Economy of Singapore
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| Economy of Singapore | |
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| Currency | Singapore dollar (SGD) |
|---|---|
| Fiscal year | 1 April - 31 March |
| Trade organisations | WTO, APEC |
| Statistics | |
| GDP (PPP) | $222.7 billion (2007 est.) (48th) |
| GDP growth | 7.5% (2007) |
| GDP per capita | $48,900 (2007 est.) |
| GDP by sector | agriculture: 0%, industry: 33.7%, services: 66.3% (2007 est.) |
| Inflation (CPI) | 7.5% (April 2008) |
| Population below poverty line |
N/A |
| Labour force | 2.67 million (2007 est.) |
| Labour force by occupation |
manufacturing 18%, construction 6%, transportation and communication 11%, financial, business, and other services 39%, other 26% (2003) |
| Unemployment | 1.7% (2007 est.) |
| Main industries | electronics, chemicals, financial services, oil drilling equipment, petroleum refining, rubber processing and rubber products, processed food and beverages, ship repair, offshore platform construction, life sciences, entrepot trade |
| External | |
| Exports | $289.4 billion f.o.b. (2006 est.) |
| Export goods | machinery and equipment (including electronics), consumer goods, chemicals, mineral fuels |
| Main export partners | Malaysia 13.1%, US 10.2%, Hong Kong 10.1%, China 9.7%, Indonesia 9.2%, Japan 5.5%, Thailand 4.2% (2006) |
| Imports | $244.6 billion (2006 est.) |
| Import goods | machinery and equipment, mineral fuels, chemicals, foodstuffs |
| Main import partners | Malaysia 13%, US 12.7%, China 11.4%, Japan 8.3%, Taiwan 6.4%, Indonesia 6.2%, South Korea 4.4% (2006) |
| Public finances | |
| Public debt | $24.3 billion (2006 est.) |
| Revenues | $19.71 billion (2006 est.) |
| Expenses | $19.85 billion; including capital expenditures of $5.1 billion (2006 est.) |
| Economic aid | none |
| Main data source: CIA World Factbook All values, unless otherwise stated, are in US dollars |
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The Economy of Singapore is a highly developed and successful capitalist mixed economy. While government intervention is kept at a minimum, government entities such as the sovereign wealth fund Temasek control corporations responsible for 60% of GDP. It has an open business environment, relatively corruption-free and transparent, stable prices, and one of the highest per capita gross domestic products (GDP) in the world. Exports, particularly in electronics and chemicals, and services provide the main source of revenue for the economy, which allows it to purchase natural resources and raw goods which it does not have. Singapore could thus be said to rely on an extended concept of entrepot trade, by purchasing raw goods and refining them for re-export, such as in the wafer fabrication industry and oil refining. Singapore also has a strategic port which makes it more competitive than many of its neighbours to carry out such entrepot activities. The Port of Singapore is one of the busiest in the world, surpassing Hong Kong and Shanghai. [1] In addition, Singapore's port infrastructure and skilled workforce, which is due to the success of the country's education policy in producing skilled workers, is also fundamental in this aspect as they provide easier access to markets for both importing and exporting, and also provide the skill(s) needed to refine imports into exports.
On 14 February 2007, the Singapore government announced that economic growth for the whole year of 2006 was 7.9%, higher than the originally expected 7.7%.[2]
Contents |
[edit] Macro-economic trend
This is a chart of trend of gross domestic product of Singapore at market prices estimated by the International Monetary Fund.
| Year | Gross Domestic Product ($ millions) | US Dollar Exchange |
|---|---|---|
| 1980 | 25,117 | 2.14 Singapore Dollars |
| 1985 | 39,036 | 2.20 Singapore Dollars |
| 1990 | 66,778 | 1.81 Singapore Dollars |
| 1995 | 119,470 | 1.41 Singapore Dollars |
| 2000 | 159,840 | 1.72 Singapore Dollars |
| 2005 | 194,360 | 1.64 Singapore Dollars |
| 2007 | 224,412 | 1.42 Singapore Dollars |
The government promotes high levels of savings and investment through a mandatory retirement savings scheme known as the Central Provident Fund, and large portions of its budget are expended in education and technology, with the former having a current rate as of 21% in 2021 compared to spending in the United States of 4%. However, the figures may be misleading as the majority of US education funding comes from the state level, not federal. It also owns Temasek-linked companies (TLCs, companies that are linked to the government's investment arm) - particularly in manufacturing - that operate as commercial entities and account for 60% of GDP. As Singapore looks to a future increasingly marked by globalization, the country is positioning itself as the region's financial and high-tech centre in competition with other East Asian cities.
Singapore's strategic location on major sea lanes and industrious population have given the country an economic importance in South-east Asia disproportionate to its small size. Upon independence in 1965, Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government adopted a pro-business, pro-foreign investment, export-oriented economic policy combined with state-directed investments in strategic government-owned corporations. Whilst nominally socialist in the 1960s, the ruling party increasingly became openly capitalist but self-described itself as 'pragmatic', a euphemism for capitalism with authoritarian social controls.
