Employment Situation Report by the Manpower Research and Statistics Department of the Ministry of Manpower was released recently. It revealed that employment creation in the first quarter of the year in Singapore was fairly strong with a total of 23,700 jobs created. It is slightly lower than that of last year’s figure, which was spiked due to the hiring spree of the then newly launched Integrated Resorts. The bulk of the new jobs are from the services sector followed by the construction sector.
The overall unemployment rate fell from a seasonally adjusted 2.2% in December 2010 to 1.9% in March 2011.
Among the resident work force, the unemployment rate declined over the same period from a seasonally adjusted 3.1% to 2.7%. Both the overall and resident unemployment rates are the lowest in three years reflecting the tight labor market.

The report endorses the fact that Singapore was relatively unfazed by the global economic crisis, which left millions unemployed around the globe. Singapore has swiftly gathered to hit the road towards growth, with full momentum. The island’s economy expanded the most in Southeast Asia last quarter, and the GDP forecast for the rest of the year has been upwardly revised on May 19th. As against the previous 4-6% growth forecast in the beginning of the year, the country is expected to grow by 5-7%, as per the Ministry of Trade and Industry’s revised forecast.

Singapore’s importance as an epicenter of Asian economic activity is witnessing exponential growth. The tiny island country lacks all the vital natural resources, except for the high caliber of human resources it houses. The city state has achieved its economic salience in the east, by relying on a merit based excellence system.

Singapore has instituted a carefully devised and enforced merit based immigration system that attracts the best and brightest talents from around the globe to complement its resident work force. As a result a synergy is established, whereby international companies are able to find the right blend of team to carry on the regional operations efficiently.

In a globalized world, companies with cross border activities have realized the importance of having a team that is also a microcosm of the market to which they are catering to. Singapore’s workforce structure provides them the perfect setting for their regional ventures therefore many international businesses choose Singapore as their regional base, thus Singapore’s resident and foreign talent is undoubtedly a strategic resource for sustaining the economic growth of the island state.

Singapore has a relatively open immigration policy towards foreign talent, to ensure a seamless pool of talent and skills to sustain a resilient and vibrant economy. There are various types of Singapore work visas starting from work permits, for the lowest skilled laborers, to P1 and P2 category employment passes, to attract the niche professionals with meritorious qualifications both in terms of education and experience.

Notably the emphasize is on attracting high end talent and to this end the government has in place an Overseas Talent Recruitment Scheme under which companies, subject to certain conditions, that hire employees under P1, P2 and PEP category of work visas are entitled to tax deductions of up to S$275,000 a year. The scheme is also open to Singaporeans and Singapore PRs, thus encouraging niche talents to return home.

Singapore also attracts foreign entrepreneurs to setup their startups in Singapore by offering a work pass called Entrepass. This scheme is also open to executives of established foreign companies which setup a Singapore subsidiary. So entrepreneurs, with innovative ideas and lucrative market potential, establish Singapore companies which create employments for the residents and generate other spin offs to the local economy in terms of business spending and corporate taxes.

The immigration policy is highly calibrated to protect the interest of the local labor force. It must be noted that the resident labor force profile has been changing. As per the MOM’s 2010 labor market report nearly 52% of the residents are employed as Professionals, Managers, Executives and Technicians (PMET) and the number of residents employed in Non-PMET jobs has declined and growing at a slower pace. So the immigration policy has ample checks & balance, in the form of foreign worker levy to protect the interest of the local Non-PMET workers and allows for controlled flow of niche talent to meet any potential shortfall of talents for the PMET jobs.

Commenting on the labour market condition, Mr. Satish Bakhda of Rikvin, a Singapore based company incorporation and migration services agency, says “Devoid of natural resources, a scenario which cannot be changed, Singapore is left only with the human resource – a resource which can be designed and tapped according to the external conditions. Singapore manages this with high precision, through its immigration policy allowing a controlled flow of foreign talent. With the upward revision of GDP, businesses are gearing up for the challenge. Amidst the backdrop of the tight labor market they are forced to keep up with the growth, while managing high labor costs. To some extent the situation is eased by the controlled flow of foreign talent. Singapore work passes for various category of foreign workers has been designed to facilitate the economic growth, with due precedence to the welfare of the resident enterprises and work force.”

