Newsletter Archives

India, Newsletter

PM Modi Interacts with American CEOs on Business Opportunities in India

October 10, 2021

Indian Prime Minister Narendra Modi set out on a three-day tour to the US from 22-25 September for attending the first in-person Quad Summit and began his visit schedule in the US on 23rd, Thursday by attending a session with prominent American CEOs from five different key sectors and appraised them on the business opportunities and key benefits of company registration in India.

Modi landed in the US on Wednesday and held face-to-face meetings with President Joe Biden and his deputy Kamala Harris and ahead of these official meetings met the CEOs of Qualcomm, Adobe, First Solar, General Atomics and Blackstone.

Two of the CEOs were Indian-Americans named Shantanu Narayen from Adobe and Vivek Lall from General Atomics. The other three were Cristiano E Amon from Qualcomm, Mark Widmar from First Solar, and Stephen A Schwarzman from Blackstone.

During his one-to-one meetings with the CEOs, Prime Minister Narendra Modi deliberated on the economic opportunities in India and emphasized saying,

“Will attend the QUAD meeting, and would also interact with leading CEOs to highlight economic opportunities in India.”

Modi’s meeting with the American CEOs from five key areas echoed the policies and priorities of the Indian government.

Meeting with Adobe CEO meant that the IT and digitization of the economy has been the topmost priority of the Indian government.

The meeting with Vivek Lall was significant considering General Atomics as a pioneer in drone technologies and one of the leading manufacturers of state-of-the-art military drones. General Atomics has already provided India with a few drones and is in the process of supplying a significant number of drones for Indian defence. The CEO of General Atomics was born in Indonesia and presently settled in California, for more than 10 years. He has been responsible for finalizing defence deals with American allies and clinched a business of USD 18 billion. The US only allows sharing of advanced defence technologies to its partners. Qualcomm is the global leader in 3G, 4G and next-generation wireless technology innovation for more than 30 years and pioneering the ways to 5G connectivity. The meeting with Qualcomm CEO, Cristiano Amon was important in the face of India’s push for the 5G technology adoption and revealed the company’s commitment to fulfilling Narendra Modi’s vision of transforming his country into a digitally empowered society. The San Diego-based company is in the manufacturing of software, semiconductors and services related to wireless technology and has offices in India. Large investments from Qualcomm were expected by the Indian PM.

As India is harnessing solar power for a prosperous rural India and taking huge initiatives in meeting its energy demand from clean and renewable energy, the meeting with Mark Widmar, the CEO of First Solar assumed significance as the company is the leader in providing comprehensive photovoltaic (PV) solar solutions globally.

The Arizona-based company has already recognized India’s geographic location as most conducive for solar power generation and announced a 3.3 GW of capacity solar plant in India with a USD 684 million project cost.

Blackstone is reputed around the world as a professionally managed investment firm that invests capital on behalf of pension funds, hedge funds, large institutions and individuals. Stephen A. Schwarzman is the Chairman, CEO, and Co-founder of this company and in 2019 has launched the first Real Estate Investment Trust (REIT) in India with Embassy group and then another two REITs in the country. The company asserted that it would invest another USD 40 billion in India over the next five years.

PM Modi also interacted with the CEOs from the US oil and gas sectors to discuss plans for addressing the country’s growing energy needs.

“It is impossible to come to Houston and not talk energy! Had a wonderful interaction with leading energy sector CEOs. We discussed methods to harness opportunities in the energy sector,” Modi remarked.

The American CEOs appreciated India’s moves in promoting doing business in India and welcomed measures taken by Modi’s government to liberalise the Indian economy including corporate tax structure revision. The CEOs assured their business presence in India and thanked the PM for the support initiatives being undertaken by his government. A complete guide on doing business in India can facilitate business setup in the country for aspiring American companies and investors.

India, Newsletter

India UK Getting Ready for an Early Harvest Trade Agreement

October 9, 2021

India and the United Kingdom are aiming to resume negotiations on a Free Trade Agreement (FTA) on 1 November 2021 as the two countries agreed for an Early Harvest Agreement by March 2022 that would allow both to establish selective gains in commodities and services. India and UK arrived at this decision soon after a virtual meeting held between the Indian Commerce and Industry Minister Piyush Goyal and his British counterpart, Secretary of State Elizabeth Truss on Monday13 September 2021.

The announcement comes when India has initiated fast-tracking of FTA negotiations with several other countries including the European Union, Australia, United Arab Emirates, and Canada for promoting FDI with the help of a complete guide on doing business in India.

“Proposed FTA between India and the UK is expected to unlock extraordinary business opportunities and generate jobs. Both sides have renewed their commitment to boosting trade in a manner which benefits all,” a statement from the Indian Commerce and Industry Ministry revealed.

Earlier on September 3, Goyal said in an industry event that India was working on multiple FTAs with other democracies who believe in transparent, fair and rule-based investment and trade opportunities as a part of its renewed strategy to move past protectionism, reduce trade deficits and attract foreign investors for company formation in India.

“Substantial work has already been done and extensive stakeholder consultations have been held involving industry/business associations, export promotion councils, buyers/sellers associations, regulatory bodies, ministries/departments, public research bodies, etc,” Indian Commerce and Industry Ministry noted.

Goyal mentioned the formation of bilateral working groups (BWGs) for different tracks to identify and understand the ambitions, interests and sensitivities of each other to accelerate the negotiation progress. Regular meetings were convened amongst the BWGs and most of the work was almost over.

