Foreign investment in Singapore

Abstract

This project is undertaken mainly due to the importance of direct foreign investment (DFI) to Singapore. In this study, the success of Singapore as an investment centre so far, its competitiveness in the face of changing local, regional and global trends and the government's new directions regarding direct investment have been highlighted. The objectives of this study are achieved through literature review, presentation and analysis of data and review of journals and newspapers for the newest update. An economic model will first be used as a general explanation for the inflow of investment. This is followed by a specific look at Singapore as an investment centre. Singapore's success has been highlighted through the examination of the factors prompting foreign investment in Singapore and data analysis of foreign investment in Singapore. In the next section, the rationale for the government's aggressiveness in promoting foreign investment has been explained through the benefits of foreign investment. For the most part, the study is more concemed with the competitiveness of Singapore as an investment centre. In comparison with the other ASEAN countries, it is found that Singapore could still maintain its competitiveness mainly because it attracts more sophisticated investment. Problems specific to Singapore at the moment include rising costs, slumps in certain sectors and prospects of lower export demand. However, the government's various policies to counter the problems and the country's economic stability have secured its standing as an investment centre. Various significant global events have proven to be posing certain challenges to Singapore and other ASEAN countries. A general bleak future of the world economy may deter capital flows. Singapore must be prepared to mitigate any adverse impact of such global trends. Due to the rapid development of the economies m the Asia-Pacific region, the government is now encouraging outward investment. The government is trying to achieve a balance between inward and outward investment so as to strengthen the economy. Various policies have been implemented to encourage and guide the regionalisation of local companies.