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RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #0034/01 0100727
ZNR UUUUU ZZH
R 100727Z JAN 08
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 4695
INFO RUCPDOC/USDOC WASHDC
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPCIM/CIMS NTDB WASHDC

UNCLAS SECTION 01 OF 14 SINGAPORE 000034 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA/JNHATCHER AND AKAMBARA 
STATE PASS USTR FOR AUSTR WEISEL AND DAUSTR BELL 
STATE PASS OPIC 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV OPIC USTR
SUBJECT: SINGAPORE - 2008 INVESTMENT CLIMATE STATEMENT 
 
REF: STATE 158802 
 
¶1.  (U) In response to reftel instructions, this message is Post's 
draft chapter of the 2008 Investment Climate Statement for 
Singapore.  As requested, we have also provided via email a 
Microsoft Word version of the document to EB/IFD/OIA. 
 
¶2.  (SBU) Begin text of Statement: 
 
Singapore 
 
2008 Investment Climate Statement - Singapore 
 
Introduction 
 
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 2007:  How to Reform," ranked 
Singapore as the easiest country in which to do business.  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 of Singapore (GOS) is strongly committed both to 
maintaining a free market and to taking 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 October 2007, the top six Singapore-listed GLCs 
accounted for nearly 22 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. 
 
Singapore's aggressive pursuit of foreign investment as another 
pillar of its overall economic strategy has enabled the country to 
evolve 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 
 
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. 
 
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:  Any foreign or domestic company can provide 
facilities-based (fixed line or mobile) or services-based (local, 
international, and callback) telecommunications services.  Under the 
Telecoms Competition Code, most recently revised in 2003 , the 
former monopoly (and 62-percent government-owned) telecommunications 
service provider, SingTel, faces competition in all market segments, 
including fixed line, mobile and paging services.  Its main 
competitors, MobileOne and StarHub, are also GLCs.  Singapore has 
approximately 60 facilities-based and 110 services-based operators. 
 
 
The FTA requires that Singapore take steps to ensure that U.S. 
telecom service providers obtain the right to interconnect with 
networks in Singapore at competitive rates and on transparent and 
reasonable terms and conditions.  Despite the Infocomm Development 
 
SINGAPORE 00000034  002 OF 014 
 
 
Authority's (IDA) requirement that SingTel offer wholesale prices 
for local-leased circuits at reduced rates, U.S. industry is still 
unable to avail itself of this more competitive pricing structure 
due to certain uneconomical technical interconnection requirements 
imposed by SingTel. 
 
SingTel announced in June 2006 plans to consolidate its local 
exchanges but failed to provide details of specific local exchanges 
to be closed.  This has put U.S. and other carriers' build-out plans 
on hold.  IDA issued a decision in June 2007 that increases the 
notification period SingTel must provide from six to 18 months.  IDA 
has denied requests by U.S. and other companies for interconnection 
at more centralized locations.  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.  U.S. and other companies continue to have 
problems with access to inter-exchange ducts as provided for in the 
FTA. 
 
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, 
to request public comments about such requests, or to publish a 
detailed explanation concerning final decisions made by IDA or the 
Ministry of Information, Communication and Arts (MICA). 
 
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 5 percent of the 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 5 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 "declared" foreign 
newspaper, and significantly restricts freedom of the press, having 
curtailed or banned the circulation of some foreign publications. 
In September 2006, Singapore banned the Far Eastern Economic Review 
on the grounds that the publisher contravened Section 23 of the 
Newspaper and Printing Presses Act, whereby the offshore publisher 
must appoint a person within Singapore authorized to accept service 
of any notice or legal process on behalf of the publisher and post a 
security deposit of S$200,000 (US$170,000).  The government has also 
"gazetted" foreign newspapers, i.e., numerically limited their 
circulation.  Singapore's leaders have threatened foreign publishers 
with defamation suits for perceived slights, which has often 
resulted in the foreign publishers issuing apologies and paying 
damages. 
 
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.  StarHub Cable Vision (SCV), the sole pay-TV provider 
since 1996, is a 100-percent owned subsidiary of StarHub Ltd, a 
publicly-listed GLC.  SingTel entered the pay-TV market in January 
¶2007.  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. 
 
