Singapore

Bureau of Economic and Business Affairs
July 5, 2016

This is the basic text view. SWITCH NOW to the new, more interactive format.


Executive SummaryShare    

Foreign investments, combined with investments through government-linked corporations (GLCs), underpin Singapore's open, heavily trade-dependent economy. With the exception of some restrictions in the financial services, professional services, and media sectors, Singapore maintains a predominantly open investment regime, with strong government commitment to maintaining a free market and active management of Singapore's economic development. Companies in Singapore cite transparency and lack of corruption, business friendly laws and regulations, tax structure, customs facilitation, and well-developed infrastructure as leading attractive features of Singapore’s business and investment climate. The World Bank's, Doing Business 2016 report ranked Singapore as the easiest country in which to do business. The Global Competitiveness Report 2015-2016 by the World Economic Forum ranked Singapore as the second-most competitive economy globally. Singapore typically ranks as the least corrupt country in Asia and one of the least corrupt in the world, and actively enforces its robust anti-corruption laws. The U.S.-Singapore Free Trade Agreement (FTA), which came into force January 1, 2004, expanded U.S. market access in goods, services, investment, and government procurement, enhanced intellectual property protection, and provided for cooperation in promoting labor rights and the environment. The government actively uses the public sector resources it controls as both an investor and catalyst for development.

Highlights:

  • The U.S. direct investment position in Singapore in 2014 reached USD 179.8 billion, primarily in non-bank holding companies, manufacturing (especially computers and electronic products), and finance and insurance – an increase of 12.5 percent from the previous year.
  • Singapore's extensive arbitration and mediation centers and commercial court have contributed to its development as an international hub for dispute resolution, and a desired base for international law firms and MNC corporate counsel. The Singapore International Commercial Court (SICC) heard its first case in May 2015, marking a milestone in Singapore’s quest to become a leading arbitration center.
  • The government is increasingly tightening restrictions on hiring foreign workers in favor of employment of Singaporean nationals. The Ministry of Manpower introduced measures in 2016 to watchlist companies and suspend work pass privileges for firms found not to have a “healthy Singaporean core,” demonstrated commitment to developing a Singaporean core, and not to be “relevant” to Singapore’s economy and society. As of April 2016, approximately 100 companies have been watchlisted.

Investment Trends

Singapore's aggressive pursuit of foreign investment as a pillar of its overall economic strategy has enabled the country to evolve into a regional base for multinational corporations (MNCs). The Economic Development Board (EDB), Singapore's investment promotion agency, focuses on securing major investments in high value-added manufacturing and service activities as part of a strategy to replace labor-intensive, low value-added activities that have migrated offshore.

As part of a strategy to develop Singapore into a top financial center, the government offers tax incentives for financial institutions looking to set up operations. Further information, details and guidelines are available at: http://www.mas.gov.sg/Singapore-Financial-Centre/Value-Propositions/Setting-Up.aspx.

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2015

8 of 167

transparency.org/cpi2015/results

World Bank’s Doing Business Report “Ease of Doing Business”

2016

1 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

7 of 141

globalinnovationindex.org/
content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

2014

USD 179,800

BEA/Host government

World Bank GNI per capita

2014

USD

55,150

data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude Toward Foreign Direct Investment

Singapore's legal framework and public policies are generally favorable toward foreign investors. Foreign investors are not required to enter into joint ventures or cede management control to local interests, and local and foreign investors are subject to the same basic laws. Apart from regulatory requirements in some sectors (reference Limits on National Treatment and Other Restrictions), the government screens investment proposals only to determine eligibility for various incentive regimes (reference Annex). Singapore places no restrictions on reinvestment or repatriation of earnings or capital. The judicial system, which includes international arbitration and mediation centers and a commercial court, upholds the sanctity of contracts, and decisions are transparent and effectively enforced.

Limits on National Treatment and Other Restrictions: Exceptions to Singapore's general openness to foreign investment exist in telecommunications, broadcasting, the domestic news media, financial services, legal, and other professional services, and property ownership. Under Singapore law, Articles of Incorporation may include shareholding limits that restrict ownership in corporations by foreign persons.

Telecommunications

Since 2000, the implementation of the Telecoms Competition Code has allowed foreign and domestic companies seeking to provide facilities-based (fixed line or mobile) or services-based (local, international, and callback) telecommunications services, to apply for licenses to operate and deploy telecommunication systems and services. Singapore Telecommunications (SingTel) -- a GLC which is currently 51-percent owned by Temasek, a holding company with the Singapore Minister of Finance as its sole shareholder -- faces competition in all market segments. Its main competitors, M1 and StarHub, are also GLCs. As of February 2016, Singapore has 57 facilities-based (group) and 257 services-based (individual) operators. Since 2007, SingTel has been exempted from dominant licensee obligations for the residential and commercial portions of the retail international telephone services. SingTel is also exempted from dominant licensee obligations for wholesale international telephone services, international managed data, international IP transit, leased satellite bandwidth, terrestrial international private leased circuit, and backhaul services. U.S. and other companies remain concerned about the lack of transparency in some aspects of Singapore's telecommunications regulatory and rule-making process. In particular, there is no obligation to make information publicly available concerning a company's request for a stay of decision or the filing of an appeal, request public comments about such requests, or to publish a detailed explanation concerning final decisions made by the Infocomm Development Authority (IDA) or the Ministry of Communication and Information (MCI).

Infrastructure for the all-fiber national broadband network (NBN) has been developed since 2009 by OpenNet -- a consortium formed by Canada's Axia Netmedia (which holds 30 percent ownership), SingTel (30 percent), Singapore Press Holdings (25 percent), and SP Telecommunications (15 percent). The network is operated by Nucleus Connect, a wholly-owned subsidiary of StarHub. Operational separation is imposed on Nucleus Connect to maintain its independence from OpenNet, and to ensure that it provide services to all downstream operators on the same prices and terms and conditions, with the same processes and access to information. Nearly all homes and offices are connected to the fiber-optic broadband network.

In November 2013, IDA approved the acquisition of the shares of OpenNet by NetLink Trust, -- a business trust that supported the roll-out of the NBN by providing the ducts and manholes through which the optical fiber cables pass to reach homes and buildings. NetLink Trust’s – purchase of OpenNet gives it control over all the steps involved in connecting users to the networks. Seven Singapore telecommunication firms, including M1 and StarHub, voiced their opposition to the consolidation, noting it would see SingTel becoming the 100 percent beneficial owner of the only other nationwide fixed telecommunications network in Singapore, apart from SingTel's own network. The seven firms were concerned this arrangement could lead to discriminatory treatment and a lack of independence. In response, IDA established several conditions to allay concerns about anti-competitive practices and ensure that effective and non-discriminatory access is available to requesting licensees, including by establishing a monitoring board consisting of government representatives to ensure SingTel does not influence any decisions on service price as well as terms and conditions. SingTel must also divest its majority stake in NetLink Trust by April 2018.

In October 2015, Infocomm Development Authority of Singapore (IDA) fined NetLink Trust USD 327,320 (SGD 450,000) for failing to meet quality of service benchmarks in 2014 in delivering residential and non-residential end-user connections. The fine is the fourth in three years for the company, the largest was nearly for USD 450,000 in 2013 for not meeting its obligation to IDA to roll out the network to all homes and offices by the end of 2012.

