This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 13 SINGAPORE 000197 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA (JNHATCHER/PABROWN) 
 
TREASURY FOR D/BRESNICK 
 
COMMERCE FOR ITA/SMATHEWS 
 
STATE PASS USTR FOR EBRYAN 
 
STATE PASS OPIC 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV
SUBJECT: SINGAPORE - 2006 INVESTMENT CLIMATE STATEMENT 
 
REF: 2005 STATE 201904 
 
¶1.  Post submits below the draft text of the 2006 
Singapore Investment Climate Statement (ICS).  As 
requested reftel, we have also forwarded the document 
via email to EB/IFD/OIA. 
 
¶2.  Begin text of 2006 Investment Climate Statement: 
 
Investment Policy Summary 
 
¶3.  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 report, "Doing Business in 
2005: Removing Obstacles to Growth," ranked Singapore 
as the third easiest economy in which to do business, 
after New Zealand and the United States. 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. 
 
¶4.  The Singapore government is strongly committed both 
to maintaining a free market and to taking a leadership 
role in planning Singapore's economic development.  The 
government's active use of the public sector as both an 
investor and catalyst for development has given rise to 
the country's characterization as "Singapore Inc."  As 
of November 2005, the top six Singapore-listed GLCs 
accounted for nearly 25 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 entrepreneurship. 
 
¶5.  Singapore aggressively pursues foreign investment 
as another pillar of its overall economic strategy; the 
country has evolved into a 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. 
 
Openness to Foreign Investment 
 
¶6.  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 (see "Limits on National Treatment and Other 
Restrictions"), the government screens investment 
proposals only to determine eligibility for various 
incentive regimes (see Annex).  Singapore places no 
restrictions on reinvestment or repatriation of 
earnings or capital.  The judicial system upholds the 
sanctity of contracts, and decisions are effectively 
enforced. 
 
¶7.  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. 
 
¶8.  Telecommunications: On April 1, 2000, Singapore 
began removing all barriers limiting foreign entry to 
the telecommunications sector. Under the Telecoms 
Competition Code 2000 (Competition Code), Singapore 
Telecommunications (SingTel), the former monopoly, that 
is currently 62-percent government-owned, faces 
competition in all telecom services, whether facilities- 
based (fixed line or mobile) or services-based (local, 
international and callback).  Its main competitors, 
MobileOne and StarHub, are also GLCs.  Following the 
government's 2005 review of the Competition Code aimed 
at enhancing market transparency, SingTel has made 
public its prices for interconnection services. 
 
¶9.  The FTA requires that Singapore take steps to 
ensure that U.S. telecom service providers obtain the 
right to interconnect with networks in Singapore on 
terms and conditions, and with cost-oriented rates, 
that are transparent and reasonable.  Despite recent 
regulatory changes designed to moderate SingTel's 
market dominance, concerns remain that SingTel's 
interconnection requirements for "tail" local leased 
circuits are anti-competitive. 
 
¶10.  Under the FTA, Singapore has also agreed that 
dominant licensees (SingTel and Starhub) must offer 
cost-based access to submarine cable-landing stations 
and allow sharing of facilities.  The interpretation of 
this commitment has, in some cases, differed from U.S. 
companies' understandings. 
 
¶12.  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.  Part X of 
the Broadcasting Act states that no person shall, 
without prior approval, hold more than 5 percent of the 
shares issued by a broadcasting company. 
 
¶13.  The Newspaper and Printing Presses Act restricts 
equity ownership (local or foreign) to 5 percent per 
shareholder.  The Act also requires that all the 
directors of a newspaper company be Singapore citizens. 
Newspaper companies must issue two classes of shares, 
ordinary and management, with the latter available only 
to citizens of Singapore or corporations approved by 
the government.  Holders of management shares have an 
effective veto over selected board decisions. 
 
