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Viewing cable 07SINGAPORE24, SINGAPORE - 2007 INVESTMENT CLIMATE STATEMENT

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Reference ID Created Released Classification Origin
07SINGAPORE24 2007-01-04 00:46 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Singapore
VZCZCXYZ0000
RR RUEHWEB

DE RUEHGP #0024/01 0040046
ZNR UUUUU ZZH
R 040046Z JAN 07
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 2145
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPCIM/CIMS NTDB WASHDC
UNCLAS SINGAPORE 000024 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/IFD/OIA/JNHATCHER 
TREASURY FOR DO/WALLACE 
COMMERCE FOR ITA/SMATHEWS 
STATE PASS USTR 
STATE PASS OPIC 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV OPIC USTR
SUBJECT: SINGAPORE - 2007 INVESTMENT CLIMATE STATEMENT 
 
REF: 2006 STATE 178303 
 
1.  Per reftel instructions, Post submits the text of 
the 2007 Investment Climate Statement for Singapore. 
As requested, we have also provided the document via 
email to EB/IFD/OIA. 
 
2.  Begin text of Statement: 
 
Singapore INVESTMENT CLIMATE STATEMENT 2007 
 
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 Singapore government is strongly committed both to 
maintaining a free market and to taking a leadership 
role in planning Singapore's economic development. 
The government actively uses the public sector as both 
an investor and catalyst for development.  As of 
September 2006, the top six Singapore-listed GLCs 
accounted for nearly 25 percent of total 
capitalization of the Singapore Exchange (SGX).  Some 
observers have criticized the dominant role of GLCs in 
the domestic economy, arguing that it has displaced or 
suppressed private 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: On April 1, 2000, Singapore began 
removing all barriers limiting foreign entry to the 
telecommunications sector.  Under the Telecoms 
Competition Code 2000 (Competition Code), Singapore 
Telecommunications (SingTel), the former monopoly that 
E 
is currently 62-percent government-owned, faces 
competition in all telecom services, whether 
facilities-based (fixed line or mobile) or services- 
based (local, international and callback).  Its main 
competitors, MobileOne and StarHub, are also GLCs. 
Following the government's 2005 review of the 
Competition Code aimed at enhancing market 
transparency, SingTel has made public its prices for 
interconnection services. 
 
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) regulatory changes 
designed to moderate SingTel's market dominance, 
concerns remain that SingTel's interconnection 
requirements for "tail" local-leased circuits are 
anti-competitive and not in compliance with 
Singapore's FTA commitments in this area. 
 
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 
has denied requests by U.S. and other companies for 
tandem-level interconnection.  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, Communications and Art (MICA). 
Although this "closed-door" system does not contravene 
Singapore's FTA obligations, Singapore is reviewing 
this process at the U.S. Government's request to 
determine how to make it more transparent. 
 
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.  The 
Broadcasting Act (Part X) states that no person shall, 
without prior approval, hold more than 5 percent of 
the shares issued by a broadcasting company. 
 
The Newspaper and Printing Presses Act restricts 
equity ownership (local or foreign) to 5 percent per 
shareholder.  The Act also requires that all the 
directors of a newspaper company be Singapore 
citizens.  Newspaper companies must issue two classes 
of shares, ordinary and management, with the latter 
available only to citizens of Singapore or 
corporations approved by the government.  Holders of 
management shares have an effective veto over selected 
board decisions.  Distribution, importation and sale 
of any "declared" foreign newspaper is controlled by 
the government.  Singapore 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 did 
not comply with 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$125,000).  The government has also 
"gazetted" foreign newspapers, i.e., numerically 
limited their circulation.  Foreign publishers face 
the risk of defamation suits should they be found to 
"interfere" with Singapore's domestic politics. 
 
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 a 
majority government-owned, public-listed company.  In 
November 2006, the government granted SingTel a six- 
month commercial pay-TV trial license.  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.  In July 2005, the Media 
Development Authority (MDA) announced more restrictive 
regulations governing the relationships between 
content/channel providers and pay TV operators in 
Singapore.  Following industry and U.S. Government 
feedback, MDA rescinded the decision in May 2006. 
 