About Rikvin.com:
Rikvin offers company incorporation for entrepreneurs worldwide. Establish since 1998, Rikvin specialise in Singapore company registration, Singapore employment pass, Entrepass and related corporate services. For more information visit the company website at: http://www.rikvin.com/

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What Is A Hedge Fund?

The Singapore Code on Collective Investment Schemes (issued under the Securities and Futures Act 2001 and administered by the Monetary Authority of Singapore (MAS)) defines hedge funds in the following way:

There are different characteristics and investment strategies that define hedge funds. In general, a hedge fund seeks to deliver an “absolute” return independent of the directional move of equity, fixed income or cash markets. In considering whether a fund falls within these guidelines, MAS (Monetary Authority of Singapore) would consider, but not restricted to the following factors:

1. Strategies that use leverage, short-selling, arbitrage, derivatives and
2. Investment in non-mainstream asset classes (investments other than listed equities, bonds and cash)

Hedge Fund Structures

Based on the domicile, hedge funds are classified as

Domestic (Onshore) funds
Foreign (Offshore) funds

Domestic or Onshore funds are Singapore domiciled funds, therefore are governed by the Hedge Fund Guidelines set out in the Code on Collective Investment Scheme (the “Code”) issued by the Monetary Authority of Singapore (MAS). Trust and Company are typical structures used by Onshore Funds but from 2009 Limited Partnership is also an available fund vehicle.

Foreign or Offshore funds are funds established in jurisdictions other than Singapore.

Domestic funds can be offered to both domestic and foreign investors but conventionally it is marketed to the domestic investors only. Subject to certain conditions Offshore Funds can be marketed to domestic investors.

Distribution of hedge funds to retail investors is generally through distributor banks and licensed financial advisors. Distribution of non retail hedge funds is through private banks and other exempt institutions

Licensing Requirements

Fund managers operating with not more than 30 qualified investors are exempted from licensing.  A “qualified investor” includes a fund (e.g. the hedge fund) which is (i) offered in Singapore only to accredited investors, meaning an individual with net assets exceeding S$2 million or a corporation with net assets exceeding S$10 million, or (ii) if offered elsewhere, such offer or invitation is made only to accredited investors, or investors in an equivalent class under the laws of the country or territory in which the offer is made. Therefore a qualifying hedge fund would count as “one” qualified investor. This is an option adopted by hedge fund managers/sub-managers in Singapore

The fund managers planning to market a fund to retail investors will have to obtain a Capital Markets Services (CMS) License from the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (Chapter 289) (SFA). A minimum capital requirement must be met to qualify for the CMS License. Hedge funds offered to retail investors and constituted in Singapore are called Authorized unit trusts.

Offshore Fund Managers promoting to Singapore investors must be licensed or regulated in the jurisdiction of its principal place of business and be fit and proper. Offshore hedge funds offered to retail investors in Singapore are called Recognized unit trusts.

The investment adviser promoting a fund would need a Financial Adviser’s license (“FA Licence”). An exemption is available on the basis that a person resident in Singapore who acts as a financial adviser to not more than 30 accredited investors is exempt from licensing. This option is only viable if the Offshore fund manager qualifies as an accredited investor.

The following activities are regulated by Securities and Futures Act (SFA) and require a Capital Markets Services (CMS) License from the Monetary Authority of Singapore (MAS)

• Dealing in securities
• Trading in futures contracts
• Leveraged foreign exchange trading
• Advising on corporate finance
• Fund management
• Real estate investment trust management
• Securities financing
• Providing custodial services for securities

The following activities are regulated by Financial Advisers Act (FAA) and require a Financial Adviser’s license (“FA License”)

• Marketing of unit trusts
• Offering of life insurance products
• Advisory services on investment products including life insurance policies, foreign exchange contracts, etc.
• Issuance of investment reports

Unless specifically exempted and funds with less than 30 qualified investors all other schemes and persons engaged in any of the above stated activities must obtain the appropriate license.