In 2011, the GOS amended the Telecommunications Act, giving it more power to curb monopolistic behavior in the telecommunications sector and ensure continuity and competiveness in telecommunications services. The amendments allow the Minister for Communication and Information to issue a Separation Order to a telecommunications company (Telco) that engages in anti-competitive behavior, where the Ministry assesses that imposition of regulatory obligations in relation to the relevant market or business has failed and other regulatory actions would fail to achieve effective competition

The amendments allow the Minister of Communication and Information to issue Special Administrative Orders (SAOs) that ensure a key telecommunication network or service continues to be functional in the public national interest and revise the maximum administrative financial penalty on Telco that breach regulations to 10 percent of the annual business turnover for licensable services of a licensee, or USD 790,514 (SGD 1 million), whichever is higher.

Media:

The local free-to-air broadcasting, cable and newspaper sectors are effectively closed to foreign firms. Section 44 of the Broadcasting Act restricts foreign equity ownership of companies broadcasting to the Singapore domestic market to 49 percent or less, although the Act does allow for exceptions. Individuals cannot hold more than five percent of the ordinary shares issued by a broadcasting company without the government's prior approval.

The Newspaper and Printing Presses Act restricts equity ownership (local or foreign) to five percent per shareholder and requires that directors be Singapore citizens. Newspaper companies must issue two classes of shares, ordinary and management, with the latter available only to Singapore citizens or corporations approved by the government. Holders of management shares have an effective veto over selected board decisions. The government controls distribution, importation and sale of any foreign newspaper, and significantly restricts freedom of the press, having curtailed or banned the circulation of some foreign publications. The government has also gazetted foreign newspapers, i.e., numerically limited their circulation. Singapore's leaders have brought defamation suits against foreign publishers. Such suits have resulted in the foreign publishers issuing apologies and paying damages.

While local media is heavily government influenced, in practice there are few restrictions on the internet, and Singaporeans generally have uncensored access to international media. However, the Media Development Authority (MDA), which is responsible for regulating Internet service providers, has blocked various websites containing objectionable material, such as pornography and racist and religious hatred sites. In a high-profile case in 2016, the government charged and sentenced to 10 months imprisonment a foreign operator of an online media news site for sedition on the grounds of generating ill-will and hostility.

Licensing Scheme for News Websites

The Media Development Authority implemented in 2013 a regulation requiring certain internet news sites to obtain an individual license. MDA asserts the new regulation was intended to put online news sites on a more consistent regulatory basis with traditional media such as print and television, which are also individually licensed. This requirement applies to both commercial news and other sites that publish on average over a two-month period one article per week relating to issues in Singapore and which receive a two-month average of at least 50,000 monthly site visits from unique addresses of Singapore-based internet providers. The license requires these sites to submit a bond of USD 40,000 (SGD 50,000) and to remove prohibited content within 24 hours of notification from the MDA. Some viewed this regulation as a way to censor online critics of the government. In June 2013 more than 2,500 people participated in a protest against the new regulation. The Minister for Communications and Information publicly stated that the new regulation was not intended to target individual bloggers or blogs.

Pay-Television

MediaCorp TV is the only free-to-air TV broadcaster; the government via Temasek Holdings (Temasek) owns 100 percent of it. Pay-TV providers StarHub Cable Vision (SCV) and SingNet are wholly-owned subsidiaries of StarHub and SingTel, respectively. Free-to-air radio broadcasters are mainly government-owned, with MediaCorp Radio Singapore being the largest operator. BBC World Services is the only foreign free-to-air broadcaster in Singapore.

To rectify the high degree of content fragmentation in the Singapore pay-TV market, and shift the focus of competition from an exclusivity-centric strategy to other aspects such as service differentiation and competitive packaging, the Media Development Authority (MDA) implemented cross-carriage measures in 2011 requiring pay TV companies designated by MDA as Receiving Qualified Licensees (RQL) – currently SingTel and StarHub -- to cross carry content, subject to exclusive carriage provisions. Correspondingly, Supplying Qualified Licensees (SQLs) with an exclusive contract for a channel are required to share that content with other pay TV companies. Content providers consider the measures an unnecessary interference in a competitive market that would reduce the ability of pay TV companies to negotiate freely in the marketplace, and an interference with their ability to manage and protect their intellectual property. More common content is now available across the different pay-TV platforms, and the operators are beginning to differentiate themselves by producing their own content, offering subscribed content online, and delivering content via fiber networks.

The Media Development Authority (MDA) finalized in March 2016 its recommendations to enhance pay-TV consumer protection measures under the Media Market Conduct Code (MMCC) to address consumer concerns including unilateral contract changes, forced upgrades of non pay-TV services and the lack of awareness of the terms and conditions of contracts. According to MDA, these recommendations were based on feedback received from a public consultation held from September to November 2014.

Under the proposed changes MDA will require pay-TV operators to allow consumers to exit fixed term contracts without paying Early Termination Charges (ETCs) if unilateral contract changes by the operators are detrimental to subscribers due to: increase in subscription fee; removal of material channel(s); removal of material sports content within a channel; or removal of at least 20 percent of total number of channels in entire pay-TV service since the date of subscription. Pay-TV operators will also be required to provide consumers with options for 12-month or shorter contract terms for all packages or bundles as an alternative to longer term commitments.

The MMCC prevents operators from requiring subscribers to upgrade their non pay-TV services such as broadband or phone service contracts to modify the terms of their pay-TV services. The MMCC also requires operators to provide consumers with a critical information summary (CIS) clearly highlighting key terms and conditions, provide consumers a copy of the contract and the CIS within 14 days of contracting, and obtain consumers' confirmation that they understand contract terms.

In January 2016, citing the convergence of the information and communications technology (ICT) and media sectors and a desire to expand the reach of the digital economy to more people, MCI announced that it will restructure the Infocomm Development Authority of Singapore (IDA) and the Media Development Authority of Singapore (MDA). to become the Infocomm Media Development Authority (IMDA) and the Government Technology Organization (GTO). in the second half of 2016.

Banking

The Monetary Authority of Singapore (MAS) regulates all banking activities covered under the Banking Act. Singapore maintains legal distinctions between foreign and local banks, and the type of license (i.e., full service, wholesale, and offshore) held by foreign banks. As of March 2016, 28 foreign full service licensees, 53 wholesale licensees, and 38 offshore licensees operated in Singapore. All offshore banks are eligible to be upgraded to wholesale bank status based on MAS criteria. Such an upgrade would enable them to conduct a wider range of activities. Except in retail banking, Singapore laws do not distinguish operationally between foreign and domestic banks. Foreign banks with a significant retail presence in Singapore are required to locally incorporate their retail operations.

The government initiated a banking liberalization program in 1999 to ease restrictions on foreign banks, and has supplemented this with phased-in provisions under the FTA, including removal of a 40-percent ceiling on foreign ownership of local banks and a 20-percent aggregate foreign shareholding limit on finance companies. The Minister in charge of the Monetary Authority of Singapore must approve the merger or takeover of a local bank or financial holding company, as well as the acquisition of voting shares in such institutions above specific thresholds of five percent, 12 percent or 20 percent of shareholdings. Although the GOS has lifted the formal ceilings on foreign ownership of local banks and finance companies, the approval of controllers of local banks ensures that this control rests with individuals or groups whose interests are aligned with the long term interests of the Singapore economy and Singapore’s national interests. Of the 28 full-service licenses granted to foreign banks, four have gone to U.S. banks. Ten of the 28 full-service licensees (including one U.S. bank) have been granted qualifying full bank (QFB) status. U.S. financial institutions enjoy phased-in benefits under the FTA. Since 2006, U.S.-licensed full-service banks that are also QFBs have been able to operate at an unlimited number of locations (branches or off-premises ATMs) versus 25 for non-U.S. full-service foreign banks with QFB status. U.S. and foreign full-service banks with QFB status can freely relocate existing branches and share ATMs among themselves. They can also provide electronic funds transfer and point-of-sale debit services, and accept services related to Singapore's compulsory pension fund. In 2007, Singapore lifted the quota on new licenses for U.S. wholesale banks.

