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DE RUEHGP #0051/01 0150916
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R 150916Z JAN 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 6247
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 12 SINGAPORE 000051 
 
STATE FOR EB/IFD/OIA 
STATE PASS USTR FOR AUSTR WEISEL AND DAUSTR BELL 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV ETRD EFIN ELAB KTDB PGOV OPIC USTR SN
 
SUBJECT:  SINGAPORE - 2009 INVESTMENT CLIMATE STATEMENT 
 
REF:  08 STATE 123907 
 
¶1.  (U) In response to reftel instructions, this message is Post's 
draft chapter of the 2009 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: 
2009 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 "Doing Business 2009" report 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 to 
maintaining a free market but also takes a leadership role in 
planning Singapore's economic development.  The government actively 
uses the public sector as both an investor and catalyst for 
development.  As of November 2008, the top six Singapore-listed GLCs 
accounted for nearly 24 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: The Telecoms Competition Code opened the 
industry in 2000 to foreign or domestic companies seeking to provide 
facilities-based (fixed line or mobile) or services-based (local, 
international, and callback) telecommunications services.  Singapore 
Telecommunications (SingTel), the former monopoly and currently 
55-percent government-owned, faces competition in all market 
segments.  Its main competitors, MobileOne and StarHub, are also 
GLCs.  Singapore has approximately 65 facilities-based and 121 
pre-paid 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 
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 
 
SINGAPORE 00000051  002 OF 012 
 
 
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. 
Since 2007, SingTel has been exempted from dominant licensee 
obligations for the residential and commercial portions of the 
retail international telephone services.  In August 2008, IDA 
granted preliminary approval to exempt SingTel from dominant 
licensee obligations for three of the 13 telecommunication services 
SingTel provides to business and government end-users.  SingTel has 
appealed for exemption of all 13 services.  IDA will issue a final 
decision pending reactions from a formal public consultation held in 
September 2008. 
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). 
OpenNet, a consortium formed by Canada's Axia Netmedia (which holds 
30-percent ownership), SingTel (30 percent), Singapore Press 
Holdings (25 percent), and SP Telecommunications (15 percent) won 
the bid in September 2008 to build the infrastructure for 
Singapore's next generation access network, (officially known as the 
Next Generation National Broadband Network), a high-speed nationwide 
network.  Temasek Holdings owns 55 percent of SingTel and 100 
percent of SP Telecommunications, giving Temasek 31.5 percent 
ownership of OpenNet.  When completed in 2012, the broadband network 
may allow fuller access to telecom services providers to reach homes 
and businesses without requiring access to SingTel-owned circuits. 
Media: The local free-to-air broadcasting, cable and newspaper 
sectors are effectively closed to foreign firms.  Section 44 of the 
Broadcasting Act restricts foreign equity ownership of companies 
broadcasting to the Singapore domestic market to 49 percent or less, 
although the Act does allow for exceptions.  Individuals cannot hold 
more than five percent of the shares issued by a broadcasting 
company without the government's prior approval. 
The Newspaper and Printing Presses Act restricts equity ownership 
(local or foreign) to five percent per shareholder and requires that 
directors be Singapore citizens.  Newspaper companies must issue two 
classes of shares, ordinary and management, with the latter 
available only to Singapore citizens or corporations approved by the 
government.  Holders of management shares have an effective veto 
over selected board decisions.  The government controls 
distribution, importation and sale of any "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 
for contravening 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 brought defamation suits against foreign 
publishers.  Such suits have 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 2008, 26 foreign full 
service licensees, 42 wholesale licensees, and 40 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 
 
