Thanks in part to its generous tax regime, Singapore has been a millionaire haven for years. But a new report says the tiny island state may soon overtake Switzerland as the world's largest offshore wealth hub.
The report, by WealthInsight, a London-based research firm, says Singapore is the fastest growing wealth center in the world, with $550 billion in assets under management - up from $50 billion in 2000. About $450 billion of that is offshore.
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Switzerland has $2.8 trillion in assets under management, with $2.1 trillion of that coming from offshore wealth. Switzerland accounts for 34 percent of the $8.15 trillion in total global wealth.
Yet the report said Singapore could overtake Switzerland in offshore assets under management by 2020. It said Swiss offshore assets could fall below $2 trillion by 2016, while Singapore's assets could more than quadruple by then.
The reason: Switzerland may be falling out of favor with the wealthy, while Singapore is attracting more of the new wealth from Asia. Recent offshore wealth scandals and prosecutions in the United States and Europe have pierced the veil of Switzerland's vaunted bank secrecy laws. Western countries are also tightening their tax codes and chasing tax shelters more aggressively.
"The Swiss wealth management model is under intense pressure," the report states. "Offshore centers have suffered significant reputational damage in the past four years and advanced economies are increasing their oversight of cross-border banking and tax havens."
While the West is cracking down on wealth in Switzerland, however, Singapore is opening its arms to all the new rich from Asia. Millionaires and billionaires in Asia, especially China, are pulling hundreds of billions of dollars out of their country to stash overseas.
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Much of that is going to Singapore and Hong Kong. More than half of Singapore's offshore assets come from China, WealthInsight says.
"Rapid growth in Asian economies such as China, India, Indonesia and Malaysia will continue to see new investments in the years ahead," the report stated.