In April 2015, MAS announced a framework for identifying and supervising domestic systemically important banks (D-SIBs) - banks that are assessed to have a significant impact on the stability and functioning of the financial system and economy in Singapore -- and the inaugural list of D-SIBs, which includes DBS Bank, Oversea-Chinese Banking Corporation, United Overseas Bank, Citibank, Malayan Banking Berhad, Standard Chartered, and The Hong Kong and Shanghai Banking Corporation. MAS will apply additional supervisory measures on D-SIBs, including higher capital requirements for locally-incorporated D-SIBs.

Locally and non-locally incorporated subsidiaries of U.S. full-service banks with QFB status can apply for access to local ATM networks. However, no U.S. bank has come to a commercial agreement to gain such access. Despite liberalization, U.S. and other foreign banks in the domestic retail banking sector still face barriers. Under the enhanced QFB program launched in 2012, MAS will require QFBs it deems systemically significant to incorporate locally. If those locally incorporated entities are deemed “significantly rooted” in Singapore, with a majority of Singaporean or permanent resident members, Singapore may grant approval for an additional 25 places of business, of which up to 10 may be branches. Local retail banks do not face similar constraints on customer service locations or access to the local ATM network. As noted above, U.S. banks are not subject to quotas on service locations under the terms of the FTA. Holders of credit cards issued locally by foreign banks or other financial institutions sometimes cannot access their accounts through the local ATM networks. They are also unable to access their accounts for cash withdrawals, transfers, or bill payments at ATMs operated by banks other than those operated by their own bank or at the foreign banks' shared ATM network. Nevertheless, full-service foreign banks have made significant inroads in other retail banking areas, with substantial market share in products like credit cards and personal and housing loans.

U.S. industry advocates enhancements to Singapore's credit bureau system, in particular, adoption of an open admission system for all lenders, including non-banks. There are currently two credit bureaus in Singapore, Credit Bureau (Singapore) Private Ltd. (CBS) and Credit Scan.

Securities and Asset Management

Singapore has no trading restrictions on stockbrokers employed by foreign companies. There is no cap on the aggregate investment by foreigners regarding the paid-up capital of dealers that are members of the SGX. Direct registration of foreign mutual funds is allowed, provided MAS approves the prospectus and the fund. The FTA has relaxed conditions that foreign asset managers must meet in order to offer products under the government-managed compulsory pension fund (Central Provident Fund Investment Scheme).

Legal Services

As of end February 2016, 17 out of the 121 foreign law firms operating in Singapore were from the United States. In December 2008, Singapore granted Qualifying Foreign Law Practice (QFLP) licenses to six foreign law firms (two U.S. firms) to practice domestic law. Restrictions remain in certain legal fields including; conveyance, penal law, and domestic relations. In the first quarter of 2013, Singapore awarded another four QFLP licenses, stemming from applications submitted in 2012. As of 2015, there are nine QFLPs in Singapore, including five U.S. firms.

Foreign investments, combined with investments through government-linked corporations (GLCs), underpin Singapore's open, heavily trade-dependent economy. With the exception of restrictions in the financial services, professional services, and media sectors, Singapore maintains a predominantly open investment regime. The World Bank's Doing Business 2016 report ranked Singapore as the easiest country in which to do business. The 2015-2016 Global Competitiveness Report ranks Singapore as the second-most competitive economy globally.

The 2004 U.S.-Singapore Free Trade Agreement (FTA), expanded U.S. market access in goods, services, investment, and government procurement, enhanced intellectual property protection, and provided for cooperation in promoting labor rights and the environment.

The GOS is strongly committed to maintaining a free market but also takes a leadership role in planning Singapore's economic development. The government actively uses the public sector as both an investor and catalyst for development. As of February 2016, the top four Singapore-listed GLCs accounted for about 13.7 percent of total capitalization of the Singapore Exchange (SGX). Some observers have criticized the dominant role of GLCs in the domestic economy, arguing that it has displaced or suppressed private sector entrepreneurship and investment.

In accordance with current legislation, foreign law firms can provide legal services under Singapore law only through a Joint Law Venture (JLV) or Formal Law Alliance (FLA) with a domestic law firm. The Joint Law Venture is collaboration between a Foreign Law Practice and Singapore Law Practice. There is not a clear indication regarding how share percentages can be held in this type of partnership. The Attorney-General will consider all the relevant circumstances including the proposed structure and its overall suitability to achieve the objectives for which Joint law Ventures are permitted to be established in deciding on its approval. Currently, there are two U.S. law firms with Joint Law Ventures in Singapore. U.S. and foreign attorneys are allowed to represent parties in arbitration without the need for a Singapore attorney to be present. With the exception of law degrees from a handful of designated U.S., British, Australian, and New Zealand universities, no foreign university law degrees are recognized for purposes of admission to practice law in Singapore. Under the FTA, Singapore recognizes law degrees from Harvard University, Columbia University, New York University, and the University of Michigan. Singapore will admit to the Singapore professional bar citizen or permanent resident law school graduates of those designated universities who are ranked among the top 70 percent of their graduating class or have obtained lower second-class honors (under the British system).

Engineering and Architectural Services

Engineering and architectural firms can be 100 percent foreign-owned. Only engineers and architects registered with the Professional Engineers Board and the Architects Board, respectively, can practice in Singapore. All applicants (both local and foreign) must have at least four years of practical experience in engineering or architectural works, and pass an examination set by the respective Board.

Accounting and Tax Services

The major international accounting firms operate in Singapore. Public accountants and at least one partner of a public accounting firm must reside in Singapore. Only public accountants who are members of the Institute of Certified Public Accountants of Singapore and registered with the Public Accountants Board may practice in Singapore. The Board recognizes U.S. accountants registered with the American Institute of Certified Public Accountants.

Energy

Singapore completed efforts to liberalize its gas market with the amendment of the Gas Act and implementation of a Gas Network Code in 2008, which were designed to give gas retailers and importers direct access to the onshore gas pipeline infrastructure. However, key parts of the local gas market, such as gas retailing and access to offshore gas pipelines, remain controlled by incumbent Singaporean firms. In the past, the dominance of Singaporean government-linked corporations in this sector proved challenging for American companies that tried to enter the power generation and gas import business.

Other Investment Policy Reviews

Singapore has not conducted an investment policy review through OECD or UNCTAD in the past three years. Singapore is a World Trade Organization (WTO) member since 1995. The last Trade Policy Review was conducted in 2012.

Laws/Regulations of Foreign Direct Investment

Singapore enacted the Competition Act in 2004 and established the Competition Commission of Singapore in January 2005. The Act contains provisions on anti-competitive agreements, decisions, and practices; abuse of dominance; enforcement and appeals process; and mergers and acquisitions. There are no reports of government or executive interference in judicial proceedings affecting foreign investors.

Business Registration

Singapore’s online business registration process is clear and efficient, and allows foreign companies to register. All businesses must be registered with the Accounting & Corporate Regulatory Authority (ACRA) through the website https://www.acra.gov.sg/home/ , including any individual, firm or corporation that carries out business for a foreign company. Applications are typically processed immediately after the application fee is paid, but may take between 14 days to two months if the application needs to be referred to another agency for approval or review. A step-by-step guide to registering a business or company in Singapore is provided at the SME Portal (formerly known as the EnterpriseOne Portal): https://www.smeportal.sg/

Additional information on registering a branch of a foreign company is available through the Singapore’s investment promotion agency Economic Development Board (EDB) (https://www.edb.gov.sg.) EDB generally targets multinational companies (MNCs), but will consider investments on a case by case basis. EDB provides incentives including grants, allowances, awards, tax exemptions, and reduced tax rates for investments in certain sectors or categories (https://www.edb.gov.sg/content/edb/en/why-singapore/ready-to-invest/incentives-for-businesses.html). The Global Investor Programme (GIP) allows foreigners interesting in starting a business or investing in Singapore to apply for permanent residence status (https://www.edb.gov.sg/content/dam/edb/en/why%20singapore/entering-singapore/GIP-Global-Investor-Programme-Factsheet-EN.pdf).

