Navigating the New Norm

Political Headwinds for FDI in 2024

There’s a noticeable shift happening in foreign investment. Countries around the globe, even those that traditionally have been staunch supporters of the free flow of capital, are tightening their investment rules in the name of national security. This new wave of vigilance is reshaping how investments move across borders, presenting challenges and perhaps opportunities for investment promotion agencies (IPAs).

A Growing Phenomenon

Let's take a closer look at what's happening around the world, starting with Singapore, often celebrated as a champion of open-market policies. Proposed in late 2023 and passed this week, the Significant Investments Review Bill (SIRA) is designed to screen so-called ‘significant investments’, both local and foreign, into entities critical to national security. Under SIRA, certain entities will now be required to notify or seek approval from authorities for changes in ownership or control, reflecting Singapore's response to an increasingly complex and uncertain global economic environment. Critics - yes, they exist in Singapore! - have pointed to a lack of a clear set of definitions on how entities are designated. They fear that the new regime may risk “being seen as opaque (and) lacking in transparency, and fuel investors’ fear of the application being arbitrary”. 

This move is part of a wider narrative of countries prioritizing domestic and national security considerations in foreign investments.

Read the full text on our States of Trade blog…