Overview of Regulations

Regulations of Marketing to Retail Investors

Promotion of hedge funds to retail investors is allowed if it is either an authorized or recognized funds.

The minimum subscription requirements are the same for Onshore and Offshore funds offered to retail investors and they are

• Single hedge funds: S$100,000
• Hedge fund-of-funds (FOHF): S$20,000
• Capital protected/guaranteed hedge funds: No minimum

A prospectus in compliance with the SFA must be lodged and registered in the case of funds offered to retail investors. In the case of authorized Offshore Funds the foreign prospectus can be used if it contains all the information required under the SFA.

Ample measures are in place to protect the interest of retail investors, and there is substantial emphasize on disclosure of risks and uncertainties of the returns.  Therefore the prospectus must state the material differences between the hedge fund and other types of collective investment schemes and must state that only relatively little information on how the hedge fund and underlying hedge funds are managed will be available, that there is limited liquidity and that most of the underlying hedge funds are subject to minimal regulation etc.  Similarly marketing materials must highlight the risks involved and reveal information such as the fees and charges payable. Appendix 4 of the Code on Collective Investment Schemes contains a list of common examples (not exhaustive) of such disclosures.

In the case of Offshore funds that are recognized for retail subscription there must be a representative for the scheme in Singapore to act as a liaison between investors and the foreign manager. The representative must be an individual, a company incorporated in Singapore, or a foreign company registered in Singapore under the Companies Act. The Offshore Fund manager (together with its related companies) must manage at least S$500 million of discretionary funds in Singapore.

Recognized Offshore funds, for retail subscription are not subject to the investment guidelines set out in the Code of Collective Investment Schemes however are approved on the basis of sufficient regulatory oversight in the home jurisdiction. The MAS has the discretion to determine if a foreign jurisdiction’s regulatory framework is acceptable and would at the least require that the applicable regulatory framework is similar to that of Singapore.

In the interest of the retail investors the Onshore Funds authorized for retail subscriptions are subject to the following regulations

Regulation of Managers

The manager of a single hedge fund should have expertise in managing such schemes. Where investment decisions are outsourced to a sub-manager or adviser, the sub-manager or adviser should have expertise in managing such schemes. The professional experience, qualifications, assets under management and performance history of the manager or its sub-manager or adviser will be taken into account for assessing the expertise.  The manager should have at least 2 executives who each have at least 5 years of experience in the management of hedge funds. In the case of FOHF, out of the 5 years at least 3 years must be in the management of FOHFs

Regulation of Investment

A Singapore single hedge fund may invest in another single hedge fund which is not a feeder fund. A Singapore FOHF may invest in another FOHF which should only invest directly in other hedge funds and not through another FOHF or a feeder fund.

In the case of Fund of Hedge Funds (FOHF) it should have diversification as one of its key objectives. The manager should have in place strategies to achieve adequate diversification and ensure that the fund is in line with the diversification strategy at all times. An FOHF should be diversified across at least 15 hedge fund managers or have not more than 8% allocated to a single hedge fund manager.

Regulation of Liability of Investors

The liability of investors must be limited to their investment. For this purpose, the constitutive documents of the hedge fund should contain a provision limiting the liability of investors to their investment in the scheme.

Regulation of Reporting

The manager should prepare and furnish to the trustee the annual audited accounts and reports, semi-annual accounts and reports, and quarterly reports for each of the four quarters of each financial year. The trustee must audit and send or cause to be sent the reports to the participants as stipulated in appendix 4a of the Code on Collective Investment Schemes. The reports should disclose the portfolio statement and top 10 holdings but this requirement is waived, if such disclosure is prejudicial to the interests of the scheme. Alternatively, the aggregate exposure for the scheme categorized according to country, industry, asset class and/or credit rating of debt securities should be disclosed. The performance fees paid or payable by the scheme for the period under review should be disclosed.

Regulation of Leverage

A single hedge fund may be leveraged up to the extent disclosed in the prospectus. An FOHF may borrow only for the purposes of meeting redemptions and short-term (not more than 3 months) bridging requirements. Aggregate borrowings for such purposes should not exceed 25% of the deposited property of the FOHF at the time the borrowing.