Banking:  The Monetary Authority of Singapore (MAS) regulates all 
banking activities as provided for under the Banking Act.  Singapore 
maintains legal distinctions between foreign and local banks, and 
the type of license held by foreign banks -- full service, 
wholesale, and offshore.  As of November 2007, 24 foreign full 
service licensees, 40 wholesale licensees, and 42 offshore licensees 
operated in Singapore.  All offshore banks are eligible to be 
upgraded to wholesale bank status based on MAS criteria to enable 
them to conduct a wider range of activities.  Except in retail 
banking, Singapore laws do not distinguish operationally between 
foreign and domestic banks. 
 
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.  These measures include removal 
of a 40-percent ceiling on foreign ownership of local banks and a 
20-percent aggregate foreign shareholding limit on finance 
 
SINGAPORE 00000034  003 OF 014 
 
 
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. 
 
Singapore has granted 24 full service licenses to foreign banks, 
including four U.S. banks.  Of these, six, including one U.S. bank, 
have also been granted "qualifying full bank" (QFB) status.  U.S. 
financial institutions enjoy phased-in benefits under the FTA. 
Since January 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).  Non-U.S. full service foreign 
banks with QFB status have been allowed to operate since January 
2005 at up to 25 locations.  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. 
 
Locally incorporated subsidiaries of U.S. full-service banks with 
QFB status have been able to apply for access to local ATM networks 
since June 30, 2006; non-locally incorporated subsidiaries of U.S. 
full-service banks with QFB status can begin doing so effective 
January 1, 2008.  Singapore on January 1, 2007 lifted its quota on 
new licenses for U.S. wholesale banks.  Singapore abolished quotas 
on new licenses for full-service foreign banks in July 2005. 
 
Despite liberalization, U.S. and other foreign 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.  Holders of credit cards issued locally by 
foreign banks or other financial institutions 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 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 
credit lenders, including non-banks.  Singapore's two credit 
bureaus, Credit Bureau (Singapore) Private Ltd. ("CBS") and Credit 
Scan, do not currently provide sufficient support to credit lenders, 
including non-banks. 
 
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 Investment Scheme). 
 
Legal Services:  As of November 2007, 16 of the 73 foreign law firms 
in Singapore were from the United States.  Foreign law firms face 
certain 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.  Singapore has relaxed some of 
these guidelines for U.S. law firms under the FTA.  Since July 2007, 
foreign attorneys have been allowed to own equity in Joint Law 
Ventures up to a maximum of 25 percent of total shares.  Currently, 
there is one U.S. Joint Law Venture and one U.S. Formal Law 
Alliance. 
 
With the exception of law degrees from 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 relaxed its criteria for admission of attorneys to the 
Singapore Bar, effective October 2006.  One of the new criteria will 
admit to the Bar Singapore-citizen or permanent-resident law school 
 
SINGAPORE 00000034  004 OF 014 
 
 
graduates of the above-mentioned 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).  The 
government allows highly skilled foreign lawyers meeting certain 
criteria to practice Singapore corporate, finance and banking law. 
 
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 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 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. 
 
Real Estate:  In July 2005, the government relaxed certain 
restrictions on foreign ownership of real estate.  Under the 
Residential Property Act, foreigners are 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 an option 
to the EDB's Global Investor Program, up to 50 percent of the S$2 
million (US$1.38 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. 
 
Energy:  Singapore implemented the Gas (Amendment) Act in June 2007 
to facilitate competition and move towards a fully liberalized 
energy market, in part by opening access to gas pipeline 
infrastructure.  However, at least one U.S. company has encountered 
difficulties in its access bid due to lengthy delays in the review 
of its application by the Energy Market Authority.  To date, no 
non-incumbent operators have been able to secure access to the 
Singapore section of the existing Sumatra-Singapore pipeline. 
 
Conversion And Transfer 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.  (See "Efficient Capital 
Markets" for a discussion of certain restrictions on the borrowing 
of Singapore Dollars (SGD) for use offshore.) 
 
Expropriation And Compensation 
 
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. 
 
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. 
 
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 
 
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 relying solely on trade 
sanctions.  The procedures also set higher standards of openness and 
transparency. 
 
 
SINGAPORE 00000034  005 OF 014 
 
 
Singapore enacted and subsequently amended the Arbitration Act of 
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 
 
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. 
 
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. 
 
Singapore offers numerous incentives to encourage foreign investors 
to start up businesses, particularly in targeted growth sectors (see 
Annex). 
 