He believed BWG discussions will help both sides in understanding each other’s policy regimes and resume joint scoping discussions from 1st October for finalization of terms of reference and launching of negotiations in November.

“An interim trade agreement, as the first step of an FTA, would allow both of us to immensely benefit from the early gains of the partnership,” Goyal remarked. There is a need to strike a balance between commitments and concessions in goods and services, he emphasized.

There will be a reduction or elimination of tariffs on some selected goods during the interim trade agreement. In services, certain services of mutual interest may be included in the interim agreement. “If necessary, we may also explore signing a few Mutual Recognition Agreements in selective services like nursing and architecture services,” Goyal noted.

The UK Secretary of State for International Trade added, “Today Piyush Goyal and I launched trade working groups to lay the groundwork for our forthcoming UK-India trade deal, which will: boost access to more than a billion consumers; bolster our science and tech industries; and support jobs in both countries.” According to the UK government, regular ministerial dialogues between the two sides will help explore potential areas in the trade agreement encompassing tariffs, standards, Intellectual Property, trade remedy measures and data regulation.

In a bid to expand its market after Brexit, the UK has struck several FTAs and primarily with some of the largest and fastest-growing economies in the Indo-Pacific region. The UK has signed 68 deals and has reached FTAs with Vietnam, Singapore, Japan, South Korea, and Australia. A deal with India shall mean the promotion of exports, lowered tariffs, easing of regulations and enhanced bilateral trade.

Increasing UK-India trade has been dubbed a huge opportunity by the UK, given India’s position as one of the world’s biggest and fastest-growing economies and home to more than a billion consumers.

India is one of the key trading partners of the UK and the trade between the two countries stood at USD15.45 billion in 2019-20 and USD13.11 billion in 2020-21 with a trade balance in favour of India.

Data provided by the Ministry of External Affairs (MEA) revealed that during 2019-2020, India invested in 120 projects and generated 5,429 new jobs in the UK. For the UK, India was the second-largest source of foreign direct investment (FDI) in 2019 just after the US. There are more than 850 Indian companies currently operating in the UK and their combined revenue is almost Euro 41.2 billion, as per the ‘India meets UK” report- 2020 by CII- Grant Thornton.

Clinching an early Harvest deal will be favourable for both India and the UK and provide many benefits for enhancing economic recovery in the post-pandemic era and generate huge enthusiasm and momentum before signing the final FTA.

Newly introduced policies of India namely ‘Make in India’ and ‘Atma Nirbhar Bharat’ will be complemented once the FTA negotiations with trading partners come to fruition.

Newsletter, U.A.E

Dubai Reduces Investment Amount and Extends Validity of Visa Period for Property Investors

October 8, 2021

The property investors in Dubai can now avail three years visa with a minimum investment of Dh750,000 against Dh1 million required earlier, an official notification on the website of the Dubai Land Department (DLD) says. Previously the investor visa used to have a validity of 2 years and has also been extended now.

The visa facility is made available to the property investors by DLD through Taskeen Programme when an individual owns a property valued at a minimum of Dh750,000. The visa is renewable on the expiration of validity after three years.

This is a much awaited and highly welcome move to the real estate developers who demanded a long-term property visa for reviving the languishing real estate market. It is believed that the reduction in minimum investment amount would be an added advantage for real estate developers and help improve the sentiment of global investors willing to participate in Dubai’s flourishing real estate market during the historic event of Dubai Expo 2020. The property developers can see an increase in demand which in turn will boost the construction sector.

The government move has also been seen as timely and strategic as it would attract wealthy individuals in the middle east, many of whom are witnessing a growing geopolitical instability in the region, to own permanent residential property in Dubai and UAE for long term prospects and stability and would be an additional stimulus for the country’s economic growth.

For wealthy families across the world, Dubai is already well known for its high standards of living, world-class healthcare facilities, highest standards of safety, economic stability, ease of doing business, and with the roll-out of this new scheme, it shall further promote its competitiveness amongst the global investors and facilitate the business establishment and new company formation in Dubai.

Increased participation of entry-level buyers is expected for Dubai real estate assets and would present an opportunity to the real estate developers in selling off their existing properties and freeing up their blocked capital for new projects. Though it would take some time to correctly ascertain the exact ramifications of this move, it is unequivocally agreed by all quarters associated with Dubai Properties that the confidence of property developers in Dubai will be many times boosted on the back of extension of visa validity.

The Dubai real estate sector has started showing signs of recovery after being severely hit by the pandemic as almost 10% of expatriates had to leave Dubai due to job losses and many residential properties stayed vacant amidst a fall in real estate prices.

Emaar Properties, one of the biggest property developers In Dubai witnessed its sales skyrocket to a new high of USD 2.63 billion during the second quarter of 2021 and the official sales price index released by the DLD was also seen rising. August 2021 recorded the highest property sales of almost 4 billion USD last achieved more than a decade ago.

Dubai residency law mandates certain documents for investor visa application including the passport of the investor and an electronic copy of the title deed certificate. Owning a property with a minimum value of Dh750,000 is also mandatory for the applicant. For mortgaged properties, 50% of the property value or a minimum of Dh750,000 payment must be made to the bank. A mortgage bank statement along with a no objection letter in Arabic is needed for the visa application process. As the visa application process varies from emirate to emirate, involves several steps and can be overly complex at times needing expert knowledge on Dubai residency law, professional Dubai based Investor visa services are normally recommended for speedy visa processing and future follow-ups with the General Directorate of Residency and Foreign Affairs ( GDRFA), Dubai.

