April 3, 2017

Deputy Head of Real Estate Sandra Han shares that the government may take small steps to “test the waters” rather than signal an outright relaxation on property cooling measures in The Business Times

RHTLaw Taylor Wessing Deputy Head of Real Estate Sandra Han was featured in The Business Times article titled “Targeted approach likely to have muted market impact”. The article was first published in The Business Times on 11 March 2017. Targeted approach likely to have muted market impact Source: The Business Times © Singapore Press Holdings Ltd. Date: 11 March 2017 Author: Lynette Khoo WITH the government seen taking a targeted approach to adjusting the seller's stamp duty (SSD) and the total debt servicing ratio (TDSR) framework, market players believe the impact on the property prices and transactions will be muted. But it is highly debatable as to whether the move signals the start to a gradual unwinding of property cooling measures, with most observers perceiving the government's stance as largely unchanged. As things stand, it is not only retaining the current additional buyer's stamp duty rates (ABSD) and loan-to-value limits, but also imposing new taxes on transfer of shares in residential-property-holding entities to mimic the ABSD on direct residential transactions. "Rather than signal an outright relaxation on property cooling measures, the government's latest announcement reflects how the government is responsive to market feedback and can take small steps to "test the waters"," said Sandra Han, deputy head of real estate at RHTLaw Taylor Wessing LLP. Concurring, Cushman & Wakefield research director Christine Li said: "We expect the overall impact to the residential market to be rather muted, as the easing is just a minor tweak to help certain groups who are adversely affected by the cooling measures." Under the revised SSD scheme, the holding period for residential properties - after which the SSD will not apply - is reduced to three years from the date of purchase instead of four years. The SSD rates for each tier are also cut by four percentage points. But since the reduced SSD rates apply only to properties purchased from March 11, this is unlikely to have a major impact on transaction volumes in the near term nor would speculative activities set in, property consultants say. "Over the years, SSD has perhaps deviated from its original intent and lost its relevance given that other measures such as ABSD and TDSR have been put in place to deter speculation," Ms Li said. "On the flipside, SSD can potentially hit one group of home owners really hard - those whose circumstances change due to unforeseen events such as deaths, divorces and job losses." Property consultants note that the move to waive the TDSR framework on mortgage equity withdrawal loans not exceeding half of the value of the mortgaged property is also expected to affect only a small group of owners. Such equity loans can typically be obtained by borrowers against their existing property, for which they have been paying down the mortgage. Such changes will help homeowners to monetise their properties in their retirement years, said PropNex CEO Ismail Gafoor. The TDSR framework - which caps all borrowings of an individual at 60 per cent of gross monthly income - still largely applies in most situations. Nonetheless, the latest moves may be perceived as the start of unwinding of cooling measures, said JLL national director for research and consultancy Ong Teck Hui. This could lead to more buyers coming back to the market as they perceive the market is bottoming and hopeful of a recovery, he said. Many market players are more worried about the amendments to the Stamp Duty Act, particularly for unforeseen consequences on business transactions. The government is imposing new taxes, known as Additional Conveyance Duties (ACD), on transfer of shares on property holding entities (PHEs) that primarily own residential properties in Singapore. The ACD on the buyer that becomes a significant owner mimics the buyer's stamp duty of up to 3 per cent plus a 15 per cent ABSD; the ACD at a flat 12 per cent on the seller with significant ownership during the three-year holding period is higher than the reduced SSD on direct sale of residential unit. Still, a prevailing 0.2 per cent stamp duty for transfer of shares will continue to apply. This is seen as one of the ways to expand tax revenue sources, quipped SLP International executive director Nicholas Mak. Apparent outcomes from this could be higher transaction costs to property funds and developers. It could also push developers who are hard-pressed by looming deadlines to sell out their projects under the conditions of qualifying certificates or ABSD remission clawback to offer units directly at steeper discounts. Of greater concern is some unintended consequences that have not been envisaged. This move is "yet another wound for the real estate funds management industry" but fund managers are hardly speculators of residential properties, said International Property Advisor key executive officer Ku Swee Yong. The ACD on share transfers may also affect estate planning, he said. Another tricky situation may be when companies undertake joint venture (JV) agreements for property development, according to Dentons Rodyk & Davidson senior partner Lee Liat Yeang. When a company acquires the land first via a property holding entity before bringing in a JV partner, it is unclear if the sale of a 50 per cent stake in that entity to the JV partner will incur ACD. PwC real estate and hospitality tax leader Teo Wee Hwee felt that government should provide clarity on these issues. In principle though, a new JV partner should be able to obtain the same ABSD remission that applies to a property developer, he said. "The new rules should not be seen stifling economic activities in real estate."