Right To Private Ownership And Establishment 
 
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 liability partnership, incorporated company, 
foreign company branch or representative office. 
 
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. 
 
The FTA contains specific conduct guarantees to ensure that GLCs 
will operate on a commercial and non-discriminative 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 which was implemented in three phases. 
Phase I established the Competition Commission of Singapore in 
January 2005.  Phase II implemented provisions on anti-competitive 
agreements, decisions and practices, abuse of dominance, 
enforcement, and the appeals process in January 2006.  Phase III 
provisions, which address mergers and acquisitions, came into effect 
in July 2007. 
 
Singapore has an extensive network of GLCs that are active in many 
sectors of the economy.  Some sectors, notably telecommunications, 
power generation/distribution, and financial services, are subject 
to sector-specific regulatory bodies and competition regulations 
typically less rigorous than those being implemented under the 
Competition Act. 
 
Protection Of Property Rights 
 
In line with its FTA commitments and obligations under international 
treaties and conventions, Singapore has developed one of the 
strongest intellectual property (IP) regimes in Asia.  Amendments to 
 
SINGAPORE 00000034  006 OF 014 
 
 
the Trademarks Act, the Patents Act, the Layout Designs of 
Integrated Circuits Act, Registered Designs Act, a new Plant 
Varieties Protection Act, and a new Manufacture of Optical Discs Act 
came into effect in July 2004.  The amended Copyright Act and 
Broadcasting Act came into effect in January 2005.  Singapore 
further amended the Copyright Act in August 2005.  Singapore's 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 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 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.  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.  Amendments to 
 
SIPDIS 
the Trademark Act, which took effect in January 2007, fulfill 
Singapore's obligations in WIPO's revised Treaty on the Law of 
Trademarks. 
 
According to recent industry estimates, Singapore's piracy rate 
averaged about 5-10 percent for audio and video and 39 percent for 
business software.  Software piracy levels in Singapore, while among 
the lowest in Asia, are almost double the estimated level in the 
United States.  Business software losses were estimated at nearly 
$125 million in 2006.  Rights holders have encountered difficulties 
when attempting to prosecute IP cases based on tips provided by 
company insiders.  Singapore currently does not offer specific 
protection to "whistleblowers."  As a result, many informants refuse 
to provide crucial testimony in court. 
 
U.S. industry has raised concerns that Internet piracy in Singapore 
is on the rise as a result of the increasing availability of the 
country's broadband facilities.  Industry groups also claim that the 
Copyright Act violates FTA obligations by permitting entities in 
Singapore to "simulcast" performances over the Internet without 
paying the proper license fees. 
 
While a number of local educational institutions (the majority 
government-operated) have signed agreements to comply with legal 
obligations to pay royalty fees to publishers, unlawful duplication 
of textbooks at some commercial copy centers continues.  The police 
have conducted multiple raids, but according to industry 
representatives, the activity is lucrative enough to continue in 
spite of the possibility of large fines. 
 
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.  In 
addition, goods in transit are not subject to seizure under the 
Copyright Act, although it may be possible if a search warrant is 
obtained in advance.  Under its FTA commitments, Singapore amended 
Section 31 of the Import/Export Act in November 2003 to facilitate 
information-sharing with the U.S. Customs and Border Protection and 
other country officials with which it has relevant trade agreements. 
 
 
The FTA ensures that government agencies will not grant approval to 
patent-violating products.  Singapore allows 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, but rather 
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. 
 
 
SINGAPORE 00000034  007 OF 014 
 
 
Transparency Of The Regulatory System 
 
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. 
 
Singapore in the past lacked a formalized system whereby it 
published proposed regulations for public comment.  Beginning in 
April 2003, the government established a centralized Internet portal 
-- http://www.reach.gov.sg -- to solicit feedback on selected draft 
legislation and regulations, a process that is being used with 
increasing frequency.  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, 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. 
 
Corporate Governance:  In January 2003, Singapore established 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. 
 
Accounting Standards:  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 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 
 
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. 
 
Total assets under management in Singapore grew 24 percent to $581 
billion between 2005 and 2006.  Over 80 percent of the funds managed 
in Singapore are foreign sourced, with close to 60 percent of these 
funds invested in Asia.  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 the 
Government of Singapore Investment Corporation (GIC).  Financial 
institutions issued more than US$16.8 billion in SGD-denominated 
corporate debt instruments in 2006. 
 
