Its recommendations come as Singapore, along with other Asian wealth management centres, are working to develop a pan-Asia fund passporting regime, similar to Europe’s UCITS funds directives.
PwC bases its recommendations on feedback it received from a survey conducted during July and August of this year. Those surveyed included registered or licensed asset managers operating in Singapore, as well as some foreign fund groups, and spanned all the key industry sub-sectors, such as traditional funds, private equity, real estate and hedge funds.
Singapore does not currently have an investment fund platform that caters to the specific needs of hedge funds, private equity, securitisation or cross border investment funds, PwC notes.
"To compete or even be on par with global investment centres such as Luxembourg, Dublin, and Cayman Islands, Singapore must be able to offer a variety of investment fund platforms beyond the current structures – such as open-ended companies, segregated portfolio companies, and even segregated sub-funds," said Justin Ong, asset management leader at PwC Singapore.
According to Ong, the creation of such a framework for the funds industry could lead to an increase in the number of funds set up and managed in the southeast Asian city-state, which is already one of the world’s most important wealth management centres.
SICAV-type structure
In the paper, entitled Why not, indeed?, PwC also calls for the creation of a corporatised investment vehicle structure like the SICAV, an open-ended collective investment scheme popular in Europe. SICAV is a French acronym that translates as investment company with variable capital.
The current regulatory framework in Singapore is structured to accommodate investment funds set up as unit trusts, which don’t permit access to the privileges offered through double tax treaties, or a corporate vehicle which comes with many restrictive components that makes it investor unfriendly, PwC points out.
PwC also suggests that Singapore adapt its fund laws in ways that would better accommodate the various relevant market sub-sectors, such as private equity, real estate, hedge funds and retail-distributed funds, while also providing better governance and protection for investors.
‘Bandwidth’ needed
Meanwhile, with the approaching creation of a pan-Asia fund passporting regime, Ong points out, Singapore should ensure it has the bandwidth to allow alternative investment structures to accommodate both regulator and investor preferences.
And, in line with other investment centres, Singapore should also seek to introduce legislation that offers regulated fund products to all types of investors, including the retail market, which typically requires more regulatory intervention.
PwC suggests that Singapore’s financial authorities adopt a systematic and meticulously-planned, phased in approach to implementing its recommendations.
For more information on PwC’s proposals for Singapore’s funds industry, click here. To download the 12-page white paper, click here.
