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The Investment Regime in ASEAN Countries

Dr. Lawan Thanadsillapakul


The 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).

There 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.

The 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.

Part 5


(42) It should be noted that ROC has the power to refuse to register a foreign company with a name that is "undesirable".

(43) 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.

(44) 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.

(45) 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.

(46) 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.

(47) 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.