March 30, 2017

“The wave of restructuring was a survival necessity, preparing banks and other financial institutions for the opportunities that will be coming this year”, Deputy Head of Banking & Finance Ow Kim Kit discusses more with Singapore Business Review

RHTLaw Taylor Wessing’s Deputy Head of Banking & Finance Ow Kim Kit was quoted in an article published in Singapore Business Review titled “Will 2017 see the “great adjustment”? The article was first published in the March 2017 edition of Singapore Business Review.  --- Will 2017 see the “great adjustment”? After entering a bleak forest of slow growth and restructuring in 2016, investment banks can look forward to a relatively brighter 2017 amidst a fintech-influenced, compliance-heavy environment. Source: Singapore Business Review © 2017 Charlton Media Group Date: March 2017 Edition If investment banks in Singapore had a hard time coping with the flurry of challenges and changes in 2016, then 2017 will provide a much-needed breather, especially for banks that have started shaping up their operations. Analysts forecast a thrilling year ahead marked by an improving outlook as well as opportunities to collaborate with financial technology firms. Consolidation, innovation, and compliance will be the key themes in the coming months – and banks that fail to keep up will remain lost in the woods. “The winners in this environment will be investment banks that restructure successfully and develop a sharp focus on the things they do best and embrace innovation,” says Liew Nam Soon, ASEAN managing partner, financial services at Ernst & Young Solutions LLP. Liew reckons that investment banks in Singapore face a slew of hurdles that are driving down return on equity (ROE). Not only is economic growth slowing, but revenue for fixed income, commodities, and currencies is on the decline. Banks must also contend with new tax and compliance regulations that impose tougher penalties. As a result, ROE amongst investment banks has declined in the past years, forcing some to restructure their businesses. Liew says EY has been working with investment banks to restructure operations and implement new models to optimise business, taking into consideration legal entity structures and transfer pricing. “We have seen a lot of downsizing in the past couple of years for investment banking and I think that has resonated across many financial institutions,” says Ow Kim Kit, deputy head of banking and finance practice, RHTLaw Taylor Wessing LLP. “The result is that many senior level people have been displaced, most of them very experienced, having seen through several market cycles.” She reckons the wave of restructuring was a survival necessity, preparing banks and other financial institutions for the opportunities that will be coming this year. Assimilating into new circumstances “I saw the second half of 2016 as a time when investment banking players regrouped and built the backdrop for what may be a very exciting 2017,” says Ow. “The markets will assimilate into the new set of circumstances and a positive outlook should soon emerge within the first quarter, barring any severe and unexpected situations.” Ow believes we are not likely to see that many mega deals but thinks we should expect to at least see some reasonably steady deal flow till at least early 2018. She warns though that some banks may have gone too far in their restructuring. Those that implemented severe layoffs may have let go of experienced executives and dissolved business units that will be critical to forthcoming deals. “If the investment banking sector picks up in 2017, it may be that some of these financial institutions would face the challenge of having young teams front complex deals or may lose out totally because they are no longer able to do such deals,” says Ow. “2017 may be the year of the ‘Great Adjustment’,” says Marcus Chow, partner at Bird & Bird ATMD LLP, explaining that banks face a lot of uncertainty this year that will put their new models to the test. He reckons the Trumpian governance approach may convince international banks to reduce their outsourcing of banking support jobs in Asia. US President Donald Trump has repeatedly warned US companies that they would face higher taxes and other penalties for outsourcing jobs abroad. “Also, your guess is as good as mine how ‘draining the swamp’ will impact Wall Street and its repercussions in Asia,” says Chow. “However, if the election promise to pull back on regulations is carried through in the US, this may cause a ripple across parallel regulations elsewhere in Asia and may lead to a late Autumn bloom.” Fintech’s promise On top of a slow-growth environment, investment banks in Singapore currently face multiple market and regulatory constraints. Customer trust has also weakened in the wake of certain interest rates and foreign exchange scandals, as well as the rising threat of cybercrime. In response, banks are beginning to leverage technology, analytics, partnerships, and industry utilities to shore up security, improve service and reduce the cost to serve. Smarter banks have even formed alliances with their upstart rivals, the financial technology (fintech) firms. “The disruption from