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Country Commercial Guides for FY 2000: Singapore Report prepared by U.S. Embassy Singapore, released July 1999 Note*

Chapter VII. Investment Climate

Investment Policy Summary
Singapore has a highly open investment regime, through which it successfully transformed itself from a trading port into a modern industrial economy. Presently, anticipating rapid technological changes, increasing globalization of business operations, and keener competition from other countries offering lower land, labor and business costs, Singapore is engaging in active manpower development, infrastructure enhancement and market liberalization efforts to advance itself to a knowledge-based economy.

To catalyze its transition to a knowledge-based economy, Singapore is encouraging foreign skilled professionals to settle in the city-state, and multinational companies (MNC's) to establish knowledge-intensive manufacturing and service activities. These include research and development, product design and development, high-tech manufacturing, process engineering, and value-added logistics.

Through MNC's, Singapore aspires to become a world class player in electronics, petroleum and petrochemicals, life sciences, engineering, education, healthcare, logistics, and communications and media. Singapore is also aiming to draw MNC's to set up headquarters in the city-state to manage their regional or global activities, and leading banking and financial institutions to establish or upgrade operations to develop the city-state into an international financial center.

Openness to Foreign Investment
Singapore's free enterprise economy, which recorded the world's second highest per capita GDP of US$24,610 in 1997 in purchasing power parity terms (according to a World Bank ranking), is dominated by government-linked companies (GLC's) and major foreign MNC's. GLC's straddle all major sectors of the economy, while MNC's are mainly concentrated in the electronics and chemicals industries.

Besides its high per capita GDP, Singapore is also highly ranked for its economic competitiveness. It was the world's most competitive country in 1999 (ahead of the U.S. and Hong Kong) and the world's second freest economy (after Hong Kong) as ranked by the World Economic Forum (WEF). The US$6 billion wage and business cost cutting package introduced by the government in November 1998 in response to the recession brought on by the Asian economic crisis, and moves to liberalize the economy, particularly banking and financial services, will further enhance Singapore's economic competitiveness.

Attracting foreign investment into the country - initially to spearhead industrialization and subsequently to climb the technological and value-added ladders - has been a key economic strategy of the Singapore Government since independence in 1965. Through it, Singapore evolved into a base for MNC's to engage in high-end manufacturing and product development, and coordinate regional procurement, production, marketing, and distribution operations, thus complementing lower-end assembly operations located in other Southeast Asian countries where production and business costs are lower. Consequently, the country's legal framework and public policies have always been foreign investor-friendly.

In response to increasing globalization of business operations, rapid technological changes, and keener competition from other countries offering lower land, labor and business costs, Singapore recently launched a national initiative, called Industry 21 or I21 for short, to advance itself into a knowledge-based economy.

To achieve its goal, Singapore is intensifying efforts to upgrade its manpower capabilities (in addition to attracting relevant foreign skilled professionals to work and settle in the country), and promote entrepreneurship among citizens (particularly in information-technology (IT)-related fields). Singapore is also encouraging businesses to invest in new technology and engage in research and development, and actively enhancing its economic and IT infrastructure. The infrastructural improvement projects include Jurong Island, which is being created through reclamation works to house the oil refining and chemicals industries, and Singapore ONE, a nation-wide high-speed fiber optic broadband network providing multimedia applications and internet services to virtually all homes, schools and offices. Additionally, the country is liberalizing its economy, particularly the banking and financial services sector, which is presently undergoing a gradual but significant market-opening and reform process. It has also recently permitted joint ventures and alliances between foreign and local law firms to upgrade the country's legal services industry.

In line with I21, Singapore is encouraging MNC's to establish high value-added manufacturing and service operations in the city-state, including research and development, product design and development, high-tech manufacturing, process engineering, and value-added logistics. Through foreign investment, Singapore aspires to become a world class player in the electronics, petroleum and petrochemicals, life sciences, engineering, education, healthcare, logistics, and communications and media industries. It also aims to be a choice location as headquarters of MNC's, from which regional or global operations are managed, and a vibrant international financial center.

Foreign investors are not required to enter into joint ventures or cede management control to local interests. The Singapore Government generally does not restrict or discourage foreign investment either to protect local industries or for any other reason. However, notable exceptions exist in the armament manufacturing, news media, telecommunications, broadcasting, property ownership and domestic banking sectors, where investment opportunities are still limited.