Banking: The Monetary Authority of Singapore (MAS) 
regulates all banking activities as provided for under 
the Banking Act.  Singapore maintains legal 
distinctions between offshore and domestic banking 
units, and the type of license held -- full service, 
wholesale, and offshore.  As of November 2006, 24 
foreign full service licensees, 35 wholesale 
licensees, and 44 offshore licensees operated in 
Singapore.  Of the 24 foreign full service licensees, 
the government has granted "qualifying full bank" 
(QFB) licenses to seven foreign banks, including two 
U.S. banks.  Eventually, all offshore banks will be 
upgraded to wholesale bank status 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. 
 
In 1999, the government embarked on a five-year 
banking liberalization program to ease restrictions on 
foreign banks.  The government has removed a 40- 
percent ceiling on foreign ownership of local banks 
and a 20-percent aggregate foreign shareholding limit 
on finance companies.  It has stated publicly, 
however, that it will not approve any foreign 
acquisition of a local bank.  Acquisitions exceeding 
prescribed thresholds of 5 percent, 12 percent or 20 
percent of the shares or voting power of a local bank 
require the approval of the Finance Minister. 
 
U.S. financial institutions enjoy phased-in benefits 
under the FTA.  U.S. licensed full-service banks have 
been able to operate at up to 30 customer service 
locations (branches or off-premise ATMs) since January 
2004, and at an unlimited number of locations since 
January 2006; non-U.S. full-service foreign banks have 
been allowed to operate at up to 25 locations since 
2005.  U.S. and foreign full-service banks 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 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 can begin 
doing so effective January 1, 2008.  Singapore will 
lift its quota on new licenses for U.S. wholesale 
banks from January 1, 2007.  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.  Foreign charge card issuers 
are prohibited from allowing their local card holders 
to access their accounts through the local ATM 
networks.  Customers of foreign banks are also unable 
to access their accounts for cash withdrawals, 
transfers or bill payments at ATMs operated by banks 
other than those operated by their own bank or at 
foreign banks' shared ATM network.  Nevertheless, 
foreign full-service banks have made significant 
inroads in other retail banking areas, with 
substantial market share in products like credit cards 
and personal and housing loans. 
 
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 2006, 64 foreign law 
firms operated in Singapore, among them 16 U.S. firms. 
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.  The FTA has relaxed some of these 
guidelines for U.S. law firms.  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 
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 is also working on requirements to 
implement its decision to allow highly skilled foreign 
lawyers 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 must be engineers, 
architects or land surveyors registered with local 
professional bodies.  Only engineers and architects 
registered with the Professional Engineers Board and 
the Architects Board, respectively, can practice in 
Singapore.  All applicants (both local and foreign) 
must have at least four years of practical experience 
in engineering or architectural works, and pass an 
examination set by the respective 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 now allowed to purchase condominiums or 
any unit within a building of six or more levels 
without the need to obtain prior approval from the 
Singapore Land Authority.  For landed homes (houses) 
and apartments in buildings of fewer than six stories, 
prior approval is required.  Under a new option to the 
EDB's Global Investor Program, up to 50 percent of the 
S$2 million (US$1. 2 million) investment required by a 
foreigner to qualify for Permanent Resident status can 
be in private residential properties.  There are no 
restrictions on foreign ownership of industrial and 
commercial real estate. 
 
CONVERSION AND TRANSFER POLICIES 
 
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 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, in 
particular, 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 is being 
implemented in three phases.  Phase I established the 
Competition Commission of Singapore in January 2005. 
Phase II involved implementation of provisions on 
anti-competitive agreements, decisions and practices, 
abuse of dominance, enforcement, and the appeals 
process; these came into effect in 2006.  Phase III 
provisions, which address mergers and acquisitions, 
are expected to come 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 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 new and 
amended IP laws should help alleviate problems related 
to the availability of pirated optical discs, use of 
unlicensed software by businesses, the transshipment 
of pirated material through Singapore, and removal of 
infringing material from Internet sites.  In 
accordance with its FTA obligations, Singapore has 
implemented Article 1 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 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. 
 
Singapore claims that its enforcement efforts have 
almost eliminated the production of pirated material 
and blatant storefront piracy and counterfeiting. 
According to the Singapore Police, the value of 
counterfeit and pirated goods seized in 2005 was 
nearly $12 million, compared to $8 million in 2004. 
In September 2005, the Singapore Police initiated its 
first corporate end-user enforcement action under the 
amended Copyright Act, raiding a private company 
suspected of using approximately $30,000 in illegal 
software. 
 
According to industry estimates, Singapore's piracy 
rate averaged about 5 percent for music and 12 percent 
for movies.  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 $86 million 
in 2005. 
 