¶14.  MediaCorp TV is the only free-to-air TV 
broadcaster; the government owns 80 percent and SGX- 
listed Singapore Press Holdings (SPH) owns 20 percent. 
The sole subscription TV provider, StarHub Cable Vision 
(SCV), is a 100-percent owned subsidiary of a majority 
government-owned publicly-listed company.  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.  The Media Development 
Authority (MDA) recently imposed more restrictive 
regulations governing the relationships between 
content/channel providers and pay TV operators in 
Singapore, i.e., SCV. 
 
¶15.  Banking:  The Monetary Authority of Singapore 
(MAS), under the Banking Act, regulates all banking 
activities.  Singapore maintains legal distinctions 
between offshore and domestic banking units, and the 
type of license held -- full service, wholesale, and 
offshore.  As of December 2005, 24 foreign full service 
licensees, 35 wholesale licensees, and 46 offshore 
licensees operated in Singapore.  Of the 24 foreign 
full service licensees, the government has granted 
"qualifying full bank" (QFB) licenses to six foreign 
banks, including two U.S. banks, which allow them to 
operate off-premise ATMs and, subject to government 
approval, access to local ATM networks.  Eventually, 
all offshore banks will be upgraded to wholesale bank 
status to enable them to conduct a wider range of 
activities.  Except for retail banking, Singapore laws 
do not distinguish operationally between foreign and 
domestic banks. 
 
¶16.  In 1999, the government embarked on a five-year 
banking liberalization program to ease restrictions on 
foreign banks.  The government has removed a 40 percent 
ceiling on foreign ownership of local banks and a 20 
percent aggregate foreign shareholding limit on finance 
companies.  It has stated publicly, however, that it 
will not approve any foreign acquisition of a local 
bank.  Acquisitions exceeding prescribed thresholds of 
5 percent, 12 percent or 20 percent of the shares or 
voting power of a local bank require the approval of 
the Finance Minister. 
¶17.  U.S. financial institutions enjoy phased-in 
benefits under the FTA.  U.S. licensed full-service 
banks have been able to operate at up to 30 customer 
service locations (branches or off-premise ATMs) since 
January 2004, and at an unlimited number of locations 
since January 2006; non-U.S. foreign full-service banks 
have been allowed to operate at up to 25 locations 
since 2005.  U.S. and foreign full-service banks can 
relocate freely 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. 
 
¶18.  Locally incorporated subsidiaries of U.S. full- 
service banks can apply for access to local ATM 
networks beginning June 30, 2006; non-locally 
incorporated subsidiaries of U.S. full-service banks 
can begin doing so January 1, 2008.  Singapore will 
lift its quota on new licenses for U.S. wholesale banks 
January 1, 2007. 
 
¶19.  Despite liberalization, foreign banks, including 
U.S. banks, in the domestic retail banking sector still 
face barriers.  Local retail banks do not face similar 
constraints on customer service locations or access to 
the local ATM network.  Foreign charge card issuers are 
prohibited from allowing their local card holders to 
access their accounts through the local ATM networks. 
Customers of foreign banks are also unable to access 
their accounts for cash withdrawals, transfers, or bill 
payments at ATMs operated by banks other than their 
own.  Nevertheless, foreign full-service banks have 
made significant inroads in other retail banking areas, 
with substantial market share in products like credit 
cards and personal and housing loans. 
 
¶20.  Securities and Asset Management: Singapore removed 
all trading restrictions on foreign-owned stockbrokers 
in January 2002.  Aggregate investment by foreigners 
may not exceed 70 percent of 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 (CPF) Investment Scheme). 
 
¶21.  Legal Services: As of December 1, 2005, 63 foreign 
law firms operated in Singapore, among them 16 U.S. 
firms.  Foreign law firms face significant 
restrictions.  They cannot practice Singapore law, 
employ Singapore lawyers to practice Singapore law or 
litigate in local courts.  Since June 2004, U.S. and 
foreign attorneys have been allowed to represent 
parties in arbitration without the need for a Singapore 
attorney to be present.  U.S. law firms can provide 
legal services in relation to Singapore law only 
through a Joint Law Venture or Formal Law Alliance with 
a Singapore law firm, subject to the Guidelines for 
Registration of Foreign Lawyers in Joint Law Ventures 
to Practice Singapore Law.  The FTA has relaxed some of 
these guidelines for U.S. law firms.  Currently, there 
is only one U.S. Joint Law Venture. 
 