Small and medium enterprises (SMEs) are defined as companies with annual sales turnover not exceeding SGD100 million, or staff numbering less than 200. SPRING Singapore is an agency under the Singapore’s Ministry of Trade and Industry to promote Singapore enterprises and products through assistance in financing, capability and management development, technology and innovation, and access to markets. SPRING also provides these services to foreign SMEs which meet the SME criteria stated above, and are registered and based in Singapore with at least 30 percent local shareholding (http://www.spring.gov.sg/About-Us/Pages/spring-singapore.aspx).

Industrial Strategy

Singapore's investment promotion agency, the EDB, focuses on securing major investments in high value-added manufacturing and service activities as part of a strategy to replace labor-intensive, low value-added activities that have migrated offshore.

As part of the government's strategy to develop Singapore into a premier financial center, the GOS offers tax incentives for financial institutions looking to set up operations. Further information, details and guidelines are available at: http://www.mas.gov.sg/Singapore-Financial-Centre/Value-Propositions/Setting-Up.aspx

Limits on Foreign Control and Right to Private Ownership and Establishment

Exceptions to Singapore's general openness to foreign investment exist in telecommunications, broadcasting, the domestic news media, financial services, legal, and other professional services, and property ownership. Under Singapore law, Articles of Incorporation may include shareholding limits that restrict ownership in corporations by foreign persons.

Foreign and local entities may readily establish, operate, and dispose of their own enterprises in Singapore. Except for representative offices (where foreign firms maintain a local representative but do not conduct commercial transactions in Singapore), there are no restrictions on carrying out remunerative activities.

All businesses in Singapore must be registered with the Accounting and Corporate Regulatory Authority. Foreign investors can operate their businesses in one of the following forms: sole proprietorship, limited partnership, incorporated company, foreign company branch or representative office.

Singapore's GLCs are active in many sectors of the economy, especially strategically important sectors including telecommunications, media, public transportation, defense, port, and airport operations. In addition, the GLCs are also present in many other sectors of the economy, including banking, shipping, airline, consumer/lifestyle, infrastructure, and real estate. GLCs operate on a commercial basis and compete on a generally equal basis with private businesses, both local and foreign. The GLC's are fully or partially owned by Temasek, a holding company with the Singapore Ministry of Finance as its sole shareholder. Some observers have complained that GLCs benefit from cheaper financing due to an implicit government guarantee. Singapore officials counter that the government does not interfere with the operations of GLCs or grant them special privileges, preferential treatment or hidden subsidies, asserting that GLCs are subject to the same regulatory regime and discipline of the market as private sector companies. Many observers, however, have been critical of cases where GLCs have entered into new lines of business or where government agencies have "corporatized" certain government functions, in both circumstances entering into competition with already-existing private businesses.

Singapore has an extensive network of GLCs that are active in many sectors of the economy. Some sectors, notably telecommunications and financial services, are subject to sector-specific regulatory bodies and competition regulations typically less rigorous than those being implemented under the Competition Act.

Screening of FDI

Singapore has a generally open investment regime, and no overarching screening process for foreign investment.

Competition Law

The U.S.-Singapore FTA contains specific conduct guarantees to ensure that GLCs will operate on a commercial and non-discriminatory basis towards U.S. firms. GLCs with substantial revenues or assets are also subject to enhanced transparency requirements under the FTA. In accordance with its FTA commitments, Singapore enacted the Competition Act in 2004 and established the Competition Commission of Singapore in January 2005. The Act contains provisions on anti-competitive agreements, decisions, and practices; abuse of dominance; enforcement and appeals process; and mergers and acquisitions.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

The FTA commits Singapore to the free transfer of capital, unimpeded by regulatory restrictions. Singapore places no restrictions on reinvestment or repatriation of earnings and capital, and maintains no significant restrictions on remittances, foreign exchange transactions and capital movements.

Remittance Policies

The FTA commits Singapore to the free transfer of capital, unimpeded by regulatory restrictions. Singapore places no restrictions on reinvestment or repatriation of earnings and capital, and maintains no significant restrictions on remittances, foreign exchange transactions and capital movements.

3. Expropriation and CompensationShare    

The FTA contains strong investor protection provisions relating to expropriation of private property and the need to follow due process; provisions are in place for an owner to receive compensation based on fair market value.

Singapore has not expropriated foreign owned property and has no laws that force foreign investors to transfer ownership to local interests. No significant disputes are pending.

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.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Singapore’s legal system has its roots in English common law and practice. All core obligations of the FTA are subject to the dispute settlement provisions of the FTA. The dispute settlement procedures promote compliance through consultation and trade-enhancing remedies, rather than relying solely on trade sanctions. The procedures also set higher standards of openness and transparency.

Singapore enacted and subsequently amended their 2001 Arbitration Act on domestic arbitration by basing their rules on the United Nations Commission on International Trade Law (UNCITRAL Model Law). In 1986, Singapore ratified the convention on the Recognition and Enforcement of Foreign Arbitration Awards (1958 New York Convention) and is a member state to the International Centre for Settlement of Investment Disputes (ICSID convention). The Singapore International Arbitration Center (SIAC) and the Singapore Mediation Center (SMC) actively promote alternative dispute mechanisms (ADR) for settling commercial disputes.

Bankruptcy

Singapore has strict bankruptcy laws, with both debtors and creditors able to file a bankruptcy claim. Singapore is ranked number 27 for resolving insolvency in the World Bank's Doing Business index.

Investment Disputes

Singapore amended their Arbitration Act of 2001 by adapting the rules of the United Nations Commission on International Trade Law (UNCITRAL) Model Law to their arbitration procedure. In 1986, Singapore ratified the convention on the Recognition and Enforcement of Foreign Arbitration Awards (1958 New York Convention) and in 1968 became a member state to the International Centre for Settlement of Investment Disputes (ICSID convention). The Singapore International Arbitration Center (SIAC) and the Singapore Mediation Center (SMC) actively promote mediation and reconciliation for settling commercial disputes. There are no outstanding investment disputes or expropriation claims involving U.S. citizens.

International Arbitration

Singapore's extensive arbitration and mediation centers and commercial court have contributed to its development as a regional hub for dispute resolution, and a desired base for international law firms and MNC corporate counsel. Among the alternative dispute resolution (ADR) institutions for the both investment and commercial disputes is the Singapore International Arbitration Centre (SIAC), the Singapore International Commercial Court (SICC), the Singapore International Mediation Institute (SIMI) and the Singapore International Mediation Centre (SIMC) established in November 2014, the Singapore Mediation Centre (SMC), the Primary Dispute Resolution Centre, and Maxwell Chambers, Asia's first integrated dispute resolution complex. Singapore's extensive arbitration centers have contributed to its development as a regional hub for alternative disputes mechanisms. Arbitral awards in Singapore, for either domestic or international arbitration, are legally binding and enforceable in local courts. The SICC, established in January 2015, heard its first case in May 2015.

ICSID Convention and New York Convention

Singapore is a member of the International Centre for Settlement of Investment Disputes (ICSID convention). Singapore ratified the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). These agreements have been fundamental in the development of Singapore’s arbitration law.

