Foreign Direct Investment in Singapore

Overview by Globlatrade.net:

FDI in Figures

Singapore has based its economic development on a proactive strategy to attract FDI and trade openness. According to the World Bank, Singapore is the country where it is easiest to do business. Favorable lending to foreign investors, simple regulatory system, tax incentives, high-quality industrial real estate park, political stability and absence of corruption make Singapore an attractive destination for investment.

According to the UNCTAD, Singapore leads the list of the most attractive countries in the world, together with the United States, but the performance of its City is comparatively low in terms of receiving FDI. United States is by far the biggest investor, followed by Japan, Europe, China and India. Following the global recession, FDI flows have decreased and are expected to recover slowly in the coming years.

 

Country Comparison For the Protection of Investors

  Singapore East Asia & Pacific United States Germany
Index of Transaction Transparency* 10.0 5.2 7.0 5.0
Index of Manager’s Responsibility** 9.0 4.5 9.0 5.0
Index of Shareholders’ Power*** 9.0 6.3 9.0 5.0
Index of Investor Protection**** 9.3 5.3 8.3 5.0

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 35,778 10,912 16,809
FDI Stock (million USD) 322,978 326,790 343,599
Performance Index*, Ranking on 141 Economies 7 50 18
Potential Index**, Ranking on 141 Economies 2 2 -
Number of Greenfield Investments*** 251 295 309
FDI Inwards (in % of GFCF****) 89.3 20.8 27.1
FDI Stock (in % of GDP) 188.3 173.6 194.0

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Singapore

Strong Points
Singapore is the easiest country in which to do business, according to the Doing Business 2009 World Bank report. Singapore has excellent telecommunication, financial,and transport infrastructures, and its strategic location at the crossroads of maritime routes and proximity to the big markets is an advantage. The country offers tax concessions and easy loan conditions as part of investment incentives.
Weak Points
The lack of transparency in administrative incentives and the non-internationalization of the Singaporean dollar are investment hindrances. Despite being a free port, tariff protection for industrial firms is not provided. The dominant role of semi-public companies could hinder investments in some sectors.
Government Measures to Motivate or Restrict FDI
Singapore is open to foreign investment and offers tax incentives to companies after they register with Economic Development Board. However, the country continues to maintain monopolies in certain sectors (financial services, professional services, media and telecommunications). Government linked corporations play a dominant role in the domestic economy and to a large extent, on investment.
Bilateral Investment Conventions Signed By Singapore

Singapore has signed investment promotion and protection agreements with a wide range of countries. These agreements mutually protect nationals or companies of either country against war and non-commercial risks of expropriation and nationalization for an initial period of 15 years and continue thereafter unless otherwise terminated.
Visit: Singapore 's FTA Network

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Procedures Relative to Foreign Investment

Freedom of Establishment
Guaranteed
Acquisition of Holdings
Possible. A majority stake in the capital of a local company is legal in Singapore.
Obligation to Declare
It is obligatory to declare if the proposed company name includes a trademark or patent name or the name of another company/business already existing in any other country.
Competent Organization For the Declaration
Monetary Authority of Singapore (MAS)
Accounting and Corporate Regulatory Authority
Requests For Specific Authorizations
Though country's legal framework and governmental policies does not require any specific authorization to invest in the country; but certain limits exist in sectors like telecommunications, broadcasting, domestic news media, financial and some professional services. For these sectors, the Articles of Incorporation may include shareholding limits that restrict ownership in corporations by foreign persons. Moreover, Finance Ministry approval is required for acquisition of local bank when exceeding the specified share limit.
 
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Investment Opportunities

Investment Aid Agency
Economic Development Board (EDB)
Tenders, Projects and Public Procurement
Ministry of Finance, Government Procurement Opportunities
Tenders Info, Tenders in Singapore
Asian Development Bank, Procurement Plans in Asia
DgMarket, Tenders Worldwide
Other Useful Resources
Singapore Business Federation

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