SINGAPORE: The Monetary Authority of Singapore (MAS) will roll up and put away one red carpet for rich foreigners aiming for permanent residence (PR) here, amid criticism of the influx of immigrants and its impact on asset prices, sources have told BT.
Wealthy foreigners who want their PR application expedited will now have to apply under a different scheme for well-heeled entrepreneurs from abroad who invest in businesses here.
The first programme, known as the Financial Investor Scheme (FIS), will be scrapped by the end of this month, sources told BT. MAS later confirmed that it is putting an end to the scheme.
Since 2004, FIS has allowed high net worth individuals from overseas with net personal assets of S$20mil (RM49.4mil) and at least S$10mil of assets held in Singapore for five years to get onto a fast track and apply for PR status through private banks or other financial institutions via MAS.
The minimum sum of S$10mil was already doubled in 2010 from S$5mil, as part of the government's move to curb the flow of immigrants.
Up to S$2mil of the S$10mil that these wealthy foreigners park here can be used to buy private residential property.
Now that this scheme is being axed, wealthy foreigners can still apply for PR status under the Global Investor Programme (GIP) a scheme that allows entrepreneurs from abroad to obtain PR.
Unlike FIS, where assets held in Singapore are the main criterion, GIP is aimed at entrepreneurs who have a track record in corporate circles and is a scheme that can boost employment locally.
Banks are understood to have received notices from the central bank recently. No public announcement was made by MAS which puts banks in a slight fix as clients have to be properly informed, especially if they want their PR applications processed.
Sources told BT that banks have until the end of this month to provide full details to MAS.
“My speculation is that this has to do with the issues surrounding immigration and property prices,” said one market watcher in the banking industry.
A small knock-on effect may be felt by the private banking and wealth management sectors, with DBS Treasures still advertising its services to help with PR applications under FIS.
One source said that the number of private banking clients coming through his bank's doors as a result of FIS had been minimal. But clients could have applied through several banks if they hold multiple private banking accounts.
A property player noted that from anecdotal evidence, there has been a slowdown in the approval of applications, and a higher rejection rate.
He observed that there was a spike in the number of such foreigners applying via FIS in 2007, when work on the two casinos began, and as Singapore started developing its private banking sector.
But a PR application that was previously approved in four months might now take 12 months, said the source.
“Why should it be so difficult for the high net worth individuals to come, though? It's already such an expensive PR process,” the source said.
In an emailed response to BT, MAS confirmed that FIS would be removed, but declined to provide details on the number of PR applicants under the scheme.
MAS did not directly respond to queries on how Singapore's recent review of immigration policies and asset bubbles has impacted this decision.
“In the recent review (by MAS), the focus was on engaging and entrenching quality individuals who can contribute to Singapore and are keen to be rooted in Singapore,” an MAS spokesperson told BT.
MAS suggested that since FIS and GIP run by the Economic Development Board (EDB) have become similar, it would be more efficient to have one investor PR scheme.
Asked about the impact on the private banking sector, MAS said Singapore continued to welcome quality individuals who were keen to contribute to Singapore economically, and that private banks could continue to direct their clients to the GIP facility.
To obtain PR status under the current terms of GIP which was tweaked as recently as 2010 foreigners must have US$2.5mil invested in a new business entity or expansion of an existing business operation. Their company should have an annual turnover of at least S$30mil. And these businessmen, from 2010, have also not been allowed to include the cost of buying a private home as part of their required investment.
GIP was expected to be tweaked again soon, one source said. Foreign businessmen who hold PR status through GIP may have to show an annual million- dollar expenditure on products and services in Singapore, when the PR is up for renewal three or five years later.
By 2010, entrepreneurs applying for PR through GIP had invested S$1.5bil (RM3.7bil) in Singapore, the government disclosed in parliament in November that year. Some 1,500 jobs were also created as a result. - Singapore BT