The Global Investor Programme (“GIP”) is a permanent residency scheme that was launched by the Economic Development Board (“EDB”) in Singapore to encourage high-net-worth individuals and entrepreneurs to invest in the country. The scheme provides a fast track to permanent residency for eligible applicants who are willing to invest a significant amount of money.
In a recent announcement by EDB, there will be a number of changes to the programme. These changes aim to selectively attract investors who have the ability to make a significant economic impact for Singapore and at the same time, make them rooted to Singapore. It is hoped that high value foreign investment will enter the Singapore economy and then create economic growth for the country.
Since its introduction, the GIP has been successful in attracting high-calibre applicants who value Singapore’s stability, competitive business environment, skilled talent pool and global connectivity.
Amid fierce competition for capital, the new changes are indeed a step in the right direction to help Singapore attract top-tier business owners and investors to our shore. Competition for capital is getting tough and these regime changes will place Singapore in good stead to be a top-notch wealth management hub.
The changes will apply to applications made from 15 March 2023. For applications with supporting documents submitted before 15 March 2023, the old regime will continue to be applicable.
Salient Features of the GIP
The GIP targets investors with the following profiles:
1) Established business owners;
2) Next generation business owners;
3) Founders of fast growth companies; and
4) Family office principals.
These investors have the choice of investing in one of the following investment options:
1) Option A – Invest S$2.5 million in a new business entity or in the expansion of an existing business operation in a qualifying industry.
2) Option B – Invest S$2.5 million in a GIP fund that invests in Singapore-based companies.
3) Option C – Invest S$2.5 million in a new or existing Singapore-based single family office having assets under management of at least S$200 million.
Key Changes to the GIP
The changes are mainly seen in the investment conditions and the re-entry permit renewal conditions.
Option A – New business or expanded business investment
New investors will have to invest in a new business entity or existing business operation in Singapore. The investment quantum has been increased from S$2.5 million to S$10 million inclusive of existing paid-up capital.
With respect to the re-entry permit renewal conditions, the previous regime required the investor to hire at least 10 incremental employees, of which at least 5 must be Singaporean citizens by Year 5 of the investor’s permanent residency status. The new regime requires the investor to hire more employees, at least 30 employees, of which at least 15 must be Singaporean citizens. Of these, at least 10 must be incremental hires.
The requirement of a total business expenditure of S$2 million in the old regime will be removed. This is because the focus of the new regime is to create high quality jobs for Singaporeans which in the process, would lead to more business expenditure, similarly achieving the business expenditure goal of the previous regime.
Option B – GIP Fund Investment
The investment quantum is increased from S$2.5 million to S$25 million. Additionally, instead of investing in a GIP fund that invests at least 50% in Singapore-based companies upon in-principle-approval, investors are now required to invest in a GIP selected fund that invests in Singapore-based companies.
EDB will shortlist these funds based on the funds’ track record, the investment mandate of Singapore and the industries that these funds operate in. The fund managers will be selected from amongst the best in the world. The funds will likely comprise of venture capital funds that have investments in Singaporean businesses.
With respect to the re-entry permit renewal conditions, the previous regime had hiring and business expenditure requirements. It required the investor to hire at least 10 incremental employees, of which at least 5 must be Singaporean citizens. It also required the incurrence of $2 million in total business expenditure by Year 5 of the investor’s permanent residency status. All these requirements will be removed under the new regime. All that is required under the new regime is that the investor maintain his or her investment in the GIP selected fund.
Option C – Singapore-based single-family office investment
The previous regime required the investor to invest S$2.5 million into a new or existing single-family office with assets under management of at least S$200 million, of which at least S$50 million must be held in Singapore, upon in principle approval. This will be removed.
The new regime seems more stringent. It requires the investor to establish a Singapore-based single-family office with assets under management of at least S$200 million, of which at least S$ 50 million must be deployed in certain “local investment” categories, such as companies listed on the Singapore Exchange’s mainboard and secondary Catalist board no later than 12 months from the date of the final approval of the investor’s Singapore permanent residency status.
These “local investments” include:
1) Companies listed on MAS-licensed exchanges;
2) Singapore qualifying debt securities;
3) Funds distributed by Singapore licensed/registered fund managers; and
4) Private equity injection into non-listed Singapore-based businesses.
With respect to the renewal criteria, the hiring requirement will be changed. The old regime required at least 10 employees, of which at least 5 must be Singaporean citizens and 3 investment professionals. The new regime instead requires the hiring of at least 5 incremental family office professionals of which at least 3 must be Singaporean citizens by Year 5 of the investor’s permanent residency status.
The total business expenditure requirement of S$2 million will also be removed. It is believed that the hiring of the family office professionals would increase business spending in Singapore.
The investor is also required to maintain at least S$50 million asset under management across any of the “local investments” until the fifth year of the investor’s permanent residency status.
For More Information
Please do not hesitate to get in touch with Leon Yee, Chairman of Duane Morris & Selvam or Yu Lan, Director, Duane Morris & Selvam LLP if you would like to discuss this update. If you would like to receive a Mandarin version of this client update, please do not hesitate to contact us too.
About Duane Morris & Selvam LLP
Duane Morris & Selvam LLP (DMS) is a joint law venture between international firm Duane Morris LLP (DM) and Singapore-based firm Selvam LLC. DMS runs a unique Latin American-Asian practice out of Singapore, with a team of international lawyers qualified in multiple jurisdictions including Singapore, the US, the UK, Canada, Mexico and Colombia, with substantial experience in international transactions and disputes. DMS also has a wide cooperation network with some of the best Latin American and Asian law firms.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.