Singapore grabs crown as Asia-Pac's hottest investment hub

Here's why it keeps on luring investors.

According to Vriens and Partners' Asia Pacific Investment Climate Index, Singapore tops this year’s rankings for the second consecutive time. Scoring consistently high across all six pillars, Singapore offers a stable political and legal environment and prudent macroeconomic policies that help attract foreign investment. 

Singapore’s trade regime is open and competitive, with few tariffs imposed on imports. Competitive tax rates, a transparent regulatory environment, and an efficient judicial framework further bolster foreign investment.

Even so, Singapore slipped to second in political stability, mostly as a result of rising political activism and challenges to controversial domestic policies. In
the most recent election, the People’s Action Party (PAP), which has ruled the country since independence, endured its worst performance in the
polls since separating from Malaysia in 1965.

Singapore also fell behind Hong Kong in openness to international trade and business. As Singapore seeks to address immigration concerns, increasing
restrictions on hiring foreigners have impacted companies across industries, from construction to professional services.

Singapore’s liberal immigration policies havebecome an extremely sensitive political issue in the city-state, as population density exacerbates competition for employment and housing, contributes to rising prices, and strains infrastructure.

The publication of a government white paper in early 2013, which projects a rapid rise in the foreign population by 2030, instigated the country’s largest protest since independence.

New licensing requirements for online news sites further riled some citizens, who faulted thegovernment for using old tactics to control new media. The policy move also resulted in another large protest organized and supported by prominent online commentators and bloggers.

The PAP is trying to balance local concerns without abandoning the policies that attract foreign investors and MNCs, the irony being that the PAP is, to some extent, a victim of its own success in bringing such high levels of economic growth.

The PAP’s ability to navigate the growing social and economic challenges will underpin the country’s ability to continue to attract foreign investment in the coming years.