fintech firms, which initially focussed on retail, wealth, and payments and is now extending to investment banking,” says Liew. “These fintechs are using technology innovation to capture market share from incumbent investment banks.” Liew reckons that despite the cutthroat competition between banks and fintech firms, there are opportunities for collaboration, including in cloud technology, robotic process automation, analytics, digital transformation, blockchain, artificial intelligence, and the Internet of Things. “The challenge of disruptive technology and digitisation of money flows and fund raising, which is not going to go away, will also force investment banks to rethink roles and value proposition,” adds Chow, and partnerships with fintech firms may help facilitate such transformations. “Singapore’s financial technology sector is poised for growth, facilitated by its highly mature ICT market and supportive regulatory landscape. The country has one of the world’s most technologically advanced telecommunications markets, with 3G/4G subscribers reaching 8.4m and broadband internet subscribers at 4.3m in 2016,” says BMI Research in a report. “We expect the development of sandbox regulations to further advance the spread of fintech within the city-state, whilst its status as a regional banking hub will increase its attractiveness to fintech startups that are looking to enter the region.” According to KPMG, around 200 fintech firms operating in Singapore were opened in the past two years – the fastest growth rate in Asia. Add to this Singapore’s financial inclusion rate – the highest in Asia in 2014 at 96.4%, according to World Bank data. “In our view, the government’s active participation in the development of a fintech-friendly regulatory environment is key to fintech development. As part of its efforts to develop Singapore into a smart financial centre where innovation and technology are used to enhance value and increase efficiency, the government released sandbox regulatory guidelines in June 2016,” explains BMI Research. 2016 slowdown The cautiously optimistic outlook for investment banks in Singapore follows a difficult 2016 during which investment banking activities decelerated and the Singapore’s gross domestic product (GDP) growth weakened. “Mergers and acquisitions (M&A) deals and initial public offerings were fewer in 2016 and this slowdown is felt in investment banking,” says Liew. “Soft commodity prices have also affected the performance of trading desks.” He reckons the slowdown in China’s economic growth and Singapore’s GDP growth have reduced the appetite for business expansion, which negatively affected loans growth. Amidst this slowing market, local investment banks have begun to feel the heat as Chinese investment banks raised their competitive aggresion. A small consolation for investment banks in Singapore is that the government will likely rally to bring GDP growth back on track. “We expect the government to introduce new policy measures based on the recommendations of the Committee on the Future Economy – and in the Singapore budget announcements – to help businesses improve local value creation and expand overseas,” says Irvin Seah, senior economist at DBS. Still, he expects 2017 to be a year of consolidation, noting that whilst growth has bottomed it will remain tepid due to “challenging” global conditions such as stronger US trade protectionism, tightening monetary policy from the Federal Reserve, and a slowdown in China. “2016 was somewhat of an ‘annus horribilis’ for the equity teams of investment banks in Singapore,” says Chow. “Investment banks already burdened by enhanced regulatory oversight continue a struggle against weak market and fundraising conditions.” However, Chow adds, “The reprieve is that M&A work continues to thrive and the uptick in activities on the buy and sell sides is providing a consistent stream of work for the M&A teams in investment banks.” Silver lining Analysts note that despite the dire conditions in 2016, there were notable deals that continued to pull through. Ow says in 2016 she was working on an estimated US$400m collateralised loan obligation special purpose vehicle. It will securitise Asia emerging markets loans to borrowers in the Asia-Pacific region that were originated by both global and regional banks in Asia, and is envisioned to help revive the Asian securitisation market. A leading American investment firm, alongside leading banking institutions in Asia, are joint-arrangers on the transaction. In terms of sector focus and deal value, Liew reckons a large proportion of the deals have been in real estate, industrials, and technology. State and sovereign wealth funds executed a sizeable proportion of the deals. Investment banks in Singapore may continue to find success in these sectors, provided they can shape their business to suit the prevailing slow-growth, fintech influenced, compliance-heavy environment. “Although we are facing slower growth, businesses will continue to need help in raising capital, managing risks, and facilitating trade,” he says. “Investment banks have restructured their businesses and it is a journey and still work in progress. Controls and compliance are key.”