The Economic Development Board (EDB), the Government's manufacturing investment promotion agency, does screen investment proposals to determine their eligibility for various incentive schemes and to provide assistance. While those investments that do not meet the criteria are not given incentives, they are not prohibited from proceeding. As a one-stop service that helps foreign investors avoid red tape, the EDB has a reputation for being responsive to changing business conditions and investor needs.

The Monetary Authority of Singapore (MAS), Singapore's central bank, is overseeing the market-opening and reform measures introduced by the government to expand fund management services, develop the bond market, and gradually allow greater foreign competition in domestic retail banking and other financial services. The MAS administers generous tax and other incentives to encourage leading banking and financial institutions to invest in new operations or upgrade existing ones, with the view to spearhead Singapore's drive to become an international financial center.

Rights to Private Ownership and Establishment
Foreign and local entities may freely establish and operate their own enterprises in Singapore. Except for representative offices, whereby foreign firms maintain a local representative but do not conduct commercial transactions in Singapore, there are no restrictions on carrying out remunerative activities.

All businesses in Singapore must be registered with the Registry of Companies and Businesses. Foreign investors can operate their businesses in one of the following forms:

• sole proprietorship: an individual operating as a sole trader regulated under the business registration act;
• partnership: two to 20 persons, regulated under the business registration act;
• incorporated company: comprising not more than 50 shareholders and operating as a company limited by shares or guarantee, or as an unlimited company regulated by the provisions of the Companies Act (Cap. 50); or,
• foreign company: registered as a branch of the parent company under the Companies Act but not incorporated as a Singapore company;
• representative office: offices of foreign corporations, which undertake promotional and liaison activities on their parent company's behalf. They must not engage in business, conclude contracts, provide consultancy for a fee, undertake transshipment of goods, or open or negotiate any letters of credit directly or on behalf of their parent companies.

Protection of Property Rights
Common law protects and facilitates the acquisition and disposition of all property. There are some restrictions on foreigners owning real estate in Singapore. Under the Residential Property Act, foreigners can purchase freehold condominiums. They are, however, not permitted to own landed homes (houses) and apartments in buildings of less than 6 levels, even if they are leasehold properties, unless approval is first obtained from the Minister of Law. Such approvals are granted very selectively; an example where approval may be granted is a foreign MNC buying properties to house its executives. There are no restrictions on foreign ownership of industrial and commercial real estate.

Foreign Trade Zones / Free Trade Zones
Singapore has six free-trade zones (FTZ's) for seaborne cargo and one for airfreight. The FTZ's may be used for storage and repackaging of import and export cargo and goods transiting Singapore for subsequent re-export. Manufacturing is not carried out within the zones. Foreign and local firms have equal access to the FTZ facilities.

Performance Requirements/Incentives
Singapore does not impose performance requirements on foreign investors as a condition for establishing operations. However, if investment incentives are requested, a company's track record, the amount of its investment, and their contributions to Singapore's goal of becoming a knowledge-based economy are important considerations in the selection process.

The Government does not require investors to purchase from local sources or specify a percentage of output for export. The government also does not limit investors' access to foreign exchange or require local equity ownership in the investment.

The Companies Act requires that every company must have at least two directors, one of whom must be resident in Singapore. Foreign investors face no requirement to reduce equity over time and are free to obtain their necessary financing from any source. Employment of host country nationals is not required. The Government discourages dependency on unskilled foreign labor, encouraging companies to automate and re-engineer their work processes instead. To manage the foreign worker problem, the government sets a limit on the percentage of foreign workers that various industries may employ, and imposes a monthly levy for each foreign worker (see the section on Labor below).

There are no rules on the level and period for investors to effect transfer of technology. However, a conducive business climate and supportive government policies have encouraged foreign investors to deepen and diversify their manufacturing and service operations, as well move up the value-added and technological ladders, providing Singapore with valuable engineering and management know-how in the process.

The EDB, the Trade Development Board (TDB) and the MAS offer a broad range of attractive tax and other incentives to entice specific types of investments relevant to Singapore's goal to become a knowledge-based economy and global financial center. (Note: Apart from these tax incentives and as part of the November 1998 US$6.0 billion cost-cutting package, a 10 percent rebate on corporate income tax - currently at 26 percent - was also provided to help companies tide over the economic slowdown caused by the Asian economic crisis.)

