New Foreign Investment Entry Requirement

The Ministry of Economic Development and Trade, pursuant to the Foreign Investment Act, has formally introduced revised Entry Requirements, effective 8 October 2025, which materially alter the framework governing foreign investment across multiple sectors.

Under the revised regime, foreign investment approvals are contingent upon the proposed activity being:

• Expressly permitted;
• Restricted; or
• Permitted subject to specified conditions and limitations.

The revisions represent a shift toward controlled market access, prioritising domestic participation in certain economic segments while directing foreign capital into strategic and high-value sectors.

Prohibited Sectors (Closed to Foreign Investment)

General Prohibition on Trade Activities

The revised framework maintains a blanket restriction on foreign participation in:

• Wholesale trading activities
• Retail trading operations

This prohibition reflects a continuation of existing policy, reaffirming the Government’s position that domestic trade and distribution activities are to remain under local ownership and control.

Restricted Service-Based Sectors

Additional limitations have been introduced in sectors considered integral to local economic participation, including:

• Transportation and logistics services
• Certain operational and service-based business activities

These restrictions indicate a clear policy direction toward localisation of operational industries.

Construction Sector Limitations

Foreign participation in construction activities is subject to minimum contract value thresholds.

Projects below the prescribed threshold are effectively closed to foreign investors, thereby reserving smaller-scale construction works for domestic contractors.

Key Sectoral Policy Developments

The revised framework introduces several notable policy adjustments across sectors, including:

• Tightening of entry requirements in real estate development through more granular sub-sector classifications
• Increased minimum thresholds in construction, limiting participation in smaller-scale projects
• Additional restrictions imposed on transportation and logistics sectors
• Reduction in investment thresholds in selected financial services segments
• Introduction of renewable energy as a defined foreign investment activity
• Adjustment of foreign shareholding limits in certain service sectors
• Relaxation of franchising restrictions, including removal of location-based limitations

Conditional Entry and Investment Thresholds

Where sectors are not fully prohibited, access is regulated through minimum investment thresholds and structural conditions.

Construction Sector (Threshold-Based Entry)

• Projects below the required value → Not eligible for foreign participation
• Projects meeting or exceeding the threshold → Permitted subject to licensing and regulatory approvals

This establishes a dual-tier system distinguishing local contractor markets from large-scale infrastructure investments.

Real Estate Development

The revised framework introduces stricter categorisation within real estate activities, limiting access to smaller developments and favouring larger, capital-intensive projects.

Foreign participation is therefore increasingly tied to:

• Project scale
• Investment value
• Compliance with sub-sector classifications

Sectoral Adjustments and Emerging Categories

The Entry Requirements also introduce:

• Reduced thresholds in certain financial services segments
• New classifications for renewable energy investments
• Adjustments to foreign shareholding limits in niche sectors such as dive operations

These changes indicate a selective liberalisation approach, targeting strategic industries.

Transitional Arrangements for Existing Investors

Continuity of Existing Agreements

Foreign entities operating under valid Foreign Investment Agreements (FIAs) may continue operations until the expiry of such agreements.

Continuation beyond expiry is conditional upon full compliance with the revised regulatory framework.

Transitional Relief Mechanism

Entities impacted by newly imposed restrictions may apply for a transition period to:

• Restructure operations; or
• Facilitate an orderly exit from restricted sectors

Duration of Transition Periods

Transition periods are determined based on sector classification and investment scale, generally structured as follows:

• Service-oriented / non-capital-intensive sectors → up to 1 year
• Capital-intensive investments:
  • < USD 5 million → up to 3 years
  • USD 5–10 million → up to 5 years
  • USD 10 million → up to 7 years (extendable at discretion)

Oversight and Approval Process

Applications for transition arrangements are subject to review by a designated Foreign Investment Transition Committee, which will:

• Assess eligibility
• Determine timelines
• Define operational limitations during the transition period

Final determinations are formalised through issuance of a Transition Arrangements Letter.

Right of Review

Applicants who are dissatisfied with decisions issued by the relevant authorities may submit a request for re-evaluation, supported by additional documentation or representations, for further consideration.

Regulatory Implications

The revised Entry Requirements have the following practical implications:

• Domestic trade protection: wholesale and retail activities are formally preserved for local entities
• Shift toward high-value investments: foreign participation is encouraged primarily in capital-intensive sectors
• Increased compliance obligations: existing investors must undertake structural adjustments to remain compliant
• Reduced flexibility in market entry: sector-specific restrictions limit traditional entry routes such as distribution-based models

The revised Entry Requirements establish a more controlled and policy-driven foreign investment regime, characterised by increased sectoral restrictions and targeted liberalisation in strategic industries.

The framework reinforces the Government’s objective of protecting domestic commercial participation while attracting high-value foreign capital, and requires businesses to adopt a proactive approach to regulatory compliance, structuring, and long-term operational planning.