Dubai issues golden visas which are also long-term UAE investor visas only issued to eligible investors for a five or ten-year residency based on the size of their investment in the UAE and sponsor an investor’s spouse, children, one manager and one advisor.

While the 10-year residency visa applies to investors of at least Dh10 million, a 5-year residency visa needs a minimum investment of Dh 5 million. The long-term investor visa also mandates an additional set of requirements established by the GDRFA-Dubai and visas are granted to selected individuals belonging to specialized fields such as technical, research, science, medicine etc.

India, Newsletter

India Explores Increased Saudi Investments in It, Defence and Energy Sectors

October 8, 2021

External Affairs Minister Dr S Jaishankar visited Hyderabad House in New Delhi on Sunday, the 19th of September 2021 to receive and meet the Foreign Minister of Saudi Arabia, on his three-day visit to New Delhi. It was the first Ministerial visit from Saudi Arabia since the time of the covid pandemic outbreak.

The two Ministers discussed the status and progress of implementation of the Strategic Partnership Council Agreement including measures for strengthening the partnership between the two countries in healthcare, trade, investment, energy, defence and security.

Indian Prime Minister Narendra Modi met Saudi Arabia’s Foreign Minister on Monday, the 20th and Tweeted saying, “Pleased to receive Foreign Minister of Saudi Arabia, Prince Faisal bin Farhan Al Saud. Exchanged views on ongoing bilateral cooperation initiatives and regional situations. Conveyed my regards to His Majesty the King and His Highness the Crown Prince”

The Prime Minister reiterated the willingness of India to witness larger investment from Saudi Arabia in the country’s industrial sectors including energy, IT and defence manufacturing in an in-person meeting with Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan Al Saud in New Delhi on Monday.

The two countries’ views and perspectives on regional developments were discussed in the meeting like the situation in Afghanistan, an official press release noted. Several bilateral cooperation initiatives that have been recently undertaken by India and Saudi Arabia were also discussed and reviewed in this meeting.

The historic visit of His Royal Highness Crown Prince to India in February 2019 along with the country’s Deputy Prime Minister and the Minister of Defence was instrumental in Saudi-India bilateral ties and paved the way for a promising relationship between the two countries. The Crown Prince announced a Strategic Partnership Council between the two countries, led by Himself and Prime Minister of India and supported by the ministerial representation from the two countries and encompassing the entire range of strategic relationships.

The Indian Prime Minister visited Saudi Arabia on 29 October 2019 and the two sides set up the Strategic Partnership Council as announced by His Royal Highness Crown Prince earlier. The Strategic Partnership Council formed by the two countries is to explore increased cooperation in trade and investment in several industry sectors, defence and counter-terrorism.

Saudi Arabia’s Ambassador to New Delhi, Dr Mohammed Al Sati previously highlighted that his country values India as a close ally and strategic business partner. Bilateral cooperation in areas of training, knowledge sharing and the fight against terrorism was emphasized in his speech. Dr Al Sati also praised India in its handling of the covid pandemic including the economic relief package provided by the Indian government.

The world’s largest oil exporter earlier confirmed saying that Saudi Arabia’s investment plans in India are on track and more than 100 billion USD investment in Indian petrochemical, infrastructure, refining, mining, and manufacturing, agriculture and several other sectors would be made as announced by Crown Prince Mohammed bin Salman in 2020. Saudi Public Investment Fund (PIF) already planned for an investment of approximately USD 1.3 billion in Reliance Retail and USD 1.5 billion in Reliance’s Jio platform.

The Reliance Saudi Aramco deal is also on the verge of finalization as Saudi Arabia commits a steady supply of crude oil for Reliance refineries and makes an investment in India’s energy sector by purchasing a stake in Reliance Industries for an estimated 20 to 25 billion USD. An investment in the West Coast refinery petrochemical project is also on the cards as per a report. A complete guide on doing business in India is helping Saudi entrepreneurs and investors in planning and launching their Indian business operations.

The Indian Prime Minister in the recently held meeting with the Saudi Foreign Minister sought greater investments from Saudi Arabia and urged that Saudi entrepreneurs come for new company formation in India in energy, IT and defence manufacturing as these sectors can offer huge growth opportunities to benefit from. Saudi Arabia’s efforts in ensuring the safety and health of Indian ex-pats and workers during the Covid-19 pandemic was also appreciated by the Prime Minister.

The recent political crisis in Afghanistan was also discussed between the Saudi Foreign Minister and Indian External Affairs Minister. India has taken a ‘wait and Watch’ stance and also started discussions with other gulf countries e.g., UAE, Qatar, and Bahrain, Jaishankar remarked. Indian Prime Minister, Narendra Modi had earlier said that the matter regarding recognition of the new set-up in Afghanistan should be a collective decision of the global community.

Newsletter, Singapore

US Businesses are Exploring Singapore as a Launchpad for Investment Opportunities in the ASEAN

October 7, 2021

The Association of Southeast Asian Nations (ASEAN) long enjoyed a robust and thriving trade and investment relationship with the US and the region is perceived by many American companies as potentially attractive for exploring business opportunities. This has been further fuelled by the recent Regional Comprehensive Economic Partnership (RCEP) signed on 15 November 2020 at a virtual ASEAN Summit hosted by Vietnam, an agreement between the 10 member states of the ASEAN and five of its free trade agreement (FTA) partners.

The RCEP is significant for both US businesses and investors due to the huge size of the participating economies amounting to 29% of the world’s GDP with 30% of the world’s population and having a market value of almost USD 25 trillion. The ASEAN economy also has a vast consumer base of approximately 2.5 billion of which an estimated 1 billion hail from the middle-class.

