WT/TPR/S/67 Trade Policy Review

Page 24

II. TRADE AND INVESTMENT POLICY REGIME

(1) INTRODUCTION

1. Singapore's institutional framework and policy regime for trade and investment remains
essentially unchanged since its previous Trade Policy Review in 1996. As a nation highly dependent
on international trade and investment for economic growth, Singapore has traditionally followed a
liberal regime for the goods sector and for much of the services sector. Policy-making is based on
political and social consensus among major players in the economy, emphasizing the importance of
economic and social stability for trade and investment.

2. Given that there are no significant barriers to trade in goods, and that the sector is already
open to foreign investment, most of the recent liberalization has taken place in services. The growing
importance of the services sector has led to gradual but unilateral reform in the foreign investment
regime, notably in financial services and telecommunications. Competition is also being introduced
gradually for other utilities. Moreover, as a participant in preferential and regional agreements, such
as ASEAN and APEC, Singapore has supported efforts to liberalize investment and services sectors
among the participating countries. APEC's open-regionalism approach, in particular, will also ensure
that any liberalization that goes beyond the Uruguay Round results will be pursued on a
most-favoured-nation basis.

(2) INSTITUTIONAL FRAMEWORK

(i) The Executive and Government

3. There have been no major changes in the general constitutional and legal framework since
Singapore’s previous Review. Singapore has a Parliamentary system of Government headed by the
President. Under Chapter 1 (Part V) of the Constitution, the President is elected by national suffrage
and serves for a period of six years.1 Elections must be held within a period of six months after the
post of President becomes vacant or not more than three months before the incumbent’s term of office
expires.

4. The President is assisted in his functions by a Cabinet consisting of the Prime Minister and
other ministers. The Prime Minister is appointed by the President, who, upon advice from the
Prime Minister, appoints all other members of the Cabinet; members of the Cabinet must be
Members of Parliament.2 The current Cabinet comprises 16 ministers, including the Senior Minister.
The President may dissolve Parliament at any time before the expiry of its term, on the
recommendation of the Prime Minister. In such a case General elections must be held within three
months of dissolution of Parliament.

5. The President is also assisted by the Council of Presidential Advisors, which presently
consists of six advisors appointed by the President, serving for a renewable term of six years.3 The
Council is responsible for advising the President on the government budget, financial reports of
statutory boards and government companies, and public appointments. The present Council includes
representatives from private companies, the public sector, and academia.

1
Article 20 of the Constitution.
2
Articles 24 and 25 (Chapter 2) of the Constitution.
3
Two members (one appointed by the President on his own discretion and another appointed on advice
of the Prime Minister) may be appointed for three years instead of six years (Article 37b, Part VA of the
Constitution).
Singapore WT/TPR/S/67
Page 25

(ii) The legislative process

6. Singapore has a unicameral Parliament, currently comprising 83 elected members, whose

term of office lasts a maximum of five years. In addition, there is one non-constituency member4;
and nine members appointed by the President.5 Non-constituency and nominated members of
Parliament may not vote on any bills amending the Constitution, supply or money bills, no-confidence
motions in the Government, or bills to remove the President from office.6

7. New legislation is enacted through bills passed by Parliament. All legislation, including trade
and trade-related laws are formulated by the ministries responsible and submitted to the Cabinet for
approval before being introduced in Parliament. A bill passed by Parliament becomes law upon
receiving assent from the President and would be in force from the date notified in the
National Gazette. Bills, except money bills, may be introduced by any Member of Parliament;
money bills may be introduced only by the Government, usually the Minister of Finance.

8. Once approved by Parliament, a bill must receive Presidential assent in order to become law.
The President may not withhold assent to a bill passed by Parliament except on supply bills, which are
likely to result in the drawing down of past financial reserves; he may also refuse to make or revoke
certain appointments to public office.7 If the President vetoes a bill, the veto may be overturned by a
two-thirds majority vote in Parliament. Once enacted, the bill becomes law when proclaimed through
publication in the National Gazette.

(iii) The judiciary

9. Under Article 93 of the Constitution, judicial authority is vested in the Supreme Court, the
highest court in the land, and in such subordinate courts as are provided in any written law. The
Supreme Court consists of the Court of Appeal and the High Court.8 The Court of Appeal is the
highest tribunal in Singapore's three-tiered judicial hierarchy and comprises the Chief Justice and two
Appellate Judges. At the middle level is the High Court, which is also presided over by the Chief
Justice along with other judges of the High Court.9 The High Court has jurisdiction both in civil and
criminal matters as well as appellate jurisdiction. The Chief Justice, the Judges of Appeal and the
Judges of the High Court are appointed by the President on the advice of the Prime Minister. At the
lowest of the three levels are the subordinate courts, which include district courts, magistrates courts,
and juvenile courts. The subordinate courts are presided over by the Senior District Judge and other
judicial officers and handle approximately 95% of all court cases in Singapore. Appeals relating to
decisions taken by the subordinate courts are handled by the High Court, and the Court of Appeal, the
final appellate court in Singapore.

4
The provision for non-constituency members, who are appointed from among losing opposition
candidates at the general election, is to ensure sufficient representation from opposition parties in Parliament.
5
The nine members may be nominated by the President in accordance with the Fourth Schedule of the
Constitution; the persons considered for such positions are generally those who are believed to have
distinguished themselves in public service; arts and letters; culture; the sciences; business; industry; the
professions; social or community services; or the labour movement (Fourth Schedule of the Constitution).
6
Article 39, Part VI of the Constitution.
7
Articles 148A, 22A and 22C of the Constitution.
8
Articles 93 and 94, Part VIII of the Constitution.
9
The term of office of judges in the Supreme Court is at most six months after they reach the age of 65
(Article 98, Part VIII of the Constitution). There are, however, provisions for an extension of the term beyond
this age if necessary (Articles 94(3) and 95(1)).
WT/TPR/S/67 Trade Policy Review
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10. As WTO obligations do not form part of the domestic legal system, WTO provisions may not
be invoked before a national court of law. However, WTO obligations may be enforced by a national
court of law either through implementing legislation or as part of common law.