¶22.  With the exception of law degrees from certain 
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 committed to recognizing law 
degrees from four U.S. law schools.  The list of 
schools has not been agreed. 
 
¶23.  Engineering and Architectural Services: 
Engineering and architectural firms can be 100 percent 
foreign-owned.  In line with FTA provisions, and also 
applicable to all foreign firms, Singapore has removed 
the requirement that the chairman and two-thirds of a 
firm's board of directors must be engineers, architects 
or land surveyors registered with local professional 
bodies.  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 Boards. 
 
¶24.  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. 
 
¶25.  Real Estate: In July 2005, the government relaxed 
certain restrictions on foreign ownership of real 
estate.  Under the Residential Property Act, foreigners 
are now allowed to purchase condominiums or any unit 
within a building of six or more levels without the 
need to obtain prior approval from the Singapore Land 
Authority.  For landed homes (houses) and apartments in 
buildings of fewer than six stories, prior approval is 
required.  Under a new option to the EDB's Global 
Investor Program, up to 50 percent of the S$2 million 
(US$1.2 million) investment required by a foreigner to 
qualify for Permanent Resident status can be in private 
residential properties.  There are no restrictions on 
foreign ownership of industrial and commercial real 
estate. 
 
Conversion and Transfer Policies 
 
¶26.  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.  (See 
"Efficient Capital Markets" for a discussion of certain 
restrictions on the borrowing of Singapore Dollars 
(SGD) for use offshore.) 
 
Expropriation and Compensation 
 
¶27.  The FTA contains strong investor protection 
provisions relating to expropriation and due process; 
provisions are in place for fair market value 
compensation for any expropriated investment. 
 
¶28.  Singapore has not expropriated property owned by 
foreign investors and has no laws that force foreign 
investors to transfer ownership to local interests; no 
significant disputes are pending. 
 
¶29.  Singapore has signed investment promotion and 
protection agreements with a wide range of countries 
(see "Bilateral Investment Agreements" below).  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. 
 
Dispute Settlement 
 
¶30.  All core obligations of the FTA are subject to the 
dispute settlement provisions of the Agreement.  The 
dispute settlement procedures promote compliance 
through consultation and trade-enhancing remedies, 
rather than rely solely on trade sanctions.  The 
procedures also set higher standards of openness and 
transparency. 
 
¶31.  Singapore enacted and subsequently amended the 
Arbitration Act 2001 for domestic arbitration based on 
the United Nations Commission on International Trade 
Law (UNCITRAL) Model Law.  Singapore ratified the 
recognition and enforcement of Foreign Arbitration 
Awards (New York, 1958) on August 21, 1986, and the 
International Convention on the Settlement of 
Investment Disputes on November 13, 1968.  The 
Singapore International Arbitration Center (SIAC) and 
the Singapore Mediation Center (SMC) actively promote 
mediation and reconciliation for settling commercial 
disputes. 
 
Performance Requirements/Incentives 
 
¶32.  In general, 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. 
 
¶33.  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.  Employment of host country nationals is not 
required. 
 
¶34.  Singapore offers numerous incentives (see Annex) 
to encourage foreign investors to start up businesses, 
particularly in targeted growth sectors. 
 
Right to Private Ownership and Establishment 
 
¶35.  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. 
 
¶36.  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 
liability partnership, incorporated company, foreign 
company branch or representative office. 
 
