Economics and business
Since Singapore became fully independent in 1965, the country quickly industrialized. The government focused primarily on labor-intensive manufacturing but also on education and better infrastructure. The lack of natural raw materials would be compensated by the availability of trained labor and a good business climate.
One of the most liberal economies in the world grew up, where the market forces have a lot of room at the same time as the government is active through stimulations and small rule shifts and monitors that the development is moving in the desired direction. The business-friendly climate has promoted entrepreneurship and has for a long time attracted greater foreign direct investment than any other country in Asia. A number of multinational companies have placed their regional headquarters as well as some qualified manufacturing and research to Singapore.
More than in any other Asian country, Singapore has for a long time had a stable political regime, very good infrastructure, well-educated, though limited labor and high living standards, more than in Hong Kong’s main competitor. More than three quarters of industrial production now takes place in foreign-owned companies and, to an increasing extent, service production is also internationalized.
The permanent workforce is very well educated. Singaporeans over the age of 24 have, on average, gone to school for almost 11 years, and just over 28 percent of them have university education (2015). However, there is a shortage of trained personnel, and especially multinational companies are recruiting specialists from abroad. Singaporeans make up just over two-thirds of the country’s labor force. The remainder are foreign guest workers, most of them low-skilled. They work primarily in the construction sector, in households and in transport and commerce.
The country’s GDP grew rapidly and steadily most years until the beginning of the 2000s, with an annual increase of 7-10 percent during the years 2004-07. The decline was severe during the global financial crisis over the next two years, especially in the manufacturing industry. After a sharp upturn in 2010, five years followed with increasingly subdued growth.
In 2015, Singapore was one of the countries in the world with the highest economic prosperity. Foreign direct investment is still increasing and now the country is itself a significant investor in other countries in Southeast Asia and also in China and India. Domestic companies are encouraged to export in these new markets where there is a growing demand for high-tech products.
The early location benefits remain, but limitations have been added as a result of strong growth. There is very little land for housing, facilities and traffic and a problematic lack of water for households and businesses. The cost of living is rising and the pay gap is the same. The Government now emphasizes the need to strengthen the social insurance system, especially for pensioners, and the need for a major investment in lifelong learning as well as efforts to promote productivity and innovation in domestic companies.
Agriculture, forestry, fishing and other raw materials
Traditional agriculture, forestry and fishing have ceased in Singapore. Farming with grain cultivation no longer exists, and the farmers, who make up about 1 percent of the employed, mainly sell chickens and eggs and to some extent vegetables. About 95 percent of all food must therefore be imported. However, two goods are exported from this sector, namely orchids and aquarium fish.
There is no productive forestry either. The tropical forest that previously existed was harvested to give way to urban development. Remains of nature-protected areas of different kinds and higher vegetation at the water reservoirs remain. Singapore can still give a green impression because the city planning is concerned with elements of green environment with tree plantings and other green spaces.
Fishing was previously an important industry in the waters around Singapore but is no longer in traditional form. However, there are fish farms in some places on the coast and also offshore.
Singapore has no own resources on minerals and energy raw materials. The only mineral deposits that are mined are granite and sand used in road construction. The country also lacks its own resources on fossil raw materials. Until the beginning of the 2000s, energy supply was entirely dependent on oil imports. Since then, energy policy has changed. Natural gas is imported via pipelines from neighboring countries, and since 2009 there is also a port facility for handling liquefied natural gas (LNG) that is imported from more distant countries. The country has become increasingly clear throughout the region’s center for trade in natural gas and for the development of natural gas use.
Calculated per capita, Singapore has high electricity consumption. Several industries are energy-intensive, primarily shipbuilding and petrochemicals. The standard of living is high and, among other things, air conditioning consumes a lot of electricity.
In 2013, more than 90 percent of the electricity came from natural gas and 5 percent from oil, while only 3 per cent was renewable energy (biomass, mainly waste).
Imports of crude oil and oil products are still very high as fossil fuels are required for all international traffic with Singapore as a hub. Above all, crude oil is the raw material for Singapore’s oil refineries and other petrochemical industries. This is one of the world’s largest centers for oil trade and oil refining and several global oil companies have their regional headquarters in Singapore. Natural conditions are lacking to achieve a more sustainable energy supply, and the almost total dependence on imports means a great deal of energy security for the country.
The country’s manufacturing industry and service are highly developed industries with international markets.
Early in industrialization, both foreign and domestic companies invested heavily in electronics manufacturing, which has since been Singapore’s most important industrial industry; In 2013, it alone accounted for almost 1/3 of the value of the country’s industrial production. Mainly, computer equipment and other consumer electronics are manufactured. During the 2010s, the growth rate slowed down in this sector.
Instead, the government has stimulated strong growth in biomedical research, biotechnological development and pharmaceutical manufacturing. Global pharmaceutical groups are increasingly placing research and clinical drug testing in the country. Singapore is seen as the center for expansion in the growing Asian market. Also attractive is Singapore’s expertise and regulations in the field of trademark law.
Since Singapore has the world’s largest transhipment port, there have long been major repair yards and a number of companies with marine service. The country’s high-tech niche in this regard has become the design and production of oil rigs and other equipment for the extraction of crude oil and natural gas at sea. 70 percent of the world’s oil rigs are built in Singapore. In collaboration with Norway, research and development of oil extraction methods are being conducted at great depths and in stormy waters.
Singapore has no oil resources of its own, but as a result of its excellent transport situation, the country has become one of the world’s largest centers for oil trade. In connection with this, an extensive petrochemical industry has emerged. It has expanded during the 2010s, despite changing conditions in the world’s oil market, and in 2015 it accounted for approximately the same share of the industry’s production value as the electronics industry. The operations have been gathered on Jurong Island, the largest of Singapore’s artificial islands, which is adjacent to the south-west coast.
The major global chemical groups have both manufacturing and research here, among other things regarding more efficient forms of fossil energy for the transport sector, chemicals for safer agricultural production and a long-running water purification.
As in the previous ten years, Singapore 2015 was placed first in the World Bank’s measurements of the world’s countries’ business climate. Among other things, the reliability and efficiency of the operations were noted. The good international rating is reflected in the importance of the service industries in the economy. Business services accounted for 15 percent of GDP in 2015, the financial sector for 13 percent and trade for 15 percent.
Singapore advocates a very liberal trade policy and has concluded free trade agreements with most of the world’s largest economies. During the period 2009-14, the value of Singapore’s foreign trade in goods increased by about a third, and in particular, the importance of trade in oil, oil products, chemicals and chemical products increased in both imports and exports. At the same time, the share of machinery and equipment decreased, particularly as regards the income from electronics exports.
2015 saw a significant change in the trade in oil and oil products. Volume still increased, but prices fell sharply and in terms of value, the composition of trade changed significantly. The downturn in the oil trade also meant that export revenues in that year decreased by just over 7 percent (to US $ 476 billion) and import costs by 12 percent (to US $ 408 billion).
Singapore’s important role as a hub in the international transport networks is reflected in the fact that a large part of its foreign trade is re-export. Imported goods are further exported in unchanged condition. Half of the country’s exports in 2015 consisted of goods produced within the country while the other half were re-exports.
According to Countryaah, the country’s most important trading partners are China and Malaysia. Significant is also trade with Hong Kong and Indonesia as well as with the EU and the US.
Service exports, which have steadily increased since 2010, are another important income. In the middle of the 10th, it generated revenue corresponding to about four-fifths of goods exports. The increase came mainly from repairs and maintenance of ships and aircraft, as well as information and communication services and insurance. Another source of income is tourism. In the mid-10s, about 15 million visitors came to the country annually.