Economy of Singapore

Economy of Singapore
Currency	Singapore dollar (SGD); Brunei Dollar (B$)
Fiscal year	1 April - 31 March
Trade organisations	WTO, APEC, IOR-ARC, ASEAN
Statistics
GDP	$318.9 billion (2011 est. PPP)
GDP growth	0.3% (Q3 2012)
GDP per capita	$62,100 (PPP, 2010 est.), $43,117 (nominal, 2010 est.)
GDP by sector	agriculture: 0%; industry: 26.6%; services: 73.4% (2011 est.)
Inflation (CPI)	5.2% (2011 est.)
Population below poverty line	N/A
Gini coefficient	47.3 (2011)
Labour force	3.237 million (2011 est.)
Labour force by occupation	agriculture 0.1%, industry 19.6% 18%, services 80.3% (2011)
Unemployment	1.9% (2012 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
Ease of Doing Business Rank	1st
External
Exports	$414.8 billion (2011 est.)
Export goods	machinery and equipment (including electronics and telecommunications), pharmaceuticals and other chemicals, refined petroleum products
Main export partners	Malaysia 12.2%, Hong Kong 11.0%, China 10.4%, Indonesia 10.4%, United States 5.45%, Japan 4.5%, (2011 est.)
Imports	$311.7 billion (2011 est.)
Import goods	machinery and equipment, mineral fuels, chemicals, foodstuffs, consumer goods
Main import partners	Malaysia 10.7%, United States 10.7%, China 10.4%, Japan 7.2%, South Korea 5.9%, Taiwan 5.9% (2011 est)
FDI stock	$497 billion (31 December 2011 est.)
Gross external debt	$23.58 billion (31 December 2011 est.)
Public finances
Public debt	118.2% of GDP (2011 est.)
Revenues	S$40.53 billion (2011 est]
Expenses	S$37.18 billion (2011 est.) note: expenditures include both operational and development expenditures
Economic aid	none
Credit rating	Standard & Poor's: AAA (Domestic) AAA (Foreign) AAA (T&C Assessment) Outlook: Stable Moody's: Aaa Outlook: Stable Fitch: AAA Outlook: Stable
Foreign reserves	US$233.368 billion (March 2011)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars

Life in Singapore
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Singapore has a highly developed and successful market economy. Singapore's economy has been ranked as the most open in the world, least corrupt, most pro-business, with stable prices, low tax rates (14.2% of GDP) compared to other developed economies, and one of the highest per-capita gross domestic products (GDP) in the world. Singapore's sovereign wealth fund Temasek Holdings is a large investor in the economy, holding majority stakes in several of the nation's largest companies, such as Singapore Airlines, SingTel, ST Engineering and MediaCorp.

Exports, particularly in electronics and chemicals, and services including the posture that Singapore is the regional hub for wealth management (and the opening of the city state's first casino in 2010) provide the main source of revenue for the economy, which allows it to purchase natural resources and raw goods which it does not have. Moreover, water is a scarcity in Singapore therefore water is defined as a precious resource in Singapore along with the scarcity of land to be treated with land fill of Pulau Semakau. Singapore has limited arable land that Singapore has to rely on the agrotechnology park for agricultural production and consumption. Human Resource is another vital issue for the health of Singaporean economy.

Singapore could thus be said to rely on an extended concept of intermediary trade to Entrepôt 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 in carrying out such entrepot activities. The Port of Singapore is the busiest in the world, surpassing Rotterdam and Hong Kong. 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.

Singapore's government promotes high levels of savings and investment through policies such as the Central Provident Fund, which is used to fund its citizen's healthcare and retirement needs. Singapore's savings rates have remained among the highest in the world since the 1970s. Most companies in Singapore are registered as private limited-liability companies (commonly known as "private limited companies"). A private limited company in Singapore is a separate legal entity, and shareholders are not liable for the company's debts beyond the amount of share capital they have contributed.

Economic history

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	Nominal Per Capita GDP (as % of USA)	PPP Per Capita GDP (as % of USA)
1980	25,117	2.14 Singapore Dollars	39.65	55.00
1985	39,036	2.20 Singapore Dollars	36.63	63.41
1990	66,778	1.81 Singapore Dollars	52.09	74.76
1995	119,470	1.41 Singapore Dollars	86.14	90.60
2000	159,840	1.72 Singapore Dollars	66.19	91.48
2005	194,360	1.64 Singapore Dollars	67.54	103.03
2007	224,412	1.42 Singapore Dollars	74.61	107.92
2008	235,632	1.37 Singapore Dollars	73.71	107.27
2009	268,900	1.50 Singapore Dollars	78.53	108.33
2010	309,400	1.32 Singapore Dollars	82.13	119.54
2011	270,020	1.29 Singapore Dollars	-	-