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.  Periodic 
police raids against these copy centers have yielded 
limited results as this activity is lucrative enough 
to continue in spite of fines imposed under the 
amended Copyright Act. 
 
Although it is a major global transshipment and 
transit point for sea and air cargo, Singapore does 
not collect information on the contents and 
destinations of most transshipment and transit trade, 
which accounts for 80 percent of cargo passing through 
the port.  This lack of information makes enforcement 
against transshipment or transit trade in infringing 
goods virtually impossible.  Under its FTA 
commitments, Singapore 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 
 
SIPDIS 
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 
 
SIPDIS 
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 new 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, comprised of 
senior civil servants, began overseeing a review of 
all rules and regulations; this process will be 
repeated every five years.  A Pro-Enterprise Panel of 
high-level public sector and private sector 
representatives examines feedback from businesses on 
regulatory issues and provides recommendations to the 
government. 
 
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 December 1999, Singapore 
established the Corporate Governance Committee, the 
Disclosure and Accounting Standards Committee, and the 
Company Legislation and Regulatory Framework Committee 
(CLRFC) to review and enhance the existing framework 
for corporate law and governance.  The government has 
implemented all of the Committees' recommendations 
except for those put forth by the CLRFC, which are 
still under review.  In January 2003, Singapore 
established a private sector-led Council on Corporate 
Disclosure and Governance to implement the country's 
Code of Corporate Governance. 
 
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 26 
percent to $450 billion between 2004 and 2005.  The 
government has sought to boost the country's asset 
management sector by placing with foreign-owned firms 
a significant portion of government reserves managed 
by MAS and the Government of Singapore Investment 
Corporation (GIC).  Financial institutions issued more 
than US$12 billion in SGD-denominated corporate debt 
instruments during 2005. 
 
Singapore's banking system is sound and well 
regulated.  Total domestic banking assets were US$267 
billion as of March 2006.  Local Singapore banks are 
relatively small by regional standards, but are more 
profitable and have stronger credit ratings than many 
of their peers in the region.  As of June 2006, non- 
performing loans (NPLs, net of bank-to-bank loans) as 
a percentage of total loans were 3.8 percent (compared 
to 4.2 percent in June 2005). 
 
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, 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 (February 2003), 
New Zealand (August 2000), the European Free Trade 
Area (Switzerland, Norway, Lichtenstein, and Iceland 
in June 2002), the United States (May 2003), Jordan 
(May 2004), India (June 2005), South Korea (August 
2005), and Uzbekistan (October 2006).  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 June 2006, Singapore's labor market totaled 2.4 
million workers; this includes nearly 600,000 
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, none 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$22.2 
billion in 2004 (latest available data).  According to 
U.S. Department of Commerce statistics (USDOC), U.S. 
firms (manufacturing and services) in 2005 had 
cumulative total investments in Singapore of $48.1 
billion; discrepancies between U.S. Government and 
Government of Singapore 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) 
 
                     2001     2002     2003     2004 
 
Total FDI         120,107  135,390  147,961  166,562 
 
United States      20,086   20,170   22,151   25,220 
Canada              1,719    1,594    1,532    1,753 
 
Europe             47,172   54,596   62,501   71,638 
  European Union   36,155   43,985   49,586   57,715 
    France          2,533    2,893    3,164    3,388 
    Germany         3,438    4,245    3,633    3,855 
     Netherlands    19,395   14,576   16,219   17,124 
     United Kingdom  7,953   18,917   23,147   28,198 
     Other European 
      Union 
      Countries      2,835    3,355    3,423    5,150 
  Switzerland       8,465    8,761    9,959   10,038 
  Other European 
   Countries        2,552    1,850    2,956    3,884 
 
Asia               28,076   31,827   34,365   37,343 
  China               481      552      510      114 
  Hong Kong         3,133    2,793    2,381    2,752 
  Japan            16,183   19,037   19,973   22,476 
  South Korea          17      661      989      738 
  Taiwan            2,567    2,908    3,474    3,549 
  India               189      233      207      278 
 
  Asean             5,242    5,292    5,001    5,222 
    Brunei 
      Darussalam      192      209      201      219 
    Indonesia         878    1,018      981      972 
    Malaysia        3,259    3,076    2,680    2,864 
    Philippines       561      554      536      524 
    Thailand          343      413      586      619 
    Vietnam             6       16       14       20 
    Cambodia            0        0        0        1 
    Myanmar             4        4        4        5 
 
