- The Global Battle for the Entrepreneur and Investor
- September 26, 2016 | Author: Leon Kwong Wing
- Law Firm: Withers Bergman LLP - Singapore Office
Singapore has long been a magnet for successful international investors and entrepreneurs, in part because of determined efforts by its government to attract talent, innovation and money from overseas. That said, government policies have evolved significantly over recent years, making it more difficult for foreigners to secure permanent residency or citizenship.
Given the substantial benefits of Singaporean residence versus that of many other jurisdictions, it is worth reviewing the various options open to foreign investors and entrepreneurs seeking to reside in Singapore. Essentially there are four avenues: temporary residence enabled by an Employment Pass or Entrepass, or permanent residence as a Permanent Resident (PR) or Citizen.
The attraction of Singapore as a place for international investors to do business is clear. There are no restrictions on foreign exchange, the import of capital or the repatriation of profits. Generally, a business may be wholly foreign-owned; no local equity or collaboration is needed. Incorporating a company in Singapore can be accomplished in a single day, though it does require at least one director who is ordinarily resident in Singapore. This resident director need not be a Singapore Citizen or PR - a foreign entrepreneur may apply for an Employment Pass linked to a local company. The Employment Pass, as its name denotes, is a Work Pass which entitles professionals, managers and executives to reside in Singapore for the purpose of and on the basis of employment.
An Employment Pass is specific to the employer company and is usually issued for 12 to 24 months at a time. It can be renewed indefinitely, subject to the criteria prevailing at the time of renewal, and assuming that the financial performance of the business in Singapore is capable of supporting the individual’s continued employment. Renewal is usually straightforward and hassle-free. The pass holder is also eligible to apply for dependant’s passes for his or her spouse and children under 21 to live in Singapore. If the individual draws a fixed monthly remuneration of S$10,000 or more, his or her parents are also eligible for passes to reside in Singapore. For Employment Pass purposes, the entrepreneur is advised to use a corporate shareholder — that is, one of the entrepreneur’s existing companies abroad — for the Singapore company. At least S$50,000 should be invested by the foreign parent company in the Singapore company as share capital. Finally, the company should declare and pay a fixed monthly remuneration of about S$8,000 for the entrepreneur.
The EntrePass is a different category of Work Pass appropriate to the entrepreneur who intends to be the shareholder of his own company in Singapore. The company must have paid-up share capital of at least S$50,000, and the EntrePass applicant must own at least 30% of the shares in the company. However, this route is considerably more involved, restrictive and onerous than the standard Employment Pass.
An EntrePass application requires the applicant to give information about business ventures in which the person is or was a founder, partner or shareholder. It must be accompanied by a detailed business plan and documentary proof of sources of funding and availability of funds. It must also meet one of a number of criteria aimed at ensuring that the venture is aligned with Singapore’s strategic priorities.
An EntrePass is issued for 12 months at a time and, as a rule, it will only be renewed each year if the business meets certain thresholds with respect to local business spending and job creation.
PR and Citizenship - the Global Investor Programme
A direct route to Singapore PR status lies in the Global Investor Programme. The prospective immigrant must either directly invest in an active business in Singapore, or make a financial investment in a locally focused venture capital fund approved by Singapore’s Economic Development Board (EDB).
According to a written answer to Parliament in 2010, about 1,000 investors over the preceding three years invested S$1.5 billion under the programme. Of these about 100 made active investments which created about 1,500 jobs. This means that about nine out of 10 applicants chose to make a passive fund investment.
Unfortunately, relatively few people are eligible for the programme as the criteria have become more demanding over the years. Until June 2009, the requirements were merely qualitative. The programme was open to persons with 'a substantial business track record' and 'an entrepreneurial background'. In June 2009, the EDB introduced an explicit requirement that it would only consider people who owned (at least in part) a business with S$10 million revenues a year. This threshold was raised to S$30 million in 2011 and to S$50 million in 2012. The eligibility of certain senior executives (non-business owners) was also removed in 2011. Thus, in less than three years, the quantitative criterion went up five-fold, and ability of a large number of international executives to avail of the programme was removed.
An application to become a Singapore PR under the Global Investor Programme takes about six months to approve, while a person working in Singapore on an Employment Pass or EntrePass may apply for permanent residence after working in Singapore for about two years. This is not an explicit condition, since the Immigration & Checkpoints Authority of Singapore gives no official guidance, but a rule of thumb.
Generally, the higher the socio-economic status of the applicant according to income, education and occupation, the greater the likelihood of obtaining permanent residence. All other things being equal, an application by a family is more to succeed than an application by one member only. Applications for permanent residence take up to 12 months to process.
A person who has been living in Singapore as a PR for at least two years may apply for citizenship. This is a more explicit rule and periods away from Singapore have to be accounted for. Once again, the higher the socio-economic status of the applicant, the greater the likelihood of the application being successful. Applications for citizenship also take about 12 months to process. Since Singapore does not permit dual citizenship, the successful applicant must renounce his existing citizenship before becoming a Singapore Citizen.
Singapore deserves its reputation as an great place to do business, as well as an extremely attractive place to live, work, raise a family or retire. Its popularity as an expatriate destination is unlikely to wane in the near future, yet its policies are likely to get more restrictive, as the government becomes ever more discerning about who it permits to reside here. Given all of this, it is important to seek advice from a trusted advisor who understands the nuances of the immigration system and can advise you on the best approach.