Foreign investments, combined with investments through government-linked companies (GLCs), underpin Singapore's open, heavily trade-dependent economy. With the exception of restrictions in the financial services, professional services, and media sectors, Singapore maintains an open investment regime.

The government is strongly committed both to maintaining a free market and to taking a leadership role in planning Singapore's economic development. That role has traditionally relied heavily on industrial policy; the government's active use of the public sector as both an investor and catalyst for development has given rise to the characterization of Singapore as 'Singapore Inc.' The dominant role of GLCs in the commanding heights of the economy has been criticized by some observers, who charge it has displaced private entrepreneurship. In the midst of its worst unemployment in 15 years and coping with structural changes in the employment market, the government is now stressing measures to encourage such entrepreneurship, while still continuing a heavy state role in the economy.

Attracting foreign investment into the country - initially to spearhead industrialization and subsequently to climb the technological and value-added ladders - has been the other key economic strategy of the government. Through it, Singapore has evolved into a base for multinational companies (MNCs) to engage in high-end manufacturing and product development, and coordinate regional procurement, production, marketing, and distribution operations. Singapore continues to have a sophisticated investment promotion strategy designed to attract major investment in knowledge-intensive manufacturing and service activities.

The Economic Development Board (EDB), Singapore's investment promotion agency, has a reputation for being highly responsive to changing business conditions and investor needs.

The country's legal framework and public policies are in general very friendly to foreign investors. Foreign investors are not required to enter into joint ventures or cede management control to local interests, and local and foreign investors are subject to the same basic laws. Apart from regulatory requirements in some sectors (financial and telecom services), the government screens investment proposals only to determine eligibility for various incentive regimes. Singapore places no restrictions on reinvestment or repatriation of earnings or capital. The judicial system upholds the sanctity of contracts, and decisions are effectively enforced.