Economy - overview: Singapore is blessed with a highly developed and successful free-market economy, a remarkably open and corruption-free business environment, stable prices, and the fifth highest per capita GDP in the world. Exports, particularly in electronics and chemicals, and services are the main drivers of the economy. The government promotes high levels of savings and investment through a mandatory savings scheme and spends heavily in education and technology. It also owns government-linked companies (GLCs) - 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 hub.
Economy - in greater depth:
Singapore's strategic location on major sea lanes and industrious population have given the country an economic importance in Southeast 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 framework, combined with state-directed investments in strategic government-owned corporations. 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, have put the estimated economic growth in 2001 to a negative 2.0%.
Singapore's largely corruption-free government, skilled work force, 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 24 26% and 25 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 prioritizing 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 pursued cost-cutting measures, including wage and rent reductions, to lower the cost of doing business in Singapore.
Trade, Investment, and Aid
Singapore's total trade in 2000 amounted to $273 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 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, 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 largescale 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 (8.0%), Indonesia (8.0%) and U.S. (4.0%). The United States provides no bilateral aid to Singapore.
In 2000, Singapore had a work force of about 2.2 million. The National Trades Union Congress (NTUC), the sole trade union federation, comprises almost 99% of total organized labor. Extensive legislation covers general labor and trade union matters. The Industrial Arbitration Court handles labor-management disputes that cannot be resolved informally through the Ministry of Labor. 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 was expected to rise to 4.0% by the end of 2001, from 2.4% early in the year.
The Singapore Government and the NTUC have tried a range of programs to increase lagging productivity and boost the labor force participation rates of women and older workers. But labor 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.
GDP: purchasing power parity - $98 billion (1999 est.)
GDP - real growth rate: 5.5% (1999 est.)
GDP - per capita: purchasing power parity - $27,800 (1999 est.)
GDP - composition by sector:
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices): 0.4% (1999)
Labor force: 1.932 million (1998)
Labor force - by occupation: financial, business, and other services 38%, manufacturing 21.6%, commerce 21.4%, construction 7%, other 12%
Unemployment rate: 3.2% (1999 est.)
revenues: $13.9 billion
expenditures: $16.9 billion, including capital expenditures of $8.1 billion (FY98/99 est.)
Industries: electronics, financial services, oil drilling equipment, petroleum refining, rubber processing and rubber products, processed food and beverages, ship repair, entrepot trade, biotechnology
Industrial production growth rate: 14% (1999 est.)
Electricity - production: 26.586 billion kWh (1998)
Electricity - production by source:
fossil fuel: 100%
other: 0% (1998)
Electricity - consumption: 24.725 billion kWh (1998)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 0 kWh (1998)
Exports: $114 billion (1999)
Exports - commodities: machinery and equipment (including electronics) 63%, chemicals, mineral fuels (1998)
Imports: $111 billion (1999)
Imports - commodities: machinery and equipment 57%, mineral fuels, chemicals, foodstuffs (1998)
Debt - external: $NA
Economic aid - recipient: $NA
Currency: 1 Singapore dollar (S$) = 100 cents
Exchange rates: Singapore dollars (S$) per US$1 - 1.6733 (January 2000), 1.6950 (1999), 1.6736 (1998), 1.4848 (1997), 1.4100 (1996), 1.4174 (1995)
Fiscal year: 1 April - 31 March