Regulations of Marketing to Accredited Investors

Restricted authorized (Onshore) hedge funds and restricted recognized (Offshore)hedge funds can be offered only to accredited investors. Onshore hedge funds offered to accredited investors (and other relevant persons) can only be offered to certain types of investors as defined under Section 305 of the SFA. These investors require a minimum total net asset size or annual income exceeding a certain amount (as set out in Section 4(A) of the SFA) or at a minimum of SGD 200,000 per transaction. The same applies to Offshore recognized schemes.

But unlike funds offered to retail investors, the restricted Offshore and Onshore Funds offered only to the accredited investors are not required to comply with any investment guidelines. Unlike offers to retail investors, there is no requirement for any prospectus or other offering document.

Regulations of Marketing to Institutional Investors

For both Onshore and Offshore funds marketed to institutional investors, there are no minimum subscription requirements for all funds (including hedge funds). As defined in section 4A of the SFA are exempted from all authorization and prospectus requirements under the SFA.

Taxation

An Onshore fund will generally be liable to Singapore income tax if it derives income sourced or deemed to be sourced in Singapore or receives foreign-sourced income in Singapore. A domestic fund is generally required to file an annual tax return with the Singapore tax authorities. Onshore funds which are established as Singapore-resident companies can generally avail of Singapore’s double tax agreements provided these funds can fulfill the relevant substance requirements.

Tax exemptions are available under the Singapore Income Tax Act (SITA) for foreign-sourced dividend, foreign branch profits, and foreign-sourced service income received or deemed received in Singapore, subject to conditions. Gains or profits which are capital in nature are not subject to Singapore income tax.

A foreign or Offshore fund distributed in Singapore which are not managed/ advised by a Singapore resident fund manager/ investment adviser are generally not subject to tax in Singapore and are not required to file an annual tax return to the Singapore tax authorities. However Offshore Funds are deemed to have permanent establishment in Singapore by virtue of their Singapore based fund managers, therefore are deemed to generate earnings from Singapore therefore are invariably subjected to tax. In this case, the foreign fund may be required to file a tax return with the Singapore tax authorities. In cases where no income is subject to Singapore tax, there could be reporting requirements for a foreign fund.

Tax Incentives

Exemption for Offshore Funds

A person in Singapore who manages a fund on a discretionary basis (whether Offshore or Onshore) will create a taxable presence for the fund in Singapore. However there are some exemptions available.

An Offshore fund managed by a Singapore-based fund manager will be exempt from tax on specified income from designated investments if the fund is a qualifying fund. For a fund to be a qualifying fund, in general, it

• should not be resident in Singapore and
• cannot be 100% owned by Singapore investors. Designated investments include investment like stocks, shares, securities, etc. It must be noted, immovable property in Singapore is excluded from the list.

But for an investor to derive tax exemption on incomes from qualifying funds, the investor must be

• An individual investor
• A foreign corporate body without presence or other forms of business activity in Singapore. In the case of foreign company, with permanent establishment in Singapore, it must not use Singapore generated funds to invest in qualifying funds
• specific Singapore government entities
• A Singapore resident corporate investor that owns not more than 30% (or 50% if the fund has 10 or more investors) of the qualifying fund.

Exemption for Onshore Funds

The above stated exemptions for offshore funds are also made available to Singapore funds with the introduction of Singapore Resident Fund Scheme, to encourage fund managers to base their fund vehicles in Singapore, by giving the same tax exemptions. To avail the exemptions a Singapore constituted fund must meet the following conditions:

• It must be approved by MAS
• The fund vehicle must particularly be a company

The key advantage that a Singapore fund has over an offshore fund is the access to Singapore’s large tax treaty network with over 50 countries.

Enhanced Tier Fund Management Scheme

This scheme was introduced to provide greater flexibility to the managers to source investors. There is no restriction on the residency of the investors or the fund vehicles. For funds under this scheme there is no cap on the percentage of Singapore investors. In order to qualify under this scheme the scheme must be approved by MAS and include a minimum fund size of SGD50 million at the time of application. The enhanced tier is open to fund vehicles in the form of companies, trusts and limited partnerships.