Upon separation from Malaysia in 1965, Singapore was faced with a lack of natural resources, a small domestic market, and high levels of unemployment and poverty. 70 percent of Singapore’s households lived in badly overcrowded conditions, and a third of its people squatted in slums on the city fringes. Unemployment averaged 14 percent, GDP per capita was less than $2,700, and half of the population was illiterate. In response, the Singapore Government adopted a pro-worker, pro-business, pro-foreign investment, export-oriented economic policy. Rejecting free market orthodoxy, the government made state-directed investments in strategic government-owned corporations, and moved towards guiding the economy. Living standards steadily rose, with more families moving from a lower-income status to middle-income security with increased household incomes. During a National Day Rally speech in 1987, Lee Kuan-Yew claimed that (based on the homeownership criterion) 80% of Singaporeans could now be considered to be members of the middle-class.

Singapore's economic strategy produced real growth averaging 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%; and in 2006, 7.9%.

Singapore's unemployment rate is around 2.2% as of 20 February 2009. As of 8 August 2010, Singapore is the fastest growing economy in the world, with a growth rate of 17.9% for the first half of 2010. As of 2012, despite attracting the highest figure in foreign direct investments among countries in Southeast Asia, Singapore has 0.3% growth for its third quarter year-on-year, the lowest among its peers in the region opposite Philippines' which got 7.1% on the same quarter but getting the lowest foreign direct investments at only $2.1 billion.

Sectors

Manufacturing and financial business services 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 total industrial output, but the government also is prioritising development of the chemicals and biotechnology industries.^{[citation needed]}

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 up 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.

Banking

See also: Banking in Singapore

Singapore is a financial centre in Southeast Asia. According to the Human Rights Watch, due to its role as a financial hub for the region, Singapore has continually been criticized for reportedly hosting bank accounts containing ill-gotten gains of corrupt leaders and their associates, including billions of dollars of Burma’s state gas revenues hidden from national accounts.

Biotechnology

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 pediatric vaccines, its first such facility in Asia. Pharmaceuticals now account for more than 16% of the country's manufacturing production.

Energy and infrastructure

Singapore is the pricing centre and leading oil trading hub in Asia. The oil industry makes up 5 per cent of Singapore's GDP, with Singapore being one of the top three export refining centres in the world. In 2007 it exported 68.1 million tonnes of oil. The oil industry has led to the promotion of the chemical industry as well as oil and gas equipment manufacturing. Singapore has 70 per cent of the world market for both jack-up rigs and for the conversion of Floating Production Storage Offloading units. It has 20 per cent of the world market for ship repair, and in 2008 the marine and offshore industry employed almost 70,000 workers.

Trade, investment and aid

Singaporean exports in 2006

Singapore Export Treemap

Singapore's total trade in 2000 amounted to S$373 billion, an increase of 21% from 1999. Despite its small size, Singapore is currently the fifteenth-largest trading partner of the United States. In 2000, Singapore's imports totaled $135 billion, and exports totaled $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, and 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, and textile yarns/fabrics.

The Singapore Economic Development Board (EDB) continues to attract investment funds on a large-scale for the country despite the city's 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.

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.

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. Singapore corporate tax is 17 per cent.^{[citation needed]}

Year	Total trade	Imports	Exports	% Change
2000	$273	$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.

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 Ja [3]
United States	United States-Singapore Free Trade Agreement	USSFTA	19 November 2002	6 May 2003	1 January 2004	[4]
Jordan	Singapore Jordan Free Trade Agreement	SJFTA	29 April 2004	16 May 2004		[5]
Brunei	Trans-Pacific Strategic Economic Partnership Agreement	Trans-Pacific SEP		August 2005	1 January 2006	[6]
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	[7]
Korea	Korea-Singapore Free Trade Agreement	KSFTA	28 November 2004	4 August 2005	End 2005	[8]
Peru	Peru-Singapore Free Trade Agreement	PesFTA	September 2007	29 May 2008	Early 2009

Singapore workforce

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 Manpower. 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 as of 2012 the unemployment rate stands at 1.9%.

While the Singapore government has taken a stance against minimum wage and unemployment benefit schemes, the government has introduced a Workfare Income Supplement (WIS) scheme to supplement wages of low-skilled workers.

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. However, 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.

Public finance

Government spending in Singapore has risen since the start of the global financial crisis, from around 15% of GDP in 2008 to 17% in 2012. The government's total expenditure as a percentage of GDP ranks among the lowest internationally and allows for a competitive tax regime. The government has no foreign debt and consistent budget surpluses. Singapore government debt is issued for investment purposes, and not for fiscal needs.

