Investment Regime in ASEAN Countries
Singapore government actively provides businesses in Singapore the opportunities
to operate within a free market economy. Most industries are open to foreign
investors, and multinational corporations are viewed as valuable contributors
to economic growth. They are constantly encouraged to use Singapore as
an international business centre for their subsidiaries, associated companies
or branches in other countries. Therefore, no restriction is generally
imposed on the percentage of foreign ownership of business operating in
Singapore. The investment promotion effort has been on higher value-added
and skilled-intensive activities including services sector activities
such as financial services, information technology services and offshore
services. Moreover, there has been no trend in divestment required by
the Singapore government. Therefore, foreign investors can confidently
invest in this country and can fully own and operate their business without
constraint. (APEC: 1998, SIN_2).
is no screening of foreign investment in Singapore. Every business in
the country must be registered under both the Business Registration Act
and the Company Act, which are administered by the Ministry of Finance.
A foreign corporation must register with the Registry of Companies and
Business (ROC) before commencing operations in Singapore(42).
Foreign companies are subject to filing and reporting requirements, in
particular they must periodically report their financial status to the
Registrar of Companies(43). Thus a foreign
company can carry on business in Singapore either by registration as "a
foreign company"(44) or by incorporating
a subsidiary(45). A branch office must also
register in accordance with Part XI of the Companies Act. If the foreign
company intends to do business as a sole proprietor or as a partner, then
the procedures referred to under "Sole proprietorship/partnership"
have to be complied with, after the company has been registered as a foreign
company under the Company Act. However, applications for the establishment
of representative offices must be made in writing in prescribed forms
to the Trade Development Board (TDB), which is a statutory board.
Registrar has primary authority over the registration of a foreign company(46).
The Department of Trade, the Economic Development Board (EDB) and the
Trade Development Board (TDB) may also have jurisdiction in relation to
the area of business in which the company wishes to operate. However,
Singapore does recognise the possibility that representative offices may
carry on strictly promotional and liaison activity in Singapore without
the need to register, so long as such activity does not amount to "carrying
on business". Generally, the Singapore government actively encourages
foreign investment and treats foreign investors the same as local ones.
With the exception of national security and certain industries(47),
there is no restriction on foreign ownership of Singapore corporations,
and there is no screening of foreign investment in Singapore as mentioned.
should be noted that ROC has the power to refuse to register a foreign
company with a name that is "undesirable".
There are two specific requirements for foreign company to report to the
ROC: firstly, a foreign company must lodge with ROC a report of its annual
general meeting, a copy of its balance sheet made up to the end of its
last financial year and it should be in the form required by the company's
country of incorporation. If the balance sheet does not sufficiently disclose
the company's financial position, ROC has the power to require further
information to be provided to supplement the balance sheet delivered;
secondly, a foreign company is required to prepare and lodge with the
ROC an audited statement showing its assets used in and liabilities arising
out of its operations in Singapore as at the date to which its balance
sheet was made up.
Section 4 of the Companies Act defines "a foreign company" to
include incorporated or unincorporated bodies formed outside Singapore
which in their country of origin may sue or be sued or hold property.
Once such an organisation establishes a place of business, or carries
on business in Singapore it should register under Div. 2, Pt XI of the
Companies Act. Registration under the Companies Act specifically exempts
the foreign company from the requirement of registering also under the
Business Registration Act, Sec 4 (j). The registration provisions of the
Companies Act require the foreign company to appoint at least two agents
resident in Singapore for the purpose of accepting service of process
and to establish a registered office in Singapore.
If a foreign company wishes to establish a separate legal entity in Singapore,
it can incorporate a company in any forms such as a company limited by
share, a company limited by guarantee, or an unlimited company.
The ROC has primary jurisdiction over the activities of foreign companies.
It is important to note that under sec 369(1) the Registrar may refuse
to register a company as a foreign company if it is being used or is likely
to be used for an unlawful purposes prejudicial to the public peace, welfare
or good order in Singapore or is acting or likely to act against the national
security or interest. This goes beyond the role of most Registrars of
Companies in other countries.
A 40% limit is placed on foreign ownership of locally incorporated banks,
airlines and shipping companies are specifically restricted as to the
amount of foreign ownership, the manufacture of arms and ammunitions is
subject to government control, public utilities services electricity,
gas and water are publicly owned, legislative control is exercised over
the newspaper publishing industry.