SINGAPORE - 2006 INVESTMENT CLIMATE STATEMENT

UNCLAS SECTION 01 OF 13 SINGAPORE 000197

SIPDIS

STATE FOR EB/IFD/OIA (JNHATCHER/PABROWN)

TREASURY FOR D/BRESNICK

COMMERCE FOR ITA/SMATHEWS

STATE PASS USTR FOR EBRYAN

STATE PASS OPIC

E.O. 12958: N/A
TAGS: EINV EFIN ETRD ELAB KTDB PGOV
SUBJECT: SINGAPORE - 2006 INVESTMENT CLIMATE STATEMENT

REF: 2005 STATE 201904


1. Post submits below the draft text of the 2006
Singapore Investment Climate Statement (ICS). As
requested reftel, we have also forwarded the document
via email to EB/IFD/OIA.


2. Begin text of 2006 Investment Climate Statement:

Investment Policy Summary


3. 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 in
2005: Removing Obstacles to Growth," ranked Singapore
as the third easiest economy in which to do business,
after New Zealand and the United States. 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.


4. 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's active use of the public sector as both an
investor and catalyst for development has given rise to
the country's characterization as "Singapore Inc." As
of November 2005, 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 entrepreneurship.


5. Singapore aggressively pursues foreign investment
as another pillar of its overall economic strategy; the
country has evolved 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


6. 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.


7. 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.


8. 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
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.


9. The FTA requires that Singapore take steps to
ensure that U.S. telecom service providers obtain the
right to interconnect with networks in Singapore on
terms and conditions, and with cost-oriented rates,
that are transparent and reasonable. Despite recent
regulatory changes designed to moderate SingTel's
market dominance, concerns remain that SingTel's
interconnection requirements for "tail" local leased
circuits are anti-competitive.


10. 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. The interpretation of
this commitment has, in some cases, differed from U.S.
companies' understandings.


12. 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. Part X of
the Broadcasting Act states that no person shall,
without prior approval, hold more than 5 percent of the
shares issued by a broadcasting company.


13. 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.


14. 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.
The sole subscription TV provider, StarHub Cable Vision
(SCV),is a 100-percent owned subsidiary of a majority
government-owned publicly-listed company. 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. The Media Development
Authority (MDA) recently imposed more restrictive
regulations governing the relationships between
content/channel providers and pay TV operators in
Singapore, i.e., SCV.


15. Banking: The Monetary Authority of Singapore
(MAS),under the Banking Act, regulates all banking
activities. Singapore maintains legal distinctions
between offshore and domestic banking units, and the
type of license held -- full service, wholesale, and
offshore. As of December 2005, 24 foreign full service
licensees, 35 wholesale licensees, and 46 offshore
licensees operated in Singapore. Of the 24 foreign
full service licensees, the government has granted
"qualifying full bank" (QFB) licenses to six foreign
banks, including two U.S. banks, which allow them to
operate off-premise ATMs and, subject to government
approval, access to local ATM networks. Eventually,
all offshore banks will be upgraded to wholesale bank
status to enable them to conduct a wider range of
activities. Except for retail banking, Singapore laws
do not distinguish operationally between foreign and
domestic banks.


16. 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.

17. 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. foreign full-service banks
have been allowed to operate at up to 25 locations
since 2005. U.S. and foreign full-service banks can
relocate freely 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.


18. Locally incorporated subsidiaries of U.S. full-
service banks can apply for access to local ATM
networks beginning June 30, 2006; non-locally
incorporated subsidiaries of U.S. full-service banks
can begin doing so January 1, 2008. Singapore will
lift its quota on new licenses for U.S. wholesale banks
January 1, 2007.


19. Despite liberalization, foreign banks, including
U.S. 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 their
own. 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.


20. 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 (CPF) Investment Scheme).


21. Legal Services: As of December 1, 2005, 63 foreign
law firms operated in Singapore, among them 16 U.S.
firms. Foreign law firms face significant
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 only one U.S. Joint Law Venture.


22. With the exception of law degrees from certain
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 committed to recognizing law
degrees from four U.S. law schools. The list of
schools has not been agreed.


23. 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 Boards.


24. 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.


25. 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


26. 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


27. 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.


28. 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.


29. 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


30. 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 rely solely on trade sanctions. The
procedures also set higher standards of openness and
transparency.


31. 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


32. 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.


33. 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.


34. Singapore offers numerous incentives (see Annex)
to encourage foreign investors to start up businesses,
particularly in targeted growth sectors.

Right to Private Ownership and Establishment


35. 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.


36. 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.


37. 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.

