Singapore Economy

12 Key excerpts on "Singapore Economy"

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  The ASEAN Region in Transition

  A Socioeconomic Perspective

  • Abu N. M. Wahid(Author)
  • 2019(Publication Date)
  • Taylor & Francis

    (Publisher)

  5 The dominant paradigm usually called “Neoclassical political economy’ is based on a market-oriented explanation and it maintains that the East Asian success provides a clear demonstration of vigorous market competition and free trade as the twin ‘engines of growth’. The alternative view often labeled “New political economy’ stresses the role of government in East Asia and thus provides the notion of the state as an engine of growth. The paper examines Singapore’s economic performance in the light of these two competing paradigms and argues that a ‘balanced’ combination of market and government is required for success. Although government intervention in Singapore was fairly extensive, the interventionist measures did not distort market efficiency due to high quality of political leadership, pragmatism, meritocracy, and social conformism, as argued in the paper.

  Economic Performance of Singapore 1965-93

  The highly-acclaimed success of Singapore in achieving rapid economic growth is displayed in Table 5.1 . The first five years following independence in 1965, the city- state experienced a record growth rate of nearly 12 percent per annum. Quite surprisingly, the high growth of real GDP sustained for the entire period of Singapore’s history, although the rate of expansion gradually diminished over the years until about 1992. The growth rate again entered into a double-digit phase in 1993 when the economy registered just about 10 percent real GDP growth. Although the data for 1994 is yet to be finalized, the growth rate in the year is expected to exceed 10 percentage points. The future outlook based on medium-term projections, also seems quite robust.

  Table 5.1 Per annum growth rates of main economic indicators for Singapore

  Although the periodic growth figures consistently show an upward trend, the yearly data indicates that Singapore also has had two ‘bad years’. In 1975, Singapore’s real GDP growth plummeted to a meager 4 percent. It was precipitated by the oil price shock which triggered off a worldwide recession. External demand fell and as incomes dropped, domestic activities were also adversely affected. Another bad year for Singapore was 1985 when the economy experienced a real GDP contraction of 1.6 percent. Since the country was not accustomed to such bad times and as high growth was virtually taken for granted, the 1985 recession shocked everybody. A high-powered economic committee was appointed by the government immediately to investigate the reasons for such a severe recession and it was found by the committee that the erosion of Singapore’s cost-competitiveness vis-à-vis its trading partners coupled with other adverse domestic factors such as over-supply in the hyperactive construction sector mainly caused the downturn. The various cost-cutting measures introduced by the government in the mid-1985 together with the policy of wage restraint helped restore Singapore’s international competitiveness, and the economy returned to its normal growth path by the end of 1987.6

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  Planning Singapore

  The Experimental City

  • Stephen Hamnett, Belinda Yuen, Stephen Hamnett, Belinda Yuen(Authors)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  2 one might wonder what exactly is not working for Singapore at present. Much of the story of Singapore’s rapid economic development over the past half century has been well-told (see Lim, 2015) and the aim here is not to provide another detailed review of the main lines of Singapore’s economic development since independence. Rather, the goal is to question the extent to which current policy approaches and economic structures can be relied upon to continue to reproduce the gains achieved thus far.

  Singapore’s economy has entered into a new phase of its growth, centred increasingly on an ability to be innovative in a broad class of industries that can provide the kind of productivity-led growth that will help the city-state better secure its future. This is a different trajectory from the labour-intensive and subsequent capital-intensive phases of predominantly ‘catch-up’ economic development that have characterized the last few decades. Singapore must confront new challenges to its economic development and growth model that carry much more uncertainty and a consequent need to be open to a host of new business models and institutional arrangements that are distinct from previous rounds of top-down economic planning and policy-making.

  This chapter is primarily concerned with the productive potential of the Singapore Economy and with the challenges that must be faced to unlock this potential. The chapter concentrates on two main topics which are central to the recent past, present and likely future directions for economic planning and development in Singapore. Firstly, the chapter examines the multi-faceted issue of productivity growth, giving special attention to the many implications arising from the economy’s labour-constrained nature. Secondly, there is an exploration of the drive to have growth increasingly founded on innovation, of what it means to organize for innovation and of those segments of the economy which are being counted on to deliver in this regard. A concluding section then addresses the role of Singapore’s government in a mode of economic development that will be different from that of Singapore’s first fifty years.