(3) DEVELOPMENT AND ADMINISTRATION OF TRADE POLICY

(i) Policy formulation and implementation

11. Responsibility for trade policy formulation and implementation falls within the Ministry of
Trade and Industry (MTI). All trade policy implementation is administered by the Singapore Trade
Development Board (TDB), a statutory body within the Ministry. Other statutory boards within the
Ministry include the Economic Development Board (EDB), responsible for the planning and
implementation of economic strategies for industrial development and services promotion; and the
Singapore Productivity and Standards Board, responsible for improving industrial competitiveness
and the formulation and implementation of standards.

12. The MTI also coordinates policy implementation with other ministries, including the Ministry
of Finance, which oversees the Customs and Excise Department, charged with administering customs
and excise duties; the Ministry of National Development, which includes the Primary Production
Department, issuing licences and carrying out sanitary and phytosanitary inspection of agricultural
and food products imported into and exported from Singapore; and other ministries and statutory
boards, which supervise policy implementation concerning various services sectors (Table II.1).
Table II.1
Ministerial responsibility for trade-related issues
Ministry/Statutory Agency Competence

Ministry of National Development

Primary Production Department
Ministry of Trade and Industry
Trade Development Board
Economic Development Board
Singapore Productivity and Standards Board
Singapore Tourism Board
Hotel Licensing Board
National Science and Technology Board
Ministry of Finance
Customs and Excise Authority
Monetary Authority of Singapore
Ministry of Law
Intellectual Property Office of Singapore
Ministry of Communications and information Technology
Land Transport Authority
Maritime and Port Authority of Singapore
Civil Aviation Authority of Singapore
Telecommunications Authority of Singapore
National Computer Board
Agriculture and fishing; sanitary and phytosanitary standards
Trade policy; anti-dumping, countervailing and safeguard measures
Trade policy; trade promotion; trade facilitation
Investment promotion; development policy; industrial development
Standards and conformance
Tourism
Hotel licensing
Science and technology; technopreneurship development
Customs tariff; valuation; rules of origin
Insurance; banking; securities and futures industry
Intellectual property rights
Land transport
Shipping and ports
Air transport
Telecommunications
Electronic commerce; information technology

Source: Government of Singapore.

13. Singapore actively seeks the opinions of its business community in formulating its trade
policy. Regular meetings are held between government officials from the MTI and trade associations
Singapore WT/TPR/S/67
Page 27

such as the Singapore International Chamber of Commerce and the Singapore Confederation of
Industries to ensure that government policy addresses the problems faced by traders and takes into
account their needs.

14. National committees are also formed periodically to examine specific issues. Such
committees include the Economic Committee, established just before an economic recession in 1985,
and the Committee on Singapore's Competitiveness, which has recently completed a study on
improving economic competitiveness. The committees are normally chaired by the ministry or
public-sector authority concerned. However, wider participation is sought through consultation with
key players from the private sector and other public-sector agencies. Several government agencies,
such as the Monetary Authority of Singapore and the Economic Development Board, also have
advisory committees that include participation from the private sector to guide them in policy
formulation and implementation.

15. Advice is also solicited from other organizations, such as the tripartite National Wages
Council, the National Trades Union Congress, and the Consumers Association of Singapore, if
deemed appropriate.

16. Under Article 148F(3) of the Constitution, the Auditor General is required to audit and report
on the accounts of Government, Parliament and the courts on an annual basis.10 However, there is no
independent body to evaluate the Government's economic policies and measures, although they may,
of course, be debated in Parliament.

(ii) Main trade laws

17. Singapore’s main trade legislation is contained in the Regulation of Imports and Exports Act.
The Act lists trade restrictions or controls imposed on selected goods, including those relating to
international trade agreements. The Customs Act covers issues relating to the customs tariff,
including the tariff and excise tax schedule and any preferential rates or exemptions. The Economic
Expansion Incentives (Relief from Income Tax) Act and the Income Tax Act relate to income tax
relief on investment for production, technology upgrading, and export (Table II.2).

(iii) Trade policy objectives

18. Singapore's reliance on international trade has necessitated a policy of outward orientation
and reduced barriers to international trade and investment. The Government believes that Singapore's
trade and trade-related policy must be managed within the framework of the multilateral trading
system and emphasize multilateral liberalization. In this regard, Singapore participates actively in the
WTO and supported the launching of new trade negotiations at the end of 1999. In general, Singapore
accords at least MFN treatment to all WTO Members and non-members alike; however, for certain
aspects of intellectual property rights protection, such as copyright, WTO non-members do not enjoy
the same level of protection as Members.

19. While supporting multilateralism, Singapore also participates in preferential and regional
free-trade agreements such as ASEAN and APEC, which it believes may result in faster trade
liberalization, regionally in the case of ASEAN, and more widely in the case of APEC. Within these
fora, Singapore seeks to accelerate liberalization beyond commitments made by countries in the
Uruguay Round. For example, within ASEAN, members are committed to achieving a free flow of

10
Republic of Singapore, (1999b).
WT/TPR/S/67 Trade Policy Review
Page 28

goods, services, and investment in the region by the year 2020 (section (4)(ii)(a) below).11
Liberalization beyond commitments made under the WTO's General Agreement on Trade in Services
(GATS) is already under way. Singapore also participates in APEC's early voluntary sectoral
liberalization (EVSL) scheme and aims to meet the developed country target of free and open trade
and investment in the Asia-Pacific region by 2010 (section (4)(ii)(b) below).
Table II.2
Main trade-related laws in Singapore
Laws Area