Transparency of the Regulatory System
Singapore's regulatory environment is business-friendly and is characterized by transparency and clarity. The bureaucracy is efficient and effective.

Prior to implementing any law or regulation, the government usually consults relevant bodies and agencies, companies and the public. Tax, labor, banking and finance, industrial health and safety, arbitration, wage and training rules and regulations are formulated and reviewed with the interests of foreign investors and local enterprises in mind. However, local laws give regulatory bodies wide discretion to modify regulations and impose new conditions. This allows government agencies to negotiate the way they provide incentives or other services to foreign companies on a case-by-case basis.

Corruption
Singapore is well known in business circles for its clean, corruption-free government. It has been ranked by the Berlin-based Transparency International as the least corrupt country in Asia, and the seventh least corrupt in the world. When cases of corruption are uncovered, the government deals with them harshly, swiftly and publicly, as they do in cases where public officials are involved in dishonest and illegal behavior. The Prevention of Corruption Act and the Corruption (Confiscation of Benefits) Act provide the legal basis for government action by the Corrupt Practices Investigation Bureau (a division of the Prime Minister's Office). These laws cover acts of corruption both within Singapore as well as those committed by Singaporeans abroad.

Labor
Singapore's labor market is characterized by a small, comparatively well-disciplined labor force of 1.9 million; a considerable pool of about 530,000 foreign, mostly unskilled, workers from the region (including domestic helpers); and a shortage of local skilled professionals.

To control dependency on unskilled foreign labor, the government places a ceiling on the percentage of foreign workers various industries may employ, and charges a monthly levy for each foreign worker. At the same time, the government provides incentives and assistance to firms to automate and invest in labor-reducing technology. Foreign workers who earn S$2,000 (about US$1,176) or less per month are given two-year work permits, usually renewable for another two years. Those with a certified skill are given three-year work permits, which are renewable up to age 60, while professional staff and those earning more than S$2,000 per month (about US$1,176) are given employment passes.

Although the labor shortage problem and wage pressures have eased as a result of the economic recession, specialist positions requiring knowledge-based skills continue to be generally hard to fill, despite active ongoing government collaborative efforts with the labor movement to upgrade and redevelop manpower capabilities. These include positions in the fields of information technology, engineering, banking and finance, regional marketing and sales, and telecommunications. To alleviate the shortage of local skilled professionals and to spearhead Singapore's move towards a knowledge-based economy, the government actively encourages foreign professionals and qualified individuals to work and live in Singapore. Besides an efficient system to process applications for employment passes and permanent residency, and regular government exhortations to citizens about the economic importance of attracting foreigners to Singapore, companies can claim a double tax deduction on approved hiring and relocation expenses related to hiring talent from abroad.

Local labor laws allow for relatively free hiring and firing practices. Employees with three years' continuous service with an employer may claim benefits if they are retrenched on the grounds of redundancy or reorganization of the company. The cash benefit paid out is negotiated between employers and the retrenched workers. The Employment Act regulates the working conditions of all workmen (regardless of salary), and of employees whose monthly wages are less than S$1,600 per month (about S$940). Working hours, paid annual leave and overtime salaries are usually determined by general prevailing practices. The current retirement age is 62 years.

Although there was a nation-wide reduction in wages arising from a cut in employers' contribution to employees' Central Provident Fund (CPF) accounts - a government-managed retirement fund - from 20 percent to 10 percent, wages in Singapore are still among the highest in Asia. (Note: The 10 percent cut in employers' contribution to CPF is part of a wider US$6.0 billion business cost-cutting package instituted by the government in November 1998 as a counter-recession and competitiveness-sharpening measure.) Firms also pay a levy equivalent to one percent of wages paid to employees earning SG$1,000 per month (US$588) or less, to the Skills Development Fund (SDF), a pool from which the government draws to provide incentives and grants for manpower training. The National Wages Council (NWC) - comprising representatives from the unions, employer groups and the government - sets non-binding but influential guidelines for orderly wage adjustments. There is no minimum wage law in Singapore.

