By Malminderjit Singh
SINGAPORE - Some say blood is thicker than water. In the case of Singapore's super-rich, it goes beyond mere rhetoric.
More than half of the large fortunes in Singapore are managed by family-run businesses, with inherited wealth growing phenomenally in the last five years.
According to the "Global Wealth and Family Ties" study on the impact of family ties on large fortunes, 57.5 per cent of high net worth individuals in Singapore generated their wealth through family-run businesses.
This is not surprising, the study published by Societe Generale Private Banking and Forbes Insights reports, as Singapore has had free markets for many generations.
So family businesses tend to be in later stages of family life cycles.
Forty of the wealthiest here with a minimum net worth of US$210 million were chosen for the study.
Family-managed fortunes are concentrated in certain regions of the world, and hardly exist in others. Mature markets have more fortunes that are run with family involvement, at 46 per cent, than is the case in emerging markets, where they stand at 39 per cent.
Besides Singapore, this trend is common in other mature markets such as France, Germany, Hong Kong, the UK and the US.
Hong Kong, in fact, ranks the highest in this regard with as much as 75 per cent of wealth having family involvement.
The study also attributes the high rates of family involvement in HK and Singapore partially to the real estate fortunes there.
These were made generations ago, right after World War II, the report explains, and real estate fortunes tend to be founded and managed by family members.
While family-run businesses dominate the league of the rich in Singapore, individually managed fortunes still account for 42.5 per cent of the high net worth here, and are catching up.
Although the growth since 2008 of fortunes with families in business has grown at 45 per cent and at a faster rate than the growth of individual fortunes at 40 per cent, the tables have turned; the growth since 2010 in fortunes run without family involvement has been expanding at 18.8 per cent, exceeding the 14.8 per cent growth rate in family wealth.
The study shows that wealth created by inheritance has grown a mammoth 148.9 per cent since 2008, although 36 per cent of heirs to inherited wealth have also made efforts to grow their fortunes since then.
For instance, as much as 57.5 per cent of the wealth among the rich here is self-made and this has grown by 42.9 per cent since 2008.
In fact, since 2010 the largest growth rate in the sources of wealth among high net worth individuals here has come through self-made means at 19.9 per cent, exceeding 18 per cent for purely inherited wealth and 13.5 per cent for fortunes that are inherited and still growing.
Still, there is potential to boost the proportion of self-made rich here, as Singapore lags behind the average of self-made wealth at 77 per cent in emerging markets and 65 per cent in mature economies.
Self-made wealth tends to concentrate itself in emerging markets such as Russia and China.
These countries liberalised from command economies much later, so the wealthy there are less likely to have inherited fortunes.
In China, for instance, 82.8 per cent of its wealthy built their fortunes through self-made means while the country only has 33.5 per cent of its large fortunes with some form of family interest in it.
This article was first published in The Business Times.