¶37.  Private businesses, both local and foreign, 
compete on a generally equal basis with GLCs, although 
some observers have complained that GLCs benefit from 
cheaper financing due to an implicit government 
guarantee.  Singapore officials reject such assertions, 
arguing that the government does not interfere with the 
operations of GLCs or grant them special privileges, 
preferential treatment or hidden subsidies; they claim 
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 had 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. 
 
Protection of Property Rights 
 
¶38.  In line with its FTA commitments, Singapore has 
developed one of the strongest intellectual property 
(IP) regimes in Asia.  Amendments to the Trademarks Act 
and the Patents Act, a new Plant Varieties Protection 
Act, and a new Manufacture of Optical Discs Act came 
into effect in July 2004.  Amended Copyright and 
Broadcasting Acts came into effect in January 2005; 
further amendments to the Copyright Act came into 
effect in August 2005.  When fully implemented and 
enforced, Singapore's new and amended IP laws should 
help alleviate problems related to the availability of 
pirated optical discs, use of unlicensed software by 
businesses, the transshipment of pirated material 
through Singapore, and removal of infringing material 
from Internet sites.  In accordance with its FTA 
obligations, Singapore has implemented Article 1 to 
Article 6 of the Joint Recommendation concerning 
Provisions on the Protection of Well-Known Marks of 
1999, and 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). 
 
¶39.  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 three 
other international copyright agreements: the Paris 
Convention, the Patent Cooperation Treaty and the 
Budapest Treaty.  In September 2002, Singapore set up a 
specialized court (IP Court) under the Singapore 
Supreme Court to handle IP disputes.  The WIPO 
Secretariat opened offices in Singapore in June 2005. 
 
SIPDIS 
 
¶40.  Law enforcement efforts have contributed to a 
sharp reduction in the production of pirated material 
and blatant storefront piracy and counterfeiting. 
According to the Singapore Police, the value of 
counterfeit and pirated goods seized in 2005 was nearly 
$12 million, compared to $8 million in 2004.  In 
September 2005, the Singapore Police initiated its 
first corporate end-user enforcement action under the 
amended Copyright Act, raiding a private company 
suspected of using approximately $30,000 in illegal 
software. 
 
¶41.  According to industry estimates, Singapore's music 
(optical disc media) piracy rate averages about 9 
percent; the rate for movies is about 12 percent. 
Software piracy in Singapore, while among the lowest in 
Asia, is almost double the estimated level in the 
United States; business software losses were estimated 
at nearly $96 million in 2004. 
 
¶42.  Over the past few years, a number of local 
educational institutions (the majority government- 
operated) have signed agreements to comply with legal 
obligations to pay royalty fees to publishers in 
exchange for the right to duplicate copyrighted printed 
works for use in course materials.  Some commercial 
copy centers, however, continue to routinely take 
orders to copy entire textbooks.  Periodic police raids 
against these copy centers have yielded limited 
results. 
 
¶43.  Although it is a major global transshipment and 
transit point for sea and air cargo, Singapore does not 
collect information on the contents and destinations of 
most transshipment and transit trade, which accounts 
for 80 percent of cargo passing through the port.  This 
lack of information makes enforcement against 
transshipment or transit trade in infringing goods 
virtually impossible.  Under its FTA commitments, 
Singapore passed legislation in November 2003 to 
provide for information sharing with the U.S. customs 
authority and also with those of its other FTA 
partners. 
 
¶44.  The FTA also ensures that government agencies will 
not grant approval to patent-violating products.  It 
also protects against imports of pharmaceutical 
products without the patent-holder's consent by 
allowing lawsuits when contracts are breached, if these 
products have previously not been sold or distributed 
in Singapore. 
¶45.  Singapore has no specific legislation concerning 
trade secrets, but rather protects investors' 
commercially valuable proprietary information under 
common law by the Law of Confidence.  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. 
 
Transparency of the Regulatory System 
 
¶46.  The 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. 
 
¶47.  Singapore in the past lacked a formalized system 
whereby it published proposed regulations for public 
comment.  Beginning in April 2003, however, the 
government established a new centralized Internet 
portal (http://app.feedback.gov.sg/asp/ocp/ocp01a.as p) 
to solicit feedback on selected draft legislation and 
regulations, a process that is being used with 
increasing frequency. 
 
