which enables the

group to enjoy preferential tax treatment, serves to

bolster the company’s already strong presence in

Southeast Asia.

Over the last year, MLM has achieved landmark

success. Strong cash flows, buoyant markets, and

good investment performance contributed to a tripling

of assets under management over the year. In

addition, MLM appointed a new CIO and business

manager, and took on more mandates. “Singapore

has proven to be a superb location from which to run

our regional investment business,” said Nicholas

Toovey, Chief Operating Officer of the Asia Pacific

Business. “It is a city that providesexcellent communications,infrastructure and links with the rest ofthe region, and we are very encouragedby recent developments in theregulation of financial services thatbenefit the fund management industry.”

Since opening a sales office in Singapore in 1988,

MLM has grown tremendously in Asia, with the

Republic serving at the centre of Mercury’s Asia

Pacific Investment activity. In 1997, Merrill Lynch

acquired Mercury Asset Management, as part of its

strategy to develop asset management as a core

business. The group now has assets under

management exceeding US$500 billion. The

Merrill Lynch Mercury AssetManagement Achieves EnhancedFund Manager Status

acquisition brought about strong synergies in the form

of a broader product range and a wider selection of

distribution channels, as well as the sharing of best

investment practices and greater efficiencies on the

support front. In 1999, the Merrill Lynch private client

investment team in Singapore was integrated with

the Mercury Institutional team, greatly enhancing

the platform for the discussion and debate of

investment ideas.

MAS’ Enhanced Fund Manager (EFM) incentive scheme isaimed at attracting fund managers to expand their assetmanagement activities in Singapore. The scheme allowsestablished fund management companies managing atleast S$5 billion of foreign investors’ funds in Singapore toenjoy tax exemptions of up to 5 years or more.

The Merrill Lynch Mercury Asset Mgmt team - staying focused in Singapore.

6

Zurich Scudder Investments Singapore Ltd, a memberof the Zurich Financial Services Group, whichmanages more than US$440 billion worth of assets,recently opened offices in Singapore to jumpstart itsAsian business.

The firm has targeted a number of businessopportunities in Singapore, including: segregatedportfolio management for government agencies andcorporates; wealth management products, offeredthrough private banking distribution channels; andretail investment funds, developed in partnership withfull-licensed banks.

“We attach a lot of importance to the Asia-Pacificregion, and Singapore will be a focal point of ourbusiness in Asia,” said Zurich Scudder Investments’Chief Executive Officer, Edmond Villani. “For theinvestors in Asia who are seeking to increase theirinvestments abroad, our company is well-positionedto offer them the range of investments to diversifytheir portfolios.”

Zurich Scudder Investments OpensSingapore Office

Alan Lim, managing director of the Singapore

operations, noted: “Zurich ScudderInvestments was particularly attractedto Singapore because of its positivefundamentals, political stability,transparent regulatory environment,strong business opportunities stemmingfrom its liberalization efforts and highsavings rate.”

He added: “The MAS has demonstrated its desire tocreate a streamlined licensing regime incorporatingglobal best practices.” In addition to Mr Lim, theSingapore team also includes Paul Schmidt, AssistantVice President (Regional Business Development), whohelped set up the Singapore operation.

As part of the global group, Zurich Scudder Singaporewill tap the expertise of the group’s internationalinvestment professionals and proprietary researchteam. First opened in 1919, Zurich ScudderInvestments has offices in more than 60 countries.

“We attach a lot of importance to the

Asia-Pacific region, and Singapore will be

a focal point of our business in Asia.”

Edmond Villani,CEO, Zurich Scudder Investments

Official Opening of Zurich Scudder Investments Singapore’s Office.

7

The MAS has awarded three insurance companies

with the Approved Marine Insurer (AMI) status, which

entitles them to generous tax breaks and other

benefits. Gerling Global Re, HSBC Insurance (Asia)

and Swiss Re are the first batch of companies to be

granted the new AMI status.