Duration of Dispute Resolution

Mediation cases can be handled within a short period of time. Arbitration cases involve a lengthier process and therefore vary considerably in the time they take to obtain an award. Within Singapore, arbitral awards, for cases involving domestic or international arbitration, are legally binding and enforceable in domestic courts.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

Singapore is a World Trade Organization member since 1995. Singapore complies with WTO Trade-Related Investment Measures (TRIMS) obligations. The FTA prohibits and removes certain performance-related restrictions on U.S. investors such as limitations on the number of customer service locations for the retail banking sector.

There are no discriminatory or preferential export or import policies affecting foreign investors. The government does not require investors to purchase from local sources or specify a percentage of output for export. The government also does not require local equity ownership in the investment. There are no rules forcing the transfer of technology. Foreign investors face no requirement to reduce equity over time and are free to obtain their necessary financing from any source.

Investment Incentives

Singapore offers numerous incentives to encourage foreign investors to startup businesses; particularly in targeted growth sectors.

Research and Development

Singapore's Economic Development Board sponsors a Research Incentive Scheme for Companies (RISC) to award government grants to develop research and development capabilities in strategic areas of technology. The scheme targets businesses registered in Singapore, including foreign firms, and encourage companies to set up R&D centers in Singapore.

Performance Requirements

There are no discriminatory or preferential export or import policies affecting foreign investors. The government does not require investors to purchase from local sources or specify a percentage of output for export. The government also does not require local equity ownership in the investment. There are no rules forcing the transfer of technology. Foreign investors face no requirement to reduce equity over time and are free to obtain their necessary financing from any source. The government is increasingly tightening restrictions on hiring foreign workers in favor of employment of host country nationals (reference Labor).

Data Storage

Singapore has no forced localization policy requiring domestic content in goods or technology. Personal data is protected under the Personal Data Protection Act of 2012, covering electronic and non-electronic data.

6. Protection of Property RightsShare    

Real Property

Real property interests are enforced in Singapore. Residents have access to mortgages and liens, with reliable recording of properties. In the 2015 World Bank’s, Doing Business Report, Singapore ranks number one in enforcing contracts, and number 24 in registering property.

Foreigners are not allowed to purchase public housing (HDB) in Singapore. Under the Residential Property Act, foreigners are allowed to purchase private sector housing (condominiums or any unit within a building) without the need to obtain prior approval from the Singapore Land Authority. However, foreigners are not allowed to acquire all the apartments within a building or all the units in an approved condominium apartment without prior approval. For landed houses and vacant residential land, prior approval is required. There are no restrictions on foreign ownership of industrial and commercial real estate. In December 2011, the GOS enacted an additional effective 10 percent tax, or Additional Buyer’s Stamp Duty (ABSD), on foreigners who purchase homes in Singapore. In January 2013, the GOS further raised the ABSD to 15 percent, however, U.S. citizens are accorded national treatment under the FTA, meaning only second and subsequent purchases of residential property will be subject to seven and 10 percent ABSD accordingly, the same as Singaporean citizens.

Intellectual Property Rights

In line with its FTA commitments and obligations under international treaties and conventions, Singapore has developed one of the stronger intellectual property rights (IPR) regimes in Asia. Some concerns remain in certain areas such as business software piracy, online piracy and enforcement. Singapore has brought its IPR laws in line with international standards, including amending its Trademarks Act, Patents Act, the Layout Designs of Integrated Circuits Act, Registered Designs Act, and the Plant Varieties Protection Act. In accordance with its FTA obligations, Singapore has implemented Article 1 through Article 6 of the Joint Recommendation concerning Provisions on the Protection of Well-Known Marks of 1999. It has signed and ratified the International Convention for the Protection of New Varieties of Plants (1991) and the Convention Relating to the Distribution of Program-Carrying Signals Transmitted by Satellite (1974). Singapore is not listed in USTR's Special 301 report.

Singapore is a member of the WTO and a party to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It is a signatory to other international copyright agreements, including the Paris Convention, the Berne Convention, the Patent Cooperation Treaty, the Madrid Protocol, and the Budapest Treaty. The World Intellectual Property Organization (WIPO) Secretariat opened offices in Singapore in 2005 (http://www.wipo.int/about-wipo/en/offices/singapore/). Amendments to the Trademark Act, which took effect in January 2007, fulfill Singapore's obligations in WIPO's revised Treaty on the Law of Trademarks.

Music and film industry representatives continue to express concerns over persistent Internet piracy and a lack of effective enforcement against online peer-to-peer infringement on Singapore’s high-speed broadband network. Facing reports stating Singapore has the highest incidence of per-capita online infringement in Asia, Parliament amended the Copyright Act in July 2014 to allow rights owners, or the exclusive licensees of copyrighted material, to directly apply to the high court for an injunction to block infringing websites. The law went into effect in December 2014. The changes to the law target websites which clearly and blatantly infringe copyright, rather than search engines or websites based primarily on user-generated content, and is designed to allow rights holders to more effectively protect online content. In February 2016, Singapore's High Court ordered internet service providers Singtel, StarHub and M1 to disable access to the website Solarmovie.ph which was found to be "flagrantly infringing" intellectual property, marking the first infringing website to be blocked under the amended Copyright Act.

The FTA ensures that government agencies will not grant approval to patent-violating products, but Singapore does allow parallel imports. Under the amended Patents Act, the patent owner has the right to bring an action to stop an importer of "grey market goods" from importing the patent owner's patented product if the product has not previously been sold or distributed in Singapore.

The FTA ensures protection of test data and trade secrets submitted to the government for product approval purposes. Disclosure of such information is prohibited for a period of five years for pharmaceuticals and ten years for agricultural chemicals. Singapore has no specific legislation concerning trade secrets. Instead, it protects investors' commercially valuable proprietary information under common law by the Law of Confidence. U.S. industry has expressed concern that this provision is inadequate.

The intellectual property chapter of the EU-Singapore FTA (EUSFTA) concluded in 2014 includes a list of 196 product names to be applied for protections as geographical indications (GIs). While the EUSFTA is not yet in force, U.S. industry has raised concerns that a number of the proposed GIs are common names that would unfairly restrict market access and limit consumer choice.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

George Ward
Economic Chief
U.S. Embassy Singapore
+65-6476-9100
WardGL@state.gov

Local lawyers list: http://singapore.usembassy.gov/list_of_attorneys.html

7. Transparency of the Regulatory SystemShare    

The government establishes clear rules that foster competition and the U.S.-Singapore FTA enhances transparency by requiring regulatory authorities, to the extent possible, to consult with interested parties before issuing regulations, to provide advance notice, and comment periods for proposed rules, and to publish all regulations. Singapore’s legal, regulatory, and accounting systems are transparent and consistent with international norms.

Notices of proposed legislation to be considered by Parliament are published, including the text of the laws, the dates of the readings, and whether or not the laws eventually pass. The government has established a centralized internet portal -- www.reach.gov.sg -- to solicit feedback on selected draft legislation and regulations, a process that is being used with increasing frequency. There is no stipulated consultative period, but public consultations typically last for four weeks, with results usually consolidated and published on relevant websites. As noted in the "Openness to Foreign Investment" section, some U.S. companies, in particular, in the telecommunications and media sectors, are concerned about the government's lack of transparency in its regulatory and rule-making process.

Singapore strives to promote an efficient, business-friendly regulatory environment. Tax, labor, banking and finance, industrial health and safety, arbitration, wage and training rules and regulations are formulated and reviewed with the interests of both foreign investors and local enterprises in mind. Starting in 2005, a Rules Review Panel, comprising senior civil servants, began overseeing a review of all rules and regulations; this process will be repeated every five years. A Pro-Enterprise Panel of high-level public sector and private sector representatives examines feedback from businesses on regulatory issues and provides recommendations to the government.

