Joseph He and Gerry Gan
Section 1: China outbound investment
a) What are the key sectors in Singapore that attract, or to which the government is seeking to attract, China outbound investment (COI)?
With the rise of certain key sectors in China, International Enterprise Singapore (IE Singapore) has identified various areas of potential partnership:
Internet+: With the launch of “Internet Plus” (互联网+) by Premier Li Keqiang, China’s start-up and innovation scene is vibrant, with Alibaba, Baidu, Huawei and Xiaomi having become global household brands in the last decade. IE Singapore partners existing e-marketplaces such as Alibaba to help Singapore companies capitalize on China’s growing e-commerce sector.
Water: Introduced by President Xi Jinping in 2013, Singapore has an ecosystem of companies that have the reliability and track record to provide water solutions to China’s sponge city developments, especially in the areas of flood prevention, water infrastructure development and smart water management technologies.
Logistics: Increasing domestic consumption in China has enhanced the demand for better supply chain management services for consumer goods. Singapore companies are well-positioned in providing niche logistics services such as in the cold-chain services arena.
Consumer lifestyle products: China’s burgeoning middle class has increased the demand for high-quality shopping malls, consumer products and lifestyle services. Singapore companies in the fashion, retail and other lifestyle sectors are encouraged to seize these opportunities in China’s booming consumerist market.
Food services: The rising emphasis over food safety in recent years has allowed Singapore’s brand-name to enjoy a high level of credibility among Chinese consumers for food safety standards and quality. IE Singapore has partnered with local food manufacturers to help set up shop on Alibaba’s Tmall website.
Education: Chinese parents today are more willing to invest in quality education, especially in the pre-school and enrichment sectors. Singapore companies can leverage on Singapore’s reputation in providing a world-class bilingual education.
Townships: Urbanization in China has generated huge demand for residential, commercial and industrial development, with demand for residential township projects estimated to be worth $540 billion. Singapore remains one of the most important partners in China’s township development–examples include Tianjin Eco-City, Guangzhou Knowledge City, Singapore-Sichuan Hi-Tech Innovation Park in Chengdu, and Nanjing Eco High-Tech Island.
Healthcare and wellness: China is committed to encouraging private sector participation to support the development of the nation’s healthcare services.
This table demonstrates COI in Singapore, broken down by sector over the previous years.
|China foreign direct investment in Singapore
(Stock as at year-end, annual)
|Sector / millions in SGD||2013||2014||2015|
|Wholesale & retail trade||4,382.3||2,487.2||8,814.4|
|Accommodation & food service activities||NA||NA||1.1|
|Transport & storage||-498.6||-471.5||-746.3|
|Information & communications||0.4||NA||15|
|Financial & insurance services||11,338.8||11,060.6||9,974.6|
|Real estate activities||4.7||460||378.3|
|Professional, scientific & technical, administrative & support services||170.8||578.9||690.5|
Source: Department of Statistics, Singapore
b) Is the government generally supportive of COI? Can you describe the current political climate surrounding China and Singapore?
The Singapore government and its laws are generally pro-business, especially towards China. Since 2013, China has been Singapore’s largest trading partner, and Singapore has been China’s largest foreign investor.
c) What are some notable Chinese investments or M&A that have recently taken place in Singapore?
The One Belt, One Road (OBOR) initiative announced by President Xi in 2013 has gained significant traction. Various industries, such as infrastructure and logistics, tourism, clean energy and financial and professional services, will stand to benefit from the policy.
On February 28, 2017, Singapore and China signed four cooperation pacts, including one for each of the three government-led projects.
In 2016, IE Singapore signed three Memoranda of Understanding (MOUs) with the three largest Chinese banks (the Industrial and Commercial Bank of China (ICBC), China Construction Bank and Bank of China), committing a total of S$90 billion worth of financing services for OBOR projects in the region.
Other notable deals include the MOU between ICBC and Surbana Jurong to commit Rmb50 billion to finance services and project financing structures for major urban and infrastructure projects across Asia.
Section 2: Investment vehicles and capital
a) What are the most common legal entities and vehicles used for COI in Singapore? How long do they take to become operational?
Singapore has a broad range of corporate and investment vehicles, such as sole proprietorships, partnerships and companies.
A private limited company is one of the most popular forms of business and investment vehicles used in Singapore. It is a separate legal entity and shareholders are not liable for the company’s debts beyond the amount of share capital contributed.
Any individual, firm or corporation intending to carry out business for a foreign company must be registered with the Accounting and Corporate Regulatory Authority.
The application is usually processed within 15 minutes after the name application fee is paid.
