The Wall Street Journal explained why rich people are emigrating to the dictatorship in Singapore:
Many Americans and Europeans just want a place where their investments can keep growing—hardly a problem in Singapore, smack in the middle of the fast-growing Asia.
“This kind of sharp change [in the global economy] brings with it an emergence of the very rich, who seek security and stability and a pronounced need for financial services in wealth management, investment, and facilitating and guiding decisions,” Quah says. “A place like Singapore has developed both the reputation and the expertise along every single one of these dimensions.”
But what really checks all the right boxes for many of the world’s ultra-rich is Singapore’s obsession with order, predictability and control, all of which give comfort to individuals whose fortunes have recently gone down the drain in many parts of the world. It doesn’t hurt that Singapore has some of the lowest taxes in the world, including none on capital gains and most foreign dividends. But it also has relatively secretive private banking laws and zero harassment from paparazzi or protesters, whose activities are narrowly proscribed by Singaporean authorities, further creating an aura of order and stability.
….The irony, as with other earlier boomtowns, is that the very sources of Singapore’s success may ultimately prove its undoing. The gushers of cash that have flooded Singapore in recent years have put relentless upward pressure on property prices, with private-home prices rocketing 59 percent higher since the second quarter of 2009, even as real-estate prices have tumbled or gone sideways in much of the rest of the world. Prime Minister Lee Hsien Loong was only admitting the obvious, some analysts say, when in a recent interview he said that the country’s property boom is “almost a bubble.”
Singapore has enacted a huge tax on real estate tax on foreigners, hoping to contain the bubble. In a rare service to United Statesians, the government has secured an exception to the tax for United Statesians because the free trade agreement with Singapore requires both governments to refrain from unjust discrimination: since citizens of Singapore don’t pay the tax, United States don’t pay, either. There are 5 other countries that have similar agreements with Singapore, all small, none with population greater than 20 million. Equal protection of the law is rare. The Wall Street Journal reports:
This month, the government boosted to 15% from 10% the fee added to the purchase price of residential property bought by many foreign nationals, including the Chinese, who were the second-largest group of foreign buyers last year. In contrast, U.S. buyers don’t have to pay the surcharge, thanks to a bilateral trade accord with Singapore….
Singapore’s government imposed the tax in December 2011 on most foreigners to fight what it contends is excessive speculation in the property market. Private-home prices have surged 59% since the market’s most recent trough in 2009.
The government worries that foreign buying is introducing the risk of a market bubble and making homes less affordable for Singaporeans, which is feeding a growing resentment of foreigners. But the move risks alienating some wealthy foreigners, including the Chinese, whose home-buying activity dropped markedly last year after the government imposed the original 10% surcharge.
One of the founders of Facebook, Eduardo Saverin, emigrated to Singapore a few months before Facebook sold stock to the public. Some people have speculated that he emigrated to reduce his taxes.
Stock fund manager Jim Rogers emigrated to Singapore in 2007. A British newspaper published his thoughts on governments bailing out incompetent businesses:
When asked his advice for a young person growing up in Britain, Jim Rogers, former partner of George Soros and one of the world’s most successful investors, is forthright. “Move to China; learn Chinese.” In an interview with The Independent, Mr Rogers warns that Britain will go bankrupt if the Government continues to follow its present policy of attempting to save the banks through subsidy and nationalisation.
He has sold all his sterling assets and has “no position” in sterling, but Mr Rogers reveals that he had been planning to short-sell sterling in the present financial crisis, before recent disparaging remarks about the pound’s prospects from his own lips had put paid to those plans. “I should have kept my mouth shut.”
Mr Rogers had in mind a repeat of his previous coup, when he and Mr Soros’s Quantum Fund famously “broke” the Bank of England in 1992, when sterling was forced out of the European exchange rate mechanism, costing UK taxpayers $1bn and making Mr. Soros and Mr. Rogers correspondingly wealthier.
Rogers was motivated to provide a prosperous future and better education for his daughter, Happy:
Happy Rogers, age 8, stands among her classmates in the schoolyard at dismissal time, immune, it seems, to the cacophonous din. Her parents and baby sister are waiting outside, but still she lingers, engrossed in conversation. A poised and precocious blonde, Hilton Augusta Parker Rogers, nicknamed Happy, would be at home in the schoolyard of any affluent American suburb or big-city private school. But here, at the elite, bilingual Nanyang Primary School in Singapore, Happy is in the minority, her Dakota Fanning hair shimmering in a sea of darker heads. This is what her parents have traveled halfway around the world for. While her American peers are feasting on the idiocies fed to them by junk TV and summer movies, Happy is navigating her friendships and doing her homework entirely in Mandarin.
Fluency in Chinese, she says—in English—through mouthfuls of spaghetti bolognese at a Singapore restaurant, “is going to make me better and smarter.”
The Wall Street Journal also reports that Nathan Tinkler, the richest Australian younger than 40, has emigrated; and Singapore “has a marginal individual tax rate of 20% for the highest income bracket, which compares with 45% for the top income bracket in Australia. Unlike Australia, Singapore has no capital-gains tax…” and Singapore “boasts the highest percentage of millionaire households in the world…. New Zealand billionaire Richard Chandler relocated to Singapore in 2008.”
Israeli venture capitalist Arnon Kohavi moved from Israel to the USA to Chile to Singapore. Chileans who complain about the vast difference between rich and poor should note that the Gini index of Singapore, 47.3, is almost as high as Chile, 52.1. The Gini index of Hong Kong is even higher (53.7). A country that offers opportunities to become rich won’t entice everyone to embrace those opportunities. According to Matias Mori of the Foreign Investment Committee of Qatar, “Chile in the Latin American context is what Singapore is to Asia. It is the most institutionalised, economically efficient, and transparent business destination.”