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HANOI UNIVERSITY OF AGRICULTURE

FACULTY OF ACCOUNTING AND BUSINESS MANAGEMENT

ECOMOMIC GROWTH AND DEVELOPMENT IN ASIA

“Economic growth and development in Singapore”

Group 10:

1. Do Thanh Vinh 554554

2. Nguyen Thi Hue 551516

3. Pham Anh Duong 540412

4. Luong Thi Nhu 552053

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Table of ContentsIntroduction.........................................................4Content..............................................................5

I. Main stages of economic development of Singapore..................5II. External events that affected Singapore..........................8

2.1 Industrial Revolution...........................................82.2 Opening of the Suez Canal.......................................8

2.3 Developments in Asia............................................92.4 World War I....................................................10

2.5 The Great Depression...........................................11III. Economic theories and Policies apply in Singapore:.............12

3.1 Economic theories..............................................123.2 Economic policies applies......................................15

IV. Current picture of Singapore’s economic.........................184.1 Overview.......................................................18

4.2 Recent picture of Singapore’s economic.........................194.2.1 Natural resources:.........................................19

4.2.2 Agriculture:...............................................194.2.3 Industry:..................................................19

4.2.4 Service:...................................................214.2.5 Export and Import:.........................................21

4.2.8 PUBLIC DEBT:...............................................244.2.9 CURRENCY STRENGTH:.........................................25

4.2.10 Labor:....................................................25V. SWOT analysis....................................................27

4.1 Strengths......................................................274.2 Weaknesses:....................................................30

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4.3 Opportunities..................................................304.4 Challenges:....................................................31

VI. Direction in Singapore..........................................32VII. Lesson from Singapore..........................................36

Conclusion..........................................................39

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Introduction

Overview about Singapore:

Location: Off Southern tip of Malay Peninsular

Singapore is an island country made up by 63 islands

The area is 710 km2 (a little bit more than Jakarta, 661.5 km2)

Population 5.18 million people (in 2011)

Singapore was previously part of Malaysia before separated on 9 August 1965

Currency: SGD (Singapore Dollar)

Language: English, Malay, Chinese, Tamil

Religion: Buddhism, Christian, Islam, Taoism, Hinduism

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Content

I. Main stages of economic development of SingaporeSingapore economic development did not come easy. Theprogressive economy that Singapore is enjoying now isthe fruit of continuous struggles against adversities.Even though a number of setbacks occurred, Singaporeemerged victorious in the end.

The island nation is home to around 4 millionresidents. Being the littlest nation in Southeast Asia,Singaporeans live in small, high-rise apartments andtake the public transport to get around.

In 1819, Europeans came to Singapore. The British EastIndia Company owned by Sir Stamford Executive used thecountry as the center for spice trading. Singaporeserved as a commercial and military point of theBritish Empire in Asia. When World War II, the islandcity adapted the technological and political changes

In 1950s, Singapore takes part of the industrializationmovement. They want to create an image separate fromthe entrepot image associated to them. The governmentwanted to turn Singapore into an industrializedeconomy. Their first priority to attain economicdevelopment was to help people find employment.Fortunately, the island state had a huge number ofskilled workforces that made Singapore competitive.

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In the 1960s, the efforts of the government to eraseunemployment paid off when the unemployment rate inthis country dwindled significantly compared to otherAsian countries. The Singapore Economic DevelopmentBoard (EDB), formed in 1961 with a budget of $100million, set about the challenge of convincing foreigninvestors that Singapore was a good place for business.The Economic Development Board (EDB) main goal in 1960swas to attain industrialization. Singapore'sindustrialization program began with factoriesproducing garments, textiles, toys, wood products andhair wigs. Along with these labor-intensive industrieswere capital and technology-intensive projects fromcompanies such as Shell Eastern Petroleum and theNational Iron and Steel Mills.

The freedom that Singapore enjoyed from its Europeansettlers in 1963 made it decide to become part ofMalaysia. Singapore joined forces with Malaya, Sabahand Sarawak to be merged to Malaysia. But the mergerended two years later when Singapore chose to become aseparate republic. The new challenge for Singapore wasto develop export-oriented industries. EDB opened itsfirst overseas centers in Hong Kong and New York to bebetter placed to woo foreign investors.

In the 1970s, skilled labor and technology were centralto the government plans. They also shifted their focusto the rising industries at that time such aspetrochemicals, electronics and precision machinery. As

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more foreign investments entered the country,industrialization became a distinct reality.

Between 1971 and 1976, new EDB overseas centers wereopened in Zurich, Paris, Osaka and Houston. InSingapore, a Manpower and Training Unit was establishedto focus attention on industrial training. The OverseasTraining Program was drawn up in 1971. This placedyoung Singaporean workers in apprenticeship programs inGermany. Discussions began for Joint GovernmentTraining Centers with Tata of India, Philips ofHolland, and Rollei of Germany. This unique partnershipapproach to workforce training was the first of itskind and was a significant step forward in Singapore'sinvestment promotion program.

The world recession in 1975 slowed progress slightly,but Singapore's economy remained nimble and flexible.EDB pushed for more industrial projects andmanufacturing became the largest sector in the economy,surpassing trade.

In 1979, the government created additional changes. Anew policy was instituted to replace focus on low wageearners and encourage huge, money-making industries.

The 1980s saw Singapore embark on what the governmentcalled the "Second Industrial Revolution," a move intoknowledge-intensive activities such as R&D, engineeringdesign, and computer software services. Singaporeprovided for the entry of foreign investments to the

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country in the areas of computers, electronics andautomotive, pharmaceuticals, optical and other growingindustries.

