The Investment Chapter in a Free Trade Agreement (FTA) seeks to make it easier for Singapore investors to invest in our FTA partners. This is achieved by lowering the barriers to entry for investors, providing a predictable operating environment through agreed standards of protection for investors, and offering investors an avenue for recourse if FTA obligations are contravened. The Investment Chapter can also take the form of a standalone bilateral investment agreement.
Singapore investors enjoy preferential investment commitments from our FTA partners.
Our FTA partners are obliged to accord to Singapore investors and their investments treatment that is no less favourable than that accorded to their own investors and investments in like circumstances.
Most-Favoured Nation Treatment
Our FTA partners are obliged to accord to Singapore investors and their investments treatment that is no less favourable than that accorded to investors and investments from any other trading partner in like circumstances.
Prohibition of Performance Requirements
Our FTA partners are obliged not to impose conditions on investors that are not related to market considerations.
Senior Management and Boards of Directors
Our FTA partners are obliged not to impose nationality requirements on senior management positions in an enterprise of an investor.
Investment commitments in FTAs lock in a minimum standard of treatment and minimum level of market access for our investors. FTAs serve as an “insurance policy” to deter a trading partner from changing their laws to become more restrictive, even when government regimes change.
Standard of Treatment
Our FTA partners are obliged to provide an absolute basic level of treatment to investors, which is commonly expressed through the concepts of Fair and Equitable Treatment and Full Protection and Security. This serves to protect investors against serious instances of arbitrary, discriminatory or abusive conduct by host States.
Our FTA partners are obliged to meet the following conditions if they expropriate an investment: for a public purpose; conducted in a non-discriminatory manner; in accordance with due legal process; and with the payment of compensation without delay, at fair market value and in a currency that is freely transferable.
Our FTA partners are obliged to allow the movement of funds related to a foreign investment to be made freely and without delay in and out of its territory.
Compensation for Losses
Our FTA partners are obliged to accord non-discriminatory compensation for losses arising from armed conflict or civil strife. In our more recent FTAs, our FTA partners are also obliged to compensate foreign investors if unnecessary damage or destruction to their investments are caused by the host State’s armed forces or authorities.
FTAs provide an avenue for investors to seek recourse directly should a trading partner contravenes its FTA commitments, through the Investor-State Dispute Settlement mechanism.
Investor-State Dispute Settlement (ISDS)
The ISDS mechanism allows investors to submit their investment disputes for resolution directly via neutral international arbitration. It serves to enforce commitments entered into by governments under the FTA and depoliticise investment disputes. The period of consultations mandated under the ISDS mechanism also encourages the settlement of the dispute without proceeding to arbitration.