It is down to economics presumably, and basically the dreaded Certificate Of Entitlement. The COE lumps eco-friendly 1.0liter cars together with cars (and sadly, taxis) 1.6liters and below. So if VW were to bring in the Up, it would have to actually be Up (pun intended) against the Polo and the Golf. And as Singapore is a small market, in-house competition isn't good especially when external competition is already pretty ridiculous as even Mercedes Benz is technically a competitor with the C-class sedans. Note that the same 1600cc and below COE is required to buy the Mercedes C class and if the COE costs SG$50,000. That would be the COE you need to pay for a truly tiny car like the Up and it isn't logical to the eyes of potential car owners. They'd rather buy a bigger car for better value of money.
But I suppose most of you are already aware of this, aren't you? And therefore, there is presumably no chance of a Volkswagen Up in whatever form for people over here.