Local laws give regulatory bodies wide discretion to modify regulations and impose new conditions, but in practice agencies use this positively to adapt incentives or other services on a case-by-case basis to meet the needs of foreign as well as domestic companies.

Procedures for obtaining licenses and permits are generally transparent and not burdensome, with some exceptions. Procedures can be faster for investors in areas considered national priorities. Singapore has established an online licensing portal to provide a one-stop application point for multiple licenses -- https://licences.business.gov.sg.

Singapore has a private sector-led Council on Corporate Disclosure and Governance to implement the country's Code of Corporate Governance. Compliance with the Code is not mandatory but listed companies are required under the Singapore Exchange Listing Rules to disclose their corporate governance practices and give explanations for deviations from the Code in their annual reports.

Singapore's prescribed accounting standards (Financial Reporting Standards or FRS) are aligned with those of the International Accounting Standards Board. Companies can deviate from these standards when required to present a true and fair set of financial statements. Singapore-incorporated publicly-listed companies can use certain alternative standards such as International Accounting Standards (IAS) or the U.S. Generally Accepted Accounting Principles (U.S. GAAP) if they are listed on foreign stock exchanges that require these standards. They do not need to reconcile their accounts with FRS. All other Singapore-incorporated companies must use FRS unless the Accounting and Corporate Regulatory Authority exempts them.

8. Efficient Capital Markets and Portfolio InvestmentShare    

The Government of Singapore actively facilitates the free flow of financial resources. Credit is allocated on market terms and foreign investors can access credit, U.S. dollars, Singapore dollars (SGD), and other foreign currencies on the local market. The Monetary Authority of Singapore (MAS) formulates and implements the country's monetary and exchange rate policy, and supervises and regulates the country's sophisticated financial and capital markets.

Total assets under management in Singapore stood at USD 1.86 trillion at the end of 2014, a 30.0 percent year-on-year increase (in Singapore dollar terms), a result of strong inflows and higher market valuations. About 81 percent of the funds managed in Singapore are foreign sourced, with some 68 percent of these funds invested in the Asia-Pacific region. Singapore-based companies issued approximately USD 20.7 billion in bonds in 2015, down from USD 24.9 billion in 2014.

Money and Banking System, Hostile Takeovers

Singapore's banking system is sound and well-regulated. Total domestic banking assets were about USD 769.39 billion as of December 2015. Local Singapore banks are relatively small by regional standards, but are reasonably profitable and have stronger capital levels and credit ratings than many of their peers in the region. As of fourth quarter 2015, the non-performing loans (NPLs) ratio of the three local banks averaged 1.1 percent, slightly up from the NPL ratio of 0.9 in 2014. Banks are statutorily prohibited from engaging in non-financial business. Banks can hold 10 percent or less in non-financial companies as an "equity portfolio investment."

The Securities and Futures Act (SFA) of 2002 moved Singapore's capital markets to a disclosure-based regime. The SFA allows for imposition of civil or criminal penalties against corporations listed on the Singapore Exchange (SGX) that fail to disclose material information on a continuous basis. Listed companies are required to prepare quarterly financial reporting. The SFA requires persons acquiring shareholdings of five percent or more of the voting shares of a listed company to disclose such acquisitions as well as any subsequent changes in their holdings directly to the SGX within two business days. The SFA also contains enhanced market misconduct provisions. The Act was further strengthened in 2009 to provide for stronger market misconduct enforcement with the courts empowered to order disgorgement of gains from illegal trades, and allowing the transfer of evidence between the Commercial Affairs Department of the police force and MAS.

U.S. financial regulations do not restrict foreign banks’ ability to hold accounts for U.S. citizens, however, some Americans have reportedly been turned away by banks, or required to meet a higher deposit threshold, as a result of the additional reporting requirements associated with the U.S. Foreign Account Tax Compliance Act (FATCA) and other U.S. financial regulations. The U.S. Embassy routinely encounters U.S. citizens with complaints about not being allowed to open accounts. There have also been cases of U.S. citizens with existing accounts who have been asked by their banks to close them. U.S. Citizens are encouraged to alert the nearest U.S. Embassy of any such practices they encounter with regard to the provision of financial services.

9. Competition from State-Owned EnterprisesShare    

Singapore has an extensive network of government-linked corporations (GLC) that are fully or partially owned by Temasek, a holding company with the Singapore Minister of Finance as its sole shareholder As previously noted, Singapore GLCs are active in many sectors of the economy, especially strategically important sectors including telecommunications, media, public transportation, defense, port, and airport operations. In addition, the GLCs are also present in many other sectors of the economy, including banking, shipping, airline, consumer/lifestyle, infrastructure, and real estate.

GLCs operate on a commercial basis and compete on a generally equal basis with private businesses, both local and foreign. However, some private sector companies have said they encountered unfair business practices and opaque bidding processes that appeared to favor incumbent, government-linked firms.

Corporate governance within GLCs typically are guided or influenced by policies developed by Temasek. Temasek, however, does not directly manage or control the business decisions or operations of its portfolio companies, as it prefers to maintain the ability to divest GLCs transparently at will. There are differences in corporate governance disclosures and practices across the GLCs, and GLC boards are allowed to determine their own governance practices, with Temasek advisors occasionally meeting with the companies to make recommendations. GLC board seats are not specifically allocated to government officials, although retired officials are often represented on boards and fill senior management positions.

OECD Guidelines on Corporate Governance of SOEs

As of the end of February 2016, the top four Singapore-listed GLCs accounted for about 13.7 percent of total capitalization of the Singapore Exchange (SGX). Some observers have criticized the dominant role of GLCs in the domestic economy, arguing that it has displaced or suppressed private sector entrepreneurship and investment. GLCs funding decisions are often driven by goals emanating from the central government.

Sovereign Wealth Funds

There are two sovereign wealth funds (SWF) in Singapore, the Government of Singapore Investment Corporation (GIC) and Temasek Holdings. The government established the two SWFs to manage the Government of Singapore's substantial investments, fiscal, and foreign reserves, with the stated objective to achieve long-term returns and preserve the international purchasing power of the reserves.

GIC, Singapore's largest SWF, does not publish the size of its funds, but some industry observers estimate its assets exceed USD 300 billion. GIC does not invest domestically, but manages Singapore's international investments, which are generally passive (non-controlling) investments in publicly-traded entities. Its investment is entirely overseas, with the United States as its top destination, accounting for 34 percent of GIC's portfolio as of March 2015. Although not required by law, since 2008 GIC has published an annual report describing its management and governance, and how it invests Singapore's foreign reserves.

Temasek’s portfolio value reached USD 200 billion (SGD 266 billion) in 2015. Temasek began as a holding company for Singapore's state-owned enterprises, now GLCs, but has since branched to other asset classes and generally focuses on holding significant (often controlling) stakes in companies. As of March 2015, Temasek's exposure to Singapore (based on underlying assets) was 28 percent, with the rest of Asia accounting for 42 percent of its portfolio. Temasek's stated goal is to hold and manage the government's investments in companies for the long-term benefit of Singapore, to create jobs, and contribute to Singapore's economic survival, progress and prosperity. Temasek formerly focused on managing industries to promote economic development, but has shifted emphasis to commercial objectives and principles. Temasek exercises its shareholder rights to influence the strategic directions of its companies but does not get involved in the day-to-day business and commercial decisions of its firms and subsidiaries. Temasek has published an annual report since 2004, but only provides consolidated financial statements, which aggregate all of Temasek's subsidiaries into a single financial report. Temasek follows the Santiago Principles for SWF good practices. Singapore is a member of the IMF international Working Group of Sovereign Wealth Funds.