EDB co-established institutions of technology withJapan, Germany and France to meet the specializedmanpower needs of high-technology industries. Thesetrained Singaporeans for specialized jobs inelectronics and engineering. EDB administered theSkills Development Fund to encourage the right kind ofmanpower training.

The government adopted a high-wage policy to acceleratethe move away from labor-intensive industries and theattraction to high-technology industries. But wagebills swelled as the world slipped into an economicslowdown, and Singapore slid into a recession.

When recession occurred in 1985 to 1986, Singaporeconcentrated on turning the country into an importantmanufacturing and communications center for investors.The promotion of local enterprises also becameincreasingly important. EDB set up the Small EnterpriseBureau in 1986 and shaped a range of assistance schemesto help small local enterprises grow.

The 1990s was a technologically intensive phase.Companies looked to moving up the value chain, andintensified their use of technology to achieve this. Atthe same time, service industries were identified as asecond pillar and engine for growth for the Singapore

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economy. Manufacturing remained important however, andthe EDB strengthened its focus on key industries,namely chemicals, electronics and engineering.Leveraging its strengths in these industries, Singaporealso began to develop a biomedical science industrythat included the pharmaceutical, biotechnology andmedical technology sectors. This helped Singapore'seconomic structure become diversified and balanced.

The Strategic Economic Plan (SEP) in 1991 geared itsefforts in encouraging the education and humanresources sector in this country to make export grow.EDB still focuses its efforts on business developmentin the island state. Singapore cost of living hadimproved drastically in these last few yearsparticularly after they gained independence fromBritain. Foreign investments and the government effortsto push industrialization turned the island nation to aprogressive country now.

The 2000s, Singapore focus on innovation, knowledge andR&D. At the turn of the century, Singapore increasedits focus on knowledge and innovation-intensiveactivities. R&D is now a cornerstone of the country’seconomic development, and in 2006, the Government setaside more than $13 billion to promote R&D over thenext 5 years. Singapore's goal is to increase grossexpenditure on R&D (GERD) from 2.25% to 3% of grossdomestic product (GDP) within 5 years.

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II. External events that affected Singapore

2.1 Industrial RevolutionDuring certain periods in history, innovations intechnology grew at such a rapid pace that they haveproduced what have become known as industrialrevolutions.

The term INDUSTRIAL REVOLUTION originally referred tothe developments that transformed Great Britain,between 1750 and 1830, from a largely rural populationmaking a living almost entirely from agriculture to atown-centered society engaged increasingly in factorymanufacture.

Other European nations underwent the same process soonthereafter, followed by others during the 19th century,and still others (such as Russia and Japan) in thefirst half of the 20th century. In some countries thistransformation is only now taking place or still liesin the future.

Effects of industrial revolution on Singapore

Increase in Trade

+ Steamships

+ More European ships sailed to the East

+ Increase in the number of ships visiting Singapore

+ Singapore became a port of call in the region

Improvement in Communications

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+ Letters - 4 to 5 months to reach Singapore fromEurope

+ Steamships - 5 weeks in the 1860s

+ Singapore brought into closer contact with Britainand the rest of the world

2.2 Opening of the Suez CanalArtificial waterway from Port Said to Suez, linking theMediterranean and Red Seas; 160 km long

Separates Africa from Asia and provides the shortesteastwards sea route from Europe

Opened in 1869, nationalized in 1956, blocked by Egyptduring the Arab-Israeli War in 1967, and not reopeneduntil 1975

Effects on Singapore

Increase in Trade

+ Savings in distance and time

+ Reduce shipping cost

+ Singapore traders found it faster and cheaper toget goods from Europe

+ Increased trade for Singapore as a result ofincreased speed and volume of ships

Improvement in Port facilities

+ Problems at the Old Harbour

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+ Unable to cope with the large number of ships

+ New Harbour - renamed Keppel Harbour in 1900

+ New facilities were built

2.3 Developments in AsiaOpening up of China

+ Entre-pot trade with China and surrounding areas

+ Traders’ unfounded fears of opening up Chineseports

+ Instead, it increased Singapore’s trade

Development of Malaya

+ Spread of British control brought about peace andorder in Malaya

+ Invention of motor-car and tin-canning industry

+ Great demand for rubber and tin

+ Singapore became the chief port for trade in tinand rubber

2.4 World War IEffects on Singapore

+ Rush for food

Why?

When war broke out -> Frantic rush to buy food

What would happen to prices?

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-> Huge increase in price of goods (e.g. rice andmilk)

How solved- prices decreased?

Adequate (Enough) supplies of staples (eg rice)

Government stepped in to ensure enough food forpeople

+ Trade threatened

Why?

Presence of German warship in the East Sep 1914

What effects?

Endangered trade between Singapore and Europe

Attacking British trading ships in Indian Ocean

How solved?

Destroyed by Australian warship in Nov 1914

+ Indian Mutiny

What is a mutiny?

Taking over power from person in charge withoutapproval

Why started?

British ordered Indian sepoys stationed inSingapore to go to Hong Kong

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Rumour they will be sent to fight in Turkey (Muslimcountry)

Against fighting muslims

How it started?

Sepoys seized Alexandra Barracks and releasedGerman prisoners

Formed small groups

Roamed town killing any Europeans they met

Mutiny stopped after 10 days

Why failed?

No local support

2.5 The Great Depression+ The Great Depression took place from 1930 to 1939,starting with the US and spreading to the rest of theworld

+ During this time the prices of stock in the US fell40%. 9,000 banks went out of business and 9 millionsavings accounts were wiped out.

+ 86,000 businesses failed, and wages were decreasedby an average of 60%. The unemployment rate went from9% all the way to 25%, about 15 million jobless people.

