MAS introduces 3 new measures to strengthen S'pore's asset management industry

MAS has announced three measures aimed at keeping Singapore competitive as an asset management hub, amid growing international competition.

The measures were announced on Aug. 19, and comprise a tax exemption on profit-related returns, a new hedge fund investment programme, and a new track under the Overseas Networks & Expertise (ONE) Pass to attract top leaders and senior investment professionals.

Why it matters

Asset management accounts for about 15 per cent of the financial sector's output and 13 per cent of its employment.

Over the past five years, the industry grew by an average of 7.5 per cent a year on average to almost S$7 trillion.

It employs close to 25,000 people, around 80 per cent of whom are locals, in roles spanning portfolio management, investment research, client servicing and risk management.

MAS Deputy Chairman Chee Hong Tat said the package was meant to attract leading asset managers, global capital and world-class investment talent to Singapore.

He said at a doorstop:

"The measures that we are announcing today reflect our continued commitment to strengthen Singapore's value proposition and ensure we remain a trusted, vibrant, and globally competitive financial hub."

The tax exemption

Under the first measure, MAS and the Ministry of Finance plan to introduce a tax exemption on profit-related returns fund managers earn from managing qualifying funds.

What that means in practice: when a fund manager delivers strong returns for investors, the cut they take from those profits will not be taxed. Ordinary salaries, bonuses and other forms of staff pay are not covered.

The exemption is expected to take effect from the Year of Assessment 2027, with further details at Budget 2027.

Funds that qualify are already required to meet economic substance requirements, including minimum headcount.

The hedge fund programme

MAS will also set up a Hedge Fund Investment Programme to invest alongside hedge fund managers who commit to establishing or growing their presence here.

Beyond anchoring the managers and investment talent, MAS said the programme is meant to build up the hedge fund ecosystem, including ancillary service providers and prime brokerages.

More details will be shared later, MAS shared.

The ONE Pass track

Lastly, MAS and the Ministry of Manpower (MOM) intend to introduce an Investment Management Track under the ONE Pass framework, aimed at senior investment professionals and global leaders in the industry.

The track may refine how salaries are assessed, recognising that a significant part of pay in the industry comes from returns tied to investment performance rather than a fixed monthly salary.

On Hong Kong

At the doorstop, Chee was asked on the timing of the announcement and whether the announcement was a response to increased competition from Hong Kong, including whether it addressed fears that highly paid fund managers might leave Singapore.

He said:

"We don't see the competition with Hong Kong as zero sum. We believe that the region is big enough. There's enough scope for both cities to grow as financial centres."

However, he acknowledged that Singapore needs to take a look at "what is happening in the global landscape in reviewing and adjusting our own policies".

He said competitiveness was not anchored on any single factor such as tax, and that MAS also has to weigh trust and stability, the regulatory framework and access to talent.

Chee noted that it requires a "whole-of-government" approach to uphold the competitiveness of the industry.

He said: "My colleagues and I, we will do what it takes to maintain and uphold the competitiveness of our financial services industry."

Why announce now if the details come at Budget

When asked why the announcement was being made roughly six months before Budget 2027, Chee said tax changes have always been finalised at Budget.

However, he said MAS felt it was important to signal its plans early after speaking to the industry.

He said:

"We thought it's important after speaking to the industry that we share with the industry what are some of our plans, so that they can take this into account in deciding where they want to locate their business, where they want to grow their business."