Singapore may face more political pressure from the United States and other tax hungry welfare countries over its role as an offshore financial center catering to wealthy foreigners, the country's prime minister admitted last week.
Prime Minister Lee Hsien Loong told journalists that U.S. pressure on some European countries to 
loosen banking secrecy laws and open their banks to greater scrutiny may lead to still more European money flowing into Singapore in the short term. "But I expect Singapore to come under pressure too," he said in response to a question on whether pressure on countries such as Switzerland and Liechtenstein will help Singapore.
Singapore's government has previously denied suggestions that the country is or wishes to be known as a tax haven. But it offers tax breaks to foreigners and has adopted strict bank secrecy laws patterned after Switzerland. It has been promoting itself as a rival financial center to Hong Kong to attract banks such as UBS, Credit Suisse, Julius Baer, and Citigroup to manage money for rich local and foreign clients.
Cash Flows to Singapore
"In the past 10 years, a lot of money from outside of Asia has moved to Singapore from Europe, Latin America, the Middle East, Russia and Central Asia," said Edmund Leow, a principal at the law firm of Baker & McKenzie, Wong & Leow in Singapore.
Many of the worlds wealthy have moved from traditional tax havens of the Caribbean, Switzerland and the Channel Islands to Singapore. One of the prime reasons for this movement is pressure in those places from Organization for Economic Co-operation and Development (OECD) member countries, most notably the United States. Local Singapore bankers expect this pressure probably will grow once president-elect Obama takes office in January.
Escape from the EU
In Europe money is being moved out of Switzerland to avoid paying withholding tax on interest income as required by the European Union, even as the EU is calling for more and expanded taxes. In Asia, even in the face of the global recession, huge wealth has been amassed with funds from the region, particularly China, Indonesia and India, and those funds dominate the bulk of Singapore's private banking business.
Singapore's private banking assets under management have grown over the past few years by an average of 20% each year and now are estimated at US$200 billion, according to the Monetary Authority of Singapore (MAS). Private banks have fueled the growth by expanding their wealth management services, most notably in the setting up of trust companies.
Trusts Use Growing
"Unlike the Europeans, Asian clients previously did not have full knowledge of what trusts can do such as the complicated tax structures," said Mr. Leow. "As the trust industry develops, it will not only grow in terms of the number of trusts or customers or assets under management, but also in terms of sophistication." With business from wealthy clients still growing in this English common law jurisdiction, Mr. Leow said Singapore's greatest task would be to manage its clean and well regulated image both at home and abroad.
Our executive director, Erika Nolan, myself and several Sovereign Society editors have visited 
Singapore. We've made strong banking, legal, trust and other professional contacts that can be useful to our members with Asian business and financial interests.
That’s another good reason why you should protect yourself and your wealth by joining this unique organization that, for more than a decade, has shown the way for sound offshore banking, prudent investing and real financial peace of mind -- the Sovereign Society.
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