Foreign direct investment (FDI) is an investment from an entity in one country into a business or corporation in another country, with the intention of establishing a lasting relationship or interest. This could come in the form of an acquisition of a substantial stake in a foreign business, or an outright purchase of a company as a means to expand into a new market and develop a multinational presence.

As with any kind of investment, FDI activities carry with them a certain level of risk. Given the international nature of FDI, investors may face financial risks because of high transaction costs, sudden currency volatility, or third-party intermediaries. In foreign markets – especially those in emerging economies – investors may also face liquidity risks, or risks posed by political instability.

Although Singapore widely welcomes foreign investment, it is governed by specific regulations and restrictions. Sectors considered sensitive to public or national security, including media and real estate, may face FDI limitations. Meanwhile, industries such as professional services, banking, and telecommunications might be regulated through licensing requirements.