March 29, 2017

RHTLaw Taylor Wessing Founder-Senior Consultant Rajan Menon, who has a Foundation named after him – RHT Rajan Menon Foundation – shares his passion for CSR with Tabla! news

RHTLaw Taylor Wessing’s Founder-Senior Consultant Rajan Menon was quoted in an article published in Tabla! titled “He champions CSR” The article was first published in the 24 March 2017 edition of Tabla!. He champions CSR Law firm Rajan Menon founded names its charity foundation after him Source: Tabla! © 2017 Singapore Press Holdings Ltd. Date: 24 March 2017 Author: Patrick Jonas Spending a few minutes gazing out of the glass panelled windows of Mr Rajan Menon’s office takes you back in time. The 10th storey office of RHTLaw Taylor Wessing on 6 Battery Road looks at the Singapore River meandering its way from Boat Quay towards the Marina Barrage. Prominent builds with a hoary past and the new Parliament House also grab your eye. Six years ago, the view for Mr Menon was a bit different. He has then been a senior partner at another law firm for 30 years. One day in April 2011 he and a few partners made a decision to part ways and set up RHTLaw LLP. It was a brave move. Finding office space for the new law firm, 49 lawyers and 50 members of staff, was the first priority and very challenging at short notice. It so happened that a leading bank’s corporate office was moving out of its Battery Road location to Marina Bay Financial Centre. At first Mr Menon and his team hesitated. The landlord’s office was: Take both floors of about 22,000 sq ft or none of it. What would the new entity do with about 30 per cent of the space not required? Would it be able to afford the rent even as it struggled to meet other operational expenses? Mr Menon and his partners decided to take a leap of faith, went ahead and took up the offer. Today, all the space is fully occupied and the RHT Group of Companies has also taken up additional space at Republic Plaza. Such has been the growth in the short time since it was formed on May 28, 2011 that RHTLaw – it joined Taylor Wessing, an international group of member firms, in March 2012 – is now among the top ten law firms in Singapore. “It was a big challenge initially. So many of my former colleagues had placed their trust in us by joining us. Our priority was to see that their salaries were paid on time, even as we continued to service clients we knew and secure new business. I am happy that with God’s blessings and the hard work of my colleagues not only were we able to do this but also venture into and grow business into new areas,” Mr Menon said with pride. Today, in addition to the Law Practice, the RHT Group of Companies provides a wide range of non-law professional services. It consists of five groups – RHT Holdings, RHT Media, RHT Knowledge, RHT Wealth and RHT Business Consultancy. As the law firm and the group of companies grew, so did their hearts to give back to society. Mr Menon has over the years done a considerable amount of pro-bono work. And that has included helping raise funds for Sinda and manging and building the Sri Sivan Temple. In his early days, he was asked to help some of the trade unions and the NTUC Co-operatives. For his services, he was awarded the Public Service Medal, a National Day Award by the President and the Friend of Labour Award by the National Trades Union Congress. Mr Menon, who turned 68 last year, felt that reaching out to the poor and underprivileged should be one of the cornerstones of the business. He says he wanted to instill in his follow lawyers an element of selfless service to those in need. In 2015, Mr Menon’s partners decided to set up the RHT Rajan Menon Foundation. The firm’s co-founder and managing Partner, Mr Tan Chong Huat, has this to say on why the Foundation was named after Mr Menon, on the company’s website. “Let me reiterate the reasons why the Foundation is named after Rajan. When we started as RHT Law, we had our CSR (corporate social responsibility) firmly in sight as we always wanted our firm to be one of purpose and giving