Singapore's banking system is sound and well regulated.  Total 
 
SINGAPORE 00000034  008 OF 014 
 
 
domestic banking assets were US$359 billion as of June 2007.  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 June 2007, 
non-performing loans (NPLs, net of bank-to-bank loans) as a 
percentage of total loans were 2.2 percent (compared to 3.4 percent 
in June 2006). 
 
A statutory requirement prohibiting banks from engaging in 
non-financial business took effect in July 2001.  As of January 1, 
2006, banks could hold 10 percent or less in non-financial companies 
as an "equity portfolio investment." 
 
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 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.  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 
 
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 
 
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. 
 
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 
 
Singapore has signed Investment Guarantee Agreements (IGA's) with 
all other ASEAN member nations, the Belgium-Luxembourg Economic 
Union, and the following economic partners:  Bahrain, Belarus, 
Bulgaria, Canada, China, the Czech Republic, Egypt, France, Germany, 
Hungary, Latvia, Mauritius, Mongolia, The Netherlands, Pakistan, 
Peru, Poland, Saudi Arabia, Slovakia, Slovenia, Sri Lanka, 
Switzerland, Taiwan, Ukraine, the United Kingdom, the United States, 
Uzbekistan and Zimbabwe.  These agreements mutually protect 
nationals or companies of either country against war and 
non-commercial risks of expropriation and nationalization. 
 
Singapore has signed free trade agreements, including investment 
chapters, with Australia, the European Free Trade Area (Switzerland, 
Norway, Lichtenstein, and Iceland), India, Japan, Jordan, New 
Zealand, Panama, Peru, South Korea, the United States, and 
Uzbekistan, as well as a Trans-Pacific Strategic Economic 
Partnership agreement (P-4) with Brunei, New Zealand, and Chile. 
Singapore is negotiating FTAs with Canada, China, the Gulf 
Cooperation Council, Mexico, Pakistan, and Ukraine.  Singapore is a 
member of the Association of Southeast Asian Nations (ASEAN), which 
has concluded portions of FTAs with China and South Korea, and is 
negotiating FTAs with Australia/New Zealand, India, and Japan. 
 
SINGAPORE 00000034  009 OF 014 
 
 
Singapore has signed tax treaties with a number of countries, but 
not with the United States. 
 
OPIC And Other Investment Insurance Programs 
 
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 
 
As of mid-2007, Singapore's labor market totaled 2.61 million 
workers; this includes nearly 760,000 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. 
 
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. 
 
Labor-management relations in Singapore are generally amicable. 
More than 20 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, no workers have done so since 1986. 
 
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 
 
Singapore has five free-trade zones (FTZs), four for seaborne cargo 
and one 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 
 
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$25.7 billion in 2005 
(latest available data).  According to U.S. Department of Commerce 
statistics (USDOC), U.S. firms (manufacturing and services) in 2006 
had cumulative total investments in Singapore of $60.4 billion. 
Discrepancies between USG and GOS FDI numbers are attributable to 
differences in accounting methodologies. 
 
Investment Statistics 
 
TABLE A 
------- 
 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE BY COUNTRY 
(As at Year-end, Historical Cost) 
(US$ million) 
 
                       2002     2003     2004     2005 
                       ----     ----     ----     ---- 
Total FDI           135,390  147,961  174,977  186,927 
 
United States        20,170   22,151   27,636   25,691 
Canada                1,594    1,532    1,754    1,551 
Australia             1,451    1,233    1,653    1,621 
 
SINGAPORE 00000034  010 OF 014 
 
 
New Zealand             113       85       87      135 
 
Europe               54,596   62,501   74,615   80,529 
  European Union     43,985   49,586   60,588   62,691 
  France              2,893    3,164    3,412    3,395 
  Germany             4,245    3,633    4,481    4,548 
  Netherlands        14,576   16,219   19,747   19,064 
  Norway              1,639    2,745    3,818    4,718 
  Switzerland         8,761    9,959   10,128   13,010 
  United Kingdom     18,917   23,147   27,663   30,137 
 