Protection of Property Rights


38. In line with its FTA commitments, Singapore has
developed one of the strongest intellectual property
(IP) regimes in Asia. Amendments to the Trademarks Act
and the Patents Act, a new Plant Varieties Protection
Act, and a new Manufacture of Optical Discs Act came
into effect in July 2004. Amended Copyright and
Broadcasting Acts came into effect in January 2005;
further amendments to the Copyright Act came into
effect in August 2005. When fully implemented and
enforced, 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 to
Article 6 of the Joint Recommendation concerning
Provisions on the Protection of Well-Known Marks of
1999, and 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).


39. 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 three
other international copyright agreements: the Paris
Convention, the Patent Cooperation Treaty 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.

SIPDIS


40. Law enforcement efforts have contributed to a
sharp reduction in 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.


41. According to industry estimates, Singapore's music
(optical disc media) piracy rate averages about 9
percent; the rate for movies is about 12 percent.
Software piracy in Singapore, while among the lowest in
Asia, is almost double the estimated level in the
United States; business software losses were estimated
at nearly $96 million in 2004.


42. Over the past few years, a number of local
educational institutions (the majority government-
operated) have signed agreements to comply with legal
obligations to pay royalty fees to publishers in
exchange for the right to duplicate copyrighted printed
works for use in course materials. Some commercial
copy centers, however, continue to routinely take
orders to copy entire textbooks. Periodic police raids
against these copy centers have yielded limited
results.


43. 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 passed legislation in November 2003 to
provide for information sharing with the U.S. customs
authority and also with those of its other FTA
partners.


44. The FTA also ensures that government agencies will
not grant approval to patent-violating products. It
also protects against imports of pharmaceutical
products without the patent-holder's consent by
allowing lawsuits when contracts are breached, if these
products have previously not been sold or distributed
in Singapore.

45. Singapore has no specific legislation concerning
trade secrets, but rather protects investors'
commercially valuable proprietary information under
common law by the Law of Confidence. The FTA ensures
protection of test data and trade secrets submitted to
the government for product approval purposes.
Disclosure of such information is prohibited for a
period of five years for pharmaceuticals and ten years
for agricultural chemicals.

Transparency of the Regulatory System


46. 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.


47. Singapore in the past lacked a formalized system
whereby it published proposed regulations for public
comment. Beginning in April 2003, however, the
government established a new centralized Internet
portal (http://app.feedback.gov.sg/asp/ocp/ocp01a.as p)
to solicit feedback on selected draft legislation and
regulations, a process that is being used with
increasing frequency.


48. 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.


49. 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.


50. 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/.


51. 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.


52. Accounting Standards: Singapore's prescribed
accounting standards ("Financial Reporting Standards"
of FRS) are aligned with those issued by 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


53. 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.


54. Singapore-based asset management firms managed
$572.6 billion in 2004. 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).
Approximately US$12.8 billion in SGD-denominated
corporate debt was issued in 2004.


55. Singapore's banking system is sound and well
regulated. Total domestic banking assets were US$243
billion as of March 2005. Local Singapore banks are
relatively small by regional standards, but are more
profitable and have stronger credit ratings than many
of their peers. As at June 2005, non-performing loans
(NPLs, net of bank-to-bank loans) as a percentage of
total loans were 4.2 percent (compared to 5.5 percent
in June 2004).


56. A statutory requirement prohibiting banks from
engaging in non-financial business took effect in July

2001. Beginning January 1, 2006, banks are able to
hold only 10 percent or less in non-financial companies
as an "equity portfolio investment."


57. 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 may impose 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


58. 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


59. 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.

60. 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


61. Singapore has signed Investment Guarantee
Agreements (IGA's) with ASEAN member nations, the
Belgium-Luxembourg Economic Union and the following 31
economic partners: Bahrain, Belarus, Bulgaria,
Cambodia, Canada, China, the Czech Republic, Egypt,
France, Germany, Hungary, Indonesia (Riau Province
only),Laos, Latvia, Mauritius, Mongolia, The
Netherlands, Pakistan, Peru, Poland, Slovenia, Sri
Lanka, Switzerland, Taiwan, Thailand, the United
Kingdom, the United States, Uzbekistan, Vietnam, and
Zimbabwe. These agreements mutually protect nationals
or companies of either country against war and non-
commercial risks of expropriation and nationalization.


62. 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),and South Korea
(August 2005). Singapore has signed tax treaties with
a number of countries, but not with the United States.

OPIC and Other Investment Insurance Programs


63. 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


64. As of September 2005, Singapore's labor market
totaled 2.28 million workers; this total includes
nearly 645,000 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.


65. 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.


66. Labor-management relations in Singapore are
generally amicable. About 22 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.


