http://www.businesstimes.com.sg/arch...egion-20140417

Published April 17, 2014

Singapore is most attractive destination for FDI in region

NZ, HK take 2nd, 3rd spots in Asia Pacific Investment Climate Index for 2014

By Malminderjit Singh

[email protected] @MalminderjitBT


[SINGAPORE] The Republic is still the most attractive destination for foreign direct investment (FDI) in the region despite the tightening of its foreign manpower policy.

Singapore ranked first in the Asia Pacific Investment Climate Index for 2014, repeating its feat for the past two years.

This was despite the Singapore government tightening "immigration controls in recent years, (and) raising financial barriers to entry for foreign labour", the report stated.

Said Hans Vriens, managing partner of Vriens & Partners (V&P), which published the study: "They (investors) understand that this is what Singaporeans want and the government doing so will lead to a more stable political environment."

To compile the report, V&P surveyed and interviewed more than 200 corporate leaders and business executives from multinational companies and policy specialists across the region as well as leveraged data from third-party reports.

To examine the relationship between political and economic governance and FDI in the region, the report ranks the top 20 Asia-Pacific countries according to six pillars - rule of law; openness to international trade & business; political stability; taxation; corruption; as well as fiscal and monetary administration.

Singapore took pole position in the taxation, and fiscal and monetary administration categories, and was ranked second in all the other areas. The report found that Singapore's strengths lie in an open trade regime, stable political and legal environment, prudent macroeconomic policies, competitive tax rates, a transparent regulatory environment and an efficient judicial framework, which make it the most attractive base for MNCs to do business in the region. Singapore has held the top position since 2012, displacing its rival Hong Kong, which had topped the league table in the report's inaugural year of 2011. This year, Hong Kong dropped to third place, falling behind second-placed New Zealand, after it scored lower for political stability and the rule of law because of China's more pronounced influence on the special administrative region.

China itself ranked a lowly 11th, losing out to Taiwan, Japan and South Korea, which were ranked sixth, seventh and eighth respectively.

With the exception of Singapore and Brunei (ranked fifth), the rest of the Asean member states did not fare well in the index. This prompted Mr Vriens to question their readiness for a common market next year. "It is important to note that the Asean government leaders will declare in 2015 that the Asean Economic Community (AEC) has been achieved, but it is clear that their aims are very ambitious and the reality on the ground is completely different."

He noted that Indonesia had demonstrated a more protectionist and nationalist stance in its economic policies in recent times, and this is reflected in its 15th rank. "I am not sure how Indonesia's growing protectionism, for instance, will square with the objectives of the AEC," he said.