Foreign Direct Investment

Data on FDI are sourced and compiled from financial statements and records which companies file with the Accounting and Corporate Regulatory Authority (ACRA) and other government agencies, as well as from DOS’s Foreign Debt and Financial Derivative Transactions Survey.

Foreign Direct Investment (FDI) refers to cross-border investment, where a direct investor residing in one economy owns 10 per cent or more of the ordinary shares or voting power in a direct investment enterprise, residing in another country.

FDI flows compiled by the Department of Statistics (DOS) cover the various industries and sectors of the Singapore economy, whereas FAI commitments cover investments in Singapore facilitated by the Economic Development Board (EDB). Some key differences between FDI flows and FAI commitments are:

• FDI flows are recorded only when a direct investment transaction takes place whereas FAI commitments are recorded during the period when the undertaking to implement the project is made (regardless of whether the actual investment on fixed assets has taken place during the period).
• FDI flows only include the financing from the direct investor and related entities, and not the external financing (e.g., borrowings from banks) whereas FAI commitments do not take into consideration the source of the financing.

For more information, you may view the Understanding FDI and FAI Commitments Infographic.

The stock of FDI in Singapore may decline due to:

1. partial/complete divestment in Singapore direct investment enterprise by the foreign direct investor
2. Singapore direct investment enterprise buying back its shares from the foreign direct investor
3. Singapore direct investment enterprise is operating at a loss, resulting in a decrease in retained earnings
4. dividends distributed by Singapore direct investment enterprise are higher than current earnings recorded
5. redemption of inter-company loans by the Singapore direct investment enterprises
6. valuation changes and/or currency translation changes.

Negative FDI may be recorded when:

1. the Singapore direct investment enterprise has negative reserves due to the dividends distributed by the Singapore direct investment enterprise being higher than current earnings recorded, and/or cumulative losses.
2. the Singapore direct investment enterprise lends more to their foreign related entities than they are borrowing from them.

Negative FDI flows may occur when:

1. the foreign direct investor divests equity stake in its Singapore direct investment enterprise.
2. redemption of inter-company loans by the Singapore direct investment enterprises.
3. dividends distributed by the Singapore direct investment enterprise are higher than current earnings recorded.

No. Changes in stock positions consist of not only flows (i.e., net transactions), but also other changes in volume (e.g., write-offs, re-domiciliations) and revaluations (due to exchange rate and other price changes) during the period. Hence, the change in direct investment stock is not equivalent to the direct investment flows for that period.

For more information on Singapore’s Foreign Direct Investment (FDI), you may refer to the Technical Notes document.

Equity Capital

Equity capital covers all components of shareholders' funds (proportionate to the percentage of shares held), including equity, contributed surplus, reinvested earnings, revaluations, as well as any reserve accounts. The amount of equity capital is compiled based on market value.

Fixed Asset Investment (FAI)

Refers to a company’s incremental capital investment in facilities, equipment and machinery.

Foreign Direct Equity Investment (FDEI) in Singapore

Foreign Direct Equity Investment in Singapore refers to equity capital and retained earnings of enterprises in Singapore attributable to direct investors residing in another economy.

Foreign Direct Investment (FDI) in Singapore

Foreign Direct Investment (FDI) in Singapore refers to cross-border investment, where an investor residing in another economy (direct investor), owns 10 per cent or more of the ordinary shares or voting power in an enterprise in Singapore (direct investment enterprise). 

FDI is measured by the sum of three components: 

• equity capital invested by the direct investor in another economy in the direct investment enterprise in Singapore
• retained earnings accrued to the direct investor in another economy, which are earnings generated by the direct investment enterprise in Singapore after deducting the dividends payable to the direct investor
• net inter-company lending between the direct investment enterprise in Singapore and its related entities in another economy

Income of Foreign Direct Investment in Singapore

Income of Foreign Direct Investment (FDI) in Singapore consists of earnings on equity investment (i.e. foreign investor’s share in the net income or earnings of its Singapore-incorporated enterprise) plus net income on inter-company lending.

Net Inter-Company Lending

Refers to the net inter-company debt, in the form of loans and debt securities, between the enterprise in Singapore and its related entities overseas.

Return on Foreign Direct Investment in Singapore

Return on Foreign Direct Investment (FDI) in Singapore is a measure of the profitability of Singapore-incorporated enterprises. Return on FDI is the ratio of the current year income of FDI to the average of the FDI positions in the current and preceding years.

Retained Earnings

Retained earnings refer to the accumulated net profits of an enterprise that have been retained and reinvested in the enterprise rather than distributed to shareholders as dividends.

For direct investment statistics, retained earnings refer to the earnings on equity accruing to direct investors less distributed earnings (i.e. dividends), proportionate to the percentage ownership of the equity stake owned by the direct investor, which are reinvested into the direct investment enterprises.