Labor-management relations in Singapore are excellent. There has been only one strike since 1986, which resulted in the loss of 122 worker-days. Though workers other than those in essential services have the legal right to strike, the chances of strikes taking place are minimal given the dispute settlement process. Industrial disputes are usually settled through mediation by the government. When this fails, the matter is decided by the Industrial Arbitration Court (IAC), whose rulings are binding. Once the IAC recognizes a dispute, strikes or lockouts are illegal under the Trade Disputes Act. About 14 percent of the work force are unionized. The vast majority of unions are affiliated with the National Trades Union Congress (NTUC). The NTUC is headed by a Cabinet Minister who has no government portfolio, and is staffed by a variety of government officials, including Members of Parliament from the ruling political party.

Efficient Capital Markets and Portfolio Investment
Singapore has a liberal exchange control regime, with no restrictions on current and capital account flows and with market-driven exchange rates. Singapore's policies are designed to facilitate the flow of financial resources to support the product and factor markets in Singapore and the region. According to a Bank of International Settlements survey in 1998, Singapore has the world's fourth largest foreign exchange market. Its Asian Dollar Market is among the world's largest offshore lending center. An increasing number of multinational corporations with substantial operations in Asia have located their regional treasury offices in Singapore.

The MAS formulates and implements the country's monetary and exchange rate policy. It supervises and regulates all of the financial and capital markets and more than 700 financial institutions in Singapore, including approximately 230 (mainly foreign offshore) commercial and merchant banks. These financial institutions offer a full range of financial services, from trade financing and foreign exchange to derivatives products, asset management, securities trading and other capital market activities. Singapore laws do not distinguish operationally between foreign and domestic banks; the only legal distinction is that between offshore and domestic units, and in the type of license (full, restricted or offshore) held. The government has a strict policy of separating the domestic capital market from the offshore market, primarily to maintain control over developments in the domestic retail market and limit the internationalization of the Singapore dollar in order to prevent speculative attacks on the country's currency. Banks are required, for example, to consult with MAS if their credit to any single non-resident client exceeds S$5 million (US$3 million).

In late 1997, the government began a comprehensive program to revamp the country's financial services sector to promote Singapore as an international financial center. It started with measures to boost the country's fund management industry which presently comprises over 160 fund managers investing funds amounting to nearly US$75 billion out of the country.

The government announced that it will place out an additional US$20 billion to private asset managers over the next three years while liberalizing guidelines to encourage investment of national pension funds in professionally-managed funds. To develop and provide a benchmark for its debt market, the government also issued its first 10-year bonds in June 1998, and encouraged statutory boards and government-linked corporations to issue their own development bonds as well. It relaxed restrictions against the internationalization of the Singapore dollar by allowing foreign entities to borrow in Singapore dollar, as long as the funds are converted to foreign currencies for use abroad, and clarified that MAS consultation is not required for Singapore Dollar loans to residents for overseas projects. Soon after these policy changes, Singapore saw its first supranational (3-year) bond issue of SG$300 million (US$176 million) by the World Bank, followed by a series of private issues by foreign corporations and government statutory boards. The MAS also raised the limit on offshore banks' Singapore dollar loans to residents to S$500 million (US$300 million).

The Stock Exchange of Singapore (SES) included, as of mid-1999, more than 350 listed companies with a total market capitalization of US$130 billion. Foreign companies may list foreign currency-denominated shares on the local exchange. The government has undertaken measures to ease conditions for foreign companies to list in Singapore dollars on the SES and removed limits on local fund investments in foreign currency-denominated stocks. It began to reduce, and plans eventually to eliminate, fixed brokerage commissions. It approved the launch of a number of new derivative contracts over the past year, further solidifying Singapore's futures and options exchange as one of the region's leading derivatives exchange and providing investors in Singapore with an effective and efficient global risk management and trading facility. The government has set a timetable for opening up foreign access to the SES and the eventual merging of the SES with the local futures exchange.

More recently in 1999, as part of its financial liberalization efforts, the government announced that it will be issuing additional full and restricted-bank licenses over the next three years, allowing foreign banks greater access to the domestic retail banking market as well. These foreign full-license banks will be permitted to expand the number of their branch offices and ATM's, as well as share an ATM network among them. The MAS also lifted the 40 percent foreign ownership restriction on local banks as a means of encouraging greater foreign participation in and upgrading the technical level of local banks. At the same time, it raised banking standards by requiring disclosure of significant exposures and details on non-performing loans and provisions.