Singapore's economic strategy proved a success, producing real growth that averaged 8.0% from 1960 to 1999. The economy picked up in 1999 after the regional financial crisis, with a growth rate of 5.4%, followed by 9.9% for 2000. However, the economic slowdown in the United States, Japan and the European Union, as well as the worldwide electronics slump, had reduced the estimated economic growth in 2001 to a negative 2.0%. The economy expanded by 2.2% the following year, and by 1.1% in 2003 when Singapore was affected by the SARS outbreak. Subsequently, a major turnaround occurred in 2004 allowed it to make a significant recovery of 8.3% growth in Singapore, although the actual growth fell short of the target growth for the year more than half with only 2.5%. In 2005, economic growth was 6.4% while there was 7.9% growth in Year 2006.
Singapore's largely corruption-free government, skilled workforce, and advanced and efficient infrastructure have attracted investments from more than 3,000 multinational corporations (MNCs) from the United States, Japan, and Europe. Foreign firms are found in almost all sectors of the economy. MNCs account for more than two-thirds of manufacturing output and direct export sales, although certain services sectors remain dominated by government-linked corporations.
Manufacturing and financial business services are the twin engines of the Singapore economy and accounted for 26% and 22%, respectively, of Singapore's gross domestic product in 2000. The electronics industry leads Singapore's manufacturing sector, accounting for 48% of Singapore's total industrial output, but the government also is prioritising development of the chemicals and biotechnology industries.
To maintain its competitive position despite rising wages, the government seeks to promote higher value-added activities in the manufacturing and services sectors. It also has opened, or is in the process of opening, the financial services, telecommunications, and power generation and retailing sectors to foreign service providers and greater competition. The government has also attempted some measures including wage restraint measures and release of unused buildings in an effort to control rising commercial rents with the view to lowering the cost of doing business in Singapore when central business district office rents tripled in 2006.
[edit] Bio-tech
Singapore is aggressively promoting and developing its biotechnology industry. Hundred of millions of dollars were invested into the sector to build up infrastructure, fund research and development and to recruit top international scientists to Singapore. Leading drug makers, such as GlaxoSmithKline (GSK), Pfizer and Merck & Co., have set up plants in Singapore. On 8 June 2006, GSK announced that it is investing another S$300 million to build another plant to produce paediatric vaccines, its first such facility in Asia.[3]. Pharmaceuticals now account for more than 16% of the country's manufacturing production.
[edit] Tech
Whilst praise has been given to efforts to promote the Bio-tech sector the traditional Tech sector remains larger and could benefit from similar public-private sector effors to promote Singapore tech companies. Whilst the government wlll not consider a "Buy Singaporean Tech" campaign, the spending power of the government and government-linked companies alone could impact sales and company value of Singapore tech companies. More tax holidays for tech hardware companies and government loans for the more innovative of them will lead Singapore to surpass other tech centres in East Asia although competing with inventors and product designers in Japan and South Korea would prove difficult in view of Singapore's small base. Hence whilst there is criticism of unskilled foreign labour in Singapore, the nation needs skilled foreign tech talent and should make it easier for those with the latest tech skills to come to Singapore from China and South Asia as well as from Japan, South Korea and western countries.
[edit] Trade, investment and aid
Singapore's total trade in 2000 amounted to S$373 billion, an increase of 21% from 1999. Despite its small size, Singapore is the tenth-largest trading partner of the United States. In 2000, Singapore's imports totalled $135 billion, and exports totalled $138 billion. Malaysia was Singapore's main import source, as well as its largest export market, absorbing 18% of Singapore's exports, with the United States close behind. Re-exports accounted for 43% of Singapore's total sales to other countries in 2000. Singapore's principal exports are petroleum products, food/beverages, chemicals, textile/garments, electronic components, telecommunication apparatus, transport equipment. Singapore's main imports are aircraft, crude oil and petroleum products, electronic components, radio and television receivers/parts, motor vehicles, chemicals, food/beverages, iron/steel, textile yarns/fabrics.
Singapore continues to attract investment funds on a large-scale despite its relatively high-cost operating environment. The U.S. leads in foreign investment, accounting for 40% of new commitments to the manufacturing sector in 2000. As of 1999, cumulative investment for manufacturing and services by American companies in Singapore reached approximately $20 billion (total assets). The bulk of U.S. investment is in electronics manufacturing, oil refining and storage, and the chemical industry. More than 1,500 U.S. firms operate in Singapore.
The government also has encouraged firms to invest outside Singapore, with the country's total direct investments abroad reaching $39 billion by the end of 1998. The People's Republic of China was the top destination, accounting for 14% of total overseas investments, followed by Malaysia (10%), Hong Kong (8.9%), Indonesia (8.0%) and U.S. (4.0%). The rapidly growing economy of India, especially the high technology sector, is becoming an expanding source of foreign investment for Singapore. The United States provides no bilateral aid to Singapore, but the U.S. appears keen to improve bilateral trade and signed the U.S.-Singapore Free Trade Agreement.
| Year | Total trade | Imports | Exports | % Change |
|---|---|---|---|---|
| 2000 | $373 | $135 | $138 | 21% |
| 2001 | -9.4% | |||
| 2002 | $432 | 1.5% | ||
| 2003 | $516 | $237 | $279 | 9.6% |
| 2004 | $629 | $293 | $336 | 21.9% |
| 2005 | $716 | $333 | $383 | 14% |
| 2006 | $810 | $379 | $431 | 13.2% |
All figures in billions of Singapore dollars.