Effects of G.D on Singapore

Trade and Business

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+ America and Europe were the biggest buyers of tinand rubber

+ Businesses trading in these commodities were badlyaffected; many closed down

Unemployment and Hardship

+ Many people suffered

+ Government had to retrench workers and manysuffered pay cuts

+ By 1931, one third of the population was out of job

Government’s Response

+ Passed a law in 1930 to restrict and reduce thenumber of immigrants coming to Singapore

+ Arranged for large numbers of Indian and Chinese toreturn home

III. Economic theories and Policies apply in Singapore:

3.1 Economic theories- Harrod – Domar model:

The Harrod-Domar model is the easiest model tostart learning about growth and the long-run.We start by using the general conceptsof income, saving and consumption, and capitalaccumulation, to give us a few equations thatwill form a framework of thinking about growth:+ Income, saving and consumption:

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. So .

Also   so  . Given that all income willeither be saved or consumed,  .+ Capital accumulation:

 So The Harrod-Domar model adds the concept ofa capital-output ratio. This is basically theefficiency of production for an economy,measured in terms of capital. If the capital-output ratio is low, then the economy canproduce a lot of output from a little capital.If the capital-output ratio is high then itneeds a lot of capital for production, and itwill not get as much value of output for thesame amount of capital. The capital-outputratio can take into account things like the‘quality’ of capital, if a country has highquality capital that is very productive then itwill have a low capital-output ratio. Thecapital-output ratio is denoted as   where .Now we can use these equations to find anexpression for growth.First, rearrange the capital-output ratioequation:  .

Now substitute this into   to

get  .

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This can be expanded

to  .

Now divide both sides by   to get .

Now divide both sides by   to get  .

Notice what the left-hand side of that equationis:  . This is basically the proportionateincrease of output compared to this year’soutput, which is the rate of output growth. Ifwe define this as g, then we get a simpleHarrod-Domar equation for growth:

.

The Harrod-Domar model is nice and simple butit does have some weaknesses. It is basedaround two concepts, the saving rate and thecapital-output ratio. It assumes that there areconstant returns to factor, ie the capital-output ratio stays constant and the more of thefactor (capital) that you add, the more growthyou will get, so if you add more and morecapital than your growth rate will go up andup. The weakness here is that physical capitalneeds another factor, labor, to operate. We arenot in a situation yet where capital canoperate itself and is fully automated. Inreality if you just keep adding more and morecapital, and the population and labor force

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doesn’t grow quickly enough to keep up, therewon’t be enough workers to use the new capitaleffectively, so adding more capital will giveyou diminishing returns to factor. In theHarrod-Domar model this would mean the capital-output ratio dropped as you accumulated morecapital. The Solow model takes care of thisconcept of diminishing returns to factor, whichis why the Solow model is probably morerealistic.

- Solow model (neoclassical growth)The Solow growth model breaks the growth ofeconomies down into basics. It starts with ourproduction function Y = F(K; L) and puts inper-worker terms.

(1)where k is the amount of capital per worker andy is the amount of output per worker. The slopeof this function measures the change in outputper worker due to a one unit increase incapital per worker which, as we saw fromchapter 3, is equal to the MPK. Thus the slopeof (1) is f’ (k) = MPK. Due to the decreasingmarginal productivity of capital, this is

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decreasing in y, making f(k) a concavefunction.Individuals consume whatever they do not save,where s is the savings rate, somewhere between0 and 1 c = (1 s)y(2)All output is either allocated to consumptionor investment. y = c + i(3)By combining equations 2 and 3, we can showthat i = sy.

- Endogenous growth model: The limitations of the model of neoclassicalgrowth has spurred several research directionsto extend the model to better fit the realitiesof developing countries and launched theendogenous growth model .Known as endogenousgrowth models is by the growth model of thisnew attempt internal growth, growth that isexplained within a model of the economy. In the endogenous growth model, derived fromincreased productivity of human capitalaccumulation or the patent activities arefactors that make long-term growth of incomeper capita. Therefore, increase productivity -"working smarter" rather than "work harder" -

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are essential elements of economic growth ingeneral.

Application of economic theories in Singapore:Over the past two decades, as Korea and Taiwanespecially have liberalized economically (andpolitically) along many dimensions, reducingthe state’s role in their economies, and HongKong has remained the freest economy in theworld, Singapore’s economy has remained firmlystate-directed even as it diversified out ofexport manufacturing and into high-valueservices. Today, there are three majordifferences between Singapore’s growth modeland those of the other Asian economies usuallyconsidered its peers, beyond its obviously much smaller size. The first is the heavy reliance on state-promoted immigration, which is strictly thoughnot always successfully restricted in the othereconomies. The second is the continued dominance ofmultinationals and government-linkedcorporations in sectors of the economy thatelsewhere have strong domestic private sectorparticipation. Most notably, outside of bankingand property, there is an absence of the largecorporations established and grown by domesticprivate entrepreneurs that are such a

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distinctive feature of the business andeconomic landscape in Japan, Korea, Taiwan andHong Kong and have expanded globally—theSony’s, Samsung’s, Acer’s, Hutchinson’s etc.The third difference is the lesser integrationof Singapore’s economy with that of itsSoutheast Asian neighbors, in contrast to therapid and strong market-led integration ofNortheast Asian economies, including China.

3.2 Economic policies appliesThere are also disadvantages as well as advantages

to agglomeration, or clusters—most notably congestioncosts (such as land and labor shortages which emergewhen too many firms chasing the same scarce resourcesand skills in the same location push up their pricesand thus undermine each other’s competitiveness), andnegative externalities (such as environmental pollutionand dissipation of intellectual property). Comparativeadvantage, particularly in its dynamic version, andcompetitive advantage—new trade theory and clusters—both allow a role for government policy in shaping alocation’s competitiveness in particular sectors.Besides allowing free trade and capital flows which aremarket-driven, market-shaping policies are possible.These include selective investments to shape resourceendowments (develop or attract particular skills, forexample), tax incentives and subsidies to target theallocation of scarce resources toward particular

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sectors, and infrastructure investment to enhance alocation’s overall attractiveness to business. Besidesthe Asian tigers, countries such as Ireland, Dubai,Caribbean banking centers and—most notorious recently,Iceland--have all made use of such state strategies,capitalizing additionally on a fixed resource, theirrespective geographic locations.