Conversion and Transfer Policies
Singapore lifted all restrictions on foreign exchange transactions and capital movements in 1978 and places no restrictions on reinvestment or repatriation of earnings and capital.

Affected by the contagion of the financial crisis in Southeast Asia, the Singapore Dollar has depreciated against the U.S. Dollar since July 1997 when the Asian financial crisis erupted. The Singapore Dollar is expected to trade at about 1.72 to the U.S. Dollar in 1999, a 14 percent depreciation (based on US$ per S$ terms) compared to the 1997 average rate of 1.48, and a three percent drop from last year's rate of 1.67.

Expropriation and Compensation
Singapore has investment promotion and protection agreements with all countries in the Association of Southeast Asian Nations (ASEAN)- Malaysia, Thailand, the Philippines, Indonesia, Brunei, Laos, Cambodia and Vietnam. Additionally, Singapore has similar agreements with the Belgo-Luxembourg Economic Union and 19 other countries, including the United States.

These agreements mutually protect nationals or companies of either country for a specific period (usually 15 years) against war and non-commercial risks of expropriation and nationalization. In the event that expropriation or nationalization occurs, the host government will compensate affected foreign investors based on the market value of the properties concerned prior to expropriation or nationalization. To date, there have been no significant disputes between the government and foreign investors. The risk of expropriation or nationalization of foreign investments in Singapore is virtually nil. Political risk insurance is available from the U.S. Overseas Private Investment Corporation (OPIC).

Dispute Settlement
Singapore has institutionalized and internationalized arbitration through the creation of arbitration bodies and ratification of international conventions. The Singapore International Arbitration Center (SIAC), a non-profit organization, was set up in 1991 to promote the settlement of disputes by arbitration and conciliation. The UNCITRAL (United Nations Commission for International Trade Law) Model Law, with modifications for international arbitration and conciliation under the International Arbitration Act (IAA), provides the main framework for international arbitration.

Singapore ratified the recognition and enforcement of Foreign Arbitration Awards (New York, 1958) on 21 August 1986; and the International Convention on the Settlement of Investment Disputes on 13 November 1968.

Political Violence
The Singapore political environment is stable. The ruling People's Action Party (PAP) has dominated Singapore politics since independence, and currently controls 81 of the 83 regularly contested parliamentary seats. Opposition parties, which hold two regularly-contested parliamentary seats and one additional seat reserved to the opposition by the constitution, do not espouse views that are radically different from the mainstream of Singapore political opinion. The expression of political differences takes place predominantly in a non-confrontational way. There has been no political violence in Singapore in over thirty years. Tough internal security laws, whose use in politically related (especially communist) security cases has declined in recent years, are a factor in the maintenance of political peace, but are secondary to other economic, social and cultural factors.

Bilateral Investment Agreements
Singapore has signed General Investment Guarantee Agreements (IGA's) with ASEAN member nations, the Belgo-Luxembourg Economic Union and the following 19 economic partners: Canada, China, the Czech Republic, Egypt, France, Germany, Hungary, Latvia, Mongolia, the Netherlands, Pakistan, Poland, the Riau Archipelago, Slovenia, Sri Lanka, Switzerland, Taiwan, the United Kingdom and the United States. The U.S. and Singapore signed a trade and investment framework agreement in October 1991.

OPIC and Other Investment Insurance Programs
Under the 1966 investment guarantee agreement with Singapore, the U.S. Overseas Private Investment Corporation (OPIC) offers insurance to U.S. investors in Singapore against currency inconvertibility, expropriation and losses arising from war. Singapore became a member of the Multilateral Investment Guarantee Agency (MIGA) in February 1998.

Intellectual Property Rights
Singapore has enacted strong intellectual property rights (IPR) legislation in the areas of copyrights, patents and trade marks. A series of recent amendments have brought these laws into full compliance with the World Trade Organization's (WTO) Trade-Related Intellectual Property Agreement (TRIPS). Singapore also adopted in 1998 new regulations controlling the local manufacture of optical disc (OD) products and the import/export of OD manufacturing equipment. IPR piracy at the retail level remains a serious problem, however, as the smuggling of pirated OD products into the country continues unabated and enforcement efforts remain insufficient. Singapore is a signatory to the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, and the Budapest Treaty. Singapore also became a member of the Berne Convention in December 1998. Under the Berne Convention, all works first published in Singapore will enjoy copyright protection in over 100 member countries, including the United States. However, Singapore is not a signatory to the Geneva Phonogram Convention, or the Universal Copyright Convention.

