Country Profiles



Official name : Republic of Singapore

Government : Parliamentary democracy

Head of State : The president, Halimah Jacob

Land area : 647.5 sq km (including smaller islands)

Population : 5.639m

Climate : Tropical

Currency : Singapore dollar (ISO currency code: SGD)

Exchange rate : USD 1=SGD 1.37 (Oct 2005);

Measures : Metric system

Language : English, Mandarin, Malay and Tamil

Time : 8 hours ahead of GMT

Regulatory Scheme

Singapore has a long history of economic interventionism and government involvement in economic development. The Singapore government has regulated on a macro as well as microeconomic level. In addition the government has also held ownership stakes in firms in a variety of different sectors. Since the late 1980's the Singapore government has been highly supportive of SME's and firms in the services sector via a series of carefully targeted, fiscal incentives have also been introduced to encourage specific industries most notably "high growth" financial services and R&D. Singapore economic policy is strictly regulated by the Monetary Authority of Singapore (MAS), and has been criticized by the US and the WTO.

Despite strict regulations in the domestic financial services market, foreign exchange controls are almost nonexistent. There are no restrictions on Singapore dollar borrowing by non-resident firms if the funds are used for economic activities in Singapore , excluding financial investments, third-country trade and activities outside Singapore . However for offshore use of such funds firms must first obtain approval from MAS, which will typically support the borrowing only if they can see a clear benefit to the Singapore economy. Banks must obtain MAS approval for extensions of Singapore dollar credit facilities more than SGD 5m to non-residents.


The Asian financial crisis in 1997 was the catalyst for a subsequent shift in Singapore banking policy. The MAS moved towards a supervisory role and called for greater transparency in the banking system to avoid systemic risk. There has been a sharp increase in the number of overseas banks awarded qualifying full bank (QFB) licenses allowing more branches and cash machines to be established in Singapore by the QFB. In 2000 the MAS introduced new rules requiring domestic banks to separate their financial and non-financial operations to ensure banks retain a healthy book of core banking business. There has also been a number of tax incentives set up to encourage the development of the financial services sector. Since the Asian financial crisis the Singapore banking industry has gone through a period of consolidation. Some of the sizable M&A transactions in recent years include the Keppel and Tat Lee merger, DBS and the Post Office Savings Bank (POSB), the Overseas Chinese Banking Corporation (OCBC) and Keppel Capital, and the United Overseas Bank (UOB) merger with the Overseas Union Bank (OUB).

Stock Exchange

The Singapore Exchange (SGX) was formed on December 1st 1999 by a merger of the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (Simex). In November 2000 it became a publicly listed company. Despite these reform efforts, the country's stock market remains relatively small and shallow when compared to other international markets. The stock index fell sharply in 1997 and 1998 and after staging a recovery in 1999, the index fell again in 2000 and 2001, reaching a low point in September. Although there was a slight recovery in early 2002 the market has remained generally feeble. The market is dominated by government- linked companies. In 1998 legislation was introduced to encourage the development of a debt market in Singapore and the government has now set up an Approved Bond Intermediary (ABI) scheme. Funds managed by approved firms enjoy tax exemption on interest received. Despite these efforts the Singapore bond market continues to have liquidity and development problems.


The Singapore insurance sector is sophisticated and well developed. The Insurance Department, as part of the Financial Supervision Group within the MAS is the primary regulator in the market. In Singapore both local and foreign insurance companies are treated equally and are subject to the same regulatory and supervisory regime. The paid-up capital (or where an insurer does not have a share capital, its surplus assets over liabilities) is SGD25 million. In assessing an application for life and/or general reinsurance licenses, MAS takes into consideration the following factors: world ranking; credit rating; and reputation and financial soundness. Singapore has a risk base capital (RBC) framework which consists of two components, the Fund Solvency Requirement (FSR) and Capital Adequacy Requirement (CAR). There were 48 domestic non-life insurers in 2003 of which 29 are either foreign branches or majority foreign-owned (MFOs). The share of top 5 non-life insurers was 43.8% of gross premiums in 2003. The share of foreign insurers (including MFOs and foreign branches) was 52.4% in 2003. The major lines in 2003 were motor (29.8%), fire (12.9%), marine hull & liability (15.4%), and workmen's compensation (6.6%). There were 13 life insurers in 2003 including 8 foreign branches or majority foreign owned (MFO). The share of top 5 life insurers was 90.53% (2003) and the share of foreign insurers (MFOs and foreign branches) was 58.99% (2003). The major lines of individual non-linked business (2003) included whole life (38.5% of total premiums), endowment (45.2%), term (3.7%), and others (12.6%).

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