News / Economy

Singapore Fights Image as Swiss Banker of Asia

FILE - Singapore's financial district
FILE - Singapore's financial district
In a place that restricts everything from chewing gum to pungent durian fruit.  Singaporean authorities pride themselves in having a high bar for strict laws and a low crime rate to match. So they’ve been none too pleased by reports that tax dodgers, corrupt officials, and money launderers might be closing their Swiss bank accounts and moving funds to Singapore.
 
In response, the government is ramping up measures to battle this reputation as a tax haven. It is now negotiating a deal with the United States that requires banks in Singapore to share details of Americans’ offshore assets with the Internal Revenue Service. The United States just signed the so-called FATCA (Foreign Account Tax Compliance Act) with six other governments this month.
 
“There is no basis for the allegation that wealthy individuals can hide money and avoid taxes in Singapore,” a Ministry of Finance spokesperson told VOA.
 
FATCA would be part of broader efforts to improve transparency in banking. Singapore already has similar information-sharing pacts with Germany and the Organization for Economic Cooperation and Development club of mostly-rich countries. As of this year, it also will be easier to prosecute money launderers in Singapore and “obtain bank and trust information from financial institutions without having to seek a court order,” the finance ministry said.
 
But critics don’t believe that’s enough. John Christensen, director of the British research firm Tax Justice Network, said Singapore’s bilateral agreements require foreign governments to make individual requests for banking information. He said the information-sharing should be automatic, meaning that as soon as a UK citizen opens an account in Singapore, for example, authorities here will disclose it to the UK government.
 
“All the infrastructure is in place to encourage and facilitate tax evasion,” said Christensen, also a former economic adviser to the British Channel Island of Jersey, another hub of offshore banking.
 
Singapore boasts one of the world’s most stable governments and economies, friendly business regulations, competitive tax rates, and banking privacy. All of this attracts the super-rich from abroad.
 
“It’d be stupid for them not to take advantage of this -- but you have to do it legally,” said Joseph Cherian, director of National University of Singapore Business School’s Center for Asset Management Research and Investments.
 
People certainly are taking advantage. Compared with $50 billion in 2000, Singapore managed $550 billion worth of assets in 2011, according to WealthInsight, a London-based research firm. Of that figure, $450 billion were in offshore accounts. In other words, more than 80 percent of private accounts in Singapore belonged to foreigners.
 
WealthInsight expects the number will continue to balloon by 2020, when it said Singapore will take Switzerland’s top spot in wealth management.
 
The question is whether that wealth is legally gained and legally taxed. Christensen doesn’t think it is. His group releases a Financial Secrecy Index every two years. Singapore ranked number five on the list published in November, compared with sixth place in 2011. Christensen said banking is so opaque that officials can’t prove financial assets are clean.
 
“It’s pure assertion on their part,” he said. “We know that the vast majority who use offshore accounts are using them for tax evasion.”
 
Alan Lau disagrees. He said that in his experience as head of financial services tax at KPMG Singapore, an accounting firm, most money flows into Singapore through legitimate channels.
 
“Whilst there may always be a risk or temptation for a small minority to attempt parking their ill-gotten wealth in a banking secrecy jurisdiction such as Singapore, the recent tightening noose on money laundering here has made it increasingly difficult for this to happen,” Lau said.
 
He added that the crackdown on illicit wealth “has caused a certain level of stress and anxiety for the private banking sector,” to ensure it complies with new regulations.
 
Similarly, Cherian said the push for compliance is evident in the mountains of new paperwork for account holders in the past six months. He said the government’s actions reflect Singapore’s obsession with keeping a squeaky clean image.
 
“It’s the most law-abiding city in the world,” Cherian said. “They don’t want to be seen as a cowboy, wild-wild-west kind of place.”
 
Some argue there is nothing wrong with individuals and multinational corporations flocking to tax-friendly jurisdictions, as long as it’s done above board. Eduardo Saverin, a Facebook co-founder, famously renounced his US citizenship in 2011 after relocating to Singapore, a move widely seen as driven by the low taxes here. But others argue that when governments push down tax rates to attract business, they force other countries into a race to the bottom.
 
Even if tax avoidance is legal, it could be harmful. Christensen said that when the rich use their wealth to find ways to pay fewer taxes, they transfer the burden to lower income brackets to fill the tax gap.
 
“We don’t make this distinction between evasion and avoidance, because it’s abuse,” he said.
 
In recent years, global wealth has shifted to Asia, especially to Singapore and Hong Kong, partly because of the new, far tougher scrutiny on traditional tax havens like Switzerland and Bermuda. But if Singaporean authorities are seriously clamping down, too, then private wealth could be on the move again.

You May Like

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

UN Report Exposes Widespread Boko Haram Atrocities

Damning report graphically details pattern of vicious, widespread atrocities committed by Islamist militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs

World Currencies

EUR
USD
0.9012
JPY
USD
122.90
GBP
USD
0.6400
CAD
USD
1.2582
INR
USD
63.438

Rates may not be current.