Patents
Singapore's parliament passed a new Patent Law at the end of 1994, which entered into force in February 1995. Amendments to make the new law fully TRIPS-consistent came into effect on January 1, 1996. The new law replaced the previous system whereby patent protection was accorded through registration in Great Britain. The new Patent Law establishes patent registration in Singapore and provides product protection for a 20-year period.

Copyrights
Singapore's Copyright Act came into effect in 1987, covering (first level) musical, literary, dramatic and artistic property; and (second level) sound recording, films, broadcast and published editions of works. It also protects computer programs and databases. Amendments to make the Copyright Act TRIPS-consistent were passed by the parliament and entered into force in April 1998. Specifically, the amendments enhanced performers' rights, provided new protection for rental rights, strengthened customs controls and procedures, and legalized the seizure of business documents in raids on IPR violators. Singapore is a member of the World Intellectual Property Organization (WIPO) but has not yet ratified the two WIPO treaties. Singapore became a signatory to the Berne Convention in December 1998. Singapore does not subscribe to the Universal Copyright Convention (UCC).

Generally, the Singapore Government has interpreted the Copyright Law in such a way as to place the responsibility for enforcement largely on industry. Challenged by piracy stemming from the proliferation of optical disc technology, U.S. industry and the U.S. government have urged the government to take greater initiative. Recognizing that rising piracy levels could discourage inflows of high-tech foreign investment, Singapore executed an unprecedented number of police-initiated raids on retail outlets and makeshift stalls in 1998, during which enforcement authorities conducted nearly 700 raids and seized over two million IP-infringing OD products. This increased effort - continued into 1999 - has had notable results, although the problem of retail IPR piracy remains a serious concern.

The broad Government initiative also addressed industry concerns about the local production of pirated optical discs by introducing new regulations on OD manufacturers in April 1998. The new regulations impose controls on the import, export, and transfer of OD manufacturing equipment and require OD manufacturers to be licensed. The Government has announced that it will revoke the license of manufacturers caught violating the Copyright Act. To complement the new regulations, the government facilitated the development of a Code of Conduct, which all ten of Singapore's OD manufacturers have signed since April 1998. By signing the Code of Conduct, the manufacturers voluntarily pledged to verify orders, maintain internal controls subject to verification by the manufacturer's external auditors, and use source identification codes (SID) unless otherwise directed in writing by the customer. Moreover, if SID codes are not used, and the order is found to be unauthorized, manufacturers shall release information about the order and the customer.

In December 1998, the TDB, in partnership with private sector IPR protection associations, launched an anti-IPR piracy public awareness campaign. The campaign was kicked-off by a three-month series of radio advertisements featuring local music, film and television celebrities. In June 1999, TDB unveiled a series of six anti-piracy posters that will be used over the next twelve months. The posters are intended to highlight the harm to industry and consumers caused by IP pirates.

Increased enforcement activities by the Government and industry have been accompanied by tough penalties for offenders. In April 1998, one IP pirate was given an approximately US$890,000 fine. In another case in May 1998, the IPR offender was fined about US$90,000 and subsequently sentenced to 49 months in prison for failing to pay the fine. Perhaps sending the strongest signal about judicial concern over IPR is a February 1999 case involving three co-defendants whose case was on appeal before the Chief Justice of Singapore. The Chief Justice actually increased the penalty imposed by the lower court on the three men, adding 30 months of jail time on top of a US$35,000 fine.

While commending the Government for stepped-up enforcement and tough penalties, industry still urges the government to better publicize its efforts to stop piracy and to initiate a sustained and long-term enforcement effort to deal with the retail sale of pirated OD products. According to the International Intellectual Property Alliance (IIPA), Singapore's piracy rate for business software stood at 54 percent in 1998, with resulting business losses estimated at US$49.6 million, slightly below the previous two years. Entertainment software piracy rates rose in 1998 to 73 percent (from 68 percent in 1997) with business losses estimated at US$65.2 million. Piracy rates for films rose to 25 percent in 1998 with losses estimated at US$8.0 million. The rate of piracy for sound recordings, however, fell to 19 percent and US$16 million in losses in 1998, down from 30 percent and US$17.3 million lost in 1997. Singapore's overall piracy rates, nevertheless, remain high compared to other nations of equivalent levels of wealth and development. IIPA estimates total piracy-related losses in 1998 at US$140.8 million.