Customs Act, (Cap 70). Customs tariff

Customs Duties (Exemption) Order, (Cap 70 05). Tariff exemptions
Customs (Valuation) (Import Duty) Regulations, (Cap 70 Rg 8). Customs valuation
Regulation of Imports and Exports Act, (Cap 272A). Regulation of imports and exports
Regulation of Imports and Exports (Licensing), Regulations, (Cap 272A Rg 2); Import licensing
Endangered Species (Import and Export) Act, (Cap 92A).
Regulation of Imports and Exports, Regulations, (Cap 272A Rg 1). Import, export and transshipment of goods;
certificates of origin
Countervailing and Anti-Dumping Duties Act, (Cap 65B); Countervailing and Anti-dumping and countervailing measures
Anti-Dumping Duties Regulations, (Cap 65B Rg 1).
Economic Expansion Incentives (Relief from Income Tax) Act, (Cap 86); Income Tax Tax incentives
Act, (Cap 134).
Patents Act, (Cap 221); Copyright Act, (Cap 63); Trade Marks Act, 1998; United Intellectual property rights
Kingdom Design (Protection) Act, (Cap 339); Geographical Indications Act, 1998;
Layout Design of Integrated Circuits Act, 1999.
Singapore Productivity and Standards Board Act, (Cap 303A) Standards
Sale of Food Act, (Cap 283); the Poisons Act and its Rules, (Cap 234); Medicines Food standards and safety, labelling
Regulations, (Cap 176).
Weights and Measures Order, (Cap 349 02). Packaging
Control of Plants (Amendment)Act, 1999; Agricultural Pest (Plant Importation) Rules; Sanitary and phytosanitary measures
Animals and Birds Act, (Cap 7).
Government Contracts Act, (Cap 118); Government Procurement Act, (Cap 120). Government procurement

Source: Government of Singapore.

20. The Singapore Government takes an active role in promoting investment in certain sectors
and activities in which it believes it has a comparative advantage. While in earlier decades industrial
strategy targeted labour-intensive industries, such as textiles and clothing, rising labour costs have
resulted in a shift since the 1980s in favour of high value-added manufacturing industries, such as
electronics, and services. Accordingly, the Government's industrial strategy encourages training in
value-added skills, and incentive measures are provided to promote investment and economic activity
in higher value-added and knowledge-based industries and services.

21. Regional proximity and participation in ASEAN has resulted in an expansion in Singapore's
trade with the Asian region. However, there appears now to be a concerted effort to expand
Singapore's exports and investment activities in emerging markets outside the region. Besides Africa
11
At their annual meeting ASEAN Ministers agreed in September 1999 to bring forward the date for
the elimination of import duties on all products, including those on the Inclusion List, to 2015 for the six
original founding members (Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand) and to 2018 for
the remaining members (Reuters Press, 29 September 1999). At the third ASEAN Informal Summit in
November 1999, the original six ASEAN members made new commitments to completely eliminate tariffs on
all products in the Inclusion List by 2010. As an interim target, the original six ASEAN members have
committed to reduce tariffs on 60% of their products on the Inclusion List to 0% by 2003.
Singapore WT/TPR/S/67
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and Latin America, the TDB has also included non-traditional markets in the Middle East and Central
and Eastern Europe in its trade expansion efforts. These efforts include the organization of trade fairs
and exhibitions, and the provision of information to Singapore-based companies on different market
opportunities abroad.

(4) TRADE RELATIONS

(i) The World Trade Organization

22. Following the Cabinet's decision to ratify the Uruguay Round Agreements, Singapore became
a founding Member of the WTO on 1 January 1995. Under Singapore's legal system, the Constitution
is the highest law. All international treaties or bilateral agreements signed by the Government must
be incorporated into Singapore's legislative system through legal amendments or new laws, which are
passed by Parliament through subsidiary legislation or under common law, where necessary.
Ratification of the Uruguay Round Agreements has necessitated changes in domestic legislation to
bring Singapore’s trade-related laws into conformity with various WTO Agreements.

23. At the time of the previous Review, Singapore notified the WTO of changes to the
Patents Act (Cap 221) in 1995, fulfilling its obligations under the TRIPS Agreement as a developing
country Member. Since that time, Singapore has notified changes to its legislation on trade remedies
under the Countervailing and Anti-dumping Duties Act (Cap 65B). As a developing country member
of the WTO, Singapore was granted transitional arrangements under several WTO Agreements,
including the Agreement on Customs Valuation, and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS). Singapore has, nevertheless, implemented its obligations under
these agreements ahead of the expiry of the transition period. In the case of the Agreement on
Customs Valuation, Singapore implemented its obligations under Article VII of GATT 1994 in 1997
(Chapter III(2)(ii)). New laws have been passed by Parliament for trade marks (1998), geographical
indications (1998), and layout designs of integrated circuits (1999), bringing Singapore's intellectual
property rights legislation into conformity with the TRIPS Agreement (Chapter III(4)(vi)).

24. Singapore participated actively in the Uruguay Round of multilateral trade negotiations and
was also actively involved in preparations for the 1999 Ministerial Conference agenda. Singapore
believes that although successive rounds of trade negotiations have reduced industrial tariffs
significantly, there remains scope for further tariff reductions and improved market access. For the
next round of trade negotiations Singapore had suggested in a notification to the WTO, in particular:
deeper tariff cuts, well beyond those achieved by the Uruguay Round; elimination of tariff escalation,
tariff peaks and nuisance tariffs; and expansion of the scope of tariff bindings. These proposals may
evolve and change over time.12 In the forthcoming mandated negotiations on services, Singapore
would like to see a widening and deepening of current sectoral commitments, including through a
reduction in limits on market access and national treatment, in addition to the scheduling of additional
sectors.13

25. Singapore would also like to see new and interdisciplinary areas, such as electronic
commerce, included in the forthcoming negotiations. For a subject such as electronic commerce,
which cuts across issues relating to the GATT, GATS, and TRIPS Agreements, Singapore has
suggested that a clarification on the interpretation and application of electronic commerce in relation
to these Agreements would be useful for WTO Members.14 Other issues in which Singapore has

12
WTO document WT/GC/W/196, 4 June 1999.
13
WTO document WT/GC/W/296, 5 August 1999.
14
WTO document WT/GC/W/247, 9 July 1999.
WT/TPR/S/67 Trade Policy Review
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expressed an interest include enhanced transparency in government procurement and improved trade
facilitation.