The MAS introduced the new scheme as part of its

plans to develop Singapore as a marine insurance

centre for Asian business. MAS’ Executive Director of

Insurance, Mrs Hauw Soo Hoon said: “The AMI

scheme provides experienced marine insurers with

the relevant expertise an added incentive to grow

their business focus here, and contribute to

developing the level of marine hull and liability

underwriting capabilities in Singapore.”

The newly launched Tax Exemption Scheme for

Offshore Marine Hull and Liability Insurance Business

aims to reward companies making additional

commitments in Singapore. It is available to all

general and direct insurance and reinsurance

companies making these commitments to writing

offshore marine hull and liability insurance business

from Singapore. Companies that qualify for the

scheme are exempted from tax on underwriting

profits, as well as certain income derived from

investing premium income and shareholders’ funds in

relation to marine insurance business.

Gerling Global Re, HSBC Insurance andSwiss Re Awarded Approved MarineInsurer Status

Strategically located at the crossroads of major shipping lines, Singaporeis a major port of call - a boost for the marine insurance industry.

Mrs Hauw noted the intense competition facing the

marine insurance industry and called on players to work

together to grow the level of expertise for industry

services. She noted that MAS’ role as a regulator is to

maintain high prudential standards, while also ensuring

that a conducive regulatory framework is in place to

encourage innovation. Singapore has good potential as

a marine insurance centre for Asian business.

Currently, some 40% of the world’s commercial tonnage

are controlled by Asian owners and operations. Asian

shipping lines and traffic are also among the fastest

growing in the world.

Singapore already hosts many international insurers,

including three Protection and Indemnity clubs. The

Republic is also developing as an International

Maritime Centre, with rapid growth of shipping

agencies, shipping registry, ship broking and

surveillance services.

8

The MAS has announced further measures toliberalise its policy on the non-internationalisation ofthe S$. The latest measures were significant steps infacilitating participation by international investorsand financial institutions in Singapore’s capitalmarkets, and are aimed at globalising Singapore’scapital markets. “With greater participation byinternational financial players, we can expect theSingapore dollar capital markets to grow in size,liquidity and sophistication.” The new rules allowforeign investors to borrow Singapore dollars toinvest in local assets, such as bonds, equities andcommercial real estate. However, analysts say thepolicies will have greatest impact on the bond andderivatives markets, where fund managers stand tosee the greatest returns. Specific measures include:• Banks can lend Singapore dollars to non-residents

in Singapore and extend Singapore dollar credit tonon-residents to fund offshore activities.

• Banks can transact Singapore dollar currencyoptions with other banks and financial institutionsin Singapore.

However, MAS is still cautious about notinternationalising the Singapore dollar, as asafeguard against speculative attacks. Specifically:• Foreigners or non-residents borrowing Singapore

dollars to fund offshore activity will still haveto swap Singapore dollar proceeds intoforeign currency.

Singapore Further Liberalises Debt Market

• Foreigners cannot borrow Singapore dollars topurchase residential real estate, to guard againstproperty market speculation.

As a further sign of how the Singapore debt market hascome of age, SGS and S$ bonds were included inLehman’s Asia Pacific Aggregate Index late last yearand JP Morgan’s Government Bond Index Broad in Aprilthis year. Said MAS on the inclusion of Singapore into

these global indices, “We welcome theinclusion of Singapore to JP Morgan andLehman’s Bond Indices, as it willsignificantly raise the profile ofSingapore Government Securities andS$ bond markets, and encourage greaterinternational participation in ourmarkets.”

And as a sign of how the industry was reactingpositively to MAS’ policy changes of the last few years,Singapore’s debt market continues to show astoundinggrowth, according to the results of MAS’ latestCorporate Debt Market survey. The survey covered theSingapore corporate debt market, as at end December lastyear. [Survey does not include government debt securitiesissues, such as treasury bills and bonds.] Highlights of thesurvey are presented below.