Fund Management Incentive Scheme

The FSI-FM scheme aims to promote fund management sector in Singapore. This incentive provides a concessionary tax rate of 10% for fund management and investment advisory activities, subject to certain conditions. For new applicants to qualify for a minimum 5 year award, the applicant:

• must be licensed or exempted from having a CMS license in respect of its fund management or investment advisory activities
• must have at least three professional staff engaged only in fund management or investment advisory services. Such professionals must earn a basic monthly income of more than SGD 3,500, and is engaged substantially in qualifying activities.

It must be noted that MAS will asses other factors such as growth targets in terms of assets under management, business spending etc while considering the applicants under this scheme

Investors are increasingly considering hedge funds as a source of diversification.  Singapore implements the appropriate responses to build strong foundations for the fund administration and domiciliation activities. The strong fundamentals will enhance Singapore’s status as the Asian magnate of the fund management industry attracting capital, talent, managers and opportunities to build a thriving industry ecosystem.

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To begin, you will need to make sure your business is already registered with the Accounting and Corporate Regulatory Authority of Singapore (ACRA). Your business, may be retail, must register as a sole proprietorship, partnership or a private limited company.

Two more things have to happen before you can start importing goods into Singapore. First, after you have the business registered with ACRA, you will then activate your Custom Accounts using ACRA assigned Unique Entity Number (UEN) and Singpass. Second, you will have to be registered as a trader with Singapore Customs. As a trader you will be able to apply for permits using TradeNet® for each shipment of goods.

Generally most goods are considered ‘non-controlled goods’ such as clothes and shoes. You do not need license to import ‘non-controlled goods’. However, if you are going import “controlled goods” such as food and animal products, drugs or telecommunication items, you will need to apply for appropriate license for each category from the ‘competent authority’. An example would be importing animals and birds products, you have to apply for a license from the Agri-food and Veterinary Authority of Singapore.

Be forewarn that there is a significant amount of paperwork to submit for application of import permit for each shipment with the addition of customs documentation and clearance; insurance papers; and paperwork for ‘controlled goods’. There are also taxes, duties and fees to pay. You can do all the paperwork as you are also a registered trader with access to TradeNet®, however, most businesses choose to relegate the task to freight forwarders and cargo agents since the import procedure is quite complex.

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Choosing a Name

An important thing to note is choosing the appropriate name for your school. The name of your business registered with ACRA has to be the same name as the school if the business is registered as sole proprietorship or partnership. The name cannot have the words ‘Singapore’ and ‘National’; ‘University’, ‘Conservatory’ and ‘College’, or ‘International’.

To use the term ‘Academy’ or ‘Institution’ as part the school name usually indicates that it is a school that offers post secondary or tertiary education, and the facilities can accommodate 500 students at any given time.

Choosing a Premise

There are stringent rules and guidelines for educational facilities such as the size of classroom and student ratio. A planning permission is required and has to be obtain from Urban Redevelopment Authority of Singapore (URA). A premise for private academic school requires a Class II approval from URA. It’s best to understand and fulfill the rules outlined by URA then to risk losing accreditation.

If you plan to renovate the space, you will need to apply for a building work permit through Building and Construction Authority of Singapore (BCA). When the building works are complete, you will also need to obtain from BCA: a Certificate of Statutory Completion and/or a Temporary Occupation Permit before you can occupy the space.

You will also need a Fire Safety Certificate (FSC) prior to occupying the building. You can obtain an FSC from Singapore Civil Defense Force through a registered architect or engineer. All renovation works are to be performed by certified or licensed contractors including architects. A business signage that is placed on the building will require an application of an Advertisement License from BCA.

Registering a Private School

It is mandatory for all private academic schools, including schools that offer External Degree Programs (EDP), to register with MOE in Singapore. Each EDP has to be registered individually; however, being registered is not akin to gaining accreditation or recognition from MOE.

When you register the school, you are also required to register the school curriculum and teachers. A education plan for each course has be submitted that states the learning outcomes, teaching methodology, class schedules, resources and materials. You will need to also submit the qualification documents of the teachers conducting the courses.