It may take between 14 days and two months if the application needs to be referred to another agency for approval or review. A foreign company intending to set up a private school will be referred to the Ministry of Education, for example.
b) What are the key criteria for establishment and operation of these vehicles that are relevant to COI (e.g. capital requirements, local directors)?
A foreign company that wants to set up a branch in Singapore must appoint two local agents to act on its behalf. These agents must be Singapore residents (either citizens, permanent residents, or foreigners with employment or dependent passes).
Special licenses are required for certain businesses including banking, insurance, and stockbroking, and for the manufacture of certain goods such as cigars and firecrackers.
The minimum paid-up capital for registration of a Singapore company is S$1. Paid-up capital (also known as share capital) can be increased any time after the incorporation of the company. There is no concept of authorized capital for Singapore companies.
Section 3: Investment approval
a) Explain the process and timing for foreign investment approval (including any national security review).
There are, in general, no restrictions, approvals, or registrations aimed specifically at foreigners investing in Singapore.
Some industries (such as banking, broadcasting and legal) impose governmental approval and registration requirements on shareholding, as they are perceived to be critical to national interests.
b) Briefly explain the investment restrictions for any specially regulated/restricted sectors (e.g. natural resources, financial services, telecom and infrastructure), including whether the government is entitled to any special rights (e.g. golden shares) in those sectors.
The acquisition of interests to or exceeding the following thresholds for the following types of companies require the prior approval of the Monetary Authority of Singapore (MAS) or the Minister of Finance:
o 5%, 12% and 20% of any bank incorporated in Singapore
o 5% of any insurance company incorporated in Singapore
o 5% of any finance company incorporated in Singapore
o 5% and 12% of any newspaper or television broadcast company in Singapore
Broadcasting: No company shall be granted or hold a relevant license, if the Minister is satisfied that any foreign source(s) holds not less than 49% of the shares in the company, or its holding company, or is in a position to control voting power of not less than 49% in the company or its holding company.
Banking: MAS requires all banks in Singapore to comply with requirements on capital adequacy, asset maintenance, liquidity and limits on credit and investment exposures. Foreign bank branches are required to maintain a proportion of the assets of their Singapore branch in safe and liquid Singapore dollar-denominated and Singapore-domiciled assets.
Telecommunications: There is full competition in Singapore’s telecommunications sector and there are no direct and indirect foreign equity limits for all public telecommunications services licenses.
c) Which authority oversees competition clearance, when is notification necessary, and what is the merger control process (including whether pre- or post-closing)?
Mergers and acquisitions that result, or may be expected to result, in a substantial lessening of competition within any market in Singapore for goods or services are prohibited under Section 54 of the Competition Act (Chapter 50B), unless excluded or exempted.
While seeking prior approval of the Competition Commission of Singapore (CCS) is not required for a merger, it is advisable for parties to do so to obtain provisional immunity from financial penalties in certain circumstances.
The CCS review process takes place in two phases:
d) Are there any unique processes that could potentially block a foreign investment (e.g. consent from labor unions)?
Singapore’s legal framework and policies generally favor foreign investment and there are no unusual or unique processes that would make it difficult to invest in Singapore.
e) Are there any approval requirements when a foreign investor increases or exits its investments?
In line with Singapore’s pro-business climate, foreign investors can expect to enjoy relatively hassle-free entry into and exit from Singapore. It is unlikely there would be any approval requirements, unless specific to the investment itself.
As mentioned in 3b, for certain special industries, there may be additional regulatory requirements. Moreover, where the investment relates to a listed company, the Singapore Exchange listing rules, as well as Singapore’s public takeover laws and rules, will also have to be observed.
Section 4: Tax and grants
a) Are there tax structures and/or favorable intermediary tax jurisdictions that are particularly useful for FDI into Singapore?
A company that is a tax resident in Singapore will be entitled to claim relief from double taxation or benefits under Singapore’s tax treaties with the relevant jurisdiction. A company is considered tax resident in Singapore if control and management of its business are exercised in Singapore. Singapore and China have entered into a tax treaty (see 4e).
b) What are the applicable rates of corporate tax and withholding tax on dividends?
The corporate tax rate in Singapore is 17%, with effect from the year of assessment 2010.
Singapore has adopted a one-tier corporate tax system in which tax paid by a resident company on its chargeable income is a final tax. Thus, dividends are not subject to corporate income tax.
c) Does the government have any FDI tax incentive schemes in place?
Tax exemptions available offer various tax reductions and exemptions for businesses involved in the fields of manufacturing and research and development. The Pioneer Incentive and Development and Expansion Incentive would be most relevant for COI.
d) Other than through taxes, does the government provide any other financial support to investors? If so, please provide an overview.