Debt Market Continues To See Strong Growth

“With greater participation by international financial players, we canexpect the Singapore dollar capital markets to grow in size, liquidityand sophistication.”

8

9

Types of Instruments (S$B)Fixed Floating Zero Certificates Commercial TotalRate Rate Coupon of Deposits Papers

S$ 12.3 1.5 0.02 0.05 0.51 14.4Non-S$ 6.1 1.5 0.11 0.31 28.1 36.1Total 18.4 3.0 0.13 0.36 28.6 50.5

Level of Issuance ActivityThe total amount of corporate debt issuance in year2000 increased by 159%, from S$19.5 billion in 1999to S$50.5 billion last year.

Outstanding Corporate Debt SecuritiesThe total amount of corporate debt securitiesoutstanding was S$49.5 billion, as at December2000. This comprised S$34 billion of S$ denominateddebt and S$15.5 billion of non-S$ denominated debt.

Features of Debt IssuedAbout 85% of the S$ debt securities issued were fixedrate notes and bonds. For non-S$ debt, commercialpapers and fixed rate debt accounted for the bulk at78% and 17% respectively.

Maturities of Debt SecuritiesThere was a range of corporate debt issuance acrossall maturities of the credit curve up to 12 years. Thetenors of the S$ debt were fairly distributed acrossthe range of maturities, while issuance of short-termdebt securities of less than 1-year, dominated non-S$debt issuance.

S$ NON-S$

0

10

20

30

40

50

60

95 96 97 98 99 00 Year

S$B

5.1 5.48.4 9.1

19.5

50.5

Growth of Corporate Debt Issuance

S$ Denominated Issues2.3

1

1

2.3

0.2

4

0.7

0.4

2.3

0.2

< 1 YR

1 YR

3 YR

4 YR

5 YR

7 YR

9 YR

10 YR

11 YR

12 YRS$B 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

0

5

10

15

20

25

30

35

40

45

50

95 96 97 98 99 00 Year

Non-S$ Debt

S$B

S$ Debt

S$ NON-S$

Outstanding Debt Securities

9

10

AIG International Inc. (AIG), a member company of

American International Group, Inc., has expanded its

Singapore offices, as part of the company’s strategy to

become a leading financial services player in

Southeast Asia. The move involves an expansion of

its sales and trading operations in Singapore as well

as a relocation of the trading and back office

functions from their Hong Kong and Greenwich,

Connecticut (USA) offices.

“We view Singapore as a vibrant financial center with

significant business opportunity,” said Bradford L.

Klein, President and CEO of AIG International. “We

are pleased to announce the expansion of our offices

in Singapore. This expansion is part of our strategy to

become a leading provider of financial products and

services in this region. This move offers us a direct

presence for existing and new clients as we pioneer

new foreign exchange and commodity products.”

Mr Klein noted that institutional investors worldwide

are keen on diversifying from traditional financial

assets, such as stocks and bonds, into more liquid

products, such as the Dow Jones-AIG Commodity

Index. “Our ability as a firm to create and hedge

innovative new products and provide liquidity in this

AIG International Opens Trading Centrein Singapore

asset class is unsurpassed,” he said. “By expanding

our presence in Singapore, we will work to insure that

our customers are aware of the many services we can

provide.”

AIG International Inc. (AIGI) is a wholly-owned

subsidiary of AIG Trading Group Inc., which, in turn, is

a member company of American International Group,

Inc. AIGI trades and structures physical and derivative

transactions in the foreign exchange and commodity

markets. AIGTG operates through a worldwide

network of offices including its Greenwich,

Connecticut headquarters, London, Paris, Geneva,

Hong Kong, Singapore and Toronto.

“We view Singapore as a vibrant financialcenter with significant businessopportunity, and are pleased to announceour expansion in Singapore.”

Bradford L. Klein,President and CEO, AIG International

AIG International - Expanding its presence inSingapore with the relocation of its trading andbackoffice operations here.