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  Southeast Asian Affairs 2011

  • Daljit Singh(Author)
  • 2011(Publication Date)
  • ISEAS Publishing

    (Publisher)

  In this respect, Singapore demonstrated once again its ability to make hard-nosed decisions, solve problems in a long-term and strategic manner, and take advantage of every opportunity that circumstances throw up. The sustainability of economic growth is often linked to the dearth of local talent and the need to import foreign talent. However, given the increasing public unhappiness with the large numbers of foreign talent and labour in Singapore, the government signaled its intention to slow the pace of foreign recruitment and the granting of PR status and citizenship to foreigners. Globalization and its associated form of economic change tended to widen the income gap between the different segments of the population. The government was mindful of this ugly side. It adapted the experiences of other nations and was innovative in its policies. The question would always be how much Singaporeans themselves were willing to recognize their own limitations and be prepared to make sacrifices for the larger good and a better future, something which the political leadership has been harping on about. Notes 1 The ESC comprises eight sub-committees and several working groups tasked with examining various strategic ideas. Members of the ESC were drawn from the government, labour movement, and private sector. 2 Budget Speech 2010, “Towards an Advanced Economy: Superior Skills, Quality Jobs, Higher Incomes, Monetary Authority of Singapore (accessed 3 January 2011). 3 Ibid. 4 Ibid. 5 The activities are research and development, registration of intellectual property, acquisitions of intellectual property, design activities, automation through technology or software, and training for employees.

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  Global Economic Uncertainties and Southeast Asian Economies

  • Suthiphand Chirathivat, Chayodom Sabhasri, Aekapol Chongvilaivan(Authors)
  • 2015(Publication Date)
  • ISEAS Publishing

    (Publisher)

  Singapore: Reinventing Itself amid Global Economic Uncertainties 83 Singapore functions as a trade hub, supporting trade-related services from transportation to trade finance; hence the effects of the crisis were exacerbated. It increased the risk of trade financing owing to a greater probability of defaults. The economy felt the constraints of limited private insurance capacity to insure against buyers defaulting on payments, and a reduced credit risk appetite among banks. Another reason for the rapid contraction of Singapore’s GDP was its heavy dependence on foreign direct investment (FDI) for supply of capital, which accounted for 60 per cent of the gross fixed capital formation in the country in 2007. The country saw no FDI inflows in the second half of 2008 (see Figure 4.3). Besides trade and investment, Singapore’s economy has also been exposed to global shocks through its services sector, primarily the communication (transportation, logistics) and tourism sectors. For instance, since the onset of the global financial crisis, there was a steep fall in tourist arrivals in Singapore, particularly from neighbouring nations and the European Union. People cut down spending sharply on travel and tourism as the crisis severely hit consumer confidence and discretionary spending power. There was also a shift away from high-end tourists to budget travellers, resulting in a decline in growth of tourism receipts from 14 per cent in 2007 to 4.8 per cent in 2008 (see Figure 4.4). 2.3 Impact on the Financial and Banking Sectors As a small open economy with strong linkages to international events, the Singapore capital market mirrored the sell offs in the global equity markets. Stock market volumes and prices fell considerably from their peak in July–October 2007, with the domestic equity market falling from 3,500 points in December 2007 to 1,700 points in the last quarter of 2008, eroding millions of investors’ wealth (see Figure 4.5) .

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  Restoring East Asia's Dynamism

  • Seiichi Masuyama, Donna Vandenbrink, Siow Yue Chia(Authors)
  • 2000(Publication Date)
  • ISEAS Publishing

    (Publisher)

  The volatility of short-term capital flows should be taken up by reform of the international financial architecture so that globalisation can be a boon and not a bane for individual economies. Despite strong macroeconomic and financial fundamentals, Singapore has been sucked into the regional financial crisis. General business and consumer sentiment in Singapore’s domestic economy has been adversely affected by the regional downturn and Singapore ’s growth rate plummeted in 1998. Nonetheless, unlike other regional governments that must engage in “fire fighting” tasks, the Singapore Government has been able to focus attention on a longer-term strategy to maintain competitiveness in an increasingly globalised world. A key component of this strategy is to ensure Singapore’s competitive edge over regional countries when they emerge from the crisis with more competitive financial and corporate sectors. Measures are being put in place to strengthen Singapore ’s position as a regional services hub and particularly as a financial centre. On the threshold of the twenty-first century, Singapore has come a long way. It has achieved political stability, social cohesion, a high quality of life, and a highly competitive economy. It has been driven by a strong sense of political and economic vulnerability arising from its geopolitical position in Southeast Asia and its physical limitations. The pursuit of a stakeholder society and good governance have enabled Singapore to achieve its goals. For the next lap, with globalisation providing intense competition, Singapore ’s continuing economic prosperity will largely depend on its ability to compete on capabilities rather than costs.

