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Successfully investing in Singapore

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​​​​​​last updated on 10 October 2025 | reading time approx. 5 minutes

 

    

   

How do you assess the current economic situation in Singapore?

Singapore has a highly developed and successful market-based economy, driven by exports, especially in electronics, chemicals and services. The country is known for having a skilled and productive workforce, a favourable business environment, stable political climate, and an economic policy encouraging free trade, investment and innovation.

Singapore benefits from the global trend of supply chain diversification. Companies are relocating regional functions to Singapore and many investors allocate funds to the city-state. Since 2020, the wealth management sector has experienced substantial growth. The number of single-family offices (SFOs) increased from approximately 400 to over 2,000 by the end of 2024.

Innovation and digitalization are additional drivers of Singapore’s economy. The government invests heavily in the digital transformation of the economy and in increasing productivity. It aims to keep a strong manufacturing sector, which accounted for 17.3 percent of the nominal value of Singapore’s economy in 2024. Electronics and chemicals will continue to play a key role in this context.

The Ministry of Trade and Industry announced that Singapore’s economy grew by 4.4 percent in 2024 and maintained its GDP growth forecast for 2025 at 1 percent to 3 percent. Singapore’s economy is highly dependent on exporting goods and services. Historically, it has profited heavily from globalization and the rise in global trading volumes. 

As seen in past economic crises, Singapore’s very open economy usually bounces back quickly following global growth downturns. However, recent political developments show a global shift towards protectionism and reduced willingness for international trade. A prime example is the volatile stance by the U.S. Administration on globally imposed tariffs to all U.S. imports, which poses many challenges for the city-state. The existing free trade agreement and Singapore’s bilateral trade deficit with the U.S. might avert direct bilateral tensions. However, the broader implications of these tariffs on global trade – such as any further escalation in the trade war between China and the U.S. - will affect Singapore’s export-reliant economy as well. 

How would you describe the investment climate in Singapore? Which sectors offer the largest potential?

Singapore ranks first in the “World Competitiveness Ranking 2024” by the International Institute for Management Development (IMD), ascending three places from the previous year. In comparison, Germany fell from 22nd to 24th place. 

In 2023, the city-state was home to 4,200 regional headquarters of multinational companies. The stable political system, world-class infrastructure, excellent connection to global trade, and top-rated education system are the foundations of the country's investment climate. In the regional context, Singapore clearly distinguishes itself from its neighbouring countries with regards to its strong rule of law and a strict policy on anti-corruption and anti-money laundering. According to Transparency International’s 2024 Corruption Perceptions Index, Singapore was ranked the third-least corrupt country in the world—and first in the Asia-Pacific region.

Singapore’s government actively supports several key sectors to drive economic growth and innovation, including: 
  • High technology industry (e.g., precision engineering, electronics, chemicals, semiconductor and robotics)
  • Health care and biomedical science (e.g. medical technology and pharmaceutical industry)
  • Urban planning and development (including environmental and green technologies)
  • Logistics, transport engineering and aerospace technology
  • Regional and global financial services (including financial technologies)
  • Research, development, and education
  • Innovation and digital solutions (e.g., via Singapore`s National Artificial Intelligence Strategy 2.0)

By moving its industrial base up the value chain, Singapore intends to strengthen its position as the leading industrial hub for companies worldwide. The excellent manufacturing ecosystem has led companies to set up not just production facilities, but the full suite of headquarters, R&D centres, and supply chain management functions in Singapore to serve the region. Singapore is the world’s 5th largest global exporter of high-tech goods. 

The IT services/technology sector (including cybersecurity, data centres, fin-tech, and cloud solutions) is expected to grow, along with the renewable energies and green technologies sectors. Pharmaceutical and biotechnology firms profit from Singapore’s talent pool and R&D ecosystem. Singapore is on its way to become an established biomedical sciences hub. 

Additionally, the new Johor-Singapore Special Economic Zone (JS-SEZ) will establish a cross-border economic zone between Singapore and the region of Johor in Malaysia, creating lots of business opportunities. Nine flagship zones covering eleven economic sectors, including manufacturing, tourism, financial services and healthcare will be established. The JS-SEZ is intended to combine complementary locational advantages for companies: Singapore as global financial hub and talent pool with predictable regulations and innovation incentives; and Johro as manufacturing and warehousing location with lower costs and more space.

What challenges do German companies face during their business ventures into Singapore?

Companies and private individuals have long benefited from low tax rates in Singapore. In the meantime, the city-state has vowed to shed its image as a tax haven. Singapore has adopted the OECD's Framework on “Base Erosion and Profit Shifting”, which impacts tax structuring possibilities and transfer pricing. In addition, rigorous compliance rules, including the “Know Your Customer” due diligence imposed on banks, corporate filing agents and other service providers, are closely monitored by the regulatory authorities and may slow down some business processes. 

Companies are also confronted with an increasingly restrictive administrative practice with respect to work passes for foreigners. While Singapore has introduced new visa types for highly skilled work¬force, some industry sectors still face constraints to bring in foreign employees. 

Rising living costs present another challenge. Factors such as high housing prices, increased transportation costs, and increased costs of goods and services have driven up expenses. According to Mercer’s “Cost of Living City Ranking 2024,” Singapore ranks as the second most expensive city in the world for international employees.

Singapore is to become a smart sustainable city. what opportunities does this present?

Singapore’s “smart sustainable city” initiative aims to harness solutions across industries to ultimately create green, digital and efficient urban spaces. IMD’s Smart City Index ranks Singapore 9th in 2024 - the only Asian country in the top ten.

Serving as an urban living laboratory, companies are testing and developing smart city technologies in Singapore that will be used to commercialize sustainable solutions for Asia. The government promotes five key pillars: Infrastructure, Built Environment, Clean Energy, Water & Environment and Urban Mobility. Together, they form the Urban Solutions & Sustainability sector, an increasingly important growth area for both the region and Singapore.

Singapore plans to build 42,000 homes in a newly developed residential district as “eco smart city” and aims towards a target of ‘greening’ 80 percent of its buildings by 2030. With roughly 80 percent of residents living in public housing, a government’s commitment to sustainable urban design could create a lot of opportunities. 

Urban planners advocating green design principles and “smart” technology will need sensors and data analytics to run a smart and green city. Leveraging data and digital technologies, including Artificial Intelligence, will be used to enhance public transport, to improve waste treatment and to reduce energy consumption. Singapore already acts as a test bed for self-driving vehicles and traffic control systems; and could also assume this role for many other green and “smart” solutions for a sustainable urban development.

In your opinion, how will Singapore develop?​

Singapore has demonstrated remarkable economic growth for many years and continues to successfully reinvent itself. The Singapore Economy 2030 vision outlines strategies to enhance growth and competitiveness across four key pillars: Trade, Enterprise, Manufacturing, and Services. Singapore embraces Industry 4.0 and is ready for the digital transformation of its economy. It is set to secure its place as a regional hub for high-end manufacturing, R&D, logistics and the service industries and be the role model as Asia' s green and smart city. Mid to long-term, Singapore will have to deal with demographic and environmental challenges, due to its aging society and the effects of climate change impacts. In the coming years, the key challenge will be finding opportunities for growth, innovation, and building resilience, in the face of resource constraints and an increasingly unpredictable global environment. ​

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