26. Like all Members of the WTO, Singapore is required to make regular notifications regarding
changes in laws and imposition of trade measures; Singapore's status regarding selected notifications
as of December 1999 is presented in Table II.3.
Table II.3
Status of selected notifications by Singapore to the WTO, as at December 1999
Description of Document No. of most
WTO Agreement Periodicity Comments
requirement recent notification

Preshipment Laws and regulations Once, then changes G/PSI/N/1/Add.2 Singapore notified that it
Inspection (Art. 5) which bring the 26 July 1995 has no laws or regulations
Agreement into force on preshipment inspection.
GATT 1994 Customs valuation Once, then changes G/VAL/N/1/SGP/1
(Art. VII) (Art. 22.1) 13 October 1997
Rules of Origin Preferential rules of Once, then changes G/RO/N/4 Singapore applies
(Annex II. 4) origin 7 August 1995 preferential rules under the
ASEAN Preferential
Trading Arrangement.
GATT Council for Non-tariff measures Every two years G/MA/NTM/QR/1/Add.4
Trade in Goods beginning January 18 November 1998
(G/L/59) 1996
Import licensing Publications in which Once, then changes G/LIC/N/1/SGP/2
(Art. 1.4a and 8.2b) legislation found 18 November 1998
Import licensing Questionnaire Annual G/LIC/N/3/SGP/2
(Art. 7.3) 3 December 1997
Import licensing Products subject to Once, then changes G/LIC/N/2/SGP/1
(Art. 5) licensing 18 November 1998
Anti-dumping Laws and regulations March 1995 and G/ADP/N/1/SGP/2/Suppl.1 The Countervailing and
(Art. 18.5) subsequent changes 13 May 1997 Anti-Dumping Duties Act,
(Cap 65B); the
Countervailing and
Anti-Dumping Duties
Regulations (Cap 65B
Rg 1).
Anti-dumping Actions taken Twice annually G/ADP/N/53/SGP No new actions taken from
(Art. 16.4) 6 August 1999 1 January-30 June 1999;
definitive duties imposed
on two suppliers.
Safeguards Pre-existing March 1995 and G/SG/N/3/SGP Notified that there were no
(Art. 12.7) Article XIX measures subsequent changes 12 May 1995 pre-existing Article XIX
measures.
Safeguards Laws and regulations Once, then changes G/SG/N/1/SGP/1 Notified that it does not
(Art. 12.6) 12 May 1995 have laws and regulations
on safeguards.
Subsidies Specific subsidies Annual G/SCM/N/48/SGP Notified that it does not
(Art. 25.1) 1 July 1999 grant any subsidy in the
meaning of Article 2 of the
Agreement.
Subsidies Laws and regulations March 1995 and G/SCM/N/1/SGP/2/Suppl.1 The Countervailing and
(Art. 32.6) subsequent changes 13 May 1997 Anti-Dumping Duties Act,
(Cap 65B); the
Countervailing and
Anti-Dumping Duties
Regulations (Cap 65B
Rg 1).
Table II.3 (cont'd)
Singapore WT/TPR/S/67
Page 31

Description of Document No. of most

WTO Agreement Periodicity Comments
requirement recent notification

Subsidies Countervailing duty Twice annually G/SCM/N/52/Add.1 No countervailing action

(Art. 25.11) actions taken 20 October 1999 during the period
1 January-30 June 1999.
TRIMs (Art. 5.1) Investment measures March 1995 and G/TRIMS/N/1/SGP/1 Notified that it does not
subsequent changes 22 October 1996 maintain any TRIMs that
do not conform with the
Agreement.
GATT 1994 State trading activities Annual G/STR/N/3/SGP Notified that it maintains
(Art. 17(4)(a)) 1 December 1997 no state-trading enterprises.
TBT (Art. 15.2) Laws and regulations Once, upon entry into G/TBT/2/Add.25
force 29 October 1996
TBT (Annex 3 (c)) Acceptance of code Once, then changes G/TBT/CS/2/Rev.5 The standardizing body is
19 February 1999 the Singapore Productivity
and Standards Board
(PSB).
SPS (Annex B (3)) Enquiry points Once, then changes G/SPS/ENQ/7 The enquiry points for SPS
15 September 1998 matters are the Food
Control Department of the
Ministry of the
Environment and the
Primary Production
Department.
TRIPS (Art. 70.8 Laws and regulations Within 30 days of the IP/N/1/SGP/1
and 70.9) WTO Agreement 16 July 1996
Agriculture Domestic support Annual, 90 days after G/AG/N/SGP/4 Notified that there was no
(Art. 18.2; DS:1+) a 3 March 1999 domestic support within the
end of FY
meaning of Article 6 of the
Agreement on Agriculture
in calendar year 1998.
Agriculture Export subsidies Annual, 90 days after G/AG/N/SGP/5 Notified no export
(Art. 18.2; ES:1+) a 3 March 1999 subsidies in the meaning of
end of FY
Article 9.1 of the
Agreement in calendar year
1998.
Textiles and Quantitative Once, before 1 March G/TMB/N/99 Notified that it did not
Clothing (Art. 3.1) restrictions 1995 24 May 1995 maintain quantitative
restrictions on imports of
textiles and clothing.
Textiles and Safeguard decisions Once, before 1 March G/TMB/N/98/corr.1 Singapore waived its right
Clothing (Art. 6.1) 1995 29 June 1995 to use the transitional
safeguard mechanism.
GATS (Art. III.4) Enquiry points Once, then changes S/ENQ/26 The National Enquiry Point
30 October 1996 is the Singapore Trade
Development Board

a First notification when the WTO Agreement enters into force.