¶48.  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, comprised of 
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. 
 
¶49.  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. 
 
¶50.  Procedures for obtaining licenses and permits are 
generally transparent and not burdensome, but some 
exceptions apply.  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: http://licences.business.gov.sg/. 
 
¶51.  Corporate Governance: In December 1999, Singapore 
established the Corporate Governance Committee, the 
Disclosure and Accounting Standards Committee, and the 
Company Legislation and Regulatory Framework Committee 
(CLRFC) to review and enhance the existing framework 
for corporate law and governance.  The government has 
implemented all of the Committees' recommendations 
except for those put forth by the CLRFC, which are 
still under review.  In January 2003, Singapore 
established a private sector-led Council on Corporate 
Disclosure and Governance to implement the country's 
Code of Corporate Governance. 
 
¶52.  Accounting Standards: Singapore's prescribed 
accounting standards ("Financial Reporting Standards" 
of FRS) are aligned with those issued by the 
International Accounting Standards Board.  Companies 
can deviate from these standards where 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 (US 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. 
 
Efficient Capital Markets and Portfolio Investment 
 
¶53.  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.  MAS formulates and 
implements the country's monetary and exchange rate 
policy, and supervises and regulates the country's 
sophisticated financial and capital markets. 
 
¶54.  Singapore-based asset management firms managed 
$572.6 billion in 2004.  The government has sought to 
boost the country's asset management sector by placing 
with foreign-owned firms a significant portion of 
government reserves managed by MAS and the Government 
of Singapore Investment Corporation (GIC). 
Approximately US$12.8 billion in SGD-denominated 
corporate debt was issued in 2004. 
 
¶55.  Singapore's banking system is sound and well 
regulated.  Total domestic banking assets were US$243 
billion as of March 2005.  Local Singapore banks are 
relatively small by regional standards, but are more 
profitable and have stronger credit ratings than many 
of their peers.  As at June 2005, non-performing loans 
(NPLs, net of bank-to-bank loans) as a percentage of 
total loans were 4.2 percent (compared to 5.5 percent 
in June 2004). 
 
¶56.  A statutory requirement prohibiting banks from 
engaging in non-financial business took effect in July 
¶2001.  Beginning January 1, 2006, banks are able to 
hold only 10 percent or less in non-financial companies 
as an "equity portfolio investment." 
 
¶57.  The Securities and Futures Act (SFA), implemented 
in 2002, introduced a host of policy reforms in 
Singapore's capital markets, moving them to a 
disclosure-based regime.  The SFA may impose civil or 
criminal penalties against corporations listed on the 
Singapore Exchange (SGX) that fail to disclose material 
information on a continuous basis.  Since January 2003, 
listed companies with more than US$44 million market 
capitalization have been required to prepare quarterly 
financial reporting.  The SFA requires persons 
acquiring shareholdings of 5 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. 
 
Political Violence 
 
¶58.  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 82 of the 84 regularly contested 
parliamentary seats.  Singapore opposition parties, 
which currently hold two regularly contested 
parliamentary seats and one additional seat reserved to 
the opposition by the constitution, do not usually 
espouse views that are radically different from the 
mainstream of Singapore political opinion. 
 
Corruption 
 
¶59.  Singapore typically ranks as the least corrupt 
country in Asia and one of the least corrupt in the 
world.  Singapore has, and actively enforces, 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 independent 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. 
¶60.  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. 
 
