Oct 19, 2005
Wealth of S'pore households grows by $34b
By Lorna Tan
Finance Correspondent
SINGAPOREANS are getting richer, and by the tune of about US$20 billion (S$34 billion).
The combined wealth of households here grew from US$270 billion to US$290 billion by the end of last year, according to the latest Global Wealth report by The Boston Consulting Group (BCG).
The wealthy elite contributed to the lion's share of the wealth, with assets totalling US$275 billion. They are defined as those with at least US$100,000 in assets under management, including stocks, bonds, hedge funds and cash, but not property.
One of the main reasons why they have prospered is that Singapore has moulded itself on Switzerland, at least when it comes to changes in taxation and trust laws.
BCG vice-president and director Roman Scott said at the report's launch yesterday that recent law changes have helped Singapore become competitive and allow it to be positioned as the Asia-Pacific's Switzerland.
There is 'absolutely nothing' in Singapore tax and banking secrecy laws now that differentiates it from Switzerland, he said.
However, Singapore's wealth figures pale in comparison to some Asian countries such as South Korea.
The total wealth of households in Asia grew to US$7.2 trillion last year from US$6.4 trillion in 2003, mainly because of strong expansion in South Korea, Australia and Taiwan.
They each achieved impressive compound annual growth rates - 20 per cent in Korea, 17.8 per cent in Australia and 8.7 per cent in Taiwan.
Taiwan and China had the highest asset holdings in absolute terms of US$1.47 trillion and US$1.44 trillion, respectively.
Wealth in both economies was extremely concentrated - about 2 per cent of households hold about 70 per cent of riches.
The proportion of Asian assets held as shares has increased slightly to 28 per cent, but most wealth is still held in cash and deposits.
In fact, this cash-is-king preference is a worrying trend which shows that the industry is 'failing' to provide suitable alternatives, said Mr Scott.
He pointed out that there was an alarming increase in average cash holdings by customers of banks in the Asia-Pacific to 43.2 per cent of assets under management last year. This is up from 35.7 per cent in 2003.
Wealth in Asia is expected to grow by 6.8 per cent annually from last year to 2009 with the 'established wealth' segment - those with more than US$5 million in investible assets - being the fastest-growing.
BCG cited China, India and Russia as 'the most attractive growth countries' in the near future and urged wealth managers to focus on them for diversification.
Catch no ball. Can explain?
A step in the direction of acheiving swiss standard's of living begins with the implementation of a Banking Secrecy law...