Singapore will end a program that allows wealthy individuals to gain permanent residence quicker by putting money in the island, after an influx of foreigners in recent years spurred property prices and fueled voter anger.
The Monetary Authority of Singapore will scrap its so-called Financial Investor Scheme, the central bank said in an e-mailed response to queries. The program allowed individuals with net personal assets of S$20 million ($16 million) who hold at least S$10 million of assets in Singapore for five years to apply for permanent residence on a “fast track” through financial institutions, the Business Times reported today.
Prime Minister Lee Hsien Loong has moved to address public discontent over rising prices and a surge in foreigners and permanent residents to more than a third of the 5.2 million population, which hurt support for his ruling party in last year’s election. The government has also increased taxes for non-Singaporeans buying property on the island, tightened rules for overseas workers and increased levies imposed on companies that hire them.
“In the recent review, the focus was on engaging and entrenching quality individuals who can contribute to Singapore and are keen to be rooted in Singapore,” the central bank said. “It would be more efficient to have a single investor permanent residence scheme” in the form of the Global Investor Programme, a similar program administered by the Economic Development Board, it said.
To become a permanent resident under the Global Investor path, foreigners need to invest S$2.5 million in a new company or to expand an existing business, which should have an annual revenue of at least S$30 million, according the Economic Development Board, which helps draw investments to Singapore.
The requirements may also be changed from April 15, the government agency said, without specifying details. The Business Times said today permanent residents who gained entry under that program will be required to show they spent a certain amount in the city-state annually when their status is up for renewal three or five years later, citing a person it didn’t identify.
“The government is dead serious about bringing stability to the property market for the long run,” said Song Seng Wun, an economist at CIMB Research Pte based in Singapore. “Hence it is looking at ways and means beyond the straightforward measures like taxes.”
Under the Financial Investor Scheme, which is being scrapped, as much as S$2 million of the S$10 million foreigners must hold in Singapore can be used to buy homes, according to the Business Times.
Concentration of Millionaires
The Boston Consulting Group said in May 2011 Singapore’s millionaire population expanded the fastest globally, rising by almost 33 percent. The city also had the highest proportion of millionaire households at 15.5 percent, followed by Switzerland and Qatar, the study showed.
Singapore home prices fell in the quarter ended March 31 for the first time in almost three years after the government imposed new taxes, according to preliminary estimates released by the Urban Redevelopment Authority this week.
The government has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Foreigners and corporate entities have to pay an additional 10 percent stamp duty following measures introduced in December.
The city has added about 1 million people since the beginning of 2005 as the government allowed more immigration to make up for a declining birth rate. The influx contributed to crowded public transportation and more competition for jobs, public housing and places in schools, fueling voter anger that led to Prime Minister Lee’s ruling party retaining power last year with its smallest electoral win since independence in 1965.
Finance Minister Tharman Shanmugaratnam said in his budget speech in February the government would cut the proportion of foreign workers that companies can hire and may consider further increasing levies for employing them.