Government policy to shape comparative and competitiveadvantage does, of course, have its downsides. For onething, it is readily subject to imitation, which canlead to “beggar-my-neighbor” results—where neighboringcountries compete to attract foreign investors withever-more attractive and costly tax breaks and othersubsidies—as well as excess capacity in particularlypopular sectors. For another, the WTO increasinglylimits policies that seek to subsidize competition aswell as protect markets. There are also economists’standard efficiency and equity concerns aboutgovernment favoring one sector over another, and ofcitizens subsidizing foreigners.

In addition, as a national economy moves inexorably upthe technology ladder, the capital cost—and opportunitycost—of further state-directed shifts in comparative orcompetitive advantage escalates. This is the simple butvery powerful concept of diminishing returns.

The success of Singapore also relied on the Governmentpolicy. Government impacts in financial and monetarysystem. To regulate and to stabilize the macro economy,

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the Government has considered the proposed fiscalpolicy, monetary as the most important tool. Indonesiaand the ASEAN 5 countries have implemented proprietaryfinancial – monetary system, hold the majority of largecommercial banks with the central bank. This couldallow the government to intervene directly, quicklyfinancially and through that control for other economicareas.

With the development and supervision of banks, thegovernment minimizes the operational capability of theforeign financial institutions in the territory toavoid competition with other financial institutions inthe country. Also Singapore government has beenspending the large expenditures on these sectors areimportant as they contribute to economic growth as thecost for education, training, infrastructure building.Government policies openly, and build infrastructure toattract outside foreign investment. Like otherdeveloping countries after independence economic,Singapore still depend on foreign, the people's lifedifficult, so the economy must have capital to grow. Toovercome the lack of capital, the government use savingpolicy, issuing bonds, opening stock market in thecountry, on the other hand, the implementation of openpolicies to attract foreign investment . The Governmentencourages foreign investors with preferential policiesto ensure no nationalization, ensuring legal status andbusiness ownership indistinguishable from the natives;the state provide cheap labor for their stable

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materials used on site and allow repatriation ofcapital and profits, creating political stability forinvestors to do business safely.

Here are some main economic policies applied inSingapore:

1.Monetary policies and currency:- The first, find out Monetary authority of

Singapore (MAS):MAS has traditionally adopted a strong Singaporedollar policy so they can keep Singapore dollarsstably, control inflation, interest rate and beconfidence in Singapore financial sectorMAS believes that a large depreciation in thecurrency to enhance export competitivenessjeopardizes all the above

- In monetary policy in theory, Singapore decidednot pulish their exchange rate because:They have a small size of economy and lack ofresourceThey can openness to tradeThey can openness to capital flows

- To elaboration for this the exchange ratepolicy:

This high degree of financial openness andsensitivity of capital flows to interestrate differentials makes it difficult totarger either money supply or interestrates in Singapore.

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Net flows of funds from abroad account forthe bulk of changes in domestic moneysupply. Likewise, domestic interest rateare largely determined by foreign ratesand market expectations on the futurestrength of the Singapore dollar.

Given any attempt by the MAS to raise orlower the domestic interest rate, or moneysupply, for any sustained basis would befoiled by a shift of funds into or out ofSingapore.

2.Fiscal policies:Singapore’s fiscal policies is expansionaryThe private sector is the engine of growth, and thegovernment’s role is to provide a stable andconducive environment for the private sector tothriveTax and expenditure policies should be justified onmicroeconomics grounds and focus on supply-sideissues (ex: incentives for saving, investment andenterprise) Tax policy:Singapore built one tax policies base on: they tryto keep tax rates low and reference on tax broad.Singapore thinks that, with this tax policy theycan raise revenue and promotion economic and socialgoals.

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IV. Current picture of Singapore’s economic

4.1 Overview Singapore economy since the late 1980s growth was

the highest in the world: in 1994 10%, 1995 was8.9%.

However, since the end of 1997, due to the impactof the currency crisis, the Singapore dollar haslost 20% and economic growth in 1998 fell sharplyto 1.3%.

Since 1999, Singapore began to recover rapidly: in1999, an increase of 5.5%, and in 2000 reached morethan 9%.

In 2001, economic growth reached only -2.2%, 2002,and 2003 only 3% to 1.1% because of the September11 events and disease SARS.

Since 2004, the strong growth: in 2004 reached 8.4%in 2005 to reach 5.7% in 2006 and 7.7% in 2007 was7.5%. In 2009, GDP increased by only 1.2% due tothe impact of the economic crisis.

4.2 Recent picture of Singapore’s economic

4.2.1 Natural resources: Located at the southernmost tip of the

Malaysian peninsula and with a land areasmaller than that of New York’s, Singaporehas no significant natural resources. WhileSingapore operates the third largest oil

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refinery in the world, the raw materials comefrom overseas, specifically Saudi Arabia.

Singapore almost no natural resources and rawmaterials must be imported from outside.Singapore only less coal, lead, lava, clay,no fresh water.

4.2.2 Agriculture: Because Singapore has no fresh water, arable

land limited, mainly for rubber, coconut,vegetables and fruit, so agriculturaldevelopment, annual import food to meet foodneeds in the country.

4.2.3 Industry: The manufacturing sector contributes anywhere

between 20-30% to Singapore’s GDP annually. The major industries include:

Electronics (semi-conductors, precision-engineering, etc.)

