Financial Investor Scheme scrapped - Wealthy foreigners can't 'buy' PR status anymore

MAS ending scheme allowing those who parked $10m here to fast-track applications
By Jamie Lee, The Business Times, 4 Apr 2012

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 on Monday. 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 $20 million - and at least $10 million 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 $10 million was already doubled in 2010 from $5 million, as part of the government's move to curb the flow of immigrants.

Up to $2 million of the $10 million 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 last Friday. 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 April 15 to submit the names of prospective applicants, and 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 has 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 may 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 yesterday, MAS confirmed that FIS will 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 spokeswoman 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 continues to welcome quality individuals who are keen to contribute to Singapore economically, and that private banks can 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 $2.5 million invested in a new business entity or expansion of an existing business operation. Their company should have an annual turnover of at least $30 million. 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 is 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 $1.5 billion in Singapore, the government disclosed in Parliament in November that year. Some 1,500 jobs were also created as a result.

Some saw end of FIS approaching
By Jamie Lee, Business Times, 5 Apr 2012

The authorities' reluctance in the last six months to approve applications via the Financial Investor Scheme (FIS) - which targeted rich foreigners looking to fast-track their permanent residence (PR) application - gave market watchers an early indication that the scheme was heading for closure.

Though no numbers on the number of successful applicants have been made public, market sources told BT yesterday that the scheme has been popular with applicants from China.

The eight-year FIS programme will be axed by the end of this month, sources told BT this week, with the Monetary Authority of Singapore (MAS) confirming on Tuesday that the scheme will be dropped.

FIS had allowed high net worth individuals from overseas with net personal assets of $20 million - and at least $10 million of assets parked 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. Up to $2 million of the $10 million that these wealthy foreigners hold here can be used to buy private residential property.

With the FIS 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. For this, foreigners must have $2.5 million invested in a new business entity or expansion of an existing business operation. Their company should have an annual turnover of at least $30 million. And these businessmen cannot include the cost of buying a private home as part of their required investment.

Bank sources maintain that the amount of assets brought in via FIS are not significant, though one source acknowledged that existing clients could have sought PR via this convenient route. MAS declined to reveal approval rates.

'This was not surprising to us,' said a source from the private banking sector, referring to the end of FIS.

'The application used to take a few weeks, but in the last six months, it has taken months,' the source noted, adding that the scheme has been very popular among the Chinese clients.

Another source from the property sector noted the same, and added that the Chinese clients would rather have their assets parked in property, than invest in start-ups in Singapore.

'Why would they want to do that when they've got Chinese start-ups at home,' he said, adding that the Europeans may be more receptive to investing in businesses here.

Indonesians, who came in earlier than their Chinese counterparts to invest in the Sentosa Cove development, also liked the scheme, the source added.

The private-banking source noted that some FIS applicants could have qualified for GIP, but chose to apply under FIS, which offered less onerous terms. This scrapping of FIS could also prove to be beneficial, as banks can tap on their corporate or institutional divisions to help rich foreigners get into Singapore via GIP instead. 'When FIS was set up, Singapore was at a different stage of development. It was trying to build a critical mass for the wealth management business,' the source observed.

'Now, perhaps MAS can afford to be more picky.'