The RCEP will establish a comprehensive economic partnership based on the existing bilateral ASEAN agreements with individual FTA partners and be governed by a set of rules and standards such as better market access and reduced trade barriers. For American investors who look for one of the best Singapore company incorporation, RCEP will help by providing many trade and investment opportunities in new areas.

As per researchers, technology adoption has taken the front seat in the ASEAN to support economies and societies after the Covid pandemic and mainly for streamlining supply chains through initialization. The US high-tech companies can play a decisive role in accelerating this transformation and make distribution channels more effective. The supply chain has become the centre stage in almost all American companies’ long term business strategies due to the unprecedented disruptions experienced by the pandemic and made it more relevant for them to explore supply chain partners within ASEAN regional partners for digital integration of distribution processes.

Increased consumerism boosted by a resilient supply chain will promote sectors including FMCG, pharmaceutical and medical & diagnostic devices. Many US multinationals are now eager to relocate their manufacturing facilities closer to ASEAN and especially to Singapore, the new Silicon Valley in Asia as the city-state provides the highest level of technology adoption, political stability, safest business climate and strong manufacturing capabilities to make their businesses more competitive.

The ASEAN renewable energy sector has also got a big push recently in the face of increasing clean energy demand due to rapid industrialization and the US businesses can offer clean energy solutions to the participating economies.

A recent survey conducted by Standard Chartered revealed that the majority of the US companies expect considerable business growth in numerous business sectors of ASEAN during the next 12 months. While 93% of corporations expected an increase in revenue, an increase in production was anticipated by 86% of respondents. 60% of the respondents surveyed were optimistic about business expansion in Singapore followed by Indonesia and Thailand that were favoured by 45% and 43% of executives surveyed.

57% of the American companies looking for business opportunities in the ASEAN considered Singapore as their most preferred destination for regional marketing and administrative head offices and 43% favoured it for their innovation and R&D centre in ASEAN.

Several American corporations are critically assessing the USSFTA and RCEP synergy for making Singapore the primary hub to reach out to the vast ASEAN market. Besides the accessibility to a huge market and customer base, skilled workforce and diversified product portfolios have been considered to be the other two most important factors, the survey noted. 70% of respondents reasoned market access as the major driving factor while workforce and diversified product footprints were cited as the main cause by 53% and 40% of companies. Almost half of the surveyed participants expressed their desire to increase investment in Singapore over the next few years.

Singapore is also advantageous as a regional hub due to well-developed banking systems and other financial and logistics support services not readily available in other countries in the ASEAN. Many multinational banks in Singapore offer facilities to foreign entrepreneurs for opening a bank account seamlessly for Singapore company incorporation and meeting their financial needs in the Asia-Pacific region and beyond. US Companies incorporated in Singapore can also be 100 per cent owned by American companies.

A very competitive corporate income tax rate of 17% prevails in Singapore and profits realized overseas is excluded from taxation by the government. No capital gain or inheritance tax is also applicable to foreign American investors.

Besides all advantages, challenges are also being examined by the American businesses while considering Singapore for investment purposes. Amongst these challenges, the current global geopolitical instability reduced consumer spending and the health crisis was cited as the biggest challenges by 73%, 65% & 63% of people respectively. Acclimatizing the business model in the ASEAN was also cited as a great challenge by 68% of participants.

The US has been the worst affected by the coronavirus with the highest number of deaths and many ultra-rich families are becoming vulnerable and looking for a safer haven with world-class health and medical facilities. Singapore naturally comes as the first choice with zero counts of mishaps and high levels of control in combating the virus.

A new and innovative investment vehicle has also been introduced by the Singapore government last year, known as the Variable Capital Company, making it more attractive for American family offices and private equity firms. More than 260 VCCs have already been formed as per data available from the Monetary Authority of Singapore (MAS).

The number of single family offices in Singapore has increased by almost two times over the last two years as it is relatively easier for the ultra-rich to settle in Singapore. Google co-founder Sergey Brin and Shu Ping, the Chinese billionaire, have established family offices in Singapore. American Investment Management company, Bridgewater founder Ray Dalio recently announced establishing a family office in Singapore. The family office of late Microsoft founder Paul Allen also figures in the list.

The Singapore authorities are relentlessly striving to attract high-quality investors and UHNWIs from the USA and make the country the most desired destination for US high-tech multinationals.

Newsletter, U.A.E

Dubai Expo 2020: A Perfect Venue to Promote India-UAE Trade and Investment Ties

September 14, 2021

Originally scheduled to be hosted from 20th October 2020 to 10 April 2021, the belated Dubai Expo is ultimately going to be held from October 1, 2021 and will continue till March 31, 2022. The postponement of this historic event was due to the outbreak of the Covid 19 pandemic which ravaged the entire world including the UAE.

The Dubai Expo 2020 is spanning between the two leading cities of the Emirates, Dubai and Abu Dhabi and will witness 60 exhibitions daily with pavilions from 191 countries. The 182-day event will attract more than 25 million visitors across the globe besides running more than 200 restaurants at the venue.

The master plan for Dubai Expo 2020 has been designed by HOK, an American firm around a central plaza with three thematic districts dedicated to the Mobility District, Opportunity District, and the Sustainability District

World Expos for many decades have been used as venues to showcase the greatest innovations that have helped transform our present-day world and the same tradition will continue in Dubai Expo 2020 with the latest innovative technologies around the world.