Pharmaceutical. Chemicals. Construction. Ship-building.

Other emerging industries that are makingsignificant contributions to Singapore’seconomy include: casinos, health-care,education, and infocomm and media.

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Below is a list of Singapore’s top industriesaccording to their GDP contribution:

The manufacturing industry demonstratedresilience in 2011 thanks to thepharmaceutical and bio medical sectors.However, the manufacturing output growth isexpected to slowdown in 2012 owing to adampened demand for electronics fromtraditional export markets such as the US andEurope.

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On the other hand, key industries under theservices sector such as wholesale and retail,financial and business services, and tourismare expected to witness strong growth.

It is important to highlight Singapore’s financial servicesindustry. Its business-supportive environment and politicalstability has attracted many multi-national banking andinvestment firms. In the process, the knowledge, technologyand skills that MNCs bring are transferred into the domesticmarket.

4.2.4 Service:

Tourist arrivals to Singapore hit a recordhigh of 11,638 million visitors with touristreceipts of more than S$18.8 billion.

Thanks to government initiatives, tourism hasdiversified into niche markets such asmedical tourism, the gaming industry and theMeeting, Incentives, Conferencing andExhibitions industry.

Tourism expenditure grew by 1834% in 2010.

4.2.5 Export and Import:

Being a commercial and military seaportduring the colonial era meant Singapore

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already had a well-developed infrastructurein place.

The Port of Singapore (PSA Corporation) givesshippers a choice of over 200 shipping linesand access to some 600 ports in 123countries. At any one time, there can be asmany as 1,000 ships docked making it thebusiest container port in the world.

Singapore’s main export industries aremachinery and equipment, electronics,consumer goods, pharmaceuticals, chemicals,and other mineral fuels.

Exports in 2010 totaled $351.18 billion. Singapore’s primary export partners include

Hong Kong, Malaysia, US, Indonesia, China,and Japan.

In 2010, Singapore’s imports totaled $310.39billion. The main import industries aremachinery and equipment, mineral fuels,chemicals, foodstuffs, and consumer goods.

Singapore’s primary import partners includeUS, Malaysia, China, Japan, Indonesia, andSouth Korea. Singapore is considered to bethe world’s fourteenth largest exporter andfifteenth largest importer.

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2005 2006 2007 2008 2009 2010 20110

100000000000200000000000300000000000400000000000500000000000600000000000700000000000

Exports of goods, services and primary income (BoP,

current US$)

3.2.6 GDP

The Singapore economy grew by 4.9% in 2011. According to a Bloomberg report, Singapore’s gross domestic product was S$326.8 billion in2011, about $260 billion based on average exchange rates or $252 billion based on year-end currency rates. Given that the current economic environment is marked with uncertainty regarding the Euro zone debt crisis and sluggish economic growth in the US, GDP growth to slow down in Singapore to about 1-3% in 2012. Headline CPI inflation isexpected to average between 2.5-3.5% in 2012

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owing to higher costs of accommodation and private road transport.

3.2.7 FDI

In four decades, the average GDP growth of Singapore has reached 10%. FDI to GDP ratio increased from 5.3% in 1965 to 98.4% in recent years, the highest in Southeast Asia and leading.

Top five recipients and sources of FDI flows in East and South-East Asia, 2010 and 2011(Billions of dollars) 

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4.2.8 PUBLIC DEBT:

Since 1995, the Singapore government hasmaintained zero foreign debt. According to areport released by the Ministry of Finance,the total outstanding government borrowingwas S$312b as at December 2010.

The government debt which is 103% of GDP doesnot take into account the ability of thegovernment to meet that debt by way of strongasset protection, robust economic growth, and

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prudent macroeconomic polices. The Singaporegovernment has a strong balance sheet and itsassets outweigh its liabilities.

4.2.9 CURRENCY STRENGTH:

The Singapore dollar has been consistentlyappreciating against major currencies.According to a Bloomberg report, Singapore’sexchange rate averaged S$1.2573 in 2011,compared with an average of S$1.3632 in 2010.As of 6 March 2012, The Singapore dollar wastrading at 1.2531 against the greenback with1.25 seen as the next upside target level.

Below is a break-down of the Singapore dollar’sperformance recently (figures in SGD):

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4.2.10 Labor:

2005 2006 2007 2008 2009 2010 20110%10%20%30%40%50%60%70%80%90%100%

Population ages 0-14 (% of total)Population ages 15-64 (% of total)Population ages 65 and above (% of total)

Singapore had a population of 5165 million in2010. 2795 million of population is part ofthe labor force. In the same year, Singaporehad an unemployment rate of 2.2 percent.

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Singapore’s unemployment rate is one of thelowest in the world. The majority of thelabor force is highly skilled and welleducated – with compulsory primary educationfor all its citizens.

During the early 1990s, the Singaporegovernment foresaw a possible labor shortageproblem in the future. Despite having one ofthe best mortality rates in the world,Singapore’s birth rate of 8.5 births/1000population meant that its populationreplacement rate was among the lowest in theworld. Singapore also has one of the lowestannual population growth rates in the worldat 0.817%. As a result, the Singaporegovernment began to actively pursue foreignimmigrants and expatriates to live and workin the country. Today, foreign workerscomprise of 35.8% of the labor force. Thevast majority of foreign workers are cheaplabor from developing Asian countries whooccupy jobs that regular Singaporeans shun. Asignificant, but smaller, percentage offoreign workers are high value talent who arebrought in to provide strong laborcompetition for Singaporeans.

