Singapore realized the importance of FDI to the nation’s economic growth very early in its development.
Singapore (PRWEB) May 26, 2014
In the latest ranking of the most investor-friendly nations in the world that was released last week (CNA, 5/21/14) by the Economist Intelligence Unit (EIU), Singapore has steadfastly occupied the top spot since 2009. As Singapore’s leading company formation consultancy, AsiaBiz Services explained how Singapore has acquired the top status in this ranking by providing concessionary measures, maintaining sound macroeconomic policies, and promoting Singapore as an investor-friendly nation.
The Business Environment Ranking (BER), which assessed the calibre of the business climates in 82 nations before ranking them in order of their attractiveness to investors and businesses. Singapore was found to lead the global race for foreign direct investment (FDI) by undertaking a number of measures, which are:
Provision of Concessionary Measures
According to the Department of Statistics, Singapore’s FDI stock stood at $747 billion at the end of 2012. Singapore was able to attract so much FDI by aggressively providing many fiscal and financial incentives. The fiscal incentives offered by the country aims to alleviate the tax burden of investors by reducing corporate tax, providing investment allowances and selected tax exemptions. Singapore corporate tax rates are competitively lower than that of other capital exporting nations. Singapore also deploys a simple and predictable taxation system with uniformly low rates for all investors.
In addition to these tax incentives, the city-state also offers financial incentives to investors that directly benefit them in the form of subsidized loans, specialized infrastructure and direct capital subsidies. Such subsidies offered by the Republic offsets the costs involved in a variety of areas such as training, utilities and pricing of land. These concessionary measures have effectively presented the island nation as welcoming to FDI, and complement the country’s investment-friendly policies.
Investment Promotion Strategy
The Government of Singapore strongly favours investment-friendly policies that portray the city-state as an appealing investment destination to prospective investors. This role was specifically assigned by the Government to the Economic Development Board of Singapore (EDB). The EDB was established for the purpose of facilitating the entry and operation of FDI by a number of ways.
The EDB actively depicts Singapore as investment-friendly by reducing administrative delays and related cost overruns. In addition, it actively works with the private sector to establish direct contacts with prospective investors, and successfully targets certain international corporations and industrial sectors to invest in the country. Above all, the EDB possesses sufficient political visibility, and authority to negotiate with the regulatory system to advocate for favourable macroeconomic policies.
Sound Macroeconomic Policy Environment
Singapore’s macroeconomic environment is inviting to FDI as its sound policies identifies with the views of the private sector. It aims to elevate the overall quality of the nation’s workforce and infrastructure, and ensures that the regulatory environment is stable and conducive for the inflow of FDI. Such macroeconomic policies do not only enhance the general human capital and technical capabilities of the economy, but also serves to promote an investment-viable image of Singapore. Other macroeconomic policies in Singapore are the maintenance of a fairly valued exchange rate, augmentation of the transport infrastructure, and the mitigation of the transaction costs of doing business. All these macroeconomic policies substantially improve Singapore’s prospects for FDI.
“Singapore realized the importance of FDI to the nation’s economic growth very early in its development, and has since undertaken a very comprehensive approach to attracting FDI. From incentivizing the nation financially and fiscally, to actively promoting itself to prospective investors, and ensuring that the investment climate is inviting to investor, Singapore has been able to rise up to the ranks of being the most investor-friendly nation in the world today,” affirmed Mr. James Nuben, Head of Taxation at AsiaBiz Services.
ABOUT ASIABIZ SERVICES
AsiaBiz Services is a Singapore-based consultancy that offers business solutions for both local and foreign professionals, investors and entrepreneurs. Our areas of expertise include company incorporation, offshore company setup, accounting, taxation and other related corporate services. AsiaBiz Services also provides work visa and immigration services for professionals wishing to relocate to Singapore.
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