Starting on December 21, 2009, all private academic schools must also register with the Council for Private Education to operate in or from Singapore The schools affected are those that offer full-time courses in degree programs and placement tests. Schools that offer online and/or international curriculum are required to register. To read more about the Council of Private Education, please see our article on Mandatory Registration for Private Education Institutions.

Committee of Management

Part of the registration requisites also stipulates that a private academic school to have a Committee of Management. It has to have a minimum of one member and a maximum of nine. The Committee of Management’s role is to ensure the school stays in compliance with the provisions of the Education Act.

Enrolling International Students

If you plan to open programs in your school to international students, you will need to apply for Case Trust for Education. Without the certification from Case Trust Singapore, you will not be allowed to enroll students in any of the programs in your school.

Rikvin has help thousands of clients incorporate their companies since 1995. We can help you register your company with ACRA in less than 24 hours. Our comprehensive corporate services can provide you with a customized service that includes application for pertinent licenses and permits that you require to set up an private academic school. To learn more about our Incorporation Services please go to Singapore Company Incorporation Services

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1. Register your business first with the Accounting and Corporate Regulatory Authority of Singapore (ACRA). Your business must register as a sole proprietorship, partnership or a private limited company. Rikvin is Singapore’s leading company incorporation specialist. We can help advise you on the business structure that is most suitable for your company.
2. Secure a premise for your business. The premise has to be zoned for commercial use and designated for arts or music use by URA.

Securing a Premise

Once you have secured a space, do make sure that it is current on building codes and fire safety measures. If the existing premise is not set up to accommodate an arts or music establishment, you can discuss with the landlord to apply for a Change of Use with the Urban Redevelopment Board. Depending on the type of arts or music business you plan to have, the facility may or may not have stringent guidelines in the design and layout, so it will be worthwhile for you to do the research for the specific entertainment or recreation business you intend to set up to avoid rejection when inspected.

Any major renovation of the premise requires an application for a building work permit through Building and Construction Authority of Singapore (BCA). When the building works are complete, you will also need to obtain from BCA: a Certificate of Statutory Completion and/or a Temporary Occupation Permit before you can occupy the space. All renovation works are to be performed by certified or licensed contractors including architects. A business signage that is to be placed on the building will require an application of an Advertisement License from BCA.
You will also need a Fire Safety Certificate (FSC) prior to occupying the building. You can obtain an FSC from Singapore Civil Defense Force through a registered architect or engineer.

Arts Entertainment Licenses & Permits

Media Development Authority (MDA) presides over the following licenses that allow the operation of public arts and entertainment events such as live concerts, poetry reading and art exhibition; screening of films that are rated NC 16, M18 and R21; and the use of TV on the business premise. You may or may not require all of these licenses.

• Arts Entertainment License
• Film Exhibition License
• Non-residential TV License

Depending on the kind of events you plan to organize that are open to the public, you may need to apply one of the following permits. It is advisable for you to check with the Singapore Police Force (SPF) on the appropriate license to apply for. In any case, all events will require at least a Public Entertainment License or a Public Entertainment Ad-Hoc License. You will also need to obtain the Copyright Permit (for Ad-Hoc Events) from the Composers and Authors Society of Singapore to play copyrighted music at the events.

If you need to engage specialists from a foreign country to assist you in organizing an arts or music event you can find out from Ministry of Manpower (MOM) is you qualify to hire foreign workers. MOM determines, on a case-by-case basis, if you qualify to hire foreign workers. All foreign workers working in your business must have valid employment passes or visas.

For foreigners who are interested in setting up an arts or music business in Singapore, it would be helpful to seek an agency that specializes in company incorporation in Singapore. It is, in fact, necessary to engage a law or corporate services agency to assist you in incorporating a business in Singapore with ACRA.

Rikvin has help thousands of clients set up their companies since 1995. We can help you register your company with ACRA in less than 24 hours. Our comprehensive corporate services can provide you with a customized service that includes application for pertinent licenses and permits that you require to set up an arts or music business. To learn more about our Incorporation Services please go to Singapore Company Incorporation Services

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