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  Singapore And Asia: Impact Of The Global Financial Tsunami And Other Economic Issues

  Impact of the Global Financial Tsunami and Other Economic Issues

  • Hui Ying Sng, Wai Mun Chia(Authors)
  • 2009(Publication Date)
  • World Scientific

    (Publisher)

  The theory of comparative advantage compels Singapore to specialize which, in fact, means to depend very largely on the out-side world for imports as well as for exports. Any economic autarkic policy will ruin Singapore, as any political and social iso-lation will bring her to her knees. The average and the marginal propensity to import are very high. In foreign trade, Singapore survives, if not prospers as well. The volume of foreign merchandise trade Singapore handles is thus quite staggering. It is bigger than all the well-known countries in the whole of the Indian sub-continent combined, even when the important e ntrepot trade is excluded (Lim, 2009a, pp. 17–18). More than that, as a financial centre, Singapore also depends on capital inflow and outflow as a part of the routine function. And, of course, trade means not just visible trade but also invisible trade. Besides, as the internal market is small, FDI and much of local investment depend on the global market right from inception. Straightaway, they have to face the full blast of international com-petition. There is no import substitution or export substitution policy. There are no export taxes, nor import taxes, except on a few “sinful” products like tobacco and alcohol. Singapore Growth Model: Its Strengths and Its Weaknesses 125 (3) High Savings and High Investment Strategy In a closed economy, high investment can take place only if there is a high savings function. In an open economy such as Singapore’s, FDI inflow increases investment and investments thus can exceed savings. Singapore has both high domestic savings as well as high net FDI inflow, making her real growth rates very high, at an aver-age of 8.1 percent per annum for the last 43 years since Independence in 1965 (Lim, 2009a, pp. 5–6). The following growth equation taken from Harrod and Domar emphasizes the importance of the savings function in generating economic growth through investment growth.

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  Singapore

  A Modern History

  • Michael D. Barr(Author)
  • 2018(Publication Date)
  • I.B. Tauris

    (Publisher)

  [70] Overall, Singapore’s economic achievements have been considerable although, as Huff points out, it is certainly not the ‘miracle’ that many have identified (see his quotation at the opening of this chapter). There have also been missteps, including many egregious losses by GLCs (counted in the billions of dollars) for which no one ever seems to be held to account, as would happen in truly private enterprises. More fundamental than individual losses, however, are the two basic challenges facing Singapore’s economic growth: increasing productivity; and overcoming the constraints of Singapore’s small land mass. The historical record has been problematic for both, though the future looks more promising for the latter than the former.

  Productivity

  The challenge of increasing Singapore’s productivity (total factor productivity, TFP) as the key to expansion and healthy growth has long been recognised by Singaporean authorities. A strong statement of the importance of productivity can be found in a 2010 speech by Ngiam Tong Dow, a former permanent secretary in the Prime Minister’s Office, the Ministry of Finance and the Ministry of Trade and Industry:

  In my view, raising TFP is the core function of the CEO of a company. For the government, the prime minister is the CEO. The CEO has to own the whole process. He cannot simply delegate it to others. Performance bonuses have to be tied inextricably to TFP.

  Expansion has to be differentiated from growth. Expansion occurs when the input–output ratio is unity. One new unit of input produces one unit of output. Growth occurs when one unit of input produces two or more units of output. The input–output ratio has to be more than one before performance bonuses kick in.[71]

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  Southeast Asian Affairs 1994

  • Daljit Singh(Author)
  • 2018(Publication Date)
  • ISEAS Publishing

    (Publisher)

