Singapore companies anticipate a more stable, and transparent market environment, fairer competition and greater business opportunities in China under its newly passed “Foreign Investment Law”
- Organised by SBF, with support of the Chinese Embassy in Singapore, the first public sharing session on China’s newly passed “Foreign Investment Law” (FIL) drew close to 200 participants.
- Passed on 15 March this year, the new legislation, which pledges to build a market environment of stability, transparency, predictability, and fair competition for foreign investors, will come into effect on 1 January 2020.
17 April 2019 [Singapore] - The Singapore Business Federation (SBF), with support from the Chinese Embassy in Singapore, organised a sharing session today on “China’s New Foreign Investment Law and Business Environment” to help Singapore businesses learn more about the new legislation and regulations, as well as its implications for Singapore investors.
Close to 200 senior representatives from Singapore’s government agencies, trade associations and chambers (TACs), large enterprises and SMEs attended the event. This is the first public sharing session in Singapore after the new China FIL was passed by the National People’s Congress China’s top legislature on 15 March this year.
Seen as the main legislative accomplishment of this year’s “Two Sessions”1, as well as a landmark law in China’s opening up, the new law seeks to address common concerns of international business community in China. These include the unfair treatment regarding market access and government procurement, forced technology transfer to Chinese partners and the theft of commercial secrets from foreign businesses in China.
The new legislation replaces three previous laws passed in the 1970s and 1980s, namely the Wholly Foreign-Owned Enterprises Law (also known as the Foreign-Capital Enterprises Law), the Sino-Foreign Equity Joint Ventures Law, and the Sino-Foreign Contractual Joint Ventures Law, and seeks to level the domestic playing field for overseas investors including Singapore businesses.
The FIL will govern the activities of all individual foreign investors and foreign-invested enterprises (FIEs), which include both wholly foreign-owned enterprises (WFOEs) and Sino-foreign joint ventures (JVs).
During the sharing session, a senior representative from the Economic and Commercial Counselor's Office of the Chinese Embassy in Singapore, provided updates on the current foreign investment environment in China and took participants through a detailed rundown of various chapters of the new legislation (See Annex A). Comparing the new legislation with the previous laws, the presenter shared how the new FIL will benefit foreign investors.
For example, it bars Chinese JV partners from stealing intellectual property (IP) and commercial secrets from their foreign partners. It not only prohibits government officials from using administrative measures to pursue forced technology transfers, but also makes them criminally liable if they do so.
On the procurement front, the new law states that foreign investors will receive equal treatment when applying for licenses and participating in government procurement. Foreign investors will also be given equal opportunity to participate in the formulation of standards.
SBF Chairman Mr S.S. Teo said, “This is positive news for the Singapore business community and reflects the commitment of the Chinese government to economic liberalisation. As China’s largest investor country since 2013, Singapore has deep ties with China in the areas of trade, finance and investments. In recent years, we have seen an increased interest in China and more Singapore companies, both big and small, venturing into China. A more stable, transparent and predictable business environment in China gives more confidence to Singaporean investors and will bring more opportunities for Singapore businesses.”
Madam Zhong Manying, Economic and Commercial Minister-Counsellor of the Chinese Embassy in Singapore, shared with the participants during the sharing session that foreign investors including Singapore companies have contributed significantly to China’s social and economic development since its opening up. China welcomes more Singapore companies to invest in China with the implementation of the new Foreign Investment Law. The Chinese embassy in Singapore will continue to serve as the bridge between China and Singapore and help to further facilitate both the inbound and outbound investments between the two countries.
Participants at the event welcome the new FIL and look forward to its implementation.
Mr Jeffrey Lee, Chief Financial Officer of CrimsonLogic Pte Ltd said, “We welcome the implementation of China’s New Foreign Investment Law that promotes a positive business environment that will encourage more foreign investors to China to establish business presence to tap on the enormous market potential of the country.”
He added, “Our subsidiary – GeTS (Global eTrade Services) – is actively establishing trade connectivity through its CALISTA™ platform to drive a global supply chain and trade facilitation services in China. The platform has already established five trade linkages in the various China cities, orchestrating physical logistics, compliance and financial requirements of trade and supply chain to connect China to ASEAN and rest of the world.”
Highlighting that the revamp of the foreign investment regime has been in the works for several years and that its passing was rushed through in the midst of the US-China trade dispute, Mr Chia Kim Huat, Regional Head of Rajah & Tann’s Corporate & Transactional Group noted that the new law is “lacking details in several aspects.”
Mr Chia said, “We expect detailed implementation rules to be rolled out over the next few months before the new law comes into effect next year. Nonetheless, China has sent out a clear and positive message that it continues to welcome and encourage foreign investment, and endeavours to create a more level playing field and improve the ease of doing business in China.”
1. The “Two Sessions is China’s highest-level annual political gathering in which legislators and members of the Chinese People’s Political Consultative Conference — a political advisory body — confer for two weeks to review China’s recent development and outline its future policy goals.