SINGAPORE 00000051  003 OF 012 
 
 
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. 
Singapore has granted 26 full service licenses to foreign banks, 
including four U.S. banks.  Of these 26, 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 since January 1, 2008.  However, 
no U.S. bank has come to a commercial agreement to gain such access. 
 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 
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 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 2008, 17 of the 86 foreign law firms 
in Singapore were from the United States.  In December 2008, 
Singapore granted Qualifying Foreign Law Practice licenses to six 
foreign law firms (including two U.S. firms) to practice Singapore 
law, although restrictions remain in certain areas, including 
conveyancing, criminal law, family law and domestic litigation. 
Foreign law firms can otherwise provide legal services in relation 
to Singapore law only through a Joint Law Venture (JLV) or Formal 
Law Alliance (FLA) with a Singapore law firm, subject to the 
Guidelines for Registration of Foreign Lawyers in Joint Law Ventures 
to Practice Singapore Law.  Singapore 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.  U.S. and foreign attorneys are allowed to represent 
parties in arbitration without the need for a Singapore attorney to 
be present. 
With the exception of law degrees from a handful of designated U.S., 
British, Australian, and New Zealand universities, no foreign 
university law degrees are recognized for purposes of admission to 
practice law in Singapore.  Under the FTA, Singapore recognizes law 
degrees from Harvard University, Columbia University, New York 
University, and the University of Michigan. 
Singapore 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 
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 
 
SINGAPORE 00000051  004 OF 012 
 
 
government allows highly skilled foreign lawyers meeting certain 
criteria to practice Singapore corporate, finance and banking law 
within the JLV and FLA. 
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. In September 2008, the Energy Market Authority (EMA) 
restructured the onshore gas transportation pipeline to allow 
retailers to enter the market without having to build out their own 
infrastructure.  However, the restructured onshore and offshore gas 
pipelines remain controlled by GLCs.  At least one foreign company 
has encountered on-going difficulties in its bid for market access 
in the power sector and access to the offshore gas pipeline due to 
lengthy delays in the review of its application by the EMA. 
As part of its plan to liberalize the electricity market, Singapore 
sovereign wealth fund Temasek divested all three of its wholly-owned 
power generation companies in 2008 to foreign companies for a total 
of US$8 billion. 
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 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 
 
SINGAPORE 00000051  005 OF 012 
 
 
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 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 have 
entered into new lines of business or where government agencies have 
"corporatized" certain government functions, in both circumstances 
entering into competition with already existing private businesses. 
The FTA contains specific conduct guarantees to ensure that GLCs 
will operate on a commercial and non-discriminatory basis towards 
U.S. firms.  GLCs with substantial revenues or assets are also 
subject to enhanced transparency requirements under the FTA.  In 
accordance with its FTA commitments, Singapore enacted the 
Competition Act in 2004 and established the Competition Commission 
of Singapore in January 2005.  The Act contains provisions on 
anti-competitive agreements, decisions and practices; abuse of 
dominance; enforcement and appeals process; and mergers and 
acquisitions. 
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, although 
certain deficiencies still exist.  Amendments to 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, 
 
SINGAPORE 00000051  006 OF 012 
 
 
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 
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 five to ten percent for audio and video and 37 
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 $160 million in 2007.  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, in some cases 
informants have refused 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 argued that 
the Copyright Act violated FTA obligations by permitting entities in 
Singapore to "simulcast" radio broadcasts over the Internet without 
paying the proper license fees.  In December 2008, Singapore amended 
its Copyright Law to require remuneration for simulcasts. 
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 mandate reporting of critical 
shipping information, such as the name and address of the foreign 
supplier and ultimate recipient of most transshipment and transit 
trade, which accounts for 80 percent of cargo passing through the 
port.  This lack of timely and complete 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. 
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 
 
SINGAPORE 00000051  007 OF 012 
 
 
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 32 percent to $817 
billion between 2006 and 2007.  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$20.8 billion in SGD-denominated 
corporate debt instruments in 2007. 
Singapore's banking system is sound and well regulated.  Total 
domestic banking assets were nearly US$380 billion as of June 2008. 
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 
September 2008, the non-performing loans (NPLs, net of bank-to-bank 
loans) ratio was 1.0 percent.  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 five percent or more 
of the voting shares of a listed company to disclose such 
acquisitions as well as any subsequent changes in their holdings 
directly to the SGX within two business days.  The SFA also contains 
enhanced market misconduct provisions. 
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 00000051  008 OF 012 
 
