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The government has been tracking income inequality "closely" and it has not seen evidence of the growth of family offices having an impact on income inequality in Singapore, Finance Minister Lawrence Wong said in a written reply on Feb. 23.
Wong, who is also Deputy Prime Minister, was responding to a question posed by Member of Parliament Yip Hon Weng about the recent surge of wealthy foreign investors establishing family offices in Singapore.
Yip asked about the projected impact of such a phenomenon on Singapore's income gap, whether there are any ongoing assessments of inequality and the widening income gap, and the government's plan to strike a balance being remaining attractive for foreign investors looking to invest here, while ensuring that low-income Singaporeans benefit from such investments.
Wong: Family offices enhance Singapore's attractiveness to foreign investors
In response, Wong explained that family offices are set up primarily to invest their own families' funds.
Such entities, he added, have come to Singapore to access investment opportunities in the broader Asian region, not unlike other asset management entities, such as institutional fund managers, sovereign wealth funds and pension funds.
Family offices add to Singapore’s role as a regional asset and wealth management centre, and enhance the country's attractiveness as a destination for foreign investments, Wong wrote.
Together with other management entities, these offices contribute to Singapore's economy and create jobs "for our people", he pointed out.
Wong: Income inequality in Singapore "steadily" declining
As for income inequality in Singapore, Wong noted that it has been "steadily declining" over the past decade, as measured by the Gini coefficient.
According to the minister, the Gini coefficient declined from 0.478 in 2012 to 0.437 in 2022.
In addition, if the effects of redistribution through taxes and transfers are included, Singapore's Gini coefficient in 2022 would further decline to 0.378, down from 0.432 in 2012, Wong added.
Income growth at the 20th percentile has also been rising faster than median income, the minister highlighted.
The real annualised income growth for full-time employed resident workers at the 20th percentile was 3.5 per cent per annum from 2012 to 2022, higher than the income growth at the median, which was 2.6 per cent per annum, he wrote.
Lower-wage worker incomes uplifted through Workfare and Progressive Wage Model
Wong also highlighted that the government was working further on narrowing the wage gap through initiatives, such as Workfare and the Progressive Wage Model.
The government will also focus on ensuring Singapore's overall system of tax and transfer remains "fair and progressive", with the better off contributing more and the vulnerable benefitting more, he concluded.
Top photo by Mike Enerio via Unsplash