Singapore - Foreign investment

Legislation to attract new foreign investments, the Economic Incentives Act, was passed in 1967; it granted exemption from taxation for a five-year period to investors for export development and provided inducements and guarantees with respect to repatriation of profits and capital. Overseas offices to promote such foreign investment were set up in New York, Chicago, San Francisco, London, Paris, Frankfurt, Zürich, Tokyo, Hong Kong, Stockholm, and Melbourne. The Capital Participation Scheme, adopted in 1973, permitted high-technology industries to set up branches in Singapore with 50% equity participation by the government. With changes in Singapore's industrial development, there have also been alterations in incentives. In the early 1980s, the main criteria for granting tax incentives were capital investment ratios (including training costs) per worker, value added per worker, and the ratio of technical personnel and skilled workers to the total work force. Major investment activity focused on petroleum refining, general manufacturing, electronics, and hotel construction, as well as on traditional endeavors.

Since the mid-1980s the government's incentive policies have broadened to include Singapore's development as a total international business center, an international air-sea cargo center, a location for the regional operational headquarters of multinational corporations, and a major exporter of services. Investment in the manufacturing sector is encouraged in areas of medium-range or higher technology, or the design and production of higher value-added products. Singapore does not require that foreign investors take on private sector or government joint venture partners.

In 2000, foreign companies net investment commitments in manufacturing were $4.2 billion, somewhat ahead of the $4.016 billion reached in 1997 before the Asian financial crisis, and $1 billion more than the level in 1998. US companies accounted for 51% of the total; European companies, 23.8%; Japan, 21%, and all other countries, 4.26%. As of 1999, cumulative foreign investment in Singapore was a little over $31 billion, of $12.2 billion (39%) is from US companies; 31.6% is from Japanese companies; and 25% is from Europe. Foreign investments account for about one-quarter of cumulative gross fixed assets in the manufacturing sector.

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