 
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, North Korea, Egypt, 
France, Germany, Hungary, Latvia, Mauritius, Mongolia, The 
Netherlands, Oman, Pakistan, Peru, Poland, Saudi Arabia, Slovakia, 
Slovenia, Sri Lanka, Switzerland, Taiwan, Turkey, 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, China, the European Free Trade Area 
(Switzerland, Norway, Lichtenstein, and Iceland), the Gulf 
Cooperation Council (comprising Bahrain, Kuwait, Oman, Qatar, Saudi 
Arabia and the United Arab Emirates), India, Japan, Jordan, New 
Zealand, Panama, Peru, South Korea, the United States, and 
Uzbekistan.  Singapore is negotiating FTAs with Canada, Mexico, 
Pakistan, and Ukraine.  Singapore is a member of the Association of 
Southeast Asian Nations (ASEAN), which has concluded FTAs with 
Australia and New Zealand, China, India and South Korea, and a 
Comprehensive Economic Partnership Agreement with Japan.  Singapore 
is also party to the Transpacific Strategic Economic Partnership 
Agreement with Chile, New Zealand and Brunei.  Singapore has signed 
tax treaties with a number of countries, but not with the United 
States. 
OPIC And Other Investment Insurance Programs 
Under the 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 September 2008, Singapore's labor market totaled 2.93 million 
workers; this includes nearly one million foreigners, of which about 
85 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. 
About 18 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 
 
SINGAPORE 00000051  009 OF 012 
 
 
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$30 billion in 2006 
(latest available data).  According to U.S. Department of Commerce 
statistics (USDOC), U.S. firms (manufacturing and services) in 2007 
had cumulative total investments in Singapore of $82.6 billion. 
Discrepancies between USG and GOS FDI numbers are attributable to 
differences in accounting methodologies. 
Investment Statistics 
TABLE A 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE BY COUNTRY 
(As at Year-end, Historical Cost) 
(US$ Million) 
                       2003     2004     2005      2006 
                       ----     ----     ----      ---- 
Total FDI           147,961  174,997   196,518  225,530 
 
United States        22,151   27,636    27,255   30,059 
Canada                1,515    1,736     1,556    1,666 
 
Australia             1,217    1,637     1,711    1,695 
New Zealand              82       81       891      571 
 
Europe               61,110   73,758    84,117   98,799 
    European Union   48,268   59,807    65,465   75,320 
    France            3,035    3,886     4,208    4,332 
    Germany           3,608    4,455     4,921    5,348 
    Netherlands      15,817   19,317    19,314   22,475 
    Norway            2,733    3,805     5,147    9,639 
    Switzerland       9,899   10,065    13,384   16,843 
    United Kingdom   22,397   26,885    29,800   34,312 
 
Asian Countries      33,958   38,103    47,022   53,003 
  China                 504      220       547    1,007 
  Hong Kong           2,296    1,957     2,825    4,095 
  Japan              19,967   22,954    26,927   28,669 
  South Korea           989      518       762    1,030 
  Taiwan              3,473    3,508     4,333    4,999 
  India                 208      294       783    1,052 
  Asean               4,693    5,059     6,832    7,644 
    Brunei Darussalam   201      219       229      203 
    Indonesia           978      668       411      344 
    Malaysia          2,614    3,080     4,903    5,646 
    Philippines         304      433       445      500 
    Thailand            579      634       823      927 
    Vietnam              14       20        13        8 
    Cambodia              0        1         0        0 
    Myanmar               4        5         9       10 
 