Bilateral Investment Agreements 
 
¶61.  Singapore has signed Investment Guarantee 
Agreements (IGA's) with ASEAN member nations, the 
Belgium-Luxembourg Economic Union and the following 31 
economic partners: Bahrain, Belarus, Bulgaria, 
Cambodia, Canada, China, the Czech Republic, Egypt, 
France, Germany, Hungary, Indonesia (Riau Province 
only), Laos, Latvia, Mauritius, Mongolia, The 
Netherlands, Pakistan, Peru, Poland, Slovenia, Sri 
Lanka, Switzerland, Taiwan, Thailand, the United 
Kingdom, the United States, Uzbekistan, Vietnam, and 
Zimbabwe.  These agreements mutually protect nationals 
or companies of either country against war and non- 
commercial risks of expropriation and nationalization. 
 
¶62.  Singapore has signed free trade agreements, 
including investment chapters, with Australia (February 
2003), New Zealand (August 2000), the European Free 
Trade Area (Switzerland, Norway, Lichtenstein, and 
Iceland in June 2002), the United States (May 2003), 
Jordan (May 2004), India (June 2005), and South Korea 
(August 2005).  Singapore has signed tax treaties with 
a number of countries, but not with the United States. 
 
OPIC and Other Investment Insurance Programs 
 
¶63.  Under a 1966 investment guarantee agreement with 
Singapore, the U.S.  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. 
 
Labor 
 
¶64.  As of September 2005, Singapore's labor market 
totaled 2.28 million workers; this total includes 
nearly 645,000 foreigners, of which about 80 percent 
are unskilled or semi-skilled workers.  Local labor 
laws are flexible, and 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 must approve 
employment of foreigners. 
 
¶65.  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. 
 
¶66.  Labor-management relations in Singapore are 
generally amicable.  About 22 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.  Although workers, other than those employed in 
the three essential services of water, gas and 
electricity, have the legal right to strike, none have 
done so since 1986. 
 
¶67.  Singapore has no minimum wage law; the government 
follows a policy of allowing free market forces to 
determine wage levels.  Singapore has a flexible wage 
system in which the National Wage Council (NWC) 
recommends non-binding wage adjustments on an annual 
basis.  The NWC is a tripartite body comprising a 
Chairman and representatives from the Government, 
employers and unions.  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. 
 
Foreign Trade Zones/Free Trade Zones 
 
¶68.  Singapore has eight free-trade zones (FTZs) 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. 
 
Foreign Direct Investment Statistics 
 
¶69.  The United States is one of Singapore's largest 
foreign investors, with over 1,500 U.S. firms in 
operation.  According to the Singapore Department of 
Statistics (Singapore DOS) U.S. cumulative foreign 
direct investments in Singapore totaled US$22 billion 
in 2003 (latest available data).  According to U.S. 
Department of Commerce statistics (USDOC), U.S. firms 
(manufacturing and services) in 2004 had cumulative 
total investments in Singapore of $56.9 billion; 
discrepancies in FDI numbers are attributable to 
differences in accounting methodologies. 
 
¶70.  Investment Statistics 
 
TABLE A 
------- 
 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE 
BY COUNTRY 
(As at Year-end, Historical Cost) 
(US$ million) 
 
                  2000     2001     2002     2003 
 
 
Total FDI         112,571  122,473  135,517  143,692 
 
United States      18,373   20,084   20,173   22,099 
 
Europe             42,011   47,222   54,525   61,223 
  European Union   30,440   36,205   43,919   49,561 
    France          2,841    2,550    2,872    3,106 
    Germany         2,443    3,438    4,253    3,743 
    Netherlands    16,838   19,395   14,544   16,091 
    United Kingdom  5,163    7,987   18,908   23,239 
    Other EU        3,155    2,835    3,342    3,382 
    Switzerland     9,307    8,465    8,756    9,136 
 
Asian Countries    28,910   28,091   32,171   32,534 
  China               538      481      554      495 
  Hong Kong         3,569    3,179    2,834    2,367 
  Japan            16,865   16,183   19,074   19,387 
 
  Asean             5,365    5,211    5,555    5,310 
    Malaysia        3,216    3,243    3,333    3,038 
 