India enjoys long historic ties with the UAE and will be the largest participant in this major event with a new look of its Pavilion. The pavilion has been designed in a four-level structure with technology, culture, space and heritage as the defining themes. Once the biggest event of the world finally resumes in Dubai, the Indian Pavilion stretched over 4800 sqm will showcase the new technology, and its “5 Ts” resonating Talent, Trade, Tradition, Tourism and Technology.

Pavan Kapoor, Indian Ambassador to the UAE remarked, ” It is very clear that by sheer dint of our proportion of the population, by our connections that we have in India, we will be the largest participant at the Dubai Expo.”

The long history of trade and investment between India and the UAE has been further reinforced last year when the top leadership of the two countries convened regular virtual conferences to promote bilateral and trade investment cooperation during the post-pandemic.

Dubai Expo 2020 will showcase the robust India-UAE trade which has seen unprecedented growth over the years which was only valued at 180 million dollars per annum in the 1970s and has currently grown to 59 billion dollars in 2020. The UAE was the third-largest trading partner of India during 2019-20 after China and the US while India was the second-largest trading partner of UAE with an amount of 41.43 billion dollars of trade in non-oil sectors during 2019.

The UAE is a major exporter of crude oil and the Indian government has sought more investments from the UAE in Indian core economic sectors including infrastructure, logistics, defence, ports, highways, airports, renewable energy and food parks. In September 2020, the Consulate General of India, Dubai, and Tea Board India jointly organized a virtual B2B Meet for promoting Indian tea amongst the UAE consumers.

Besides enhancing trade and investment, the two countries also agreed to expand security cooperation and explore opportunities for mutual collaboration for fighting against the pandemic. Current geopolitical instability in many parts of the world has also forced the two countries to look for increased political and economic engagements. With millions of Indian workers employed in the UAE, India has been keen on protecting the interests of its citizens at the time of great economic turmoil.

While UAE scales up investments from India in healthcare, food security and fintech sectors and Dubai company incorporation by Indian investors, the Indian government announces major policy reforms to promote business and investments and attract foreign investors from the UAE. It is no wonder that Dubai Expo 2020 turns out as the perfect venue for enhanced bilateral trade and investment between the two countries.

Dubai Expo 2020 is the biggest event in the Middle East and North Africa (MENA) and will enhance and accelerate the country’s economy with foreign investments pouring in and new business set up in Dubai UAE.

The revival of the world’s economy is also intimately linked to the growth and economic prosperity of these two countries.

Newsletter, Singapore

Singapore is Witnessing Unprecedented Growth in Family Office Space

September 14, 2021

Overview

Though Singapore has witnessed a more than fivefold jump in the number of Family offices over the last few years, this wealth and asset management space is still in a phase of infancy with enormous potential for future growth. Most of the family offices in Singapore belong to the first or second generation of Ultra High Net Worth (UHNW) families who are planning for their wealth transfer only for the first time and will keep doing so over many future generations promising a booming market for family office services.

Traditionally, family offices have been popular with well-established structures in Western developed countries viz the US and Europe. However, as the Asian continent has put its strong footprint in the global economy with a high concentration of individual wealth and private capital, there has been a surge of this financial business model in Asia, especially in Southeast Asian Singapore. As per data available with the Monetary Authority of Singapore, there are more than 400 family offices in Singapore, and only 200 of such offices manage an estimated value of assets exceeding 20 billion dollars, a whopping sum.

Family offices are private wealth management entities providing cost-effective financial solutions for UHNW families. Family offices employ financial advisors, investment analysts, legal and tax professionals for wealth and tax planning.

Family offices carry out financial and legal activities which are either carried out in-house or outsourced from external service providers. Activities performed by family offices include management and planning of private assets, wealth protection, succession planning, tax planning, lifestyle management, family governance, education, charities etc. While a Single family office in Singapore caters to one single family, multiple family offices can serve more than one family.

Why is Singapore considered attractive for Family Offices?

Multiple reasons are driving the ultra-rich families to flock to Singapore for establishing family offices post-pandemic. Singapore provides access to both Asian and global opportunities for investments and besides the Asian families, many US and European family offices are being attracted to the country with key family figures opting for residing and taking citizenship of Singapore. The main reasons for exponential growth can be attributed to the below-mentioned reasons.

Reduced risks of regulatory changes ensuring the safety of assets
A competitive corporate tax environment irrespective of residence status and tax incentives through Singapore Resident Fund Scheme, Enhanced Tier Fund Tax Exemption Scheme and Global Investor Programme
Presence of investment and international banks planning to double their operations over next two to three years
A Matured and Regulated financial market
World-class Technology
A recognized international hub for financial services and banking
Newly introduced Variable Capital Company structures
Easy settlement for super-rich families through Global Investor Programme

How do Global Pandemic and Geopolitical Uncertainty help flourish the Family Office Space in Singapore?

Global pandemic and geopolitical instability can be a big positive rather than negative for family offices in Singapore. The fear of morality of the pandemic has indeed made the super-wealthy families vulnerable but the uncertainties also instilled a sense of urgency amongst them. Singapore has one of the lowest death rates from the covid pandemic and many billionaires all over the world have been residing for longer in this city-state.

The pandemic has become an important wake-up call for wealthy families to mobilize resources and step up to bring in the positive changes needed in family offices for reviewing and updating protocols and practices within the family office space, investing more time and money for upgrading antiquated ineffective systems and assessing all forms of risk. The geopolitical instability has also raised safety issues of their assets and a need for relocation to a safer and more politically stable jurisdiction.

