Wealth

Singapore’s Rise: Boom or Bubble?

There is one that is soaring into the sky, called Singapore.

In just 3 years, while other developed countries are still struggling to survive, Singapore’s per capita GDP is like a rocket booster. No country can achieve such an increase in the next year (2020-2021), and it is actually stable. Stand high.

Image data source: World Bank

Japan’s stock market recently exceeded 40,000 points, reaching a record high, but it is not enough in front of Singapore. Because just last month, Japanese media also released news that Japan’s nominal GDP in 2023 was initially estimated at 4.2 trillion U.S. dollars, which may be surpassed by Germany (nominal GDP in 2023 is 4.4 trillion U.S. dollars) and fall to fourth in the world. s position.

Singapore, which is full of confidence, even dares to open visa-free access to China. You should know that it is extremely rare for developed countries to exempt ordinary Chinese people from visas. Singapore, you are so brave!

This year, Singapore became the only one in Asia to host Taylor Swift’s concert tour, known as “Taylor Economics”. In the early years, Shanghai and Hong Kong were also frequent visitors to Taylor Swift’s tours.

All kinds of extraordinary signals are worthy of careful consideration.

Singapore, a small country, has really reaped the biggest dividend of this era.

Big win special win

Yes, Singapore is a small country. It covers an area of ​​only 733.2 square kilometers, even smaller than Hong Kong.

But it just so happens that it is such a small and small country. In the past two years, it has won a lot. It has won twice. It has won a lot.

Take the recent “popular fried chicken” Japan as an example. Indeed, this wave of national fortunes is about to start again, and the stock and property markets are rising one after another.

However, even the hottest Japan still pales in comparison to Singapore.

In a recent ranking of the world’s 100 richest countries/regions published by the US-based Global Finance Magazine, Singapore ranked third after Luxembourg and Ireland, with a per capita GDP of more than US$130,000. Japan, which is also on the list, ranks 36th, with a per capita GDP of US$52,000.

This list is based on the per capita gross domestic product (GDP) of each country in 2023 and calculated using purchasing power parity (PPP), which can eliminate price differences between different economies.

Why is Singapore so rich?

In fact, if I have to say it, the average monthly pre-tax salary in Singapore in 2023 is S$5,197, which is equivalent to about 28,000 yuan; while the average monthly total cash salary in Japan in the same year is 329,859 yen, which is equivalent to about 16,000 yuan. .

In other words, the gap in salary levels between the two countries is not as large as the gap in per capita GDP.

Singapore’s sudden wealth is directly related to the crazy influx of a large number of wealthy people in the past two years.

Recently, top investment institution Hillhouse Capital moved its headquarters to Singapore, and its founder Zhang Lei also chose to become a Singaporean citizen.

In addition, according to the Financial Times, as tensions between China and the United States intensify, Shen Nanpeng, a billionaire and founder of Red Shirt Capital China Fund, who is famous for his early investments in Alibaba, ByteDance and Shein, has been listed in the digital media. I have applied for and obtained permanent residence in Singapore years ago.

In February this year, according to the Singapore media “Business Times”, Jack Ma’s wife Zhang Ying bought 70, 71 and 72 Duxton Road, Singapore for about S$45 million to S$50 million (238 million to 264 million yuan). No. three adjacent shophouses. According to the Business Times, Zhang Ying has obtained Singapore citizenship.

After Li Ka-shing made Singapore the base and retirement place of his business empire, more famous investors and entrepreneurs have settled in Singapore over the years, such as Mindray Medical Chairman Li Xiting, Donghai Group founder Li Xiaodong, and Haidilao founder Zhang Mr. and Mrs. Yong, Alipay Queen Peng Lei and others.

In terms of volume, according to data released by Henley & Partners, a London-based investment consulting firm, the number of millionaires in Singapore has reached 249,800, ranking fifth in the world.

In Singapore, there are rich people everywhere. On average, there is 1 millionaire in every 22 people.

Among the wealthy people who are madly flocking to Singapore, the Chinese who have accelerated their expansion in the Lion City in the past two years are naturally a group that cannot be bypassed.