Australia           1,880    1,442    1,450    1,229 
 
Caribbean/Latin 
  America          18,088   22,037   23,269   22,514 
 
Other Countries     3,309    3,597    3,929    4,093 
 
Source: Department of Statistics, "Foreign Equity 
Investment in Singapore, 2003" 
 
TABLE B 
------- 
 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE 
BY INDUSTRY 
(As at Year-end, Historical Cost) 
(US$ million) 
                2000      2001     2002      2003 
Total FDI       112,571   122,473  135,517   143,692 
 
Manufacturing    40,840    45,011   49,799    53,654 
    Chemicals & 
      Chemical 
      Products    9,963    11,970   15,340    20,001 
    Petroleum & 
      Petroleum 
      Products    3,991     6,226    7,270     8,523 
    Electronic 
      Products & 
      Components 20,145    19,380   18,218    16,662 
 
Construction      1,219       940    1,140       854 
Commerce         17,071    17,798   21,717    22,528 
Transport, Storage 
  & Coms          4,973     5,341    5,927     6,645 
Financial & 
  Insurance 
  Services       40,427    44,835   46,137    49,223 
     Financial   39,149    43,355   44,415    47,146 
Real Estate       3,704     3,323    3,869     3,652 
Business Svs      4,399     4,856    6,549     6,848 
 
Source: Department of Statistics, "Foreign Equity 
Investment in Singapore, 2003" 
 
TABLE C 
------- 
 
GDP AND FDI FIGURES, 2000-2003 
(US$ Million) 
 
Year      GDP*      FDI       FDI as % of GDP 
----      ----      ---       --------------- 
2000      92,210    112,571   1.22 
2001      83,240    121,228   1.46 
2002      91,025    135,890   1.49 
2003      94,617    143,691   1.52 
 
Footnote: GDP at Current Market Price 
Source:  Department of Statistics 
 
Table D 
------- 
 
TOP 20 MAJOR FOREIGN INVESTORS BY TOTAL ASSETS 
(US$ Billion) 
 
                Country     Total     Business 
Company         of Origin   Assets    Activities 
-------         ---------   ------    ---------- 
 
J.P. Morgan 
 Securities Asia    U.S.    14.51     Finance 
 
Glaxo Wellcome Mfg. U.K.    13.29     Chemicals 
 
Exxonmobil Asia 
 Pacific            U.S.     6.65     Fuels 
 
Shell Eastern 
 Petroleum          Nether-  6.22     Chemicals 
                    lands 
Hewlett-Packard 
 Singapore          U.S.     5.55     Electronics 
 
Prudential 
 Assurance Co.      U.K.     5.50     Insurance 
 
Credit Suisse 
 First Boston 
 Singapore          Switzer  4.87     Banking 
                    -land 
 
Deutsche Asia       Germany  3.79     Finance 
 
Asia Food & 
 Properties         British  3.53     Multi-industry 
                    Virgin Is. 
Shell Treasury 
 Centre East        Nether-  3.10     Finance 
                    lands 
Shell Eastern 
 Trading            Nether-  2.71     Fuels 
                    lands 
National Australia 
 Merchant Bank      Austra-  2.41     Banking 
                    lia 
Texas Instruments 
 Singapore          U.S.     2.30     Electronics 
 
IBM Singapore       U.S.     2.23     Electronics 
 
ING Asia            Nether-  2.23     Banking 
                    lands 
Citicorp Invest 
 Bank               U.S.     2.14     Banking 
 
Nova Scotia Bank 
 Asia               U.S.     2.05     Banking 
 
Danone Asia         France   2.11     Food/Beverages 
 
BP Singapore        U.K.     2.05     Fuels 
 
Bank Sarasin-Rabo 
 Asia               Switzer- 1.75     Banking 
                    land 
 
Source: Singapore Economic Development Board 
        DP Information Group, "Singapore 1000, 2005" 
 
ANNEX: INCENTIVES 
----------------- 
 
INCENTIVES ADMINISTERED BY THE MONETARY AUTHORITY OF 
SINGAPORE (MAS) 
 
As part of the government's strategy to develop 
Singapore into a premier financial center, MAS offers 
tax incentives for financial institutions looking to 
set up operations here. 
 