FY Fiscal year.
-- Notification outstanding.

Source WTO documents.

27. Since 1996, Singapore has not been directly involved in any dispute at the WTO. It did,
however, reserve its third-party rights in two cases, one involving import prohibitions on certain
shrimp and shrimp products brought against the United States by Malaysia, Thailand, Pakistan, and
WT/TPR/S/67 Trade Policy Review
Page 32

India; and the second on customs classification of certain computer equipment brought against the
European Communities by the United States.15

28. Singapore has not been involved in any trade dispute outside the WTO.

(ii) Regional and bilateral trade relations

(a) Recent developments in ASEAN

29. A founding member of the Association of South-east Asian Nations (ASEAN), Singapore has
been an active participant in the regional grouping since 1967.16 In pursuit of its goal to accelerate
economic growth, social progress, and cultural development in the region, ASEAN decided in 1992 to
establish an ASEAN Free-Trade Area (AFTA) by the year 2008, later brought forward to 2003 for the
six original founding members. ASEAN's response to the regional financial crisis has been to
advance this date to 2002 for the six founding members. The Common Effective Preferential Tariff
Scheme (CEPT), the main trade policy instrument of AFTA, currently covers more than 90% of all
tariff lines in the ASEAN region.17 As Singapore's tariff is zero rated for all but four tariff lines, it has
already met its 2002 obligations under the AFTA. Singapore lists 120 products under its General
Exception List; these are currently being reviewed. Singapore has not included any products on its
Temporary Exclusion List.

30. Trade links between ASEAN members are also being improved through harmonization of
ASEAN customs procedures and valuation. In addition, ASEAN aims to increase cooperation in a
range of areas, including investment, standards and technical barriers to trade, and services. In this
regard, the ASEAN Framework Agreement on Services (AFAS) was signed during the Fifth ASEAN
Summit in December 1995; a Framework Agreement of the ASEAN Investment Area (AIA) was
signed in October 1998; and an ASEAN Framework Agreement on Mutual Recognition Agreements
(MRAs) was signed in December 1998.

31. The AFAS agreement, which is in addition to commitments made under the GATS
negotiations at the WTO, currently focuses on seven (initially five) priority sectors: air transport,
construction, business, financial, maritime transport, telecommunications, and tourism services.18
Negotiations focused primarily on five services (air transport, business, construction, maritime and
tourism), while Members agreed to adopt the results of the extended WTO negotiations on financial
and telecommunications services. The protocol to implement the initial package of commitments on
the five services entered into force on 31 March 1998. The protocol to implement the second
package, comprising commitments in all seven priority sectors, entered into force on 31 March 1999.

32. The AIA covers all investment in agriculture, forestry, fisheries, mining, and manufacturing
as well as services incidental to these sectors, other than portfolio investment. Its objectives include

15
In the first case, other countries that reserved their third-party rights were Australia; Colombia;
Costa Rica; Ecuador; El Salvador; the European Communities; Guatemala; Hong Kong, China; Japan;
Mexico; Nigeria; the Philippines; Senegal; Sri Lanka; and Venezuela (WTO document, WT/DS58/9,
17 April 1997). In the second case, Singapore was joined by India, Japan and Korea as countries with third
party rights (WTO document WT/DS62/5, 25 April 1997).
16
ASEAN currently consists of Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Malaysia,
the Philippines, Singapore, Thailand, and Viet Nam.
17
Under the CEPT scheme, it was expected that all tariffs included in the scheme would be no greater
than 5% by the year 2002 (2006 for Viet Nam, and 2008 for Laos and Myanmar).
18
Initially financial and telecommunications services were not included.
Singapore WT/TPR/S/67
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increasing investment flows into ASEAN, and liberalizing the investment environment to ensure a
free flow of investment by 2020. In this regard, national treatment will initially be extended to
ASEAN investors by 2010; the market will be opened to all investors by 2020, excluding items on
the sensitive list. Singapore has not included any products on the Temporary Exclusion List of the
AIA. However, it does have a Sensitive List for the agriculture, mining, and manufacturing sectors.

33. The Framework Agreement on MRAs, which follows the 1996 Memorandum on Cooperation
on standards and conformance, outlines general principles to be followed when agreeing sectoral
MRAs between member States and in accepting conformity assessment carried out by agencies in
member countries. The agreement also calls for the establishment of a Joint Sectoral Committee, for
each sectoral MRA, to oversee the effective functioning of the MRA.

34. Additional measures to accelerate trade and investment liberalization were taken by ASEAN
in the wake of the financial crisis that has adversely affected economies in the region since 1997
(Box II.1). ASEAN hopes that these measures will help businesses to regain confidence, enhance
economic recovery and thereby promote growth in the region.19

35. In addition to improving intra-ASEAN trade and investment ties, ASEAN aims to strengthen
links with other preferential trade regimes in the region. One such endeavour is a linkage between
AFTA and the Closer Economic Relations (CER) trade agreement between Australia and
New Zealand. In October 1999, ASEAN and CER countries also agreed to establish a high-level task
force to study the feasibility of establishing an AFTA-CER free-trade agreement by 2010. This study
is expected to be completed by October 2000. Activities to improve linkages between the two
preferential trading regimes currently include the creation of a customs compendium; exchange of
information on standards and conformance; collaborative work on ISO 14000; and linkages between
trade and investment databases held by the two partners. ASEAN is pursuing similar agreements with
other regional groupings such as the Southern Common Market (MERCOSUR), and the Southern
African Development Community (SADC).20 ASEAN also cooperates with the European Union on a
number of issues including investment, standards, trade liberalization, and development, and holds
regular meetings with its 11 dialogue partners.21 A free-trade agreement is also currently being
negotiated with New Zealand (section (d) below).