67. 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


68. Singapore has eight free-trade zones (FTZs) for
seaborne cargo and two 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


69. 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 billion
in 2003 (latest available data). According to U.S.
Department of Commerce statistics (USDOC),U.S. firms
(manufacturing and services) in 2004 had cumulative
total investments in Singapore of $56.9 billion;
discrepancies in FDI numbers are attributable to
differences in accounting methodologies.


70. Investment Statistics

TABLE A
--------------

STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE
BY COUNTRY
(As at Year-end, Historical Cost)
(US$ million)

2000 2001 2002 2003


Total FDI 112,571 122,473 135,517 143,692

United States 18,373 20,084 20,173 22,099

Europe 42,011 47,222 54,525 61,223
European Union 30,440 36,205 43,919 49,561
France 2,841 2,550 2,872 3,106
Germany 2,443 3,438 4,253 3,743
Netherlands 16,838 19,395 14,544 16,091
United Kingdom 5,163 7,987 18,908 23,239
Other EU 3,155 2,835 3,342 3,382
Switzerland 9,307 8,465 8,756 9,136

Asian Countries 28,910 28,091 32,171 32,534
China 538 481 554 495
Hong Kong 3,569 3,179 2,834 2,367
Japan 16,865 16,183 19,074 19,387

Asean 5,365 5,211 5,555 5,310
Malaysia 3,216 3,243 3,333 3,038

Australia 1,880 1,442 1,450 1,229

Caribbean/Latin
America 18,088 22,037 23,269 22,514

Other Countries 3,309 3,597 3,929 4,093

Source: Department of Statistics, "Foreign Equity
Investment in Singapore, 2003"

TABLE B
--------------

STOCK OF FOREIGN DIRECT INVESTMENT (FDI) IN SINGAPORE
BY INDUSTRY
(As at Year-end, Historical Cost)
(US$ million)
2000 2001 2002 2003
Total FDI 112,571 122,473 135,517 143,692

Manufacturing 40,840 45,011 49,799 53,654
Chemicals &
Chemical
Products 9,963 11,970 15,340 20,001
Petroleum &
Petroleum
Products 3,991 6,226 7,270 8,523
Electronic
Products &
Components 20,145 19,380 18,218 16,662

Construction 1,219 940 1,140 854
Commerce 17,071 17,798 21,717 22,528
Transport, Storage
& Coms 4,973 5,341 5,927 6,645
Financial &
Insurance
Services 40,427 44,835 46,137 49,223
Financial 39,149 43,355 44,415 47,146
Real Estate 3,704 3,323 3,869 3,652
Business Svs 4,399 4,856 6,549 6,848

Source: Department of Statistics, "Foreign Equity
Investment in Singapore, 2003"

TABLE C
--------------

GDP AND FDI FIGURES, 2000-2003
(US$ Million)

Year GDP* FDI FDI as % of GDP
-------------- -------------- --- --------------
2000 92,210 112,571 1.22
2001 83,240 121,228 1.46
2002 91,025 135,890 1.49
2003 94,617 143,691 1.52

Footnote: GDP at Current Market Price
Source: Department of Statistics

Table D
--------------

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. 14.51 Finance

Glaxo Wellcome Mfg. U.K. 13.29 Chemicals

Exxonmobil Asia
Pacific U.S. 6.65 Fuels

Shell Eastern
Petroleum Nether- 6.22 Chemicals
lands
Hewlett-Packard
Singapore U.S. 5.55 Electronics

Prudential
Assurance Co. U.K. 5.50 Insurance

Credit Suisse
First Boston
Singapore Switzer 4.87 Banking
-land

Deutsche Asia Germany 3.79 Finance

Asia Food &
Properties British 3.53 Multi-industry
Virgin Is.
Shell Treasury
Centre East Nether- 3.10 Finance
lands
Shell Eastern
Trading Nether- 2.71 Fuels
lands
National Australia
Merchant Bank Austra- 2.41 Banking
lia
Texas Instruments
Singapore U.S. 2.30 Electronics

IBM Singapore U.S. 2.23 Electronics

ING Asia Nether- 2.23 Banking
lands
Citicorp Invest
Bank U.S. 2.14 Banking

Nova Scotia Bank
Asia U.S. 2.05 Banking

Danone Asia France 2.11 Food/Beverages

BP Singapore U.K. 2.05 Fuels

Bank Sarasin-Rabo
Asia Switzer- 1.75 Banking
land

Source: Singapore Economic Development Board
DP Information Group, "Singapore 1000, 2005"

ANNEX: 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 www.ida.gov.sg.

HERBOLD