  Middle East         213      327    1,800    2,195 
 
Australia           1,432    1,451    1,233    1,632 
New Zealand           106      113       85       86 
 
Caribbean/Latin 
 America           19,742   23,380   23,466   25,287 
 
Other Countries     1,773    2,260    2,627    3,604 
 
Source: Department of Statistics, "Foreign Equity 
Investment in Singapore, 2004" 
 
TABLE B 
------- 
 
STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE 
BY INDUSTRY 
(As at Year-end, Historical Cost) 
(US$ million) 
 
                   2001      2002     2003      2004 
 
Total FDI       120,107   135,390  147,961   166,562 
 
Manufacturing    44,230    49,496   53,926    59,270 
  Petroleum & 
       Petroleum 
       Products    6,635      7,269    8,020    8,378 
     Chemicals & 
       Chemical 
       Products    2,103      3,174    3,414    4,351 
     Pharmaceutical 
       & Biological 
       Products    9,787     13,503   17,240   19,523 
     Electronic 
       Products & 
       Components 19,447     18,313   17,437   18,190 
Construction        929      1,123      829      809 
Commerce         18,427     21,921   23,572   26,471 
Transport, 
  Storage & 
  Communications  4,421      5,028    6,017    7,977 
Financial & 
  Insurance 
  Services       43,741     47,534   52,697   59,980 
Real Estate       3,361      4,030    3,787    4,104 
Business Services 3,713      4,366    5,210    5,638 
 
 
Source: Department of Statistics, "Foreign Equity 
Investment in Singapore, 2004" 
 
TABLE C 
------- 
STOCK OF DIRECT INVESTMENT ABROAD BY COUNTRY 
(As at Year-end, Historical Cost) 
(US$ Million) 
 
                   2001       2002     2003      2004 
                   ----       ----     ----      ---- 
Total Direct 
 Investment      72,184     85,761   91,531   106,383 
 
Asia             34,866     40,926   45,615    52,003 
 
  Hong Kong       6,209      6,896    6,610     7,074 
  Taiwan          1,937      1,926    2,168     2,262 
  China           8,493     10,392   11,653    12,797 
  Japan             792        946    1,161     2,012 
  South Korea     1,488      1,427    1,503     2,262 
  India             414        235      670       729 
 
  Asean          14,307     17,786   20,505    23,247 
    Brunei           31         82       36        38 
    Indonesia      3,024      4,430    6,109     7,235 
    Malaysia       6,072      7,674    7,992     8,510 
    Philippines    1,481      1,649    1,898     1,848 
    Thailand       2,434      2,363    2,767     4,106 
    Vietnam          576        798      860       902 
    Cambodia         124        149      137        75 
    Myanmar          565        611      666       483 
    Laos               0         29       39        51 
 
  Middle East       381        507      538       628 
  Other Asian 
    Countries       843        811      806       991 
 
Europe            6,855      8,919    7,986    10,295 
 
  European Union  5,622      6,575    5,703     6,979 
    Netherlands     699        700      401       599 
    U.K.          3,697      4,016    4,259     4,681 
    France           88        143      162       179 
    Germany          84         65       60       104 
    Other EU      1,053      1,650      821     1,416 
 
  Switzerland       242        306      354       202 
  Other European 
    Countries       992      2,038    1,929     3,113 
 
United States     3,959      4,748    5,310     5,521 
Canada               30         13       63        66 
 
Australia         1,361      1,915    2,733     5,248 
New Zealand         277        509      627       768 
 
Caribbean/Latin 
 America         21,427     24,263   24,965    26,033 
 
Other Countries   3,408      4,468    4,231     6,449 
 
 
Source:  Department of Statistics, "Singapore's 
Investment Abroad, 2004" 
 
TABLE D 
------- 
 
GDP AND FDI FIGURES, 2001-2004 
(US$ Million) 
 
Year      GDP*      FDI       FDI as ratio to GDP 
----      ----      ---       ------------------- 
2001      83,240    121,228   1.46 
2002      91,025    135,890   1.49 
2003      94,617    143,691   1.52 
2004     111,215    166,562   1.50 
 
Footnote: GDP at Current Market Price 
Source:  Department of Statistics 
 
Table E 
------- 
 
TOP 20 MAJOR FOREIGN INVESTORS BY TOTAL ASSETS 
(US$ Billion) 
 
                Country     Total     Business 
Company         of Origin   Assets    Activities 
-------         ---------   ------    ---------- 
 
J.P. Morgan 
 Securities Asia    U.S.      16.85   Finance 
 
Glaxo Wellcome      U.K.      16.67    Chemicals 
 Mfg. 
 
