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Foreign direct investment (FDI) in Singapore

FDI in Figures

Global foreign direct investment (FDI) flows in 2021 were USD 1.58 trillion, up 64 per cent from the exceptionally low level in 2020. The recovery showed significant rebound momentum, with booming merger and acquisition (M&A) markets and rapid growth in international project finance because of loose financing conditions and major infrastructure stimulus packages. However, the global environment for international business and cross-border investment changed dramatically in 2022. The war in Ukraine – on top of the lingering effects of the pandemic – is causing a triple food, fuel and finance crisis in many countries around the world. Investor uncertainty could put significant downward pressure on global FDI in 2022. The 2021 growth momentum is unlikely to be sustained. Indeed, world flows in the second quarter of 2022, the latest data available, were down 31% from the first quarter and 7% less than the quarterly average of 2021 (UNCTAD Global Investment Trends Monitor, October 2022). The negative trend reflects a shift in investor sentiment due to the food, fuel and finance crises around the world, the Ukraine war, rising inflation and interest rates, and fears of a coming recession. Expectations for the full year are for a marked slowdown. In developing Asia, despite successive waves of COVID-19, FDI rose to an all-time high for the third consecutive year, reaching $619 billion. Asia is the largest recipient region, accounting for 40 per cent of global FDI. However, inflows remain highly concentrated; six economies account for more than 80 per cent of FDI to the region (UNCTAD, October 2022).

According to UNCTAD's World Investment Report 2022, FDI inflows declined by over 29% from USD 106.32 billion in 2019 to USD 75.43 billion in 2020 before strengthening at 99.09 billion in 2021. In 2020 the stock of FDI was about USD 1.9 trillion and reached 2 trillion in 2021. Singapore is the 7th largest recipient of FDI inflows in the world in 2022. Singapore is also the tenth largest investor abroad, FDI outflows stood at USD 32 billion in 2020 and 47.39 billion in 2021. 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 2021, 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.

The country is ranked 18th on the AT Kearney Foreign Direct Investment Confidence Index 2022 on the most attractive economy for foreign investment. Singapore has based its economic development on a proactive strategy to attract FDI using its trade openness. 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. Since 2019, ealing with construction permits is 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 2022 and 2023.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 72,903131,151141,211
FDI Stock (million USD) 1,985,9912,169,5382,368,396
Number of Greenfield Investments* 307364410
Value of Greenfield Investments (million USD) 6,86913,14416,228

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.

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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 highly industrialised 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.
Bilateral investment conventions signed by Singapore
To see the list of investment treaties signed by Singapore, consult UNCTAD's International Investment Agreements Navigator.

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Latest Update: September 2023