A)  Financial Sector Incentive ("FSI") Scheme 
B)  Tax Incentive Scheme for Qualifying Processing 
Services Company 
C)  Tax Incentive Scheme for Offshore Insurance 
Business 
D)  Tax Exemption Scheme for Marine Hull & Liability 
Insurance 
    Business 
E)  Abolition of Withholding Taxes on Financial 
Guaranty Insurance Contracts 
F)  Tax Incentive Scheme for Commodity Derivatives 
Trading 
G)  Tax Incentive Scheme for Approved New Derivative 
Products traded on the Singapore Exchange 
H)  Tax Incentive Scheme for Finance and Treasury 
Centers 
I)  Tax Incentive Scheme for Approved Trustee Companies 
J)  Tax Incentive Scheme for Syndicated Facilities 
K)  Innovation in Financial Technology & Infrastructure 
Grant Scheme 
L)  Tax Incentive for Trading Debt Securities 
M)  Financial Sector Development Fund 
N)  Financial Investor Scheme for Singapore Permanent 
Residence 
 
Further guidelines and application information are 
available at http://www.mas.gov.sg 
 
INCENTIVES ADMINISTERED BY THE ECONOMIC DEVELOPMENT 
BOARD (EDB) 
A)  Pioneer Status 
B)  Development & Expansion Incentive 
C)  Investment Allowance Incentive 
D)  Approved Foreign Loan Scheme 
E)  Approved Royalties Incentive 
F)  Entrepreneurship Investment Incentive 
G)  HQ Program 
H)  Double Deduction for Research and Development (R&D) 
Expenses 
I)  Research Incentive Scheme for Companies 
J)  Exemption of foreign sourced interest and royalty 
income for R&D purposes 
K)  Innovation Development Scheme 
L)  Initiatives in New Technology 
M)  Integrated Industrial Capital Allowance 
N)  Special Goods & Services Tax scheme for 3rd Party 
Logistics 
Service Providers 
O)  The Enterprise Challenge (TEC) Scheme 
 
Further guidelines and application information are 
available at http://www.sedb.com. 
 
INCENTIVES ADMINISTERED BY INTERNATIONAL ENTERPRISE 
SINGAPORE (IESingapore) 
 
A)  Double Tax Deduction (DTD) Scheme 
B)  Global Trader Program (GTP) 
C)  International Marketing Activities Program (IMAP) 
D)  International Partners Program 
E)  Manpower for Internationalization Program 
F)  Regionalization Finance Scheme 
G)  iFinance Consulting Program 
H)  Design for Internationalization Program 
I)  Branding for Internationalization Program 
 
Further guidelines and application information are 
available at http://www.iesingapore.gov.sg 
 
INCENTIVES ADMINISTERED BY THE MEDIA DEVELOPMENT 
AUTHORITY 
(MDA) 
 
A)  Market Development Scheme (MDS) 
B)  TV Content Industry Development Scheme 
C)  Digital Content Development Scheme 
D)  Digital Technology Development Scheme 
 
Further guidelines and application information are 
available at http://www.mda.gov.sg 
 
INCENTIVES MANAGED BY INFOCOMM DEVELOPMENT AUTHORITY OF 
SINGAPORE (IDA) 
 
A)  Connected Homes 
B)  iLIUP (infocomm Local Industry Upgrading Program) 
C)  Overseas Development Program 
D)  SAFE (Securing Assets for End-Users) Program 
E)  WEAVE (Web Services) 
F)  Wired With Wireless Program 
G)  Digital Exchange 
H)  RFID Development Plan 
I)  Pilot and Trial Hotspots (PATH) 
J)  The Competency Centre Program (CCP) 
 
Further information, details, and guidelines are 
available at www.ida.gov.sg. 
 
HERBOLD