In 2010, 0.1% of the labor force worked inagriculture, with a further 30.2% in industryand 69.7% in services. Although the

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population is growing at the moment,Singapore faces the problem of a decliningpopulation, and by extension a declininglabor force, if fertility rates do notimprove ad the influx of immigrants isstopped. Singapore’s population is also agingrapidly. In 2010, the median age ofSingaporeans was 40.1 years– compared to 39.6years in the previous year.

The labor force is vital if Singapore wishesto continue its present path of economicgrowth. Despite a relatively small land areaof 687 sp km, Singapore aims to be a globaland regional hub for multiple activities,particularly trade and finance. Limited landarea in Singapore has led to stronggovernment planning and regulation for landuse. Singapore is also increasingly turningto land reclamation from the sea in order tomeet the nation’s demands.

V. SWOT analysis

4.1 Strengths- Singapore one of Asia's most attractive

investment destinations

- Singapore's strengths were its high quality of life, attractive corporate tax rates and stability.

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- Singapore was successful in building a country with high intellectual level. It is one of the most leading national education system in Asia

- Singapore has one of the lowest unemployment rates inthe world

- Singapore has the infrastructure and a highly developed industry in Asia Pacific and in the world, such as: seaport, industrial building and repair of ships, industry oil refining, processing and assemblemachines.

- Singapore is the leading producer of computer drives and electronic sales leads. Singapore is also the most oil refining center and transit in Asia.

Services (72.8 percent) and Industry (27.2%) Singapore is also a global leader in services,

particularly in finance Tourism is the other major service industry

available in Singapore

Singapore has a system in transportation well

developed, the quality of the traffic this island

nation was rated the best in the world:

- Dynamic economy strong about export and import.

- Strong government planning and regulation for land

use due to limited land area.

Singapore where is located in the center of Asia, is

located commercial strategy interference between East

and West.

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As a dynamic city with an area of 712.4 km2 and 5.18

million urban population. Singapore is known as an

economy is ranked A in strong development potential -

as a place to invest and collaborate with the right,

stable and profitable.

Along with the transformation into a global center,

Singapore attract investors and talent around the world

to work, live and play. In 2010, the growth rate of

Singapore's GDP reached 14.7%, surpassing China to

become the country with the highest growth in the

world. This growth ratio demonstrates that Singapore

economy is very dynamic; it has quickly overcome the

dark, back trajectory recovery and development. The

Singapore business has contributed greatly to the

country's economic development. "

As a global city, Singapore is a country with over a

million talented people abroad who are living. With

thickness multicultural, multiethnic and multilingual,

Singapore is the convergence of values, cultures and

lifestyles. This is a city of foreign nationals to

settle easily.

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Education:

- The place attracts thousands of international

students every year to study.

- Singapore's education system is very flexible and

always pays attention to the ability, interests and

aptitudes of individual students. Then, helping them to

develop their highest potential

- Besides the application of advanced scientific and

technological in teaching, curriculum of Singapore has

always focused on moral values education to maintain

healthy cultural identity of the country.

- The majority of the labor force is highly skilled

with compulsory primary education implemented by the

government for all its citizens.

- From the early 1990s, Singapore began actively

inviting foreign workers and expatriates in order to

meet a labor shortage.

- Today, foreign workers comprise of 35.8 percent of

the labor force, with the vast majority being low waged

workers from developing Asian countries who fill up

jobs that regular Singaporeans wouldn’t take.

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- In 2010, 0.1 percent of the labor force worked in

agriculture, with a further 30.2 percent in industry

and 69.7 percent in services.

Industry:

- Industry made up the entirety of Singapore’s GDP in

2010.

- Another crucial industry for Singapore is the

petroleum and petrochemicals industry. Singapore has

the third largest oil refinery in the world, behind

Rotterdam and Houston. The Singapore Petroleum Company

(SPC) is a leading player in the petroleum industry and

is engaged in exploration, production, refining and

distribution.

- Remarkably, despite not having a single drop of

proven oil reserves in the country, Singapore is a net

exporter of oil - exporting 1.374 million barrels of

oil/day and importing 1.195 million barrels/day. This

makes Singapore the 18th largest exporter of oil in the

world.

- Singapore’s banking system is considered to be

among the strongest in the world. Singapore has the

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fourth largest foreign exchange market in the world

after London, New York and Tokyo.

Tourism:

- In 2010, tourist arrivals to Singapore hit a record

high of 11.638 million visitors with tourist receipts

of more than S$18.8 billion.

- Tourism is one of the strengths of Singapore, the

place attracts many tourists to visit in Singapore such

as the underwater world (Underwater World), wax museum

(Images of Singapore) is located in Sentosa Island , at

the Dolphin Lagoon Dolphin Lagoon, national Jurong bird

park - home to many rare species of penguins or the

Esplanade - Singapore's largest theater known as the

durian for Buildings like durian ...

- Singapore has been selected as the national peace,

security and a clean world.

Transportation:

Singapore Traffic is operated by the British model. The

most popular transportation of Singapore is bus and

subway that Singapore is often called the MRT (Mass

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Rapid Transit). Also, taxi transport is also quite

common in Singapore and not too expensive.

4.2 Weaknesses:- Singapore has virtually no natural resources so

agriculture is not very well developed.- Its weaknesses were its high labor costs, quality of

research and development, and the lack of a domesticmarket.

- Economic depend on global economic- Limited land area (only 687 km2)- Aging population

4.3 Opportunities

Because of the strong points of geography, diverse

cultures, and key industrial sector has created many

opportunities for the development of Singapore. As

foreign investment attraction, tourist attraction,

attracting settlers in Singapore.

And recently, Singapore and Indian SMEs in the

engineering services and products field at a Buyer-

Seller Meet and business matching session organized by

the Singapore Business Federation's (SBF) India

Business Group, the Singapore Manufacturers' Federation

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(SMa) and the Engineering Export Promotion Council of

India (EEPC) were informed about opportunities for

business collaboration.

