By Moustafa Daly
Since 2004, global investors could obtain Singapore residency status for a five-year term, which could be renewed, by investing S$2.5 million (US$1.86 million) in ventures and enterprises that boost the economy and create jobs. Now Singapore is quadrupling the investment threshold of its Global Investor Program (GIP) to at least S$10 million ($7.42 million) starting March 15, 2023, as announced by the Singapore Economic Development Board (EDB), making the GIP arguably the world’s most expensive RBI program.
“These changes are part of EDB’s ongoing review of the GIP to ensure the programme’s effectiveness in attracting only top-tier business owners who are interested to drive the growth of their businesses and investments from Singapore,” said EDB in a press release on the matter.
Phillipe May, CEO at Singapore-based EC Holdings, doesn’t think the hiked investment threshold would cause much difference to interested applicants. “The quadrupling of the amount for the GIP is not an issue. Besides the investment amounts there are qualifying criteria which ensure that only top-tier entrepreneurs (in Asia called tycoons) with a substantial business track record are eligible,” says May.
“For this target group the higher investment amount makes only a little difference as they typically have bankable assets in eight figures anyway,” he adds, further adding that the criteria of the GIP only attracts applicants who intend to make Singapore their home: “A far cry from Portugal where a physical presence of 7 days per year is sufficient to maintain a residency or Latvia where there is no physical presence requirements.”
And thus, May continues, the GIP is only a viable option for ultra-high-net-worth individuals who plan to make Singapore their main base, which greatly reduces the attractiveness of the program to other investors who don’t intend to entirely move to the island.
The program has been beneficial to Singapore’s economy, creating more than 24,000 jobs across different fields between 2011 and 2022.
“Since it was introduced, the GIP has been successful in attracting high-caliber applicants who value Singapore’s stability, competitive business environment, skilled talent pool and global connectivity,” said Matthew Lee, senior vice president of the EDB. “Investors can tap these strengths, as well as our strategic location at the heart of a growing Southeast Asian region, to access a wide range of business opportunities.
The GIP has had long-standing structural issues, making it a hard sell
May thinks that the GIP has a long way to go before it becomes a viable option for global investors. “The importance of GIP is greatly overrated. Only 200 applicants have been approved in the last 3 years. And while no figured are published officially in this regard, the RCBI industry’s consensus is that rejection rates are high,” explains May.
“Unlike in most other industrialized countries, applicants who meet all formal criteria for citizenship may be rejected and have no legal avenue to enforce a decision in their favor,” he elaborates, adding that the fact that Singapore is one of very few countries that enforce military inscription upon second generation permanent residents could also be a detracting factor for interested applicants.
Singapore’s GIP, unlike most RBI programs, doesn’t rely on private sector companies or agents to promote it, reveals May. “Australia, New Zealand, Canada, Malta, Vanuatu and all Caribbean CBI jurisdictions carefully select, license and authorize investor migration companies and/or practitioners to promote their programs and submit applications,” he explains. “Therefore the GIP cannot be compared to most other residency-by-investment programs.”
Investors’ options within Singapore’s GIP
As per the EDB, investors now have one of three options to successfully apply for GIP. The first route would require a minimum of S$10 million investment in a new or existing business entity, hiring at least 30 employees half of which should be Singapore citizens, and 10 of them must be new employees. This marks a tripling of the number of employments required to qualify for GIP, which previously stood at only 10 employees with five of them being from Singapore.
Only by meeting these requirements would investors be able to renew their residence permit upon the conclusion of the first five-year period.
As for fund investments, a minimum of S$25 million investment would be required to be eligible for GIP, a staggering 10 times increase over the previous threshold for this category which was S$2.5 million. Under this category, investment must go to a GIP-selected fund, which the EBD said would be selected based on a ‘holistic assessment of their track record, investment mandate in Singapore, as well as the sectoral focus of the funds.’
The third and final investment option is to establish a Singapore-based Single Family Office with assets amounting to at least S$200 million. At least S$50 million of these assets must be investment into one of four categories; listed companies; debt securities; private equity investment into unlisted businesses; or funds distributed by Singapore-licensed managers.
“Building on the success of the GIP to date, these changes will strengthen the support for our local start-up ecosystem and create more good jobs for our people,” added Lee as per the release.
Singapore is serious about attracting talent and funds
The reforms to the GIP come shortly after the island-nation announced launching a five-year visa aiming at attracting wealthy foreign talent. Dubbed the ONE Pass, the visa grants individuals making at least $22,000 with visas that enable them to stay long-term in Singapore and launch business enterprises. However individuals making less than that could still qualify if they can prove having attained ‘outstanding achievements’ in their fields, as announced by its government upon the release of the ONE Pass in January 2023.
The launch of the ONE Pass and reforms to the GIP capture Singapore’s strive to remain an attractive destination for talent and investors as the island-nation is scarce in natural resources and considers the influx of foreign funds and skilled workers as crucial to the continued prosperity of its economy.
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