  Developing Singapore's External Economy 293 nal economy, Singapore's foreign direct investment had been growing steadily over time with an accelerated pace since 1989. However, about half of the di- rect investment was still in the hands of foreign-controlled companies. Local companies set up more companies abroad than did foreign-controlled compa- nies but their average size was only half that of companies set up by foreign- controlled companies. It would be interesting to examine the impact, if any, of the recent efforts towards overseas expansion. Challenges and Opportunities In developing an external economy, Singapore faces many challenges and op- portunities. Some of these are affected by internal factors and others by exter- nal ones. Some are being addressed by government schemes and action plans. Some others are being addressed by the private sector. In many cases, it is the joint effort by both the public and private sectors that has led to fruitful re- sults. In characteristic fashion, the Singapore Government not only preaches but also helps to practise overseas expansion of Singapore businesses. In January 1993 the Prime Minister appointed the Committee to Promote Enterprise Over- seas (CPEO) to recommend measures to assist Singapore business venture abroad. By August the CPEO delivered its final report. The findings and the follow-up action that has been taken since throw light on the extent to which the government has gone to, help build the external economy. Some of them are referred to in the following discussion of some key issues relating to the external economy of Singapore. Financial Assistance By far the most widely expressed concerns about overseas expansion relate to financial issues. These issues range from shortage of capital to tax incentives to funding of feasibility studies. But it is also the area where the government has done the most to help the private sector.

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  Management of Success

  Singapore Revisited

  • Terence Chong(Author)
  • 2010(Publication Date)
  • ISEAS Publishing

    (Publisher)

  Singapore’s Changing Economic Model 123 123 8 SINGAPORE’S CHANGING ECONOMIC MODEL CHOY KEEN MENG My settlement of Singapore continues to thrive most wonderfully — it is all and everything I could wish and if no untimely fate awaits it, it promises to become the Emporium and the pride of the East. — Sir Stamford Raffles, 1820 1 SURVEYING THE CHANGING WORLD he precursor to this volume was published when Singapore was recovering from the severe recession of 1985– 86. At the time of writing, the country is once again mired in a recession triggered by the global financial and economic crises that erupted in late 2008. There is, therefore, no better time than now to look back at the key economic restructuring efforts undertaken by the People’s Action Party (PAP) government in the intervening two decades. The present survey seeks to evaluate these reforms and their impact on the broader macroeconomy critically. In a fundamental sense, these restructuring measures did not change the economic model underlying Singapore’s demonstrable success in the earlier era. This model has always emphasized free trade, an export-led economic development strategy, and a dependence on international capital, technology, and labour, all combined with an extensive role for the government. What has altered instead is the configuration of policies, incentives, and infrastructures engineered to bring about continual economic success in a changing regional environment and a rapidly globalizing world. As we shall see, the shifts in emphases have led to a steady migration of production into higher value-added — albeit more T 124 Management of Success volatile — industries within the manufacturing sector and a concomitant rise in service sector employment. Compared with the previous phase of economic development from 1965 to 1985, the macroeconomic consequences have been less benign.

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  Singapore And Asia In A Globalized World: Contemporary Economic Issues And Policies

  Contemporary Economic Issues and Policies

  • Wai Mun Chia, Hui Ying Sng(Authors)
  • 2008(Publication Date)
  • World Scientific

    (Publisher)

  parts of the overall economic transformation process. Each develop-ment builds on the other developments in a circular cumulative upward surge. Singapore’s miraculous structural transformation is shown in Fig. 4. In other words, Singapore’s overall economic pie expanded in real GDP terms by an average compound rate of 8.1% per year for the last 43 years. This is a very impressive, record-breaking achievement by any standard. More than that, Singapore’s rapid rate of growth in income and wealth has been achieved with price stability, huge accu-mulation of foreign exchange reserves, a stable and strong Singapore dollar, full employment for most of the 43 years, a very high savings function and the most enviable balance of payments surpluses. Singapore’s unemployment rate is 2.7%, one of the very lowest in the world. Germany, for example, which is the biggest economy and one of the most dynamic countries in Europe, has an unemployment rate of 8.1% and France also has an unemployment rate of 8.1%. Singapore has been transformed from a low value-added, labor 10 Lim Chong Yah 1. Export-Oriented Industrialization 2. International Trading Emporium 3. International Shipping, Aviation and Telecommunication Hub 4. International Financial Hub 5. International Tourism Hub 6. Regional Education Center 7. Regional Healthcare Center 2007 1965 1. Old Entrepot Trade 2. British Military Base Figure 4: Economic structural transformation intensive old economy to a much higher value-added, knowledge-based and technology-based new economy. METAMORPHOSIS IN EXTERNAL BALANCE Some countries, including the USA, have recently achieved a very high standard of living partly through the accumulation of foreign debts. This is not the case in Singapore. Singapore has become very much a creditor nation, than a debtor country. Again, some countries, including the USA, have achieved a very high standard of living but have serious balance of payments deficit.Again this is not the case in Singapore.

