Foreign direct investment is net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments.
Service trade is an important source of growth in Singapore. The Singapore economy is export oriented and actively seeks FDI to develop its economy and further the cause of economic objectives of industrialization and development.
Some of the prominent industries attracting FDI in Singapore are:
Telecommunications
Both domestic and foreign companies can provide facilities based (fixed line or mobile) or services based (local, international and callbacks).The FTA requires that Singapore ensures, US telecom service providers obtain the license to interconnect with networks in Singapore at cost effective rates and under conditions that ensure transparency.
Media
The domestic free to air broadcasting, cable and newspaper sectors are not open to International companies. As per Section 44 of the Broadcasting Act, International Companies broadcasting to Singapore cannot have equity of more than 49 per cent. But in certain cases there are exceptions to the rule. The newspaper and printing presses act restricts equity ownership to 5 per cent per shareholder and it is mandatory that the Directors be Singapore citizens. Newspaper companies give out two types of shares, ordinary and management. The management shares are available only for Singapore citizens or corporations having Government approval.
Banking
The Monetary Authority of Singapore (MAS) monitors all banking activities as per the provisions of the Banking Act. In Singapore there are clear cut legal distinction between International and Local Banks and the type of license issued to International Banks. The license to International Banks can be further classified into full service, wholesale and offshore. The Government initiated Banking Liberalization in 1999 to relax the restrictions on foreign banks. In spite of the liberalized environment for banks, International Banks in the segment of domestic retail banking still face barriers, which are not faced by domestic banks.
Engineering and Architectural Services:
In Singapore Engineering and Architectural firms can be 100 per cent foreign owned. Keeping in line with FTA provisions, Singapore has done away with the need for the chairman and two-thirds of a firm's board of directors to be engineers, architects or land surveyors registered with local professional bodies.
Accounting and Tax Services:
Most of the major International Accounting firms have their operations in Singapore. Public accountants and at least one partner of a public accounting firm must reside in Singapore. Only those 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.US accountants registered with the American Institute of Certified Public Accountants have been recognized by the Singapore government.
Real Estate:
In July 2005, the Government removed the restrictions on International ownership of real estate. At present, the Residential Property Act allows foreigners to purchase condominiums or any unit within a building of six or more levels without the necessity to obtain approval from the Singapore Land Authority.
In July 2005, the Government removed the restrictions on International ownership of real estate. At present, the Residential Property Act allows foreigners to purchase condominiums or any unit within a building of six or more levels without the necessity to obtain approval from the Singapore Land Authority.