Covid pandemic has also triggered the possibility of higher tax regimes and stricter regulatory norms in the foreseeable future necessitating the need for wealthy families to explore better avenues for reducing the tax burden. Populist policies with several monetary stimuli introduced during early 2020 may not be viable for long due to inflationary pressure as already hinted by the Federal Reserve on Fed tapering.

In 2020, many billionaires across the world donated several billion dollars for vaccine development and many ultra-rich families were prompted to serve their communities in their countries of origin. This shift in social responsibility has spurred the growth of philanthropic trusts. Philanthropy helps in bringing people together and helps members of wealthy families do something meaningful by participating for a novel cause and reduce bureaucracy in organizations.

The pandemic also provided a big push in smart digital technologies and data securities providing wealthy families better comfort and safety in wealth management. As per recent surveys, more than 80% of family office respondents agree that artificial intelligence can be the biggest disruptive force in global business. More asset management and hedge fund professionals are joining family offices in Singapore and the technology stack is also growing more sophisticated.

Takeaway

The city-state has world-class technology, a transparent and non-bureaucratic regulatory system, a high standard of health infrastructure and a politically stable government and is attracting the super-wealthy families to set up a Singapore family office in preference to their home countries.

As there are plenty of alternatives available for family office structures and governance framework for addressing varying needs and circumstances, it is advisable for wealthy families to partner with a reputable and trusted partner with professional expertise and experience in providing advice on wealth management and implementing customized and appropriate family office structures.

IMC is led by a team of asset management and legal professionals and can help you set up your own family office in Singapore to provide independent and trusted advice on suitable structure, control and supervision keeping in view the long term needs for wealth management and administration.

Newsletter

What are the Ten Cash Flow Management Strategies for MSMEs and Startups?

September 14, 2021

OVERVIEW

Cash is oxygen for every organisation and no business can survive without cash in hand. Business expansion and growth are also impossible without a positive free cash flow. Even businesses with very high profitability can close down in absence of liquid cash. MSMEs and Startups suffer the most as they have limited access to finance and in the event of any stoppages in cash flow, the business operations are likely to come to a standstill forcing them to wound up their business either temporarily or permanently.

As any disruption in cash flow can seriously jeopardize the entire chain of business operations ranging from raw materials procurement to salary payment, Cash flow management becomes a matter of tremendous significance for businesses especially the smaller ones.

Cash flow management is a subset of finance and money management and effective implementation could be a serious issue for small businesses with limited professional skills and expertise. Several surveys conducted on MSMEs and Startups revealed that managing cash flow is the biggest of all challenges faced by small businesses during the business life cycle.

WHAT ARE THE REASONS FOR CASH FLOW CHALLENGES IN SMALL BUSINESSES?

Cash flow needs to be managed very prudently by small business owners and strict discipline must be maintained in terms of cash flow forecasting and budgeting. The main reasons for cash flow issues can be attributed to the following

Unfavourable Payment Terms with Customers and Suppliers can adversely affect the cash flow, early disbursement of payment than that realized can dry up cash flow
High Inventory especially for manufacturing MSMEs and Startups can block a considerable amount of cash
High Fixed Costs in the form of debt & interest payment, high rent, high salary etc. can adversely affect the cash flow
Unnecessary Expenses on non-value-added activities can cause reduced liquidity e.g., marketing expenses that can’t generate leads and grow customer base
Seasonal effects as financial year-end time can be challenging for cash realization

WHAT ARE THE STRATEGIES FOR AN EFFECTIVE CASH FLOW MANAGEMENT OF MSMEs AND STARTUPS?

Following are the Roadmaps of MSMEs and Startups for an effective cash flow management system.

1. Planning and Forecasting Cash Flow

Cash flow planning and forecasting can lead to better management of working capital, reduced debt and high-interest cost and better evaluation of revenue requirements for handling expenses.

2. Financing of Expensive Purchases

Easy financing is available these days that can be used for expensive purchases and help avoid blocking of a large amount of funds. Instead of paying a lump sum, payment can be made instalments. Governments have also launched many credit facilities to finance capital expenditures of MSMEs and Startups.

3. Utilising Idle Assets and Outsourcing Machinery

MSMEs and Startups with assets e.g., land and machinery not being used for business purposes can rent out or sell such assets for mobilizing cash and address short term cash flow issues at hand. Many small businesses prefer to procure machinery on rent rather than spending on Capex for preserving cash and ensuring business sustainability. The cash generated from rent or sale can be put in a short term investment fund that can earn better interest than a fixed deposit and still be liquid.

4. Negotiating Payment Terms

Based on cash flow forecasting, MSMEs and startups can negotiate with their suppliers for temporarily delayed payments to address cash flow challenges. In many cases, vendors realize the situation and agree on deferring the payments. Similar arrangements can be made with the customers to speed up the realization of funds. Relationship management plays a big role and a lot of effort must go into this.

5. Expediting Recovery of Receivables

Sending invoices immediately after delivery of services and products needs to be the guiding policy of all SMEs and Startups. Fast billing and fast collection of receivables are a must for effectively address the cash flow. Tracking of receivables with continuous follow up on past dues is also extremely critical in ensuring liquidity and optimizing Days Sales Outstanding (DSO). DSO of 30 days or less with a Collection Effectiveness Index (CEI) of more than 80% is generally recommended for small businesses for healthy cash flow.

6. Claiming Advance from Customers

For executing big orders, MSMEs and Startups must negotiate on advance deposits and payments on part deliveries with their customers.