Generally, incentives or aid are negotiated before the company’s registration. These are generally aimed at supporting the development of innovation and technology in Singapore, such as the equity financing schemes by SPRING Singapore.
Investors can contact the Singapore Trade Development Board, which aims to promote foreign investment and exports.
e) Are there any reciprocal tax arrangements between Singapore and China? If so, how can they aid investors?
The Singapore-China Avoidance of Double Taxation Agreement came into effect in 2008, and helps investors avoid the burden of double taxation of income between Singapore and China and further facilitates the cross-flow of trade, investment, financial activities and technical know-how between the two countries.
Section 5: FX controls and local operations
a) What foreign currency or exchange restrictions should investors be aware of?
There are no foreign currency restrictions on non-residents. Under MAS Notice 757, non-residents can freely remit funds into and out of Singapore and are free to purchase or sell Singapore dollars in the foreign exchange market.
Under Section 55 of the Banking Act (Chapter 19), restrictions only apply to non-resident financial institutions.
b) Are there any legal restrictions on bringing in foreign workers? How difficult is it to secure expatriate visas for shareholder representatives, senior managers and workers in practice?
Foreign nationals must obtain a work pass from the Ministry of Manpower.
The Singapore government has a policy of encouraging well-qualified and skilled foreigners who can contribute to the economy to join the workforce in Singapore, such as the Global Investor Programme which targets foreigners with outstanding entrepreneurial ability and substantial financial resources to invest in Singapore.
c) What are the requirements and process for purchasing commercial property?
There are no restrictions on foreign investors wishing to purchase commercial property in Singapore.
Section 6: Dispute resolution
a) Does Singapore have a bilateral investment protection treaty with China or other locations commonly used for investing into the country?
Singapore entered into a bilateral investment treaty with China in 1986. It applies to investments in Singapore made by nationals and companies in the PRC which are specifically approved by the Singapore authorities and vice versa (Article 2(1)).
b) How efficient are local courts’ enforcement and dispute resolution proceedings, and are there any procedural features that foreign investors must be aware of?
The Singapore judicial system is generally recognized in international third-party surveys (such as those conducted by Political and Economic Risk Consultancy and Economist Intelligence Unit) as efficient, experienced, well-qualified, and independent, especially in commercial and business matters.
c) Do local courts respect foreign judgements and are international arbitration awards enforceable?
Singapore has arrangements for the reciprocal enforcement of judgments with various countries under the Reciprocal Enforcement of Commonwealth Judgments Act (Chapter 264) (RECJA) and Reciprocal Enforcement of Foreign Judgments Act (Chapter 265) (REFJA).
Singapore recently gave effect to the Hague Convention on Choice of Court Agreements (Hague Convention) in 2016. Where a judgment (including a non-money judgment) is given by a court of another Hague Convention state, the judgment shall be recognized and enforced in the other contracting states.
There are currently no such arrangements in place with China. A judgment from a Chinese court may be enforced in Singapore by way of commencing an action for a claim on the judgment sum.
Arbitration awards are enforceable if the award was made in a country that is signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (New York Convention). Foreign awards made in non-New York Convention countries may be enforced in Singapore, but only in the same manner as a foreign judgment would be, with the leave of the High Court.
d) Are local judgments and arbitration awards from Singapore generally enforceable in other jurisdictions?
If the RECJA or REFJA applies, Singapore superior court judgments are enforceable in RECJA or REFJA countries.
Singapore is a party to the New York Convention—arbitral awards from other member states are enforceable in Singapore, and vice versa. In addition, the International Arbitration Act (Chapter 143A) allows for Singapore awards to be authenticated by a certifying authority if needed for enforcement processes abroad.
Joseph He Jun is the Joint Head of the China Practice and a partner in both the Corporate/Mergers & Acquisitions and the Capital Markets Practices.
His main practice areas are corporate finance, equity capital markets, foreign investment in the People’s Republic of China (“PRC”), mergers and acquisitions and property development in the PRC.
Joseph has been involved in significant transactions such as SingBridge Guangzhou Pte. Ltd.’s acquisition of a 40% interest in the issued share capital of Optima Investment & Development Pte. Ltd. from Wing Tai (China) Investment Pte. Ltd. and Shandong Delisi Food Co. Ltd.’s acquisition of a 45% stake in Bindaree Beef Group for A$140 million.