South & Central 
 America/Caribbean   22,393   25,507    30,130   35,724 
 
Other Countries       2,621    3,504     4,775    4,013 
Source: Department of Statistics, "Foreign Equity Investment in 
Singapore, 2006"; Yearbook of Statistics, 2008 
TABLE B 
------- 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE BY INDUSTRY 
(As at Year-end, Historical Cost) 
(US$ Million) 
                    2003      2004      2005      2006 
                    ----      ----      ----      ---- 
 
Total FDI        147,961   174,977   196,518   225,530 
 
Manufacturing     53,926    59,324    63,298    71,156 
Construction         829       691       554       687 
Wholesale &       23,572    28,153    34,509    40,555 
   Retail Trade, 
   Hotels & 
   Restaurant 
Transport &        6,017     8,029    10,397    12,540 
   Storage 
Information &      1,835     2,115     2,245     2,392 
   Communications 
Financial &       52,697    66,494    74,355    84,867 
   Insurance 
 
SINGAPORE 00000051  010 OF 012 
 
 
   Services 
Real Estate,       4,420     5,043     4,996     6,366 
   Rental & 
   Leasing 
Professional/      4,576     5,035     5,976     6,730 
   Technical/ 
   Admin Support 
   Services 
Others                89        92       188       237 
Source: Department of Statistics, "Foreign Equity Investment in 
Singapore, 2006"; Yearbook of Statistics, 2008 
TABLE C 
STOCK OF DIRECT INVESTMENT ABROAD BY COUNTRY 
(As at Year-end, Historical Cost) 
(US$ Million) 
                   2003       2004     2005      2006 
                   ----       ----     ----      ---- 
Total Direct 
 Investment      90,294     110,015 121,423   147,539 
 
Asia             45,118      52,230  62,803    72,823 
 
Asean            20,428      24,151  28,745    34,000 
   Brunei            36          39      38        46 
   Indonesia      6,055       7,360   8,792    10,698 
   Malaysia       7,991       9,018  10,747    11,420 
   Philippines    1,877       1,825   1,980     2,361 
   Thailand       2,767       4,420   5,141     7,363 
   Vietnam          859         934   1,032     1,100 
   Cambodia         137          75      73      n.a. 
   Myanmar          666         430     880       855 
   Laos              39          51      49      n.a. 
Hong Kong         6,502       7,203   9,212     9,200 
Taiwan            2,168       2,335   2,830     3,247 
China            11,651      13,577  16,391    20,017 
Japan             1,158       1,380   1,527     1,452 
South Korea       1,502       1,732   2,035     2,034 
 
India               368         400     757     1,409 
 
Europe            7,963      10,155  10,522    16,951 
European Union    6,006       6,876   7,482    13,192 
Netherlands         435         607   1,522     1,611 
United Kingdom    4,430       4,420   4,338    10,288 
France              242         146     158       155 
Germany              63         241     365       420 
Switzerland         354         366     375       408 
 
United States     4,738       5,918   5,905     5,572 
Canada               63          75     143       165 
 
Australia         2,733       6,782   5,369     6,219 
New Zealand         627         788     809       851 
 
Caribbean/Latin 
 America         24,824      26,174  28,418    33,871 
 
Other Countries   4,228       7,893   7,454    11,088 
Source: Department of Statistics, "Singapore's Investment Abroad, 
2006"; Yearbook of Statistics, 2008 
TABLE D 
GDP AND FDI FIGURES, 2002-2006 
(US$ Million) 
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 
2006     141,493    147,539   1.04 
Footnote: *GDP at Current Market Price 
**Based on Singapore dollars 
Source: Department of Statistics 
Table E 
TOP 20 FOREIGN INVESTORS BY TOTAL ASSETS 
(US$ Billion) 
                Country     Total     Business 
Company         of Origin   Assets    Activities 
-------         ---------   ------    ---------- 
 