Singapore has a golden opportunity to join forces with the Russian Corporation of Nanotechnologies (RUSNANO), banking on its immense financial resources and knowledge of the Russian Nanotechnology market potential, tapping on the existing synergy between the two countries to get into economies

4.4 Challenges:- Singapore almost no natural resources:

The majority of raw materials imported from abroad. Singapore only less coal, lead, lava, clay, no fresh water, cultivated land limited, agricultural un-development. Singapore annually has to import food tomeet the needs in the country

- Supporting an ageing population:

Apart from dealing with a labor shortage problem

during that point of time, the high influx of foreign

workers and immigrants was also meant to tackle a

poor population growth rate and an aging population.

Singapore’s annual population growth rate for 2010

was 0.817 percent. Singapore’s population replacement

rate is also one of the lowest in the world at 1.07.

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Singapore’s population is also aging rapidly.

According to data from the CIA World Fact book, the

median age of Singaporeans has risen within a year

from 39.6 years to 40.1 years. As such, without

immigration or an increase in total fertility rate,

Singapore is likely to face a declining population

over the next few decades.

- Getting more land:

In the last 50 years, Singapore's land area has

expanded by more than 20 per cent through

reclamation. As the population and economy continue

to grow, more land would be needed, and its use

balanced between the economy, housing and recreation.

- Economy dependent on foreign:Singapore's economy relies heavily on trade and services. The manufacturing machinery, transportation, logistics and wholesale trade of thiscountry is closely tied to regional trade flows as well as globally, so that Singapore will bear much economic impact as the global economy gender variation.

- Keeping a multi-religious society cohesive:

Singaporeans are getting more religious. They have to

guard against forming religious enclaves and mix with

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those of other faiths to prevent society from

becoming divided

VI. Direction in Singapore

Singapore is a developed country and has many economic

achievements, but this island nation is not self-

satisfied and is always looking for its new development

trend.

So, Singapore focuses on three main points:

-  One is

to improve scientific and technical management of the

sector, building a national mechanism,

promoting education andskills training for employees 

of enterprises, which do the businessthere are

many talented professional and business management.

- Two is

improve capacity of business development, grasp oppor

tunities, to medium  enterprises in the period from 5

to 10 years to rise to the topin the

world, become the leader in the Asian business .

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- Three is to build Singapore into

a "global city", attracting talent of

thecountry, while enhancing investment and fostering

talent in the country.

To achieve three main points, Singapore had to do some key planning strategies that promote sustainability:

- Enhancing human resources

- Becoming internationally oriented in economy

- Creating a conducive climate for innovation

- Developing manufacturing and service, which is thestrength of the economic Singapore

- Spearheading economic redevelopment

- Maintaining international competitiveness

- Safeguarding Land for growth

- Providing a quality living environment and maintaining environmental quality

- Retaining precious built heritage and protecting Singapore’s natural heritage

Economic planning

Planning for Singapore’s future

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Singapore is economically vibrant and one of themost livable cities in Asia. This is a result ofcomprehensive and long-term planning. The key challengeis to continue to sustain economic growth and ensure ahigh quality of life through careful planning. This isdone through two key plans - the Concept Plan andMaster Plan, which provide a comprehensive, forward-looking and integrated planning framework forsustainable development.

The Concept Plan

The Concept Plan is Singapore’s strategic land useand transportation plan to guide development in thenext 40 to 50 years. The Concept Plan is reviewed every10 years. This long-term plan ensures there issufficient land to meet anticipated population andeconomic growth, and to provide a good livingenvironment.

The Concept Plan is prepared in collaboration with manygovernment agencies. It takes an integrated approach,taking into account all major land use needs,considering all trade-offs and balancing future needs.This also ensures that future development balanceseconomic growth with environmental stewardship andsocial progress.

The Master Plan

The Master Plan is the statutory land use planwhich guides Singapore's development in the medium term

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over the next 10 to 15 years. It is reviewed every fiveyears and translates the broad long-term strategies ofthe Concept Plan into detailed plans to guidedevelopment. The Master Plan shows the permissible landuse and density for developments in Singapore.

Like the Concept Plan, the Master Plan is acollaborative effort between agencies to ensure thatplans meet immediate economic and social needs whilemaintaining a good quality living environment.

The Master Plan is one of the most important tools usedto shape Singapore’s physical development. Manyproposals put forth in the Master Plan have beenrealized by the private and public sectors. Examplesare the transformation of Singapore River and thedevelopment of new commercial centers at Tampines andNovena.

The population will reach between 6.5 and 6.9 millionby 2030. Singapore will increase its land area to 766square kilometers through land reclamation from thesea. Most of the reclamation will be done at Tekong andTuas islands, with additional reclamation points beyond2030 including Marina East, Changi East, and Pasir Ris.High-density towns with a full range of amenities suchas childcare centers, hospitals, and recreational areaswill be built. About 60% of Singapore's land will beset aside for housing, industry, and communityfacilities, up from 52%. In addition, 700,000 newhousing units will be built, the size of the rail

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network will be doubled, and some golf courses andmilitary training grounds will make way forredevelopment. According to the plans, 85% ofSingaporeans will live close to a park.

Concept plan review

A mid-term review of the Concept Plan in 2006concluded that there is sufficient land to cater toSingapore’s future needs while maintaining a goodquality living environment. The broad strategiesarising from the review are:

+ Need to make better use of land

There is a need to make more creative use of land tomeet future needs, such as using underground spaces andco-location of compatible uses.

+ Decentralization through new growth centers

New growth centers outside of the city are proposed atJurong and Paya Lebar. These growth centers will notonly spread jobs across the island, but also provide awider choice of location to meet future economic needs.

