Ultimately, this will serve as the motivation for the
Singaporean firms to rigorously expand their abroad investment activities. In other
words, those firms have competitive advantage in financing foreign investment due to
lower cost of borrowing in home country. On the other perspective, higher interest
rate may reduce the intention of the domestic firms to invest abroad. This is due to the
higher interest rate may attract more accumulation of investment via the saving.
Therefore, domestic firms will have the tendency to invest locally to gain favorable
return instead of taking risk investing abroad.