Take a look at the list of Singapore’s richest people. Among the top 50 richest people in Singapore released by Forbes Asia magazine in 2023, eight of the top ten richest people are Chinese.

What is the reason that makes the Chinese wealthy choose Singapore, a “small place”, instead of heading straight to the United States across the ocean?

The gates of Singapore are almost overcrowded by the rich.

On January 25 this year, China and Singapore signed an agreement on mutual visa exemption for ordinary passport holders. The agreement came into effect on February 9. Nationals of China and Singapore can enter the other country without a visa and stay for no more than 30 days with ordinary passports. .

February 9th is also New Year’s Eve.

At this point, Singapore signed a visa-free agreement with China. The day before the Golden Week of Spring Festival travel.

This wave of tourism consumption boom has almost been delivered to Singapore’s doorstep.

During the 2024 Spring Festival holiday, according to Air Travel Zongheng data, there will be more than 1,000 flights from mainland China to and from Singapore, and the passenger volume will exceed 100,000. Compared with the 2019 Spring Festival, the average daily flight volume will increase by about 10%, and the average daily passenger volume will increase. About 34%.

The flow of traffic is obvious, and the Singapore Tourism Board estimates that it would make you laugh out of your dreams.

Since Thailand and Malaysia have already implemented mutual visa exemption for China, in the eyes of most non-related people, the mutual visa exemption agreement between Singapore and China is more like filling in the last piece of the Singapore-Malaysia-Thailand jigsaw puzzle and has not set off too much Big waves. On the contrary, some people said based on this, “You see, Singapore has exempted China from visa. In the future, more and more developed countries will definitely exempt China from visa.”

This is really a bit of a mysterious confidence!

There is usually a one-way visa exemption between China and developed countries, that is, nationals of some developed countries can enter China and stay without a visa for ordinary passport holders.

The mutual visa exemption between China and Singapore marks that Singapore has begun to completely replace the site of a former international financial center and carry out the functions of an international financial center.

For an international financial center, judicial independence, no foreign exchange controls, and free flow of information are three indispensable key elements.

If foreign investors want to deal with China, they especially need such a bridge.

Now the business must continue, but a new bridge must be built.

According to a Hong Kong “South China Morning Post” report on December 3, 2023, a Hong Kong industry leader revealed that the United States also requires some exporters to abide by “unwritten rules”, that is, they are not allowed to register companies in mainland China or Hong Kong, but must register in Singapore, otherwise will be fully boycotted by the United States.

Singapore has no foreign exchange controls, free foreign exchange receipts and payments, and convenient international trade settlement. Holding companies can apply for listing on stock exchanges in many countries. If the annual income of an exempted private limited company does not exceed S$5 million, the annual accounts do not need to be audited.

According to the Global Connectedness Index report recently released by DHL and New York University’s Stern School of Business, among the 181 economies assessed, Singapore ranked first in global trade. , capital, information and population mobility are among the best, ranking first in the global connectivity index.

In addition to ranking first in overall connectivity, Singapore is also the most connected economy in the world.

Not to mention, Singapore’s legal environment is well-known around the world. In the “2023 Rule of Law Index” released by the World Justice Project, Singapore ranked 17th and second in Asia.

With the intervention of policies and international factors, Singapore’s more stable social environment and international stance can, to a certain extent, avoid trade barriers caused by tense international relations.

A large number of companies choose to “rebirth” in Singapore, which is also a convenient way to expand overseas business.

According to statistics, more than 7,000 multinational companies have centers in Singapore, including some internationally renowned companies. In recent years, more and more domestic companies have moved their headquarters to Singapore or set up offices in Singapore:

For example, iQiyi has set up its global headquarters in Singapore; the cross-border e-commerce platform SHEIN has changed its corporate entity to a Singapore company; the TikTok team has also moved its headquarters to Singapore; and even Huawei plans to set up cloud computing and artificial intelligence innovation experiments in Singapore. room……

Therefore, the reason why Singapore becomes a special one is because Singapore has to open visa-free access to China. The reason why it and China are exempt from visas is completely different from Malaysia and Thailand’s desire to attract more Chinese tourists –

With so many domestic companies moving their headquarters or important operations to Singapore, the exchanges between domestic and Singaporean company personnel have of course become a problem that must be solved.

