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

Turkey: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ends Ebola Lockdown

Health ministry says it has reached 75 percent of its target of visiting 1.5 million homes to locate infected, educate population about virus More

US Pivot to Asia Demands Delicate Balancing Act

As tumult in Middle East distracts Obama administration, efforts to shift American focus eastward appear threatened More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.