Singapore's foreign investment regime

Out-Law Guide | 15 Nov 2019 | 12:17 pm | 3 min. read

Compared to other countries in the Southeast Asia region, Singapore has relatively minimal foreign investment controls save in a few specific sectors.

These sectors relate, in one way or another, to infrastructure assets accessible by the public or areas where national security concerns may lie. In general, the Singapore government maintains a level of oversight and control over foreign investments in two ways:

  • legislative restrictions: foreign investment is restricted in certain sectors such as real estate or media; and
  • licensing regime: the government controls certain sectors through rigorous licensing regimes, applying both qualitative and quantitative criteria depending on the sector involved. A licensing regime is in place for example in the banking and telecommunications sector, and both foreign and domestic investors are required to seek specific approvals from the respective regulatory bodies.

That said, even in these specific sectors, the Singapore government generally promotes a consultative approach between foreign investors and the regulatory bodies, where each application is assessed on a case-by-case basis to ensure that it is assessed on its merits.

The Singapore government generally promotes a consultative approach between foreign investors and the regulatory bodies, where each application is assessed on a case-by-case basis to ensure that it is assessed on its merits.

In addition, the Singapore government has and continues to encourage foreign investments through the implementation of various initiatives. These include incentives granted by the Economic Development Board of Singapore (EDB); and maintenance of an overall investor-friendly tax regime which support the business community, from start-ups to mature companies looking into expansion plans to multinationals moving their businesses or headquarters to Singapore.

These are some of the sectors where foreign investment controls are imposed.

Real estate

The main regulatory bodies for this sector are the Singapore Land Authority, the Housing and Development Board (HDB) and the Jurong Town Corporation, depending on the type of real estate involved.

Specific legislative restrictions on foreign ownership apply to certain types of residential property including vacant land; land zoned for residential purposes; landed residential properties; public residential units known as HDB housing, and other real estate such as workers' dormitories.

Private high-rise residential units (condomiums); housing on Sentosa Island, and industrial and commercial real estate are generally not restricted.

Broadcasting

Info-communications Media Development Authority (IMDA) is the regulatory body for this sector.

Specific legislative restrictions on foreign ownership apply to broadcasting companies in Singapore. A broadcasting licence will not be granted if the company is controlled by foreign sources or if foreign sources hold more than 49% shares or voting power of the company. Other controls include:

  • prior approval is required before a person can become a substantial shareholder or controller of a broadcasting company;
  • prior approval is required in respect of any funds from a foreign source for purposes of financing any broadcasting service owned or operated by a broadcasting company;
  • prior approval is required for the appointment of the chief executive officer or director of a broadcasting company; and
  • a requirement for the chief executive officer and at least one-half of the directors of a broadcasting company to be Singapore citizens.

Domestic media

Info-communications Media Development Authority (IMDA) is the regulatory body for this sector.

Similar to the broadcasting sector, specific legislative restrictions on foreign ownership apply to newspaper companies in Singapore. A newspaper company must have two classes of shares, with one class of shares held only by Singapore citizens or approved corporations. Other controls include:

  • prior approval is required before a person can become a substantial shareholder or controller of a newspaper company;
  • prior approval is required in respect of any funds from a foreign source; and
  • requirement for all directors of a newspaper company to be Singapore citizens.

Legal consequences

In cases where foreign ownership restrictions are imposed as legislative restrictions, non-compliance with such restrictions is an offence. Further, in cases where real estate is acquired in contravention of the foreign ownership restrictions, the transfers will be null and void and any person contravening such restrictions will be guilty of an offence.

Separately, in cases where controls are implemented through the licensing regimes, a licence will not be granted and it is an offence to carry out licensable activities without a licence. 

The penalties for committing an offence include fines and/or imprisonment terms. The amount of fines and/or length of imprisonment term imposed vary, and are set out in the various laws governing each sector.