7. Reducing Unnecessary Expenses

Identifying and reducing unnecessary expenses should also be on the agenda of small businesses to effectively address cash flow challenges. They should continuously strive to reduce expenses, save cash, and make regular cash deposits to bank accounts for improving cash flow.

The fixed costs associated with your business must be reviewed critically and periodically to identify opportunities for cost reductions e.g., cosharing of office spaces, online marketing avenues for lead generations etc.

8. Negotiating Price

Though risky and non-viable at times, increasing the price of products and services can help small businesses garner more revenue. Similarly, price negotiations with suppliers can be initiated with strategies planned for a win-win situation. Implementing cost management and cost reduction incentives can also work well and can automatically translate into improved margins without entering into risky price increase with the customers.

9. Reducing Inventory

Reduced inventory can drastically improve liquidity within a system by unlocking a great deal of money. Reduced inventory also helps in reducing wastages and operating cost of the business. For manufacturing MSMEs and Startups, Just In Time (JIT) inventory management system has been hugely successful all over the world.

10. Technology

Last but not least, present-day technologies can help MSMEs and Startups to solve their cash flow puzzle to a great extent. Expense report software for expense management automation and credit card reconciliation. Time tracking software for optimizing staff, Inventory monitoring software for optimized inventory, online payment for speeding up receivables processing, automatic expense monitoring, etc., can help manage cash flow better.

Takeaway

More than 60% of small businesses fail to see the day of light due to imprudent working capital handling and poor cash flow management. In simple terms, delaying cash outlays as long as possible and collecting cash from customers as quickly as possible guarantee an efficient cash flow management system.

Newsletter, U.A.E

UAE New Trust Law and Tax Planning for Wealth Optimization

September 14, 2021

Overview

Trusts are most popular for estate and wealth planning and can be used as a planning tool for both tax and non-tax reasons. UAE is a no income tax jurisdiction and with the introduction of recently introduced onshore trust law may become the strongest competitor in establishing trust-based estate and wealth planning structures among the other no-tax jurisdictions. Foreign assets and foreign beneficiaries are allowed under the UAE Trusts Law. Trusts are also used as asset protection and succession tools.

What is UAE New Trust Law?

UAE witnessed a new Trust law during September last year to support the onshore wealth management sector when President Sheikh Khalifa bin Zayed enforced much needed Federal Law No.19 of 2020.

The undersecretary of the Ministry of Finance, Younis Haji Al Khouri announced in a press briefing noting, “The decree-law regarding trusts was an important addition to the UAE’s advanced legislative structure.” He also said, “The onshore Trust law supports the wealth management sector in the country and provides new mechanisms for managing companies and family funds. It also encourages the allocation of charitable trusts.”

It is noteworthy that two financial free zones in the country, the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), already have trust laws based on English common law. Now for the first time, the UAE government recognised the country’s vast onshore private wealth and has allowed this financial model within the onshore wealth management system.

A ministry official remarked that this new trust law will allow both onshore companies and individuals to transfer their wealth to a trustee through a special document which is recorded electronically to reflect the assets if movable or property. The deed will mention the settlor, trustees and beneficiaries and document the responsibility and authority of the trustee and the details of the property.

As per the ministry the new initiative ‘was an important addition to the advanced legislative structure of the UAE’ and will help the financial sector to integrate with global financial industries and be more competitive with new avenues for managing funds.

The necessary tools for administering the new trust law are already being implemented by the UAE government. The trust registry for family businesses has been established and is currently being done for private trusts.

Why did the UAE Government Pass the New Trust Law?

Legal financial products including private family trusts, real estate investment trusts, securities, investments and mutual funds are already familiar to the UAE citizens and there was already a public demand for such a law. Although these products were available in the two financial free zones, the trust arrangements didn’t effectively deal with and establish ownership over UAE onshore assets such as cash, securities, land and moveable assets.

This new law will hugely benefit the family-owned company as this empowers the founders to do succession planning for securing the future of their businesses, assets and descendants in the long run.

Besides dealing with the securities for charitable and private trusts on financial markets, the new law will also include retirement funds to provide financial security to the beneficiaries in exchange for contributions to trust once they cease to work.

The law will help bridge some gaps in the onshore legal system in the country and will accelerate developments in onshore laws and practices. The country’s financial legislation will be stronger and more effective.

Preservation and investment of huge capital within the country will also be assured with the introduction of trust law.

The law has been aligned with the regulatory structure and best practices of the wealth management industries in advanced countries strongly emphasising investor protection and will help increase the confidence of the investing community.

What are Trusts?

A trust structure is established when the settlor, legal owner of assets transfers legal ownership of those assets known as the trust property to an individual or a company called the trustee and for the benefit of some persons as the beneficiaries. Once established, the legal ownership of the trust property will lie with the trustee with beneficial ownership vested upon the beneficiaries.

There are different types of trusts including public trusts, private or family trusts or public cum private trusts based on the types of beneficiaries. However, trusts can also be formed without any beneficiaries for charitable and non-charitable purposes.

What are Foundations?

A foundation is based on civil law and is an independent legal entity with characteristics of both a corporation and a trust. It doesn’t have shareholders and there is a Council that manages the foundation following its charter and regulations.

There are mainly three types of foundations viz Charitable foundations, Private foundations and Corporate foundations.

How are Trusts and Foundations Taxed?

Tax treatment of trusts can be quite complicated because it is a legal relationship and straightforward taxation doesn’t apply as an individual or business entity. Though the trustee is the legal custodian of the trust assets, they essentially belong to the beneficiaries of the trust.

