International
support

In more than 90 countries

Foreign Direct Investment

Global foreign direct investment (FDI) flows in the first half of 2021 reached an estimated USD 852 billion, showing stronger than expected rebound momentum, with an increase of 78% of the partial-year growth rate on the previous year according to UNCTAD’s Investment Trends Monitor released on October 2021. The global FDI outlook for the full year 2021 has also improved from earlier projections. The current momentum and the growth of international project finance are likely to bring FDI flows back beyond pre-pandemic levels. Nevertheless, the duration of the health crisis and the pace of vaccinations, especially in developing countries, as well as the speed of implementation of infrastructure investment stimulus, remain important factors of uncertainty. Other important risk factors, including labour and supply chain bottlenecks, energy prices and inflationary pressures, will also affect final year results. (UNCTAD, October 2021). Covid’s impact on developing markets and shifting investment from China are major trends that will impact foreign investment in 2022.

According to UNCTAD's World Investment Report 2021, FDI inflows declined by 21% from USD 114 billion in 2019 to USD 91 billion in 2020. In the same year, the stock of FDI was about USD 1.9 trillion. Singapore is the fourth largest recipient of FDI inflows in the world, after the US, China and Hong Kong. Singapore is also the tenth largest investor abroad, FDI outflows stood at USD 32 billion in 2020; in recent years it has sought to diversify its investments beyond its traditional target markets in Asia, namely China, India and Vietnam. The main investors in Singapore are the US, Cayman Islands, British Virgin Islands and the Netherlands. Financial and insurance activities are by far the largest recipient of foreign investment, followed by wholesale and retail trade and manufacturing. In 2020, FDI in the three largest recipient industries (finance, wholesale and retail trade, and manufacturing) contracted, but investment in manufacturing declined the most - by more than 80 per cent.

Singapore has based its economic development on a proactive strategy to attract FDI using its trade openness. Since the first publication of the World Bank's Doing Business ranking in 2003, the country has always been in the lead until 2018, when it was overtaken by New Zealand. The country maintained the second position in the last publication of the report in 2021 for the Year 2020. Being favourable for lending to foreign investors, a simple regulatory system, tax incentives, a high-quality industrial real estate park, political stability and the absence of corruption make Singapore an attractive destination for investment. The country has one of the best regulatory systems of the world for paying taxes (it is fast and cheap) and for enforcing contracts. In 2019, dealing with construction permits was facilitated (in terms of improvement of the risk-based approach to inspections, improvement of the public access to soil information and rationalisation of the process of obtaining a building permit).

The latest United Nation Asia-Pacific Trade and Investment Trends Report provides additional information on FDI in Singapore and Asia-Pacific in 2021 and 2022.

 
 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 75,969114,16290,562
FDI Stock (million USD) 1,548,8491,751,2261,855,370
Number of Greenfield Investments* 424397303
Value of Greenfield Investments (million USD) 16,1756,8206,774

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Singapore East Asia & Pacific United States Germany
Index of Transaction Transparency* 10.0 5.9 7.0 5.0
Index of Manager’s Responsibility** 9.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 9.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

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

+

What to consider if you invest in Singapore

Strong Points

Singapore has been considered for many years by the World Bank as one of the best countries in the world in terms of the ease of doing business, ranking second in the 2020 Doing Business report. Advantages for FDI include:

  • Its workforce is one of the most qualified in the world, and is composed of many expatriates, which by definition makes it diversified, flexible and very open to international functions
  • High value-added sectors (such as ICT, finance, chemistry and pharmaceuticals) are very well developed
  • Financial infrastructure (solid banking system), telecommunications and transport are excellent (Singapore is a major aerial and maritime transport and trading hub for goods and financial services)
  • Its strategic location at the crossroads of shipping routes and close to major emerging markets (in Asia and in the Middle East) makes it an important hub for regional and international trade
  • In order to attract more and more FDI, the country is working to maintain an attractive tax regime and offers tax reductions and facilitated loan conditions and other investment incentives
  • Transparency and lack of corruption, business-friendly laws and regulations.
Weak Points

Disadvantages for FDI include:

  • Voluntarily very open internationally, the national economy is very dependent on exports and is therefore vulnerable to the state of the economies of its main trading partners and to the world economy
  • Like all developed countries, the country is facing an ageing population and "soft" growth, forcing the country to find new growth drivers
  • It is becoming increasingly difficult to obtain a work permit in Singapore, while the island state needs manpower for its technology sectors
  • The lack of transparency in administrative incentives and the non-internationalisation of the Singaporean dollar are the main obstacles to investment
  • Although Singapore is a free port, tariff protection for industrial enterprises is not granted
  • Singapore levies high excise taxes on alcohol, tobacco, automobiles and petroleum products
  • Limited freedom of speech
  • The preponderant role of (semi)-public companies can inhibit investment in certain sectors.
Government Measures to Motivate or Restrict FDI
Singapore is open to foreign investment and offers tax benefits that businesses can enjoy after registering with the Economic Development Board. The government is continuously supplying the national economy with public investments. Examples include transportation infrastructure projects (such as the high-speed train line between the city-state and Kuala Lumpur) or programs encouraging the transfer towards the future economy. The main obstacle to FDI lies in the fact that the country continues to hold a monopoly on certain key sectors (financial services, professional services, media, telecommunications). Government-related enterprises play a dominant role in the domestic economy and, in turn, in investment.
The government actively promotes the country as a R&D and innovation center for businesses by offering tax incentives, research grants, and partnership opportunities with domestic research institutions.
In an effort to increase the ratio of local employees to foreign workers, the government has recently introduced programs that partially subsidize the cost of recruiting, hiring, and training Singaporean workers.

+

Investment Opportunities

The Key Sectors of the National Economy
Manufacturing (petrochemical, electronics, machinery, and equipment) and services (financial services, wholesale and retail trade, and business services), medical research, chemicals, pharmaceuticals.
For a sectorial analysis, refer to the "Industries" section of the Singapore Economic Development Board (EDB) website.
High Potential Sectors
Singapore is poised to attract foreign investments in digital innovation and cybersecurity. The local government is investing heavily in automation, artificial intelligence, and integrated systems under its Smart Nation initiative and seeks to establish itself as a regional hub for these technologies.
Other developing sectors include aeronautics and aircraft parts, petroleum and refinery trade, telecommunications, computer hardware and software, environment, luxury goods.
Privatization Programmes
Full and partially state-owned enterprises have been privatized in recent years; however, the government of Singapore has not publicly announced further privatization plans. To date, the government still retain controlling stakes in strategically important sectors, including telecommunications, media, public transportation, defence, port, gas, electricity grid, and airport operations.
The Energy Market Authority (EMA) is currently extending the liberalization of the electricity retail market.
Tenders, Projects and Public Procurement
Go Business, Public Tenders
Tenders Info, Tenders in Singapore
Asian Development Bank, Procurement Plans in Asia
DgMarket, Tenders Worldwide
 

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Singapore has an extensive network of full and partially state-owned enterprises which operate under the control of the Ministry of Finance (through its company Temasek Holdings). Such companies are active in many sectors: telecommunications, media, healthcare, public transportation, defence, port, gas, electricity grid, and airport operations; and to a lesser extent in the banking, subway, airline, consumer/lifestyle, commodities trading, oil and gas engineering, postal services, infrastructure, and real estate sectors.
In principle, such companies operate on a commercial basis and compete on an equal basis with private businesses, both local and foreign; however this is not always the case.
Sectors in Decline
Electronics, manufacturing and non-digital advertising industries.
 

+