Sovereign risk is a legal or political risk that an investment in another country would become worthless because of political turmoil which leads the business environment to collapse or prompts another government to take over and seize foreign assets. Singapore Sovereign Risk can be explained through various threats faced by the country since independence.
Communism has been a major threat to Singapore's stability and security between the late 1940s to 1980s. The Special Branch carried out counter offensive against the communist and managed to render them ineffective over a period of time. Even after its independence in 1965, Pro communist elements resorted to struggle through organized strikes and acts of arson and vandalism. But in 1989, the communist signed a peace treaty with the government and with it the threat from communist came to an end.
Singapore witnessed its first terrorist attack on 31 Jan 74, when terrorists from the Japanese Red Army (JRA) bombed petroleum tanks at Pulau Bukom. Singapore witnessed another terrorist attack in 1991,when four Pakistanis hijacked a Singapore Airlines shuttle flight from Subang International Airport (Kuala Lumpur).But the International Security Department (ISD) provided vital tactical intelligence, which enabled SAF commandos to storm the plane and rescue the passengers. Since then Singapore has not witnessed any major terrorist threat.
While terrorist attacks are highly visible, espionage cases are not. The ISD exposed and expelled two Russian spies in 1982. In 1997 two persons were arrested for espionage and in 1998, 4 persons were arrested for espionage.
Sovereign Threat at Present
Today Singapore is a sovereign risk free nation. Singapore's owes its current stability to the Internal Security Department (ISD). The mission of the ISD is to keep Singapore safe and sovereign for all Singaporeans. They actively collect accurate intelligence, make time to time assessments and take timely action to counter security threats to Singapore internal stability and sovereignty.