Exxonmobil Asia 
 Pacific            U.S.       7.05   Fuels 
 
Prudential 
 Assurance Co.      U.K.       6.54    Insurance 
 
Shell Eastern 
 Petroleum       Netherlands   5.62    Chemicals 
 
Shell Eastern 
 Trading         Netherlands   4.47   Fuels 
Citicorp Invmts 
 Bank               U.S.       4.00   Banking 
 
Asia Food & 
 Properties     Br. Virgin Is  3.77   Multi-industry 
 
Glaxochem Pte Ltd   U.K.       3.74    Finance 
 
Shell Treasury 
 Centre East     Netherlands   3.29   Finance 
 
National Australia 
 Merchant Bank    Australia    3.08   Banking 
 
 
ING Asia         Netherlands   2.66   Finance 
 
Texas Instruments 
 Singapore          U.S.       2.41   Electronics 
 
STMicroelectro 
-nics Pte Ltd    Netherlands   2.20    Electronics 
 
Bank of Nova 
 Scotia Asia       Canada      2.18    Banking 
 
Credit Suisse 
First Boston 
 Singapore       Switzerland   2.13    Banking 
 
Jardine Cycle & 
 Carriage Ltd     Bermuda      2.07   Transport 
 
Aviva Ltd           U.K.       2.00    Finance 
 
Microsoft 
 Operations         U.S.       1.71    Electronics 
 
Norske Skog 
  Panasia         Canada       1.61    Paper Products 
 
 
Source: DP Information Group, "Singapore 1000, 2006" 
 
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 
 
Further guidelines and application information are 
available at http://www.mas.gov.sg. 
 
INCENTIVES ADMINISTERED BY THE ECONOMIC DEVELOPMENT 
BOARD (EDB) 
 
A)  Pioneer Status 
B)  Development & Expansion Incentive 
C)  Investment Allowance Incentive 
D)  Approved Foreign Loan Scheme 
E)  Approved Royalties Incentive 
F)  Entrepreneurship Investment Incentive 
G)  HQ Program 
H)  Double Deduction for Research and Development 
(R&D) Expenses 
I)  Research Incentive Scheme for Companies 
J)  Exemption of foreign sourced interest and royalty 
income for R&D purposes 
K)  Innovation Development Scheme 
L)  Initiatives in New Technology 
M)  Integrated Industrial Capital Allowance 
N)  Special Goods & Services Tax Scheme for 3rd Party 
Logistics Service Providers 
O)  The Enterprise Challenge (TEC) Scheme 
 
Further guidelines and application information are 
available at http://www.sedb.com. 
 
INCENTIVES ADMINISTERED BY INTERNATIONAL ENTERPRISE 
SINGAPORE (IESingapore) 
 
A)  Double Tax Deduction (DTD) Scheme 
B)  Global Trader Program (GTP) 
C)  International Marketing Activities Program (IMAP) 
D)  International Partners Program 
E)  Manpower for Internationalization Program 
F)  Regionalization Finance Scheme 
G)  iFinance Consulting Program 
H)  Design for Internationalization Program 
I)  Branding for Internationalization Program 
 
Further guidelines and application information are 
available at http://www.iesingapore.gov.sg. 
 
INCENTIVES ADMINISTERED BY THE MEDIA DEVELOPMENT 
AUTHORITY 
(MDA) 
 
A)  Market Development Scheme (MDS) 
B)  TV Content Industry Development Scheme 
C)  Digital Content Development Scheme 
D)  Digital Technology Development Scheme 
 
Further guidelines and application information are 
available at http://www.mda.gov.sg. 
 
INCENTIVES MANAGED BY INFOCOMM DEVELOPMENT AUTHORITY 
OF 
SINGAPORE (IDA) 
 
A)  Connected Homes 
B)  iLIUP (infocomm Local Industry Upgrading Program) 
C)  Overseas Development Program 
D)  SAFE (Securing Assets for End-Users) Program 
E)  WEAVE (Web Services) 
F)  Wired With Wireless Program 
G)  Digital Exchange 
H)  RFID Development Plan 
I)  Pilot and Trial Hotspots (PATH) 
J)  The Competency Centre Program (CCP) 
 
Further information, details, and guidelines are 
available at http://www.ida.gov.sg. 
HERBOLD