The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
Singapore maintains an open, heavily trade-dependent economy that plays a critical role in the global supply chain. The government utilized unprecedented levels of public spending to support the economy during the COVID-19 pandemic. Singapore supports predominantly open investment policies and a robust free market economy while actively managing and sustaining Singapore’s economic development. U.S. companies regularly cite transparency, business-friendly laws, tax structure, customs facilitation, intellectual property protection, and well-developed infrastructure as attractive investment climate features. Singapore actively enforces its robust anti-corruption laws and typically ranks as the least corrupt country in Asia. In addition, Transparency International’s 2022 Corruption Perception Index placed Singapore as the fifth-least corrupt nation globally. The U.S.-Singapore Free Trade Agreement (USSFTA), which entered into force in 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 environmental protections.
Singapore has a diversified economy that attracts substantial foreign investment in manufacturing (petrochemical, electronics, pharmaceuticals, machinery, and equipment) and services (financial, trade, and business). The government actively promotes the country as a research and development (R&D) and innovation center for businesses by offering tax incentives, research grants, and partnership opportunities with domestic research agencies. U.S. foreign direct investment (FDI) in Singapore in 2021 totaled $294 billion, primarily in non-bank holding companies, manufacturing, wholesale trade, and finance and insurance. Singapore received more than double the U.S. FDI invested in any other Southeast Asian nation. The investment outlook is positive due to Singapore’s proximity to Southeast Asia’s developing economies. Singapore remains a regional hub for thousands of multinational companies and continues to maintain its reputation as a world leader in dispute resolution, financing, and project facilitation for regional infrastructure development.
Singapore is poised to attract future foreign investments in digital innovation, pharmaceutical manufacturing, sustainable development, and cybersecurity. Singapore is investing heavily in automation, artificial intelligence, integrated systems, as well as sustainability, and seeks to establish itself as a regional hub for these technologies. Singapore is also a well-established hub for medical research and device manufacturing.
Singapore relies heavily on foreign workers, who make up 36 percent of the workforce. The government tightened foreign labor policies in 2020 to encourage firms to improve productivity and employ more Singaporean workers, and lowered most companies’ quotas for mid- and low-skilled foreign workers.
Singapore plans to reach net-zero by 2050 but also faces alternative energy diversification challenges. Singapore launched its national climate strategy – the Green Plan – in February 2021, and it focuses on increased sustainability, carbon emissions reductions, fostering job and investment opportunities, and increasing climate resilience and food security. It also launched a national hydrogen strategy in October 2022 with a focus on using low-carbon hydrogen as a decarbonization solution.
Singapore has limited economic ties with Russia and Ukraine and is not a major trading partner of either country. However, the disruptions to global energy and food supplies stemming from Russia’s war in Ukraine have resulted in inflationary pressures felt by many of the world’s economies, Singapore included. While Singapore’s investment climate has not been significantly affected by the war, second and third order economic impacts on its major trading partners may reduce demand for Singapore’s exports. To access the ICS, visit the U.S. Department of State Investment Climate Statements website.