11

United Parcel Service (UPS) made history bycompleting the largest ever Initial Public Offering (IPO)on the New York Stock Exchange in 1999. InSingapore, where UPS has its Asia Pacificheadquarters, UPS has also made several landmarkannouncements. UPS has invested in a S$38 millionfacility to serve as its regional headquarters. The280,600 sq ft facility, located at the Changi SouthAvenue, is the first company-built and owned facilityhere. It houses the Asia Pacific headquarters andSingapore country office of UPS, its logistics arm, UPSLogistics Group (UPS LG) and operations facility. Inthe second quarter of this year, it will also serve as aUPS Logistics’ finished goods warehouses and serviceparts centre. To fund the Changi facility, UPSlaunched a significant S$100 million bond issue inOctober 1999. The AAA-rated UPS was the firstforeign company to retain its funds onshore foreconomic developments and investment purposes.

“Singapore was an easy choice as UPS’ springboardinto Asia in 1988,” said Charles Adams, President ofUPS Asia Pacific Region. “It was a natural choice forour new building and expansion plans in 1999.That’s because Singapore has remarkably establishedthe confluence of financial, information, technologyand manufacturing hub which benefits not just UPSbut any company that recognises these ascompetitive advantages.”

US Express Delivery Titan United ParcelService (UPS) Gets Bullish in Asia Pacific

UPS has come a long way since itshumble origins as a messengerservice in the US in 1907. Today, the93-year old company is the world’slargest express courier and package delivery company,delivering more than 13 million packages everyday tomore than 200 countries and territories. It employs359,000 people worldwide, with revenues exceedingUS$29 billion for year 2000.

Since expanding its global footprint into Asia 13 yearsago, UPS now has 64 operating facilities throughoutAsia. UPS first came to Singapore in 1988, with 80employees and 2 facilities. In 1996, UPS LG was setup in Singapore to offer its expertise in value-addedlogistics services and supply chain management.Today, UPS has 360 employees islandwide. As one ofthe first logistics companies to attain OperationalHeadquarters (OHQ) status in Singapore in 1992, UPShas contributed actively through investment, transferof technology and manpower development inSingapore and the region. In 1999, UPS furtherexpanded its commitment in Asia when it wasaccorded the Finance and Treasury Centre (FTC) statusby MAS. With its long-term strategic plans, UPS iswell-positioned to experience continued growth in theAsia Pacific region.

“Singapore has remarkably established the confluence offinancial, information, technology and manufacturing hubwhich benefits not just UPS but any company thatrecognises these as competitive advantages.”

Charles Adams,President, UPS Asia Pacific Region

UPS - Making Singapore the home of its AsiaPacific Headquarters.

12

General Electric (GE), which first opened offices inSingapore in 1969, has expanded extensively and nowhas 2,700 staff here. It is one of the largestcompanies enjoying Operational Headquarter (OHQ)status in Singapore, earning substantial tax breaksand benefits for its wide variety of businesses. It isalso one of the oldest that have a Finance & TreasuryCentre (FTC) base in Singapore, having enjoyed theFTC status since 1992.

Stuart Dean, President of GE Southeast Asia, said thecompany has great expectations for its Singapore

General Electric - One of theOldest FTCs in Singapore

Singapore will be introducing a new retirementscheme in April allowing Singaporeans to invest in awider range of investment vehicles, while enjoyinghuge tax breaks. The Supplementary RetirementScheme (SRS), encourages Singaporeans to save morefor retirement, and complements the existing CentralProvident Fund (CPF) savings. Singaporeanscontributing to SRS will enjoy tax deductions on

deposits, tax holidays on investment gains, and taxexemptions on some of the amount withdrawn atretirement. The SRS is set up as a privately run andoperated system, with participants contributing on avoluntary basis. Any bank or fund manager is allowedto offer products for the scheme, using one of the fourappointed local operators (DBS, OCBC, OUB, UOB) asthe intermediary.

