November 19, 2013
By: Bobby Casey, Managing Director
Last Friday I arrived at Singapore Airport about 6:00 PM local time. This is my first visit to Asia aside from a few trips to the Asian part of Russia. A local buddy of mine picked me up at the airport and we promptly went to dinner at a very exclusive restaurant on the rooftop of Marina Bay Sands Resort.
Oh….where to begin? Immediately upon getting in the car I bombarded my buddy, Nick, with questions about Singapore, the economy, history, banking, cost of living, etc.
First of all, Singapore has one of the highest GDP per capita ratios in the world at approximately $62,000pp. This is the 4th highest in the world behind Luxembourg, Macau, Qatar and Norway. The US is down in 7th position with about $49,000pp.
And it shows. Everywhere you turn you can see wealth. Money is being thrown around this city like nowhere else I’ve traveled.
To give you an example, Singapore has only 2 casinos. One of them, Marina Bay Sands, is the 2nd highest grossing casino in the world. To put this in perspective, Las Vegas has 77 casinos that gross about $6.4B in gaming revenue per year.
Singapore’s 2 casinos have about $6.7B in annual gaming turnover!!!
The restaurant where Nick and I had dinner was on the roof of this hotel. Dinner for 2 cost us approximately $600 and we would never have gotten a table if Nick had not already made reservations. The place was completely packed.
The lowest blackjack tables in the casino had minimum bids of $200. Las Vegas has $5 tables. And every table was full. It was astonishing.
And it was mostly Chinese players. Clearly the Chinese are flush with cash.
The economy is booming. Singapore creates nothing. But its service sector is huge. And financial services are leading the charge. (As a side note, we have 2 banking options in Singapore for our GWP Insiders subscribers – click here to join).
Singapore is a small city/state island that covers only 276 square miles with a population of 5.4M people. But it doesn’t seem that crowded.
While I am not a big fan of government or central planning in general, there is clearly something to be said for the orderliness and well planned nature of this city.
Each year the city planners determine the proper number of cars the streets can handle without overcrowding and traffic jams. They issue the number of vehicle permits based on this number and auction them off to the general public.
As you may imagine, owning a car and driving in Singapore is quite expensive. My buddy, Nick said he paid about $70,000 just for the permit, which gives him the right to buy a car. Additionally, there is a 100%+ tax on cars. So a $50,000 car in the US will cost you at a minimum of $100,000 plus your permit (the permit is a one-time fee that can even be transferred when you sell your car).
Traffic here is never a concern. It is never overcrowded any time, day or night. If you are going to have central planning, at least it’s good their planners have some rationality with their planning strategy.
But you really don’t need a car here as the metro (subway) system works wonderfully and strangely enough taxis are quite cheap. It would be a great city in which to live if you want to exist car-free.
Taxation is one area where the western countries like the US could take some serious notes. First of all, if you make less than $100,000 (sgd), you don’t even file a tax return. Past that your taxes go up incrementally based on income level, but are capped at about 16%. Plus there’s no tax on foreign source income.
Talk about incentives to produce and invest….Wow. What a novelty….
Banking in Singapore is probably the country’s strong point. The banking and financial sector is top notch. The quality of service is excellent plus you get access to the Asian market. Singapore and Hong Kong are also the only 2 banking centers in the world outside of China where you can hold the yuan in your account. If you are looking to gain access to the Asian market, Singapore is ideal. (As a side note, we have 2 banking options in Singapore for our GWP Insiders subscribers – click here to join).
The downside for Singapore is cost of living. While quality of life is quite good, cost of living is very high. A decent 2 bedroom apartment will set you back around $3000 per month in rent. Food prices are quite high as well. You can take a look at this website to check cost of living statistics in Singapore.
I’ve spent the last few days in meetings with banks, investment firms, and a few other private businesses in addition to attending a private investment conference so my notepad is full of information in the coming days and weeks. Stay on the lookout.
Until next time, live well.