+ Priority on public transport

Priority has to be given to the use of public transportto meet the increasing transportation needs. Inparticular, new rail lines will improve the publictransport system so that there is less reliance onprivate transportation.

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+ Enhancing Quality of Life & Sense of Identity

The quality of life can be enhanced by providing for agreater variety of leisure options. At the same time,there is also a need to selectively retain Singapore’sbuilt and natural heritage to foster our sense ofbelonging.

Sustainable planning

With just 700 square kilometers, Singapore is hometo almost 4.6 mil people today. Planning forsustainability is a must, not a choice. Over 40 years,the “Singapore Way” of sustainable development haveallowed us to achieve both economic growth and a goodliving environment. The following are key planningstrategies that promote sustainability:

- Safeguarding Land for growth

- Being flexible over short term

- Providing a quality living environment

- Maintaining environmental quality

- Integrating Transport with land use Planning

- Reducing the need to commute

- Retaining precious built heritage

- Protecting Singapore’s natural heritage

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VII. Lesson from Singapore

Lessons in education from Singapore:

Over the last few years, Singapore, a tiny island nation with more than 5 million people has become paradise for researchers and foreign scientists. The government invested heavily focused on science and technology with the ambition to turn the island into a knowledge society.

Singapore not only finds and uses talent in Singapore

citizens, but also attracting talent from overseas.

Talent to Singapore to work, get permanent residence,

citizenship and Singapore are easily to day Singapore’s

education system is touted as one of the best in the

world.

With some policies in education such as:

Structure of education system ensure flexibility Marketization of education Experiences in investment and inovation of

education Experiences of study aboard

Refer to the trade policy as well as the trade activities of Singapore to Vietnam is a very important thing:

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Focusing on the development of commercial centers, large supermarkets in both quality and quantity. There are strategies to develop key economic regions, with strong items such as footwear, garments and agricultural products such as rice, coffee, rubber...

Creating credibility in trade, reducing tax in trade and extending diplomatic relations with the countries of the world.

Creating a favorable environment for the export and import. Encouraging domestic production activities, take advantage of available resources: human resources abundant, rich natural resources, foreign investment...

There should be long-term strategy for economic:

Singapore government has issued $ 2 billion off-budget Singapore, with the primary goal is to (1) reduce business costs, reduce taxes and contributions to the government, (2) funding for development projects and skills training for domestic businesses to strengthen economic infrastructure, and (3) stabilize the housing market by stopping the sale and purchase of land

Competition is a key tenet of Singapore's economic strategy. Market competition spurs firms to be more efficient, innovative, and responsive to consumer needs. Consumers enjoy more choices, lower prices, and better products and services. The economy as a whole benefits from greater productivity gains and more

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efficient resource allocation. Therefore, wherever appropriate, Singapore has opened up sectors of the economy to market competition. 

Foreign direct Investment

Foreign Direct Investment has been a synthesis of the

four elements mentioned previously. The government of

Singapore also created the Economic Development Board

(EDB) which has been importunate in the fulfillment of

its mandate. Effective harnessing of FDI has been an

important factor in Singapore’s economic

competitiveness. FDI played a particularly crucial role

in Singapore’s pursuit of export manufacturing and

development of its financial center. Singapore’s

success in attracting FDI despite its lack of natural

resources and small domestic market may be attributed

to the holistic policy approach --- providing both an

efficient and secure business environment, comfortable

living, and attractive investment incentives. The

largest percentage of Singapore FDI is manufacturing,

and construction…

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Conclusion

Today, Singapore economy is considered one of thewealthiest all over the entire world on the basis ofGDP (PPP) per capita. The Singapore official dollarreserves reached an all-time high of US$170.3 billionin January 2009. Contemporary Singapore has reachedheights beyond expectations. The huge success itattained helps people enjoy prosperity and financialsecurity. Singapore economic development is the resultof people persistence and unwillingness to let go whenfaced with adversity.

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Referenceshttp://www.mongabay.com/reference/country_studies/singapore/ECONOMY.html

http://courses.nus.edu.sg/course/ecstabey/Singapore%20Economy-Tilak.pdf

http://www.sjsu.edu/faculty/watkins/singapore.htm

http://www.fas.nus.edu.sg/ecs/scape/doc/24Oct08/Linda%20Lim.pdf

http://njsanders.people.wm.edu/101/Ch7_8_Handout.pdf

http://mnmeconomics.wordpress.com/2011/07/16/the-basic-harrod-domar-model/

http://www.economist.com/news/asia/21577108-manufacturers-struggle-city-state-changes-its-economic-model-bashing-metal-bashers

http://www.theglobeandmail.com/report-on-business/economy/canada-competes/how-singapore-creates-its-economic-miracles/article11674683/?page=all

http://www.sgs.gov.sg/The-SGS-Market/The-Singapore-Economy.aspx

http://www.economywatch.com/world_economy/singapore/?page=full

http://www.spainexchange.com/guide/SG-economy.htm

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http://www.enterpriseone.gov.sg/News/2013/Mar/130321%20Singapore%20Economy%20Growth%20For%202013%20At%202pt8%20percent%20MAS%20Survey.aspx

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Question and answer:

1.Why Singapore government can control Debt?Because The government debt which is 103% of GDP does not take into account the ability of the government to meet that debt by way of strong asset protection, robust economic growth, and prudent macroeconomic policies. TheSingapore government has a strong balance sheetand its assets outweigh its liabilities.

2.Why the Currency is strong of Singapore?Because Singapore keep Currency policy purpose to control inflation, u can see in the table the exchange rate break down because the government keep currency policy to decrease inflation. However exchange rate of Singapore still highest in south Asian. And one more reason is they will restructure economic after inflation and increase export.

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