Asian Countries      31,827   34,365   39,304   44,451 
  China                 552      510      233      244 
  Hong Kong           2,793    2,381    2,806    2,939 
  Japan              19,037   19,973   22,961   24,710 
  South Korea           661      989      518      790 
  Taiwan              2,908    3,474    3,508    4,290 
  India                 233      207      293      772 
  ASEAN               5,292    5,001    5,391    6,704 
     Brunei 
       Darussalam        209      201      219      229 
    Indonesia         1,018      981      672      756 
    Laos                  0        0        0        0 
    Malaysia          3,076    2,680    3,150    4,300 
    Philippines         554      536      686      683 
    Thailand            413      586      640      714 
    Vietnam              16       14       20       12 
    Cambodia              0        0        1        0 
    Burma                 4        4        5        9 
 
Carribbean/Latin 
  America            23,380   23,466   26,417   28,245 
 
Other Countries       2,260    2,627    3,510    4,703 
 
Source: Department of Statistics, "Foreign Equity Investment in 
Singapore, 2005" 
 
TABLE B 
------- 
 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE BY INDUSTRY 
(As at Year-end, Historical Cost) 
(US$ million) 
 
                    2002      2003      2004    2005 
                    ----      ----      ----    ---- 
 
Total FDI        135,390   147,961   174,977  186,927 
 
Manufacturing     49,496    53,926    59,324   62,253 
  Food, Beverages 
  & Tobacco          271       274       305      362 
  Textiles, 
    Wearing 
    Apparel & 
    Leather           49        49        49       50 
  Wood & Wood 
    Products           0        2         3         1 
  Paper & Paper 
    Products, 
    Printing & 
    Publishing       441      373       408       479 
  Petroleum & 
    Petroleum 
    Products       7,269    8,020     8,366     8,385 
  Chemicals & 
    Chemical 
    Products       3,174    3,414     4,329     4,830 
  Pharmaceutical 
    & Biological 
    Products      13,503   17,240    19,509    23,243 
  Rubber & 
    Plastic 
    Products         523      568       632       530 
  Basic Metals        16       21        24        13 
  Fabricated Metal 
    Products         813      735       891       836 
  Machinery & 
    Equipment      1,536    1,636     1,648     2,091 
  Electrical 
    Machinery & 
    Apparatus        766      941     1,011       916 
  Electronic 
    Products & 
 
SINGAPORE 00000034  011 OF 014 
 
 
    Components     18,313   17,437    18,306   17,518 
    Transport 
    Equipment         943    1,125     1,463      933 
  Instrumentation, 
    Photographic 
    & Optical 
    Goods           1,430    1,658     1,962    1,581 
    Others            447      433       489      486 
Construction        1,123      829       691      631 
Commerce           21,921   23,572    28,153   29,328 
  Wholesale 
    Trade          19,886   21,561    25,998   27,535 
    Retail Trade      700      532       610      564 
    Restaurants & 
    Hotels          1,335    1,480     1,545    1,229 
Transport, Storage & 
  Communications    5,028    6,017     8,029   10,164 
  Water 
    Transport       4,139    5,098     6,994    9,023 
    Land & Air 
    Transport         -20      -47       -28      -50 
  Warehousing 
    Post & Courier 
    Services          909      965     1,064    1,192 
Information & 
  Communications     -397    1,734     2,115    2,084 
Financial & 
  Insurance 
  Services         47,534   52,697    66,494   71,591 
  Financial 
    Services       45,817   50,616    64,057   68,567 
  Banks             4,866    5,282     5,448    5,414 
  Investment 
    Holding 
    Companies      36,567   40,640    52,158   56,698 
    Other Financial 
    Services        4,384    4,694     6,451    6,454 
  Insurance 
    Services        1,717    2,081     2,437    3,024 
Real Estate         4,030    3,787     4,173    3,935 
Business Services   3,798    4,576     5,035    5,884 
Others                 90       89        92       95 
 
Source: Department of Statistics, "Foreign Equity Investment in 
Singapore, 2005" 
 
TABLE C 
------- 
STOCK OF DIRECT INVESTMENT ABROAD BY COUNTRY 
(As at Year-end, Historical Cost) 
(US$ Million) 
 
                   2002      2003     2004      2005 
                   ----      ----     ----      ---- 
 
Total Direct 
 Investment      85,761     91,553 107,250    111,225 
 
Asia             40,926     45,636  52,369     57,238 
 
ASEAN            17,786     20,505  24,373     26,236 
  Brunei             82         36      39         36 
  Indonesia       4,430      6,109   7,366      8,360 
  Malaysia        7,674      7,992   9,054      9,551 
  Philippines     1,649      1,898   2,002      2,081 
  Thailand        2,363      2,767   4,422      4,607 
  Vietnam           798        860     934      1,032 
  Cambodia          149        137      75         73 
  Burma             611        666     430        446 
  Laos               29         39      51         49 
 