[edit] International trade agreements
| Economy | Agreement | Abbreviation | Concluded | Signed | Effective | Legal text |
|---|---|---|---|---|---|---|
| New Zealand | Agreement between New Zealand and Singapore on a Closer Economic Partnership | ANZSCEP | 18 August 2000 | 14 November 2000 | 1 January 2001 | [1] |
| European Free Trade Association | Agreement between the EFTA States and Singapore | EFTA-Singapore FTA | 11 April 2002 | 26 June 2002 | 1 January 2003 | [2] |
| Japan | Agreement between Japan and the Republic of Singapore for a New-Age Economic Partnership | JSEPA | October 2001 | 13 January 2002 | 30 November 2002 | [3] |
| Australia | Singapore-Australia Free Trade Agreement | SAFTA | November 2002 | 17 February 2003 | 28 July 2003 | [4] |
| United States | United States-Singapore Free Trade Agreement | USSFTA | 19 November 2002 | 6 May 2003 | 1 January 2004 | [5] |
| Jordan | Singapore Jordan Free Trade Agreement | SJFTA | 29 April 2004 | 16 May 2004 | [6] | |
| Brunei | Trans-Pacific Strategic Economic Partnership Agreement | Trans-Pacific SEP | August 2005 | 1 January 2006 | [7] | |
| Chile | 18 July 2005 | |||||
| New Zealand | 18 July 2005 | |||||
| India | India - Singapore Comprehensive Economic Cooperation Agreement | India-Singapore CECA | November 2004 | 29 June 2005 | 1 August 2005 | [8] |
| Korea | Korea-Singapore Free Trade Agreement | KSFTA | 28 November 2004 | 4 August 2005 | End 2005 | [9] |
[edit] Singapore workforce and dependence on foreign workers
In 2000, Singapore had a workforce of about 2.2 million. The National Trades Union Congress (NTUC), the sole trade union federation which has a symbiotic relationship with the ruling party, comprises almost 99% of total organized labour. Government policy and pro-activity rather than labour legislation controls general labour and trade union matters. The Employment Act offers little protection to white collar workers due to an income threshold. The Industrial Arbitration Court handles labour-management disputes that cannot be resolved informally through the Ministry of Labour. The Singapore Government has stressed the importance of cooperation between unions, management and government ("tripartism"), as well as the early resolution of disputes. There has been only one strike in the past 15 years.
Singapore has enjoyed virtually full employment for long periods of time. Amid an economic slump, the unemployment rate rose to 4.0% by the end of 2001, from 2.4% early in the year. Unemployment has since declined and in 2005, the unemployment rate is 2.7% in 2006, the lowest in the last four years, with 2.3 million people being employed. [4] [5]
The Singapore Government and the NTUC have tried a range of programs to increase lagging productivity and boost the labour force participation rates of women and older workers. But labour shortages persist in the service sector and in many low-skilled positions in the construction and electronics industries. Foreign workers help make up this shortfall. In 2000, there were about 600,000 foreign workers in Singapore, constituting 27% of the total work force. As a result, wages are relatively suppressed or do not rise for all workers. In order to have some controls, the government imposes a foreign worker levy payable by employers for low end workers like domestic help and construction workers.
[edit] Facts & figures
Percentage of economic growth in Year 2007: 7.4%
Industrial production growth rate: 6.8% (2007 est.)
Electricity - production: 41.137.7 billion kWh (2007)
Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)
Electricity - consumption: 37.420.3 billion kWh (2007)
Electricity - exports: 0 kWh (2007)
Electricity - imports: 0 kWh (2007)
Agriculture - products: rubber, copra, fruit, vegetables; poultry, eggs, fish, orchids, ornamental fish
Currency: 1 Singapore dollar (S$ or SGD) = 100 cents
Exchange rates:
| Year | Singapore Dollars per US$1 |
|---|---|
| 1981 | 2.0530 |
| 1985 | 2.1213 |
| 1990 | 1.7275 |
| 1995 | 1.4148 |
| 2000 | 1.7361 |
| 2005 | 1.6738 |
| 2008 (April) | 1.3643 |
[edit] References
- ^ Singapore Banks on Its Port - International Herald Tribune
- ^ "Singapore's economy grows by 7.7% in 2006", Channel NewsAsia, 31 December 2006. By Dominique Loh.
- ^ Pharmaceutical-Technology.com
- ^ "Latest Data (1 February 2006) - Singapore Department of Statistics. URL accessed on 2 February 2009.
- ^ "Singapore's employment hits all-time high of 2.3 m in 2005", Channel NewsAsia, 1 February 2006. By May Wong.
[edit] See also
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