Family-owned firms here are the least prepared in the ASEAN.
A succession crisis is brewing in a large number of family-owned businesses in Singapore. A new report commissioned by Labuan International Business and Financial Centre and the Economist Intelligence Unit shows that family businesses in Singapore are the least prepared in ASEAN for what will happen after the current business leader retires or steps down.
The report showed that only 58% of Singapore business families have a succession plan in place, while 32% have absolutely no succession plans. Another 10% of local family-owned businesses are unsure about their plans after the current leaders step down.
Just 35% have established formal wealth management structures such as private foundations and 41% have trusts to manage inter-generational wealth transfer.
“Our research shows somewhat surprisingly that business families in Singapore, a financial hub for the region, lag in their use of foundations, trusts and external advisors when it comes to succession issues, whereas family-run companies in Indonesia are leaders. It is representative of the region’s diversity as well as its uneven progress in addressing questions about succession,” said Kevin Plumberg, the editor of the report.
In contrast, Indonesian family-run businesses are the most prepared across the region. The survey found that 78% of family businesses in Indonesia have formal succession plans, with 57% saying they have established private foundations and 53% saying they have trusts to manage wealth and succession.
The report noted that Singaporean firms’ unpreparedness may be due to the shrinking family sizes in the country.
With a rapidly ageing population and increased job mobility, the likelihood of a firm being forced to look beyond direct male heirs increases.
news source & image credits: sg.finance.yahoo.com /pixabay