Consider revamping investment fund legal framework: PwC

PHOTO: Consider revamping investment fund legal framework: PwC

SINGAPORE - Singapore has come a long way to become a world-class asset management hub, but professional services firm PwC says it may be time to up the game, to ensure that the city stays at the forefront of the industry.

In a proposal paper it released today, the firm said Singapore should consider a revamped framework of investment fund laws that would allow asset managers to offer a variety of investment fund structures to cater to a broad spectrum of clients.

This is especially important as Asian wealth is growing and there is increasing interest among investors globally to put their funds in this region, it added.

PwC's proposals are supported by feedback it received from a survey of asset managers here that it conducted in July and August.

"The overarching consensus... was that a new investment fund law would be deemed appropriate and would actually be required to gain more share of the global fund market," the paper said.

For example, PwC noted that in recent years, there has been rising interest among fund managers in setting up Singapore-domiciled investment vehicles because of favourable tax treaties and the pro-business environment.

But Singapore does not have an investment fund platform that caters to the specific needs of hedge funds, private equity, securitisation or cross-border investment funds. "The current regulatory framework in Singapore caters mainly to investment funds set up as unit trusts only, which do not grant access to the privileges offered in double tax treaties, or a corporate vehicle which comes with many restrictive components which make it investor unfriendly," PwC noted.

"To compete with investment centres such as Hong Kong, Luxembourg, Dublin and the Cayman Islands, Singapore needs to be able to offer a variety of investment fund platforms beyond the current structures available."

A more flexible and inclusive framework would also contribute significantly to the economy in terms of higher employment, enhanced productivity and growth in fund flows through new product ranges created and managed in Singapore, PwC added.

It also suggested introducing a legal framework for sub-industry funds like real estate, private equity and hedge funds. Having laws that cater to these sub-sectors would be a better way to govern and protect investors while regulating the managers, it said.

PwC Singapore asset management leader Justin Ong added in a statement: "If Singapore can bring about the necessary changes, it will have a competitive advantage... in introducing more options and flexibility to meet the diverse needs of tomorrow's investors and fund managers."

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