Singapore authorities are scrapping a permanent residency scheme for foreign investors and high net worth individuals after receiving backlash from locals worried about rising property prices and the influx of expatriates to the city-state.

The Financial Investor Scheme was introduced by the Monetary Authority of Singapore in 2004 to allow foreign HNW individuals to earn a Singapore permanent resident status if they park at least S$10 million ($8 million) in the city-state for five years. While this had invited more foreign investment, analysts argued that it did not help with the locals' employment numbers and even played a huge part in the rising property rates. The FIS is set to be terminated by 30 April 2012.

In its place, the Global Investor Program, also introduced in 2004 will become the primary route for foreigners to earn PR status in Singapore. Under this scheme, HNW individuals may either invest at least S$2.5 million in a start-up business with a Singapore unit or an expanding local firm with a minimum of S$30 million in annual revenue, or invest at least S$2.5 million in a GIP-approved fund.

According to Asiabiz, the Singapore company registration and consulting firm, the GIP creates more value than the FIP to the local economy as it links high-potential Singapore start-ups directly to funds needed in the initial stages of their growth. This in turn helps develop capabilities and get to the level that allows them to expand. Merging the two investor programs, it said, would make the most sense.

"As the demand for Singapore PR status remains robust, we are optimistic that more funds will go directly to deserving enterprises. This will in turn benefit Singapore's economy and boost its reputation as Asia's business epicenter," said James Nuben, head of the tax division at Asiabiz.