(b) Regional trade

36. Singapore is a participant in the Asia Pacific Economic Cooperation (APEC) forum, formed
in 1989.22 In accordance with the Bogor Declaration in November 1994, Singapore plans to
implement free trade and investment by the year 2010, as planned by developed country members of
APEC. Individual Action Plans (IAPs) for each member country were established to outline a path to
this goal. The IAPs cover liberalization in tariff and non-tariff barriers, and in services and
investment. Under its IAP, Singapore is committed to accelerated implementation of its obligations
under the WTO Agreements on TRIPS, Trade-Related Investment Measures (TRIMs) and Customs
Valuation.

19
ASEAN (1998).
20
ASEAN Secretariat (undated).
21
These are Australia, Canada, China, European Union, India, Japan, New Zealand, Republic of Korea,
Russia, the United States, and the United Nations Development Programme.
22
Other members of the APEC are: Australia, Brunei Darussalam, Canada, Chile, China,
Chinese Taipei, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea,
Peru, the Philippines, Russia, Thailand, the United States, Viet Nam, and Hong Kong, China.
WT/TPR/S/67 Trade Policy Review
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Box II.1: Main features of the ASEAN response to the Asian financial crisis
The financial and economic crisis that hit the region in 1997 had a significant impact on a number of
ASEAN countries. Rather than erecting trade and investment barriers to protect their hard-hit economies,
ASEAN members have responded by accelerating the liberalization programme. Specific measures to be
undertaken as outlined in the Statement on Bold Measures at the sixth ASEAN Summit held in Hanoi in
December 1998, include:
Trade liberalization. It was agreed to accelerate the completion of the ASEAN Free-Trade Area (AFTA).
In this regard, the six original founding members of ASEAN, Brunei Darussalam, Indonesia, Malaysia, the
Philippines, Singapore, and Thailand, would advance the implementation of AFTA from 2003 to 2002. In
addition, a minimum of 85% of the tariff lines in the Inclusion List of these nations would be reduced to 0-
5% by 2000 and 90% by 2001. Viet Nam would implement its tariff reductions to 0-5% by 2003, and Laos
and Myanmar by 2005. ASEAN members also agreed to deepen tariff reductions to 0% as soon as possible
and to accelerate the transfer of products currently not included in the CEPT scheme.

Investment. Short-term measures were taken by each member of ASEAN to encourage investment into
the region. ASEAN agreed to extend additional incentives to qualified ASEAN and non-ASEAN investors
in the manufacturing sector (for applications received between 1 January 1999 and 31 December 2000).
The incentives include:
- minimum three-year corporate income tax exemption or a minimum 30% corporate investment tax
allowance;
- up to 100% foreign equity ownership;
- duty-free imports of capital goods;
- domestic market access;
- minimum industrial land leasehold of 30 years;
- employment of foreign personnel; and
- speedy customs clearance.
Industrial cooperation. A previous 30% intra-ASEAN equity requirement under the ASEAN Industrial
Cooperation Scheme (AICO) was waived for the period 1999-2000.
Services. ASEAN members agreed to launch a new round of negotiations, beginning in 1999 and
scheduled to end in 2001, to discuss services outside the current seven priority services and to include all
service sectors and all modes of supply. In addition, a number of measures were taken to strengthen the
financial structure in the region and to increase ASEAN financial cooperation.
ASEAN Surveillance Process. The ASEAN Surveillance Process (ASP), established at the Special
Meeting of the ASEAN Finance Ministers on 4 October 1998, will involve peer reviews based on a frank
exchange of views on important finance matters. The ASP will be supported by the ASEAN Surveillance
Coordinating Unit (ASCU), based at the ASEAN Secretariat, and the ASEAN Technical Support Unit
(ASTSU), to be established at the Asian Development Bank. The first report of the ASP was prepared by
the ASEAN Select Committee and presented to the Ministerial Peer Review Process in March 1999, which
discussed the current economic situation in the region and measures undertaken to revive regional
economies.
Bilateral Payment Arrangement (BPA). Formally endorsed by the Second ASEAN Finance Ministers'
Meeting in February 1998, the BPA was to be used to promote greater use of ASEAN currencies for trade
settlement purposes. One BPA has thus far been concluded between Malaysia and the Philippines while
two more are currently under discussion.

Source: ASEAN (1998), Statement on Bold Measures, 6th ASEAN Summit, Hanoi 16 December.

37. At their 1997 meeting in Vancouver, APEC leaders agreed that early voluntary sectoral
liberalization (EVSL) should take place in 15 sectors, with implementation in nine sectors to be
Singapore WT/TPR/S/67
Page 35

advanced so as to begin in 1999.23 At the Kuala Lumpur meeting in November 1998, APEC
Ministers confirmed the participation of 16 member countries in the EVSL initiative.24 APEC
Ministers further agreed to negotiate the tariff elements of nine sectors, identified under the
"accelerated tariff liberalization" (ATL) package, at the WTO. The sectors were: chemicals, energy,
environment, fish and fish products, forest products, gems and jewellery, medical equipment and
instruments, and toys, as well as a mutual recognition agreement concerning telecommunications.
The ATL initiative aimed to achieve a zero target for almost all the sectors by 2005 or earlier in some
cases.25 Singapore included 100% of all tariff lines in these ATL sectors in its schedule of
commitments. In June 1999, APEC Trade Ministers decided that negotiations to liberalize the
remaining six sectors identified under the EVSL package would also be done at the WTO, but not
within the ATL package.