Personal income taxes in Singapore are among the lowest in the world, ranging from 0% to 20% for incomes above S$320,000. There are no capital gains or inheritance taxes in Singapore. Singapore attracts entrepreneurs, and established corporations from around the world, with a corporate tax structure that encourages startups and provides incentives for international business. The corporate tax rate of 17% is low relative to other developed nations. Singapore has a single-tier corporate income tax system, which means there is no double-taxation for shareholders.

Singapore introduced Goods and Services Tax (GST) with an initial rate of 3% on 1 April 1994, increasing government's revenue by S$1.6 billion (US$1b, €800m) and estabilising government finances. The taxable GST was increased to 4% in 2003, to 5% in 2004, and to 7% in 2007.

The Singapore government owns two investment companies, the Government of Singapore Investment Corporation and smaller Temasek Holdings, which act as the nation's sovereign wealth funds. Both operate as commercial investment holding companies independently of the Singapore government, but Prime Minister Lee Hsien Loong and his wife Ho Ching serve as Chairman and CEO of these corporations respectively. Temasek Holdings holds around S$60 billion of assets in Singapore, holding majority stakes in several of the nation's largest companies, such as Singapore Airlines, SingTel, ST Engineering and MediaCorp.

Monetary policy

The Monetary Authority of Singapore is Singapore's central bank and financial regulatory authority. It administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well as currency issuance. The MAS has been given powers to act as a banker to and financial agent of the Government. It has also been entrusted to promote monetary stability, and credit and exchange policies conducive to the growth of the economy.

Unlike many other central banks such as Federal Reserve System or Bank of England, MAS does not regulate the monetary system via interest rates to influence the liquidity in the system. Instead, it chooses to do it via the foreign exchange mechanism. It does so by intervening in the SGD market.

Taxation

In April 2013, the country was recognised as an increasingly popular tax haven for the wealthy due to the low tax rate on personal income, a full tax exemption on income that is generated outside of Singapore and legislation that means that capital gains are also tax exempt. Australian millionaire retailer Brett Blundy, with an estimated personal wealth worth AU$835 million dollars, and multi-billionaire Facebook co-founder Eduardo Saverin are two examples of wealthy individuals who have settled in Singapore (Blundy in 2013 and Saverin in 2012). Additionally, Australian mining magnate Gina Rinehart owns property in Singapore and American investor Jim Rogers moved to Singapore in 2007—Rogers has identified the 21st century as an era in which Asia will dominate and wishes for his two daughters to learn Mandarin as a key outcome of the relocation.

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
2009 (March)	1.5123
2010	1.2844
2011 (May)	1.2336

International rankings

Main article: International rankings of Singapore

International rankings of Singapore
Political Rankings
Organization	Survey	Ranking
Freedom House	Civil and political liberties	"Partly Free"
Freedom House	Press freedom	"Not Free"
Reporters Without Borders	Press freedom	133rd out of 175
The Economist	Level of democracy	82nd out of 167 (Hybrid regime)
Transparency International	Perceived level of corruption	1st out of 180 (for year 2010)
Privacy International and Electronic Privacy Information Center	Privacy from corporative and government surveillance	"Endemic surveillance society" status
Economic Rankings
Organization	Survey	Ranking
International Monetary Fund	GDP (nominal) per capita	23rd out of 180
International Monetary Fund	GDP (PPP) per capita	5th out of 181
International Monetary Fund	Amount of foreign exchange reserves	9th out of 156
United Nations	GINI coefficient	Gini Coefficient of "42.5" (High income inequality country)
World Bank	Ease of Doing Business	1st out of 183
World Economic Forum	Ease of conducting Trade	1st out of 118
World Economic Forum	Global Competitiveness	3rd out of 133
Social Rankings
United Nations	Human Development Index	23rd in the world ("Developed country" status)
The Economist	Quality of life	11th out of 111
United Nations	Population density	2nd out of 239(Macau is not a country)
The Economist	Cost of Living	11th out of 111
United Nations	Number of immigrants	22nd out of 192
International Energy Agency	Carbon dioxide emissions per capita	58th out of 210
Center for Strategic and International Studies	Number of troops	62nd out of 166
United Nations	Fertility rate	221st out of 223

External links

Library resources
About Economy of Singapore
Resources in your library Resources in other libraries

• Singapore Economic Development Board

See also

• Four Asian Tigers
• 5 C's of Singapore
• Biopolis
• Dual economy
• Immigrant workers in Singapore
• Singapore Workplace Safety and Health Conference