How Does Singapore Attract Foreign Investments?

Foreign investments are critical to a country’s economy. They open up a slew of business opportunities and create more jobs, thus increasing the income and purchasing power of locals or residents in the country. For the government, there will be economic expansion, growth of human capital, inflow of new and better technology, and increase in exports amongst others.

Therefore, it makes financial sense to attract foreign investments, especially for a country that lacks natural resources.

In 2020, Singapore was the 7th country in the world with the highest recipient of foreign investments. Even at the height of the pandemic, biopharma companies such as Pfizer set up their regional headquarters in Singapore.

How does Singapore do it? Singapore has created a spider-web of sustainable financial ecosystems that not only support each other but also benefits for the government, investors, and workforce.

1.Stable Socio-Political Environment

A country’s political stability is a top investment consideration. A war-torn country or a country facing civil unrest is obviously not a good place to start a business in. The chaos and uncertainty would create more poverty, loss of jobs, increase crime rates, disruptions in supply chains, national funds not used effectively and corruption might run rampant, amongst others.

Singapore’s ruling party has been in government since the country’s independence in 1965. Although it has been debated and critiqued by many locally and internationally, the incumbent’s strong hold in the country’s governance has resulted in a stable political environment.

The policies created by party leaders have managed to propel Singapore from a third world to the first world nation we see today.

2.Business-Friendly Environment

Singapore makes a great base for businesses to launch into the rest of the ASEAN markets. Its abundance of financial resources such as availability of banks and its range of financial products and services, ease of setting up bank accounts and companies, availability of investors and talented workforce, all add up to a business-friendly environment. This allows businesses to run effectively and expand exponentially.

Singapore’s strategic location at the crossroads of the main trade and shipping routes of the world, including the major sea route between India and China gave the country a great advantage in business connectivity in the region and worldwide.

3.World-Class Infrastructure

Singapore has been upgrading and expanding its airport and sea port in recent years to accommodate the increase in trade and tourism that they have been planning for, thus ramping up business activities.

5G network coverage has been adopted islandwide since 2020, making sure people in Singapore can get connected to the internet at a faster rate for both work and leisure.

With its Smart Nation goal and initiatives, Singapore is moving towards a digital economy that is technology-optimised for businesses, industries, government and people. Services and business operations can be expected to be more efficient and productive.

Residents, regardless of age, are highly encouraged to get on board as well to ensure that the technology-based ecosystem works perfectly.

The government has rolled out digital literacy programs to allow its citizens to learn and adapt to digital technologies. Some initiatives to ensure that everyone in Singapore can have access to technology is by providing computers and tablets at subsidised rates to low-income households, introducing cashless payment methods and national digital identities.

Being a forward-thinking nation, Singapore is already moving into the future. Singapore has unveiled its Green Plan 2030 where it aims to advance sustainable development and reduce the country’s carbon footprint. Infrastructure for solar power, integrated water and waste treatment facilities, and the use of hydrogen to power facilities are being piloted.

4.Attractive Tax Framework

Foreign business owners and investors get to enjoy low tax rates and numerous tax incentives by setting up a company in Singapore. The highest corporate tax rate on taxable income is 17%.

Singapore has an extensive network of double tax agreements (DTA) with more than 80 countries across the globe. This means that one gets the benefits of avoiding double taxes, lowering withholding taxes, and preferential tax regime.

There is also no capital gains tax and there is no tax on dividends. These make it very attractive for businesses and investments via the holding company structure.

5.Free-Market Economy

With a score of 84.4, Singapore is ranked 1st in the Asia Pacific region in economic freedom in 2022. Its economy is open and has a corruption-free environment with stable prices, prudent monetary and fiscal policies, and a transparent legal framework. Unemployment rate is very low, hovering around 3%.

The economy depends heavily on exports of electronics, petroleum products, chemicals, medical and optical devices, pharmaceuticals, transportation, business and financial services. With 13 bilateral and 11 regional Free-Trade Agreements (FTAs), businesses can easily expand their market reach and operations.

The trade-weighted average tariff rate is 0.0 percent, and 182 non-tariff measures are in effect. Foreign and domestic businesses are treated equally under the law, and nearly all sectors of the economy are open to 100 percent foreign ownership.

Foreign business owners who would like to set up a base in Singapore may contact Immigration@SG for advice.



Abdul razzaq is a business entrepreneur, freelancer and digital marketer. He believes in spreading mass awareness about changing digital marketing and new trends in e-commerce

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