Other leading GLC investing entities include EDB, which has its own private equity and venture capital arm in the form of EDB Investments Pte Ltd, Singapore’s Housing Development Board, which has the power to incorporate private companies as part of its charter, and other GOS agencies, with funding decisions driven by goals emanating from the central government.

10. Responsible Business ConductShare    

The awareness and implementation of CSR in Singapore has been increasing since the government's formation of the Singapore Compact, a national society promoting CSR in Singapore. In May 2004, the National Tripartite Committee on CSR was established to study the issues holistically and address any gaps at the national level. The initiative provides strategic direction and overall coordination for various CSR programs, which include helping small and medium-sized enterprises (SMEs) adopt good CSR practices. In January 2005, the Singapore Compact for Corporate Social Responsibility was set up to provide a forum for collaboration, support, and information sharing on good CSR practices. In June 2015, the society rebranded itself as the Global Compact Network Singapore (GCNS) under the United Nations Global Compact (UNGC) network, with the goals of encouraging companies to adopt sustainability principles related to human and labor rights, environmental conservation, and anti-corruption. GCNS facilitates exchanges, conducts research, and provides training in Singapore to build capacity in areas including sustainability reporting, supply chain management, ISO 26000, measuring, and reporting carbon emissions.

The Singapore Stock Exchange implemented a requirement in June 2011 that listed companies report on their sustainable business practices. The Singapore Environmental Council (SEC) developed a green labeling scheme which endorses environmentally-friendly products, numbering over 3,000 from 27 countries. The Association of Banks in Singapore (ABS) issued guidelines to banks in Singapore in October 2015 encouraging them to adopt sustainable lending practices, including the integration of environmental, social, and governance (ESG) principles into their lending and business practices. While voluntary, the move marks the first time Singapore’s financial sector has been asked to play a significant role in sustainable development.

Singapore has no oil, gas, or mineral resources and is not a member of the Extractive Industries Transparency Initiative (EITI). A small sector processes gems and rare minerals, and complies with responsible supply chains and conflict mineral principles. Singapore has not developed a National Action Plan on business and human rights, but supports and promotes responsible business practices and encourages foreign and local enterprises to follow generally accepted CSR principles.

11. Political ViolenceShare    

Singapore's political environment is stable and there is no history of incidents involving politically motivated damage to foreign investments in Singapore. The ruling People's Action Party (PAP) has dominated Singapore's parliamentary government since 1959, and currently controls 83 of the 89 regularly contested parliamentary seats. Singapore opposition parties, which currently hold six regularly contested parliamentary seats and three additional seats reserved to the opposition by the constitution, do not usually espouse views that are radically different from the mainstream of Singapore political opinion.

12. CorruptionShare    

Singapore typically ranks as the least corrupt country in Asia and one of the least corrupt in the world. Singapore was eighth (i.e., with one being least corrupt) on watchdog group Transparency International (TI)’s global index in 2015.

Singapore actively enforces its strong anti-corruption laws. The Prevention of Corruption Act, and the Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act provide the legal basis for government action by the Corrupt Practices Investigation Bureau, an anti-corruption agency that reports to the Prime Minister. These laws cover acts of corruption both within Singapore as well as those committed by Singaporeans abroad. When cases of corruption are uncovered, whether in the public or private sector, the government deals with them firmly, swiftly and publicly, as they do in cases where public officials are involved in dishonest and illegal behavior.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Singapore is not a party to the OECD Convention on Combating Bribery, but the Prevention of Corruption Act makes it a crime for a Singapore citizen to bribe a foreign official or any other person, whether within or outside Singapore.

Resources to Report Corruption

Corrupt Practices Investigation Bureau
2 Lengkok Bahru, Singapore 159047
+65 6270 0141

13. Bilateral Investment AgreementsShare    

Singapore has 41 bilateral investment treaties (BIT) currently in force, including a BIT and a Free Trade Agreement (FTA) with the United States. These agreements mutually protect nationals or companies of either economy against war and non-commercial risks of expropriation and nationalization.

Singapore has signed free trade/economic cooperation agreements that include investment chapters with Australia, China, the European Free Trade Association (Switzerland, Norway, Lichtenstein, and Iceland), India, Japan, New Zealand, Panama, Peru, South Korea, Costa Rica, the United States, and the separate customs territory of Taiwan, Penghu, Kinmen, and Matsu. Singapore has completed negotiations with the European Union and Turkey, and is negotiating FTAs with Canada, Mexico, Pakistan, and Ukraine. Singapore also has agreements with Jordan and the Gulf Cooperation Council (comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), but these agreements do not contain investment chapters. Singapore is a member of the Association of Southeast Asian Nations (ASEAN), which has concluded FTAs with Australia and New Zealand, China, India, and South Korea, and a Comprehensive Economic Partnership Agreement with Japan. Singapore is also a member of the Trans-Pacific Partnership, a multi-lateral free trade agreement signed in February 2016 that includes Singapore, the United States and ten other countries (Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Japan and Vietnam). The agreement has not yet been ratified. Singapore is also leading the goods chapter’s negotiations for the Regional Comprehensive Economic Partnership (RCEP) FTA which was launched in November 2012 and includes ASEAN members plus Australia, China, India, Japan, New Zealand, and South Korea. Singapore has signed Comprehensive Avoidance of Double Taxation Agreements with a number of economies, but not with the United States.

Bilateral Taxation Treaties

U.S. financial regulations do not restrict foreign banks’ ability to hold accounts for U.S. citizens, however, some Americans have reported being turned away by banks, or required to meet a higher deposit threshold as a result of the additional reporting requirements associated with the U.S. Foreign Account Tax Compliance Act (FATCA) and other U.S. financial regulations. The U.S. Embassy routinely encounters U.S. citizens with complaints about not being allowed to open accounts. There have also been cases of U.S. citizens with existing accounts who have been asked by their banks to close them. U.S. Citizens are encouraged to alert the nearest U.S. Embassy of any such practices they encounter with regard to the provision of financial services.

14. OPIC and Other Investment Insurance ProgramsShare    

Under the 1966 Investment Guarantee Agreement with Singapore, the Overseas Private Investment Corporation (OPIC) offers insurance to U.S. investors in Singapore against currency inconvertibility, expropriation, and losses arising from war. Singapore became a member of the Multilateral Investment Guarantee Agency (MIGA) in 1998.

15. LaborShare    

As of June 2015, Singapore's labor market totaled 3.61 million workers; this includes about 1.37 million foreigners of which about 85 percent are unskilled or semi-skilled workers. The labor market continues to be tight, with unemployment at two percent in 2015. Local labor laws allow for relatively free hiring and firing practices. Either party can terminate employment by giving the other party the required notice. The Ministry of Manpower (MOM) must approve employment of foreigners. Since 2011 the Government has introduced policy measures to support productivity increases coupled with reduced dependence on foreign labor. The MOM has started tightening foreign labor approvals, resulting in many businesses in Singapore voicing discontent at not being able to access sufficient labor.

In order to tackle the growing concerns that many foreigners are displacing locals in the job market, as well as perceptions that foreign managers are hiring other foreigners instead of recruiting locally according to merit, Singapore’s Ministry on Manpower (MOM) announced a ruling in September 2013, requiring employers to consider Singaporeans fairly before hiring skilled professional foreigners. The new rules, known as the Fair Consideration Framework (FCF) were implemented from August 2014 and affect employers who apply for Employment Passes (EP), the work pass for foreign professionals working in professional, manager and executive (PME) positions. Companies have noted inconsistent and increasingly burdensome documentation requirements and excessive qualification criteria to approve EP applications.