New Retirement Scheme Opens Doors forInvestment Opportunities

“We expect Singapore to continue to be a major FTC for GE’sfinancial and treasury activities in East Asia. The city’s excellentcommunications and transportation links complement its strategyto be a financial hub.”

Stuart Dean,President, GE Southeast Asia

operations. “We expect Singapore will continue to bea major FTC for GE’s financial and treasury activities inEast Asia,” he said. “The city’s excellentcommunications and transportation links complementits strategy to be a financial hub.”

GE Singapore’s key businesses span a wide range,including appliances, aircraft engines, information andcapital services, medical and power systems andtelevision capability.

GE’s Headquarters in Singapore.

MAS’s Financial & Treasury Centre (FTC) incentive scheme is aimed at encouraging multinational corporations to set uptheir regional treasury and financing operations in Singapore. Under the scheme, an FTC enjoys concessionary tax ratesfrom providing qualifying FTC services to its regional network companies. Leveraging on Singapore’s attractiveness as oneof the leading financial centres in Asia, many MNCs have taken advantage of this scheme to consolidate their FTCoperations in Singapore.

13

Finance Minister Dr Richard Hu unveiled a generouspro-business budget this year, with tax cuts andrebates worth more than S$2 billion, designed toenhance business competitiveness in Singapore. Inexplaining the Budget, Dr Hu said, “Our aim hasalways been to keep business costs down whereverpossible and to ensure that our corporate tax rateremains competitive.”

The business tax cuts span a wide range, from cuts inthe corporate income tax to exemptions for thoseworking in the New Economy. For small and medium-size companies, the new policies effectively cut theirtax rate by more than half. The measures include:• A 1-point cut in corporate income tax rate to

24.5%, from YA 2002.• A new corporate tax regime, with tax exemptions

for 75% of the first S$10,000 chargeable income,and for 50% of the next S$90,000, from YA 2002.

• A 2-point cut in the property tax rate to 10% of allproperties, from July 1, 2001.

• Exemption from withholding tax for certainsoftware payments, with immediate effect.

• Write-down of allowances for intellectual propertyover 5 years, with immediate effect.

The personal tax cuts were also designed to spurprivate enterprise, rewarding business start-ups andentrepreneurs. These include tax exemptions foremployee stock options schemes and tax deductionsfor donations of shares and unit trusts. Other

Singapore Budget Hands OutGenerous Tax Cuts to Businesses

The CPF Board has announced that from January this year, members will be allowed to use their CPF Special Accountsavings to invest in approved retirement-related financial instruments. Products include bank deposits, deferredannuities, endowment insurance, Govement and statutory board bonds, unit trusts and investment-linked products.

personal tax cuts were intended to attract local andforeign talent to Singapore, including across-the-board tax cuts on personal income. The specificpolicies include:• A 10% personal income tax rebate for

YA 2001• a two to five point cut in personal income tax

rates, with the top rate down from 28% to 26%,from YA 2002.

• A tax break on the first S$7,500 of chargeableincome, from YA 2002.

Analysts polled agreed that the tax cuts announcedwill enhance Singapore’s competitiveness. NotedDavid Cohen, director of economic forecasting atStandard & Poor’s MMS International, “(This is) aprudent Budget that enhances the long-termcompetitiveness of Singapore, rather than one thatbelies any urgent need for cyclical stimulus.” AddedKaan Quan Hon, DBS economist, “The cut in corporatetax would be welcome by the business communityand increase the attractiveness of Singapore as aninvestment destination.”

14

Singapore ranks as one of the most cost-competitivenations for doing business. Its excellentinfrastructure, transport and telecommunicationsservices make it an efficient place to do business,while its high living standards and vibrant, dynamiclifestyle make it among the most enjoyable cities tolive in Asia.

So you’ve been thinking of setting up in Singapore,but don’t know how to start your costs analysis? Thefollowing guide may give you an idea.