Citicorp 
 Singapore          U.S.     29.21     Banking 
Glaxo Wellcome Mfg. U.K.     24.20     Healthcare Products 
ExxonMobil Asia 
 Pacific            U.S.      9.43     Chemicals 
Prudential 
 
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 Assurance Co.      U.K.      9.37     Insurance 
Shell Eastern 
 Trading        Netherlands   6.70     Chemicals 
Shell Eastern 
 Petroleum      Netherlands   6.13     Chemicals 
Credit Suisse 
 Singapore      Switzerland   6.13     Banking 
BP Singapore        U.K.      4.53     Chemicals 
ING Asia        Netherlands   4.29     Banking 
Citigroup 
 Investment         U.S.      3.41     Banking 
Citigroup 
 Holding            U.S.      3.33     Finance 
Seagate 
 Singapore          U.S.      3.28     Electronics 
Texas Instruments 
 Singapore          U.S.      3.23     Electronics 
National 
 Australia 
 Merchant Bank   Australia    2.97     Banking 
Kuok Singapore  Cook Islands  2.74     Multindustry 
Aviva Ltd           U.K.      2.40     Insurance 
Vitol Asia       Netherlands  2.36     Chemicals 
Motorola Trading 
 Center             U.S.      2.28     Electronics 
Asia Food & 
 Properties         BVI       2.28     Multindustry 
GE Pacific          U.S.      2.16     Multindustry 
 
Source: DP Information Group, "Singapore 1000, 2008" 
ANNEX: INVESTMENT 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 
¶O. Foreign Charitable Trust Incentive 
¶P. Tax Incentive for Approved Fund Managers 
¶Q. Over-the-Counter (OTC) Financial Derivative Payments 
¶R. Insurance and Re-insurance Broking Tax Incentive 
¶S. Wealth Management Tax Incentive 
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 
 
SINGAPORE 00000051  012 OF 012 
 
 
http://www.sedb.com. 
 
 
INCENTIVES ADMINISTERED BY INTERNATIONAL ENTERPRISE SINGAPORE (IE 
Singapore) 
¶A. Double Tax Deduction (DTD) Scheme for Overseas Investment and 
Market Development 
¶B. Global Trader Program (GTP) 
¶C. Enterprise Fund 
¶D. Trade Credit Insurance Scheme 
¶E. Loan Insurance Scheme 3 
¶F. Internationalization Finance Scheme 
¶G. International Business Fellowship 
¶H. Local Enterprise Association Development Program 
¶I. Malaysia-Singapore Third Country Business Development Fund 
¶J. Overseas Enterprise Incentive 
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 
¶E.  INVIGORATE - PC Casual Game Initiative 
¶F.  Synthesis - Online Content Initiative 
¶G.  Film in Singapore! Scheme 
¶H.  International Cooperation Agreement 
¶I.  Short Film Grant 
¶J.  Overseas Travel Grant 
¶K.  New Feature Film Fund 
¶L.  Script Development Grant 
¶M.  Overseas Travel Grant 
¶N.  SCREEN - Scheme for Coinvestment in Exportable Content 
¶O.  Media Education Scheme 
Further guidelines and application information are available at 
http://www.mda.gov.sg. 
INCENTIVES ADMINISTERED BY INFOCOMM DEVELOPMENT AUTHORITY OF 
SINGAPORE (IDA) 
¶A. Infocomm@SeaPort 
¶B. Infocomm@SME 
¶C.  Integrated Clinic Management Systems Program 
¶D.  Digital Manufacturing Program 
¶E.  Collaborative High Tech Manufacturing Plan 
¶F.  Retail eSCM Ecosystem 
¶G.  RFID Initiative 
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 
¶B. Approved Shipping and Logistics Scheme 
¶C. Maritime Cluster Fund 
¶D. Maritime Enterprise IT Development Program 
¶E. Maritime Innovation and Technology Fund 
Further information, details and guidelines are available at 
http://www.mpa.gov.sg 
HERBOLD