Under the rules, firms making new EP applications must first advertise the job vacancy in a new jobs bank administered by the Singapore Workforce and Development Agency (WDA) for at least 14 days. The jobs bank will be free for use by companies and job seekers and the job advertisement must be open to all Singaporeans. Employers are encouraged to keep records of their interview process as proof that they have done due diligence in trying to look for a Singaporean worker. If an EP is still needed, the employer will have to make a statutory declaration that a job advertisement with the national jobs bank had been made. Some exceptions have been made for smaller firms with 25 or fewer employees and jobs which pay a fixed monthly salary of USD 8,730 (SGD 12,000) or more will not be subjected to the advertising requirement. Consistent with Singapore’s WTO obligations, intra-corporate transfers (ICT) are allowed for managers, executives, and specialists who had worked for at least one-year in the firm before being posted to Singapore. ICT would still be required to meet all EP criteria, but the requirement for an advertisement in the jobs data bank would be waived.

Since October 2015, MOM requires companies to publish the salary range of job vacancies they post to comply with the FCF's advertising requirement. MOM also warned it will increasingly scrutinize EP applications from firms with a lower proportion of Singaporean PMEs relative to other firms in the same industry.

In April 2016, MOM, outlined measures to refine the work pass applications process going forward, looking not only at the qualifications of individuals, but of companies. Any companies found not to have a “healthy Singaporean core,” demonstrated commitment to developing a Singaporean core, and not to be “relevant” to Singapore’s economy and society, will be labeled “triple weak” and put on a watch list. Companies not demonstrating progress can have work pass privileges suspended. As of April 2016, approximately 100 companies have been watchlisted.

Singapore imposes a ceiling on the ratio of unskilled/semi-skilled foreign workers to local workers that a company can employ, and charges a monthly levy for each unskilled or semi-skilled foreign worker. The government also provides incentives and assistance to firms to automate and invest in labor-saving technology in an effort to increase productivity levels in traditionally low-productivity sectors.

Labor-management relations in Singapore are generally amicable. Singapore’s labor laws provide for the right of most workers to form and join trade unions. Workers have the legal right to strike and to bargain collectively. There is no law prohibiting antiunion discrimination, and no specific laws prohibit retaliation against strikers. Although workers, other than those employed in the three essential services of water, gas and electricity, can strike, no workers did so 1986-2011. Workers in “essential services” are required to give 14 days’ notice to an employer before striking.

About 24 percent of the workforce is unionized. The majority of unions are affiliated with the National Trades Union Congress (NTUC), which maintains a symbiotic relationship with the PAP ruling party and close relations with the government. The current NTUC Secretary General is also a Minister in the Prime Minister’s Office. In November 2012, some 171 SMRT bus drivers from China held an illegal strike. The drivers complained about poor living conditions and lower wages compared to Malaysian drivers. The incident resulted in four Chinese drivers being charged in a Singapore court and pleading guilty for instigating the strike and causing public inconvenience, resulting in jail terms between six and seven weeks. Another 29 Chinese SMRT bus drivers had their work permits revoked and were deported. No strikes in recent years have posed an investment risk.

Most labor disagreements are resolved through conciliation by the Ministry of Manpower. If conciliation fails, the disputing parties usually submitted their case to the tripartite Industrial Arbitration Court, composed of employee and management representatives and chaired by a judge. In some situations the law provides for compulsory arbitration. The court must certify collective agreements before they go into effect. The court may refuse certification at its discretion on the ground of public interest.

Collective bargaining is a normal part of labor-management relations in all sectors. Given that nearly all unions are NTUC affiliates, the NTUC has almost exclusive authority to exercise collective bargaining power on behalf of employees. Union members may not reject collective agreements negotiated between their union representatives and an employer. Although transfers and layoffs are excluded from the scope of collective bargaining, employers consult with unions on both issues, and the Tripartite Panel on Retrenched Workers issues guidelines calling for early notification to unions of layoffs.

Singapore law prohibits all forms of forced or compulsory labor. The Prevention of Human Trafficking Act, which strengthened victim protection and the role of law enforcement, went into effect in March 2015. MOM is responsible for combating labor trafficking and improving working conditions for workers, and generally enforces anti-trafficking legislation, although some workers in low-wage and unskilled sectors are vulnerable to labor exploitation and abuse. Some observers note that the country’s employer sponsorship system made legal migrant workers vulnerable to forced labor. MOM effectively enforces laws and regulations pertaining to child labor. Penalties for employers that violated child labor laws were subject to fines and/or imprisonment, depending on the violation. Government officials assert that child labor is not a significant issue. The incidence of children in formal employment is low, and almost no abuses are reported.

Labor laws set the standard legal workweek at 44 hours, with one rest day each week, and establish a framework for workplaces to comply with occupational safety and health standards, with regular inspections designed to enforce the standards. MOM effectively enforces laws and regulations establishing working conditions and comprehensive occupational safety and health (OSH) laws, and implements enforcement procedures and promotes educational and training programs to reduce the frequency of job-related accidents. (see the U.S. State Department Human Rights Report: http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/#wrapper).

Singapore has no across the board minimum wage law, although there are some exceptions in certain low skill industries. Generally, the government follows a policy of allowing free market forces to determine wage levels. The National Wage Council (NWC), a tripartite body comprising a Chairman and representatives from the Government, employers and unions, recommends non-binding wage adjustments on an annual basis. The NWC recommendations apply to all employees in both domestic and foreign firms, and across the private and public sectors. While the NWC wage guidelines are not mandatory, they are widely implemented. The level of implementation is generally higher among unionized companies compared to non-unionized companies

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

Singapore has nine free-trade zones (FTZs), seven for seaborne cargo and two for airfreight. The FTZs may be used for storage and repackaging of import and export cargo, and goods transiting Singapore for subsequent re-export. Manufacturing is not carried out within the zones. Foreign and local firms have equal access to the FTZ facilities.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2015

292.7

billion

2014

307.9

billion

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2014

118

billion

2014

179.8

billion

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States ($M USD, stock positions)

2014

9.3

billion

2014

20.6

billion

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2014

3.2

2014

6.7

N/A

* Source: Singapore Department of Statistics,


Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

806,768

100%

Total Outward

476,841.6

100%

United States

109,999

14%

China

88,058.2

18.5%

Netherlands

73,520

9%

Cayman Islands

45,635.9

9.6%

British Virgin Islands

61,167

8%

Hong Kong

38,984.1

8.2%

Japan

58,768

7%

Indonesia

35,689.2

7.5%

Cayman Islands

52,121

6%

Australia

34,320.4

7.2%

"0" reflects amounts rounded to +/- USD 500,000.

Source: IMF Coordinated Direct Investment Survey (Inward) and Singapore Department of Statistics (Outward)


Table 4: Sources of Portfolio Investment

Portfolio Investment Assets (2015) Top Five Partners (Millions, US Dollars)

Total

Equity Securities

Total Debt Securities

All Countries

965,867

100%

All Countries

504,197

100%

All Countries

461,671

100%

United States

269,495

28%

United States

126,541

25%

United States

142,955

31%

China

112,080

12%

China

85,713

17%

China

27,457

6%

India

55,636

6%

Taiwan

31,063

6%

India

27,246

6%

Korea

42,843

4%

India

28,390

6%

Korea

21,059

5%

UK

39,085

4%

Japan

26,200

5%

UK

19,112

4%

Source: Coordinated Portfolio Investment Survey (http://data.imf.org/?sk=B981B4E3-4E58-467E-9B90-9DE0C3367363)

 

18. Contact Point at Post for Public InquiriesShare    

George Ward
Economic Chief
U.S. Embassy Singapore
+65-6476-9100
WardGL@state.gov