back to society was a paramount tenet. As our then Senior Partner, Rajan was instrumental to the setting up of the Foundation to focus our CSR activities through the Foundation.” The Foundation has four focus areas to which it contributes funds – education, environment, disadvantaged groups and the arts. Said Mr Menon about the foundation: “For many years, doing well and doing good in business were seen as major pursuits. The foundation positions us as a business that embraces CSR, and attracts the right kind of employees, the right kind of counterparts and most importantly, the right kind of interest from the community.” When he was a young boy, Mr Menon’s father wanted him to take up medical studies but he favoured the arts. Law was far from his mind. He was active in sports while at Beatty Secondary School and got interested in law only after joining Bartley Secondary School for his A-Levels, thanks to his teachers there. He was accepted by the University of Singapore (then) for the law programme and after graduation, he joined the Singapore Government legal service. During his time with the legal service, he was Deputy Public Prosecutor and State Counsel with the Attorney General’s Chambers and the Senior Deputy Registrar of the Registry of Land Titles & Deeds. Seven years later he left the legal profession to join a bank as a credit officer. He went on to have a successful career as a banker for the next 4 ½ years till he decided to return to law practice. He joined a firm where he was privileged to deepen his knowledge of the law, meet good clients and other honourable professionals, many of whom he remains in close contact with today. And he stayed there till setting up RHTLaw. His parents moved here from Kerala. His father was K.S. Menon, a Hindu from Shoranur in north Kerala, and his mother Sara Pereira, a Catholic from Trivandrum in south Kerala. He said his parents initially had a tough time, as their families on both sides did not approve of their marriage. But they put all that aside, successfully raised Mr Menon and his two brothers Valson and Mohan against the backdrop of both faiths, and lived happily till the end. Mr Menon too is a contented man. Other the years, the genial lawyer has had to battle several critical health issues. He says it is his faith and spiritual guru Mata Amritanandamayi that has helped him overcome and mange his medical problems and progress in his career. In June last year, Mr Menon retired from the partnership of RHTLaw Taylor Wessing LLP, moving on from his senior partner role into a new role, that of founder-senior consultant of the firm. He still practices law. He says he finds the profession challenging even today, after 46 years. Every transaction, he says, teaches you something and you are always learning.
March 15, 2017

RHTLaw Taylor Wessing organised a seminar on Indonesia Post Tax Amnesty titled “Navigating a New Tax Era”

RHTLaw Taylor Wessing organised an Indonesia Post Tax Amnesty seminar titled “Navigating a New Tax Era” on 15 March 2017. We were pleased to have Partners from our ASEAN Plus Group member firms, VDB Loi and Hanafiah Ponggawa & Partners, join us in presenting to top senior executives from the private banks, family offices and multinational corporations. RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar opened the event with a welcome address followed by Deputy Head of Banking and Finance Partner Ow Kim Kit who spoke on the new global paradigm and the Common Reporting Standard “Towards a Tax Transparent World”. Partners from VDB Loi Tommy Oetomo, Olina Arizal and Graham Garven shared the stage in uncovering challenges Post Tax Amnesty, how best to build on the success of the Amnesty and utilise the new data available. Partner from Hanafiah Ponggawa & Partners Fabiola Hutagalung closed with a discussion on the legal challenges faced by tax-payers, their bankers and advisors during extra-territorial restructuring. The seminar concluded with an engaging and insightful panel discussion with active participation from the attendees.