38. Singapore's size and resource constraints have also led to the formation of regional alliances
to take advantage of resource complementarities; the alliances included, in particular, the
Indonesia-Malaysia-Singapore growth triangle formed in 1994. The Memorandum of Understanding
(MOU) signed between the three countries is aimed at encouraging cooperation in the development,
expansion, and integration of sectors, including trade, transport and communications, tourism,
shipping, agriculture, forestry, industrial infrastructure, and manufacturing. The aim was for
Indonesia and Malaysia to provide labour and land, while Singapore would provide management and
technical skills for the project.26 The MOU would also encourage human-resource development and
the flow of goods and services, investment, and people within the triangle.

(c) Other agreements

39. Under the Generalized System of Preferences (GSP), exports from Singapore are granted
preferential access by Belarus, Canada, the Czech Republic, Hungary, Japan, Norway, the Russian
Federation, and the Slovak Republic. Preferences granted to Singapore under the GSP were
withdrawn by Switzerland and the European Union on 1 March 1998 and 1 May 1998, respectively.
Singapore's annual value of exports in 1998 under the GSP was low, at S$617 million (around 0.3%
of total exports). Commonwealth Preferences are offered by Mauritius and the Seychelles to imports
of certain products from Singapore (Chapter III(2)(iv)(b)). No data are available on the annual value
of exports under the system of Commonwealth Preferences. Singapore is also a signatory to the
Global System of Trade Preferences (GSTP).

(d) Bilateral trade agreements

40. Since 1996, Singapore has not signed any bilateral free-trade agreements, although one is
currently being negotiated with New Zealand.27 Singapore is also conducting feasibility studies of

23
The fifteen EVSL sectors are: chemicals; energy; environmental goods and services; fish and fish
products; forest products; gems and jewellery; medical equipment and instruments; telecommunications
mutual recognition; toys; oilseeds and oilseed products; food; natural and synthetic rubber; fertilizers;
automotive; and civil aircraft. It was envisaged that all APEC members, with the exception of Chile and
Mexico, would participate in this initiative.
24
Australia; Brunei; Canada; China; Hong Kong, China; Chinese Taipei; Indonesia; Japan; Korea;
Malaysia; New Zealand; Papua New Guinea; the Philippines; Singapore; Thailand; and the United States.
25
WTO documents WT/GC/W/138, 26 January 1999, and WT/GC/W/138/Add.1, 22 April 1999.
26
While the governments would provide the basic infrastructure, the actual establishment and running
of investment projects would be left to the private sector (GATT, 1992).
27
Understanding between the Republic of Singapore and New Zealand on a Free Trade Agreement.
The agreement aims to remove tariffs in goods and liberalize trade in most services by 31 December 2000.
WT/TPR/S/67 Trade Policy Review
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bilateral free-trade agreements with Mexico and Japan. In addition, Singapore, New Zealand and
Chile have agreed to a tri-party study on the possibility of a free-trade agreement between the three
countries.

41. Singapore's bilateral trade agreements provide a basis for trade and investment facilitation and
development. A secondary focus is trade defence.28 The Trade Development Board (TDB) provides
assistance and advice to affected exporters, and monitors compliance of the authorities of the
initiating country with international agreements and rules.29 The TDB also ensures that companies in
Singapore are made fully aware of their rights and obligations under various international agreements,
including the WTO Agreements.

(5) FOREIGN INVESTMENT REGIME

(i) Introduction

42. Foreign investment has traditionally been welcomed in Singapore and has accounted for a
significant share of total investment in the economy. The foreign share of net investment in the
manufacturing sector was over 70% during the period 1972-89.30 During the 1990s foreign
investment continued to play an important role in the economy. According to a recent estimate,
between 1984 and 1993 the stock of foreign equity invested in Singapore grew nearly three-fold31,
while according to the Singapore International Chambers of Commerce, the foreign share of net
investment in manufacturing remained at around 70% in 1997.32

43. Reflecting the important contribution of foreign investment to the development of the
economy, there are no restrictions on inward foreign investment in most sectors. Broad political and
social consensus is sought to ensure that Singapore provides a politically and socially stable
environment, attractive to foreign investors. This is supported by a range of tax incentives for
potential investors in Singapore (section (iii) below).

44. The only restrictions on foreign investment are found in some of the services and utilities
sectors.33 In the financial services sector, the main changes since the previous Review include the
lifting of a 40% limit on foreign investment in any locally incorporated bank and the raising of a limit
on foreign ownership of Stock Exchange of Singapore (SES) Members from 49% to 70% in 1998; it
is expected that this restriction will be lifted by 1 January 2002 (Chapter IV(4)(v)). In the
telecommunications sector, foreign investment in any of the liberalized services is allowed up to a
combined total of 73.99% (49% foreign direct investment and 24.99% indirect investment)
(Chapter IV(4)(vi). Foreign ownership in electricity services is currently allowed only in electricity
generation and supply, while in water services, foreign investment is allowed in all areas except the
supply of potable water. Foreign ownership of certain residential property requires approval from the

Other areas to be covered include investment, standards, intellectual property, procurement, and contingency
measures.
28
Anti-dumping and countervailing actions taken against exports from Singapore are rare. Since the
last TPR, only the EU has initiated countervailing actions against exports from Singapore.
29
Trade Development Board (1998).
30
GATT (1992); and Singapore International Chambers of Commerce (1998).
31
Department of Statistics (1995).
32
Singapore International Chambers of Commerce (1998).
33
Certain sectors deemed essential by the Government, such as utilities, telecommunication services,
public housing, and education were, in the past, closed to private investment (United Nations Commission for
Asia and the Pacific, 1998).
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Controller of Residential Property, under the Ministry of Law, and there are no limits on portfolio
investment.