Trusts are treated as individuals in many tax jurisdictions and the trustee needs to file a tax return for the trust besides filing their tax return.

As a no-tax jurisdiction, UAE doesn’t levy any income tax on trusts. However, if a UAE trust has settlers, trustees and beneficiaries who are residents of high tax jurisdictions in other countries, the trust can be considered as ‘ deemed tax resident’ and would be liable for payment of tax and filing tax returns. The settlors of a UAE trust may be liable for gift tax.

As the resident status of trust is primarily determined by the residence status of the trustees, a UAE trust with trustees who are UAE residents can enjoy tax-free status. If a DIFC trust has trustees with a tax residency certificate in Dubai, the trust can earn tax free income even when the beneficiaries of the trust are not UAE residents.

As the foundation is treated as a legal person, taxation is relatively easier. However, if a non-resident controls the foundation, the country of residence of the controller may be considered as the residence of the foundation.

Takeaway

Tax planning of a trust can be simple when both the trustees and beneficiaries are UAE residents. However, when they are residents of other tax jurisdictions, the trust deed must be documented and phrased very wisely and carefully for ensuring that the tax advantage is preserved. Similar measures must be followed for ADGM foundations as well.

Though UAE has reached DTAA agreements with many countries, most of these tax jurisdictions don’t mention taxation of trusts very clearly and comprehensively. Considering taxation of trusts as hugely complicated affairs, expert consultations are often recommended as a necessity.

Newsletter, U.A.E

UAE Plays a Decisive Role in the Economic Integration of GCC

September 14, 2021

One of the main objectives of the GCC is the gulf economic integration as per provisions of Article IV of the GCC’s set of laws for achieving coordination, integration and interdependence among member countries in all fields through similar economic regulations, joint ventures and strengthening ties with private sectors including technological and scientific progress.

Gulf economic integration focuses on the movement of products, removal of trade barriers including coordination and unification of economic policies. Work is also in progress to complete the requirements of the Monetary Union and the issuance of a GCC single currency.

The UAE has always been a forerunner in the area of GCC joint integration and all the country’s achievements are documented in the statistical reports of the Gulf Cooperation Council General Secretariat. UAE is the first member state to permit GCC citizens to own real estate (76%) in 2013 and grant licenses for economic activities and company formation in Dubai. It also allows GCC citizens to work in its government sector, grants admission to GCC students to public education, and achieves a high volume of intra-regional trade of GCC countries.

The Minister of State for Financial Affairs of the UAE, Obaid Humaid Al Tayer met Dr Nayef Falah Mubarak Al-Hajraf, Secretary-General of the Gulf Cooperation Council (GCC) on 2nd August 2021.

The agenda of the meeting was to discuss measures for enhancing economic and financial cooperation between GCC countries, ensuring better economic integration, accelerating trade and promoting outputs delivered by the GCC Customs Union Authority (GCCCUA, established in 2003) and the Gulf Market Committee (GMC, established in 2008).

The Minister of State for Financial Affairs emphasized the crucial role that UAE played in boosting the economic, trade and developmental integration, and widening the scope of cooperation amongst the GCC member countries and solidifying the role of GCC countries in the decision-making process of the world economy.

Al Tayer noted that the Gulf Council plays the desired and necessary role in strengthening economic ties and strategic partnerships between the member countries. He also stressed the intentions of the Ministry of Finance for promoting relations between the UAE and other GCC countries for achieving planned developmental goals.

The Unified Economic Agreement of the GCC countries and its implementation is looked after by the Ministry of Finance of the UAE including joint GCC economic action, associated projects, financial integration, and the implementation of plans of the GCCCUA and GMC.

“Department of the Cooperation Council for the Arab States of the Gulf Affairs”, a specialized wing of the Ministry of Finance has been established and assigned the responsibility to keep a follow up on the effective implementation of projects for economic integration.

Implementation of policy frameworks as a measure towards strengthening and boosting economic and investment ties with the GCC countries has been discussed by Dubai UAE with particular emphasis on the enhancement of trade exchange. The framework was also designed to support the sustainability of the gains accomplished by the GCCCU and the Gulf Common Market.

Discussions were held between Obaid Humaid Al Tayer and Dr Nayef Falah Al- Hajraf on potential frameworks and ways for strengthening and accelerating economic and investment cooperation with the GCC member states. The meeting convened on 2nd August 2021 was a result of efforts put by the Ministry of Finance for strengthening and extending support to joint GCC economic action and deciding on a common direction towards confronting international as well as regional changes in the economy.

Expanding on areas of co-operation and joint coordination among the GCC countries particularly in terms of the volume of trade exchanges that could confer the GCC region a distinguished position on the global economic decision-making map were also discussed during this meeting.

Al Tayer highlighted saying, “The Gulf Cooperation Council (GCC) plays a key role in consolidating the strong relations and strategic partnership between the member countries to enhance the Council’s march. The Ministry of Finance is keen to bolster the ties between the UAE and the GCC countries, to support the GCC joint action and meet its aspirations for development and prosperity.”

To strengthen and promote ways of economic and investment cooperation with various countries of the world, the UAE, represented by the Ministry of Finance (MoF) previously signed agreements with other countries as a GCC member state to strengthen its position across the world. As per the latest data and statistics, the total volume of the economy of all GCC countries is one of the biggest across the globe.

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Takeaway

Overview

What is UAE New Trust Law?

Why did the UAE Government Pass the New Trust Law?

What are Trusts?

What are Foundations?

How are Trusts and Foundations Taxed?

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