This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.
The Ministry of Trade and Industry in Singapore generally oversees matters relating to trade and investments to ensure that Singapore’s economy continues to be competitive and attractive to investors. Singapore has a relatively open investment regime and does not have specific umbrella legislation on foreign direct investments. However, there are barriers to entry for foreign investors in sectors where sector-specific laws are applicable.
In general, Singapore regulates foreign investment in the following sectors:
a) Financial Services and Banking;
c) Legal Services; and
d) Land Ownership and Real Estate.
Financial Services and Banking
The types of banking activities that local and foreign financial institutions are allowed to carry out are tied to the conditions of the relevant licences granted to them (e.g. full bank, qualifying full bank and wholesale bank). For example, those licenced as wholesale banks in Singapore are not allowed to operate retail banking facilities denominated in Singapore dollars. However, foreign full banks may obtain “qualifying full bank” privileges in order to access more customer services locations and local Automated Teller Machine networks in Singapore.
Singapore has recently awarded a number of full and wholesale digital banking licences which also carry with them ownership requirements on the holders.
In Singapore, newspaper companies can only take the form of public companies limited by shares. Such companies are only allowed to issue ordinary shares and management shares, with the latter being available only to Singapore citizens or approved corporations. All directors of such companies are also required to be Singapore citizens.
Legislative restrictions in the broadcasting sector also prevent foreign investors from owning more than 49% of the shares or controlling more than 49% of the voting power in a broadcasting company. Prior regulatory approval is also required before a person can become a substantial shareholder of such company or receive funds from a foreign source.
All law practices in Singapore are subject to a licensing regime which determines the range of Singapore law-related services that they can offer. A foreign law firm may be established in Singapore as a Foreign Law Practice (“FLP”), and may offer legal services in foreign and international law, undertake Singapore law-related legal services in permitted areas of legal practice as a Qualifying Foreign Law Practice, or enter into a Joint Law Venture or Foreign Law Alliance with a Singapore Law Practice (“SLP”). While FLPs and regulated foreign lawyers may hold interests in SLPs, they are subject to threshold requirements – which include limits on the ratio of regulated foreign lawyers to Singapore qualified lawyers, and restrictions relating to directorships, partnership interests or shareholdings in such SLPs.
Land Ownership and Real Estate
While foreign investors do not generally face restrictions on purchasing commercial or industrial properties, specific restrictions on foreign ownership apply to certain types of residential property and land.
The Singapore government generally remains open to foreign investment and adopts a consultative approach between the regulatory authorities, stakeholders and foreign investors when considering applications made by foreign investors to invest into controlled sectors (particularly in sectors that are identified to be strategically important for Singapore’s economic growth). Foreign investors may also tap into the various governmental initiatives, incentives and schemes by the Economic Development Board of Singapore and other governmental agencies.
For further information on the foreign direct investment regime in Singapore, please refer to our Singapore guide here: Singapore FDI control | Legal Guidance | LexisNexis