45. There are no restrictions on outward foreign investment.

(ii) Legislation

46. There is no specific legislation relating to foreign investment. Businesses establishing in

Singapore may do so either under the Companies Act (Cap 50) or the Business Registration Act
(Cap 32) and must appear on the Registry of Companies and Businesses. The Companies Act
requires that all companies registered in Singapore have at least one director who is ordinarily resident
in Singapore (Chapter III(4)(i)).

47. In certain cases, a special licence is required from the Registrar of Manufacturers under the
Control of Manufacture Act for the production of certain goods. The Act aims to curb the
undertaking of manufacturing activities of undesirable products that do not promote the economic and
social well-being of Singapore. Specific reasons are given for placing each of the goods currently
listed under the Act. Licences for these goods are required both for Singapore-based and foreign
companies and are granted by the EDB: air-conditioners; beer and stout; cigars; drawn steel
products; firecrackers; pig iron and sponge iron; refrigerators; rolled steel products; steel ingots,
billets, blooms and slabs; chewing gum, bubble gum, dental chewing gum or any like substance, as
listed under the First Schedule of the Act; and cigarettes and matches, as listed under the Second
Schedule of the Act.34 Optical disc manufacturers were also placed on the First Schedule in 1998.

(iii) Incentive measures

48. The Government provides a wide range of tax and non-tax incentives to companies and
individuals choosing to invest in Singapore.35 Historically, investment incentives were provided as
part of an active government development policy to attract foreign investment in manufacturing. In
the 1980s, this policy shifted to high value-added manufacturing and services, in an attempt to help
the economy emerge from a recession.36 Investment incentives are provided mainly by the Economic
Development Board through the Economic Expansion Incentives (Relief from Income Tax) Act
(Cap 86) and the Income Tax Act (Cap 134). The incentives include corporate tax holidays of
between five and ten years for companies with Pioneer Status; concessional tax rates of 13% (rather
than the standard rate of 26%) for up to ten years; exemption of taxable income of specified
proportions (up to 50%) on new fixed investment; and a concessional 10% tax (instead of 26%) for
operational headquarters on income arising from approved services (Chapter III(4)(iv) and
Table III.17).

34
For items on the First Schedule, the Registrar of Manufacturers may not refuse the application or
impose additional conditions for existing manufacturers already engaged in the production of a good prior to its
listing on the First Schedule. For items on the Second Schedule, the Registrar of Manufacturers may refuse to
register any person for the production of any good listed and may impose any conditions he deems fit.
35
The incentives are provided to local and foreign companies alike.
36
As a result of a report produced by an Economic Committee set up to examine the causes of the
1985/86 recession, the Economic Development Board established the Services Promotion Division (SPD) in
1986. The SPD focused on the development of financial and engineering services, telecommunications,
information technology, and educational and medical services through the development of investment
promotion plans and infrastructure development to foster growth in services (United Nations Commission for
Asia and the Pacific, 1998).
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49. Incentives to develop Singapore into an international financial centre are administered by the
Monetary Authority of Singapore (MAS). These include concessionary tax rates for Asian Currency
Unit (ACU) income; asset management activities; and arranging and investing in bond instruments.
In the administration of these tax incentives, foreign and local institutions are treated alike.

50. The Government also actively promotes outward foreign investment, including through tax
exemptions for approved kinds of overseas investment for a period up to ten years, under the Overseas
Enterprise Incentive programme. In addition, non-tax incentives such as the Regionalization Finance
Scheme are provided for local enterprises to invest overseas.

51. To promote regional cooperation in investment, the Framework Agreement on the ASEAN
Investment Area (AIA) was signed at the 30th Meeting of the ASEAN Economic Ministers, in
October 1998, which established the AIA Council. The responsibility of the Council is to
substantially increase investment from ASEAN and non-ASEAN countries by making ASEAN
competitive and open. It is expected that the AIA will also bind member countries to grant national
treatment and open up industries to investment (initially in manufacturing), and to extend
liberalization to services incidental to manufacturing, agriculture, forestry, fisheries, and mining.

(iv) International agreements

52. Singapore became a member of the Multilateral Investment Guarantee Agency (MIGA) on
24 February 1998.

53. Since its previous Review, Singapore has signed Investment Guarantee Agreements with
Cambodia, Egypt, Hungary, Laos, Latvia, and Slovenia.37 Under these agreements, investments by
nationals or companies are protected for an initial period, usually at least ten years, against war and
non-commercial risks such as expropriation and nationalization.

54. In addition, Singapore has concluded double taxation treaties with 38 countries38, 11 since
39
1996.

37
Singapore has investment guarantee agreements with: Cambodia, Canada, China, Czech Republic,
Egypt, France, Germany, Hungary, Laos, Latvia, Mongolia, the Netherlands, Pakistan, Poland, Riau
Archipelago, Slovenia, Sri Lanka, Switzerland, the United Kingdom, the United States and Viet Nam in addition
to ASEAN and the Belgo-Luxembourg Economic Union. The Investment Guarantee Agreements signed with
Cambodia, Egypt, Mongolia, and Slovenia are not currently in force.
38
Australia, Bangladesh, Belgium, Bulgaria, Canada, China, Chinese Taipei, Czech Republic,
Denmark, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Republic of Korea,
Luxembourg, Malaysia, Mauritius, Mexico, the Netherlands, New Zealand, Norway, Pakistan,
Papua New Guinea, Philippines, Poland, South Africa, Sri Lanka, Sweden, Switzerland, Thailand,
the United Arab Emirates, the United Kingdom, and Viet Nam.
39
Bulgaria, Czech Republic, Egypt, Hungary, Latvia, Myanmar, Norway (revised agreement),
Portugal, South Africa, Turkey, and the United Kingdom (revised agreement).