Hong Kong         6,896      6,610   6,708      7,361 
Taiwan            1,926      2,168   2,335      2,664 
China            10,392     11,653  13,584     15,297 
Japan               946      1,161   1,394      1,464 
South Korea       1,427      1,503   1,734      1,879 
India               235        670     766      1,063 
 
Europe            8,919      7,986   8,294      7,445 
European Union    6,575      6,053   6,946      6,480 
Netherlands         700        440     618        661 
United Kingdom    4,016      4,472   4,438      4,255 
France              143        242     146        133 
Germany              65         63     241        247 
Switzerland         306        354     230        197 
 
SINGAPORE 00000034  012 OF 014 
 
 
 
United States     4,748      5,310   5,867      5,607 
Canada               13         63      75        141 
 
Australia         1,915      2,733   5,307      4,403 
New Zealand         509        627     788        713 
 
Caribbean/Latin 
 America         24,263     24,965  26,655     28,040 
 
Other Countries   4,468      4,231   7,896      7,639 
 
 
Source:  Department of Statistics, "Singapore's Investment Abroad, 
2005" 
 
TABLE D 
------- 
 
GDP AND FDI FIGURES, 2002-2006 
(US$ Million) 
 
Year      GDP*      FDI       FDI as ratio to GDP** 
----      ----      ---       ------------------- 
 
2002      90,811    135,390   1.49 
2003      98,512    147,961   1.56 
2004     111,115    174,977   1.57 
2005     116,717    186,927   1.60 
 
 
Footnote: *GDP at Current Market Price 
          **Based on Singapore dollars 
Source:   Department of Statistics 
 
Table E 
------- 
 
TOP 20 MAJOR FOREIGN INVESTORS BY TOTAL ASSETS 
(US$ Billion) 
 
                Country     Total     Business 
Company         of Origin   Assets    Activities 
-------         ---------   ------    ---------- 
 
Citicorp 
 Singapore          U.S.     30.17     Banking 
J.P. Morgan 
 Securities Asia    U.S.     28.42     Finance 
Glaxo Wellcome Mfg. U.K.     21.62     Healthcare Products 
Exxonmobil Asia 
 Pacific            U.S.      9.43     Chemicals 
Hewlett-Packard 
 Singapore          U.S.      8.88     Electronics 
Prudential 
 Assurance Co.      U.K.      7.81     Insurance 
Shell Eastern 
 Trading        Netherlands   5.90     Chemicals 
National 
 Australia Merchant 
 Bank            Australia    4.98     Banking 
Credit Suisse 
 Singapore      Switzerland   4.54     Banking 
Asia Food & 
 Properties         BVI       4.33     Multindustry 
ING Asia        Netherlands   3.81     Banking 
Citigroup 
 Holding            U.S.      3.61     Finance 
Shell Treasury 
 Centre East    Netherlands   3.39     Finance 
BP Singapore        U.K.      3.27     Chemicals 
Motorola Trading 
 Center             U.S.      3.14     Electronics 
Hewlett-Packard 
 International      U.S.      2.82     Electronics 
Texas Instruments 
 Singapore          U.S.      2.58     Electronics 
Kuok Singapore 
                Cook Islands  2.15     Multi-industry 
Vitol Asia       Netherlands  2.15     Chemicals 
Aviva Ltd           U.K.      2.03     Insurance 
 
Source: DP Information Group, "Singapore 1000, 2007" 
 
ANNEX: INVESTMENT INCENTIVES 
 
SINGAPORE 00000034  013 OF 014 
 
 
---------------------------- 
 
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 
O) Foreign Charitable Trust Incentive 
P) Tax Incentive for Approved Fund Managers 
Q) Over-the-Counter (OTC) Financial Derivative Payments 
 
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 (IE Singapore) 
 
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) 
 
 
SINGAPORE 00000034  014 OF 014 
 
 
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 ADMINISTERED 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 http://www.ida.gov.sg. 
 
INCENTIVES ADMINISTERED BY MARITIME PORT AUTHORITY (MPA) 
 
A) Approved International Shipping Enterprise Scheme 
 
Further information, details and guidelines are available at 
http://www.mpa.gov.sg