Currency, Trade, and Investment Regulation
Singapore had an exceptionally open economy.
strong, the currency reflected a sound balance of payments
position, large reserves, and the authorities'
attitude. From 1967 until June 1973, the Singapore dollar
to the United States dollar, and thereafter the currency
allowed to float.
The Monetary Authority of Singapore, the country's
quasicentral bank, pursued a policy of intervention both
and in foreign exchange markets to maintain a strong
multifaceted strategy was designed to promote Singapore's
development as a financial center by attracting funds,
inducing low inflation by preventing the erosion of the
Central Provident Fund balances. Furthermore, the strong
complemented the high wage industrial strategy, forcing
quality rather than short-term prices to be the basis for
Given Singapore's dependency on imports, however,
exchange rate always generated controversy. The 1986
Report of the
Economic Committee did not clarify official thinking. It
recommended that the exchange rate should "continue to be
market forces, but its impact on [Singapore's] export
competitiveness and tourist costs should be taken into
[Singapore] dollar should, as far as possible, be allowed
its own appropriate level, reflecting fundamental economic
After 1978, when the government abolished all currency
controls, Singaporean residents (individuals and
free to move funds, import capital, or repatriate profits
restriction. Likewise, trade regulations were minimal.
duties applied only to a few items (automobiles, alcohol,
petroleum, and tobacco), and licenses were required only
imports originating from a few Eastern bloc countries.
no export duties. As the government played an active part
promoting exports, there was an extensive system of
including an export insurance plan.
The government promoted investment vigorously through a
range of tax and investment allowances and soft loans
attracting new investment or at helping existing
or expand. There was no capital gains tax. Special
existed for foreigners, including concessionary tax
for some nonresidents, relief from double taxation, and
to buy commercial and certain residential property. In
extensive tax reductions were introduced to reduce
Data as of December 1989