Joseph has been involved in numerous Sino-Singapore projects, including having acted for Singapore-Sichuan Investment Holdings Pte. Ltd. on its Rmb20 billion development of the Singapore-Sichuan Hi-Tech Innovation Park located in the Chengdu Hi-Tech Zone and Keppel Telecommunications & Transport Ltd. in a joint venture agreement with the Jilin City government to jointly develop and operate the Sino-Singapore Jilin Food Zone International Logistics Park to serve the Sino-Singapore Jilin Food Zone.
Joseph is recommended as a foreign expert based abroad in Singapore with expertise in the PRC by Chambers Global – The World’s Leading Lawyers for Business since 2012. Joseph is also recommended as a leading lawyer in the PRC by Asialaw Leading Lawyers – The Guide to Asia-Pacific’s Leading Lawyers 2016 for corporate/M&A and Asialaw Profiles – The Guide to Asia-Pacific’s Leading Domestic Law Firms since 2014.
Gerry Gan is the Joint Head of the China Practice and a partner in the Corporate/Mergers & Acquisitions Practice. His main practice areas are M&A (involving public and private companies), equity capital markets (IPOs and private placements), and general corporate law.
Gerry has acted in significant transaction such as for Canada Pension Plan Investment Board in relation to its US$375 million investment into Raffles City China Investment Partners III; Parkway Pantai Limited, a subsidiary of IHH Healthcare Berhad, in relation to (a) its joint venture with Shanghai Broad Ocean Investments Co., Ltd., in Chengdu, PRC; and (b) the lease agreement between the joint venture and Chengdu Ruifeng Real Estate Development Co., Ltd., a subsidiary of Perennial Real Estate Holdings Limited.
Gerry’s experience in real estate-related matters include acting for Optima Investment & Development Pte. Ltd. to develop a residential project in the Sino-Singapore Guangzhou Knowledge City located in Guangzhou, PRC (a landmark project with support from the Guangdong and Singapore governments).
Gerry is recommended as a foreign expert based abroad in Singapore with expertise in the PRC by Chambers Global – The World’s Leading Lawyers for Business and a leading PRC M&A and Capital Markets practitioner by Asialaw Leading Lawyers – The Guide to Asia-Pacific’s Leading Lawyers 2016. He is also recommended as a leading lawyer in the PRC by Asialaw Profiles – The Guide to Asia-Pacific’s Leading Domestic Law Firms 2016.
何军 和 颜建堃
2016年，新加坡企发局与中国最大的三家银行（中国工商银行、中国建设银行和中国银行）签订了三项谅解备忘录，将为该地区的“一带一路 ”项目提供价值 900 亿新元的融资服务。
广播：如果部长确信，任何外国来源持有一家公司或其控股公司不少于 49%的股份，或者控制了该公司或其控股公司不少于 49%的投票权，则该公司不得获发或持有有关的执照。
阶段1是一个快速审查，如果并购的情况明显不引起竞争问题，可获准继续进行，以免出现不必要的延误。CCS通常在30个工作日内完成阶段 1 的审查。
何律师参与的重要交易包括：代表SingBridge Guangzhou Pte. Ltd. 向 Wing Tai (China) Investment Pte Ltd. 收购 Optima Investment & Development Pte. Ltd. 已发行股本40%的权益；代表山东得利斯食品股份有限公司以1.4亿澳元收购Bindaree Beef Group的45%股权。
何律师自2012年起被《钱伯斯全球— 世界顶尖商业律师》推荐为在新加坡拥有中国专业知识的外地专家，被《2016年亚洲法律顶尖律师— 亚太地区顶尖商业律师指南》推荐为中国公司/并购领域的顶尖律师。此外，何律师自2014年起被《亚洲法律简介 — 亚太地区杰出本地律所指南》推荐为顶尖的中国业务律师。
颜律师参与的重大交易包括代表Canada Pension Plan Investment Board 向来福士中国投资伙伴III投资3.75亿美元的项目；代表IHH医疗保健有限公司的子公司百汇班台有限公司进行下列项目：(a)与在中国成都的上海阔海投资有限公司成立合资公司，以及(b)该合资公司和鹏瑞利置地集团有限公司的子公司Chengdu Ruifeng Real Estate Development Co., Ltd.之间的租赁协议。
颜律师在房地产方面的工作经验包括：代表Optima Investment & Development Pte. Ltd.，开发位于中国广州的中新广州知识城住宅项目（该地标性项目获得广东和新加坡政府的支持）。
颜律师被《钱伯斯全球— 世界顶尖商业律师》推荐为拥有中国专业知识的新加坡专家，被《2016年亚洲法律顶尖律师— 亚太地区顶尖商业律师》推荐为中国并购和资本市场领域的顶尖律师。此外，颜律师被《2016年亚洲法律简介 — 亚太地区杰出本地律所指南》评为中国的顶尖律师。