Capital ExpenditureSingapore has a wide range of business offices. As inany city, rentals in the prime business districts arehigher than those on the outskirts. Prime businesslocations in Singapore are found within the CentralBusiness District (CBD) and in the Marina Centre andCity Hall areas, at the fringes of the CBD.

Setting Up A Business in Singapore -How Much Does It Cost?

Office Rentals (US$ / sq ft / month)Choice Location Higher Grade / Quality Medium Grade / Quality

Buildings BuildingsWithin Central Business DistrictRaffles Place 3.80 - 5.00 3.00 - 4.00Shenton Way 3.40 - 4.50 2.00 - 3.00

Fringes of Central Business DistrictMarina Centre 3.00 - 4.50City Hall 4.00 - 4.50

Fitting-out Costs (US$ / sq ft) 40.00 - 65.00

Expatriate CostsSingapore’s high living standards make it an attractiveplace for expatriate staff and families. The city boastsa wide variety of choices, ranging from old stylecolonial houses to full facilities condominiums andapartments. Living in the city district allows easyaccess to Singapore’s exciting night life and bustlingcultural activities. Other areas, such as the central,eastern and western suburbs, offer equalconvenience, yet provide some recluse from the bustleof city life.

Prime Residential Rental Rates(US$/month, Area of 1,200 - 1,800 sq. ft)

Apartments Houses

Central / City 1,800 - 2,700 2,200 - 3,200Eastern suburbs 1,500 - 2,200 1,800 - 2,500Western suburbs 1,400 - 2,000 1,600 - 2,200

Besides the above costs, when evaluating how much it costs to start-up your business, you may also have to takeinto account the following costs:• Office Equipment• Business Registration costs• Professional Registration costs

• Employment Passes• Legal fees• Planning & Relocation Consultancy fees

16

Financial

HubS I N G A P O R E

What’sBuzzing In

“Financial Hub Singapore” is a publication of the Financial Sector Promotion Department, Monetary Authority of Singapore. If you wish to beincluded on our mailing list, please email finhub@mas.gov.sg. Soft copy of the newsletter can also be downloaded at the MAS website :www.mas.gov.sg

Contact the Financial Sector Promotion Department for more information on investing in Singapore’s financial sector :

Singapore HQFinancial Sector Promotion DeptMonetary Authority of Singapore10 Shenton Way MAS BuildingSingapore 079117Tel : (65) 229-9199Fax : (65) 225-3261

MAS London Representative Office2nd Floor, 1 Minster CourtMincing LaneLondon EC3R 7AATel : (44) 207-256 3940Fax : (44) 207-256 3949

MAS New York Representative Office17 State Street25th FloorNew York, NY 10004Tel : (212) 809 1900Fax : (212) 809 6067

So you’ve heard the policy announcements, and read all the research about Singapore.But what’s been really buzzing in Singapore’s financial sector? The revamped FinancialHub Singapore will be devoting space in each issue to bring you the latest happeningsin the financial industry in full colour. And what better way to start, then to feature themuch-lauded inaugural client servicing event hosted by the Monetary Authority ofSingapore last October, and the inaugural Bond Fair organised by Singapore InvestmentBanking Association (SIBA) in March.

Tagged “An Evening at ArtSingapore”, the inaugural arts eventprovided MAS with the avenue to host the Singapore financialcommunity to an evening of arts, culture and entertainment. Theevent was held to recognise the contribution made by the financialcommunity in developing the financial sector with the MAS overthe last three years.

SIBA held the first-ever Singapore BondInvestment Fair in March. The 2-day fairwas held to raise awareness amongstretail investors to bonds as a means ofdiversifying investment portfolios. Said 2ndMinister for Finance, Lim Hng Kiang, at thelaunch of the fair, “ This first Fair will laythe foundations for the development of adeep, well-informed and educated retailinvestor market in bonds and interest-rateinstruments, and contribute to the growthof a diversified capital market.”