Trade Marks
The Registry of Trade Marks and Patents administers Singapore's Trade Marks Act. A new TRIPS-consistent Trade Marks Act came into force on January 1, 1999. The new Act includes new border enforcement measures to help prevent trade mark-infringing goods from entering the country. The Act also includes protection of well known trade marks, collective marks and service marks and contains administrative improvements to the trade mark registration process. Singapore also passed in December 1998 the Geographical Indications Act to prevent misleading and unfair uses of geographical indications (i.e. Virginia ham, California wine), and afford adequate protection for the interests of persons entitled to use such geographical indications.

Trade secrets
The Official Secrets Act and the Internal Security Act protect all government trade secrets. Investors' commercially valuable proprietary information is protected under common law by the Law of Confidence.

Semiconductor chip layout design
In December 1998, Singapore passed the Layout-Designs of Integrated Circuits Act. This Act provides for a new intellectual property right known as the "layout-design right." The Act gives individuals designing integrated circuits statutory protection over their layout-designs. Under the Act, any "original" layout-design which is the result of its creator's own intellectual effort and not commonplace will be entitled to protection.

Legal Services Reform
In support of the country's efforts to become a global financial center, the government also recently announced measures to upgrade its legal services sector to meet the demands of an expanding volume and growing sophistication of onshore, offshore and cross-border financial transactions. In addition to attracting more top quality law firms to Singapore, the government sought to intensify the collaboration between foreign and local law firms in the country. It announced in June 1999 that, for the first time, the government would permit the establishment of five foreign-local legal services joint ventures and an indefinite number of "formal alliances" in Singapore. These firms would be able to practice both foreign and Singapore law (as appropriate to the lawyers within the joint ventures or alliances) and market themselves as a one-stop service to its business clients. The constituent firms may also share office premises, staff equipment, databases and other resources.

Foreign Direct Investment Statistics and Outlook
Current surveys estimate that there are over 1,200 U.S. firms, and over 17,000 U.S. citizens in Singapore. U.S. Department of Commerce statistics indicate that U.S. firms (manufacturing and services) had cumulative total assets worth US$17.5 billion in Singapore in 1997.

New foreign manufacturing investment, which accounted for two-thirds of total manufacturing investment commitments, fell to US$3.1 billion in 1998 from the US$4.0 billion in 1997. Besides the Asian economic crisis, which brought Singapore into a mild recession in the second half of 1998, the decline also reflects an ongoing industrial restructuring process, in which fixed asset-intensive assembly facilities are relocated to lower cost countries as higher-end manufacturing and service operations are being established.

New U.S. manufacturing investment in Singapore - concentrated in the petroleum refining, chemicals and electronics industries - totaled US$1.4 billion (down from US$1.6 billion in 1997). The U.S. remains Singapore's largest foreign investor, responsible for 44 percent of total foreign manufacturing investment commitments in 1998, followed by Japan (35 percent) and Europe (20 percent).

The EDB forecasts that total manufacturing investment (foreign and local) will decline by about 4 percent to US$4.4 billion in 1999, despite Singapore's strong domestic economic fundamentals and improved business sentiment towards Asia following tentative signs of a recovery from the economic crisis. The recession in Japan (which discourages investment abroad by Japanese firms), excess industrial capacity in the region arising from the Asian economic crisis and corporate mergers, are the main factors restraining foreign investment into the region, of which Singapore is a part in a region-wide manufacturing and distribution network.

In terms of cumulative gross fixed assets in the manufacturing sector, foreign firms - led by those from the U.S., Europe and Japan - accounted for 71 percent in 1997. In recent years, the Singapore government has been attempting to balance the city-state's heavy dependence on foreign MNC's by nurturing large, government-linked companies to become regional MNC's, and by assisting promising local small and medium enterprises to grow and upgrade.