The troubles brought by wealth

However, the rapid influx of wealth into the safe exit of Singapore is not necessarily a good thing.

Singapore is a small country and can accommodate huge amounts of capital, but it lacks a large enough reservoir.

In fact, the large amount of funds currently entering Singapore is not hot money, but exists more as safe-haven funds.

The liquidity of the Singapore stock market is only one-tenth that of the Hong Kong stock market all year round. As a city-state, Singapore itself lacks sufficient resources and services to match its massive wealth.

In addition, in order to prevent domestic real estate from being over-hyped, Singapore is tightening its real estate policies step by step.

In April last year, Singapore raised the additional stamp duty. If foreigners want to buy a house in Singapore, the additional stamp duty doubles from 30% to 60%. That is to say, if a foreigner wants to buy a house in Singapore, he needs to pay 4% stamp tax and 60%. % of the additional stamp duty is more than twice as expensive.

In July, Singapore issued new regulations. In addition to purely residential properties, foreigners who want to purchase commercial and residential properties must also apply for approval from the relevant authorities before purchasing.

With the introduction of two new regulations in just three months, Singapore’s eagerness has exposed some shortcomings – if it wants to gather wealth and harvest capital, it must consider the impact of outsiders.

As a country with a small land area, Singapore has limited resources and relies on imports for most of its goods. As more foreigners settle in Singapore, it is easy for supply to exceed demand.

There is an imbalance between supply and demand, and the prices of local food, clothing, housing and transportation in Singapore have all increased.

On January 1, 2024, Singapore’s consumption tax will increase from 8% to 9%. The increase in taxes and fees falls equally on everyone, making the cost of living in Singapore rise again.

In fact, Singapore has been named the most expensive city in the world nine times in the past 11 years, according to the latest data from cost-of-living database Numbeo.

Now, this record may continue.

It seems that whether the short-term influx of wealth can be used by Singapore and how much actual benefit it can bring to Singapore is a real question.

In order to alleviate the pressure of a large amount of capital pouring into the country in a short period of time, Singapore is also constantly raising the threshold for wealthy status allocation.

Starting from March 15, 2023, the investment thresholds for Singapore’s three programs to obtain PR (permanent resident) have been significantly increased across the board. The biggest change is that applicants must invest S$25 million in funds selected by the Global Investor Program.

This is a tenfold increase from the original S$2.5 million.

This is also an important reason why Singapore dares to open visa exemption to China——

Singapore itself is a city-state, and consumption levels are rising day by day. Ordinary people simply cannot survive if they want to stay in Singapore.

In other words, if other foreign tycoons want to come to Singapore, they must first invest and then contribute to the local economy of Singapore to “share wealth”.

Some foreign capital uses Singapore as a springboard to transfer funds. It is no longer that simple to make money again by leveraging Singapore’s “treasure pot”.

From another perspective, what needs to be added to the entry threshold shows what Singapore lacks today.

Singapore is trying to use these systems to screen out higher-precision companies, provide more funds for the local financial industry, create more job opportunities for citizens, and allow foreign capital to irrigate the country’s land.

The fate of a country must not only consider its own struggles, but also the course of history.

This sudden legendary story in Singapore can be called a win-win situation.

An unavoidable fact is that Singapore is indeed a small country with a small size, which is why many people were not optimistic about it in the past.

But in the past three years, we have found that more and more familiar wealthy faces have appeared in Singapore. They used money to turn Singapore into Asia’s premier international financial center in a very short period of time.

Why are the wealthy people so short-term and betting on such a small country?

For some wealthy people, whether there is a long-term future may be a more important matter than whether they have a long-term vision.

When the era of great divisions comes, public opinion is torn and information is overflowing. What you lack is not information, but professional judgment and analysis skills.

It’s easy to get a point of view, but it’s not easy to master a methodology yourself. Our research and judgment team has painstakingly compiled two reports, summarizing the methods of tracking various important meetings and the focus of attention.

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