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  Institutions and Economic Growth in Asia

  • Flora Huang, Horace Yeung(Authors)
  • 2018(Publication Date)
  • Routledge

    (Publisher)

  5 Singapore Singapore has frequently been compared to Hong Kong. 1 They are both small cities with a population of around 5.6 and 7.3 million respectively in Singapore and Hong Kong. 2 They both used to be British colonies and therefore inherited the institutions left behind by the colonial ruler, most notably their legal and political systems. They both represent successful examples of economic development in Asia and are now amongst the most affluent economies in the world. Meanwhile, they are different in certain ways. Singapore has been an independent sovereign state since 1965, whilst Hong Kong has been ruled successively by Britain and then China. Further, as discussed before, the Hong Kong government has been prominent in maintaining a low profile in its economy, whilst the situation in Sin- gapore has been quite different. Also, Singapore has a multicultural society, com- pared to Hong Kong’s essentially Chinese society. Following on the previous two chapters which looked at the stories of China and Hong Kong, this chapter will move the discussion on to Singapore. Like the previous two chapters, with the help of the analytical framework laid down in Chapter 2, this chapter will first provide an overview of Singapore’s economic development both before and after its inde- pendence. Afterwards, it will examine the legal, political, cultural and other institu- tional conditions of the city-state one by one, before coming to a final conclusion. This chapter is the third of the four largely parallel chapters which explore the insti- tutional conditions of the economies selected by this book, namely, China, Hong Kong, Singapore and Malaysia. Economic growth of Singapore Singapore’s closest competitor in the region is obviously Hong Kong. According to the IMD’s World Competitiveness Yearbook 2017, Hong Kong took top spot for the second year, with Switzerland in the second place and Singapore in third.

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  Southeast Asian Affairs 1993

  • Daljit Singh(Author)
  • 2018(Publication Date)
  • ISEAS Publishing

    (Publisher)

  Southeast Asian Affairs 1993 SINGAPORE COPING WITH A MATURING ECONOMY Wong Poh Kam and Ng Chee Yuen Approaching Maturity The Singapore Economy has done exceedingly well since its separation from Malaysia in 1965. As shown in Table 1, it achieved an average growth rate of real gross domestic product (GDP) of 10.4 per cent in the 1970s, and 7.3 per cent in the 1980s. Growth rates have slowed somewhat in the early 1990s to 6. 7 per cent in 1991, and an estimated rate of 5.0-5.5 per cent in 1992. Part of this slow-down in growth in the early 1990s can be attributed to the adverse cyclical effects of weak international economic growth, particularly in the United States and Japan. None the less, there are clear signs that the Singapore Economy, like those of the other Asian dragons, is unlikely to repeat the same high average growth performance as in the past decades, for structural rather than cyclical reasons. If the 1980s have been seen as the decade in which the four Asian dragons shifted from being newly industrializing economies (NIEs) to newly industrialized economies, the decade of the 1990s will most likely be characterized as one in which their economies struggle to make the transition to maturity -that is, TABLE 1 Singapore GDP Distribution by Sectors, 1960-91 (In per cent) Industry 1960 1970 1980 1990 1991 Agriculture & Mining 3.9 2.7 1.5 0.4 0.4 Manufacturing 11.7 20.2 28.1 26.4 27.3 Utilities 2.4 2.6 2.1 1.8 1.8 Construction 3.5 6.8 6.2 5.1 6.4 Commerce 33.0 27.4 20.9 15.6 15.7 Transport & Communication 13.6 10.7 13.5 11.8 12.7 Financial & Business Services 14.4 16.7 18.9 29.7 26.0 Other Services 17.6 12.9 8. 7 9.1 9.6 Total 100% 100% 100% 100% 100% Note: Figures may not add up to 100 due to rounding. SouRCE: Calculated from Ministry of Trade and Industry (MTI), Yearbook of Statistics Singa-pore (1991). 314 Wong Poh Kam and Ng Chee Yuen from newly industrialized economies to mature industrialized economies.

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