Title: SINGAPORE
1SINGAPORE
2AGENDA
Basic data
Economic issues
Financial issues
Political issues
OUTLOOK
OUTLOOK
OUTLOOK
Natural and technical features
SWOT,RATINGS AND CONCLUSION
3Quick introduction
- Since it got independent in 1965, Singapore has
been undergoing a steady growth until the late
90s (9,4 in the 70s 8 in the 80s 4 in the
90s) and is now a modern and developed country.
In less than a half-century Singapore has turned
into a prosperous, politically and socially
stable city. - Today it is ranked 6th in the Global
Competitiveness Survey 2003-2004 of World
Economic Forum - Singapore is a major international financial
center. With political stability, modern
infrastructures and highly-developed legal and
regulatory frameworks, and strong macroeconomic
fundamentals - However it faces a decrease in economic growth
and the latter is more volatile. Its
competitiveness is challenged by the growing
forces in SEA
4In Brief
- Official name Republic of Singapore
- Form of state Parliamentary democracy
- The executive the prime minister (Goh Chok Tong)
and the cabinet are appointed by the president
and are responsible to parliament - Head of state the president, S R Nathan, took
office for a six-year term on September 1st 1999 - National elections November 3rd 2001 the next
election is due by early 2007 - National government the ruling Peoples Action
Party (PAP) won 75 of the vote in November 2001
and holds 82 seats in parliament (out of 84). The
last cabinet reshuffle took place in April 2003 - Area 685 km²
- A British colony until 1965
- Unemployment rate 4,5 in 2003
- GDP per capita 38 023 SGD in 2003
- GDP growth 0,8 in 2003
Source Singapore Dep. Of Statistics 2003
5Pop/Demo/Social/Educ/empl
Singapore Department of Statistics _ 2003
6ANNUAL Growth rate of pop
Singapore Department of
Statistics_2003
18 between 1992_2002 due to improvement of
living standards
7Singapore International Institutions
- Singapore is member of
- - international organizations UN, WB,IMF,WTO,
Commonwealth - - regional organizations ASEAN, APEC
- - others Foundation Europe-Asia, forum
Asia-Latin-America - BUT Singapore isnt a member of OCDE like
Monaco!!
81) POLITICAL RISK
- Lee Kuan Yew will not leave the stage
- Mr Lee, prime minister of Singapore from 1965 to
1990 and senior minister since then, is now 80. - This may create a small (and probably solvable)
succession problem - Mr Lees son is supposed to become Prime Minister
in 2005. His wife, Ho Ching, who is currently
executive director of Temasek Holdings, a
government investment arm. Her presence will only
reinforce worries about the nature of relations
between government and business in Singapore. - Relations with the US remain good
- In mid-November, the coordinating minister for
security and defense, Tony Tan, confirmed that
Singaporean forces would remain in Iraq. - Relations with Malaysia stagger onwards
- Relations between Singapore and Malaysia appear
to have improved since the beginning of January,
following two visits to Singapore by the new
prime minister of Malaysia, Abdullah Badawi - Mr Badawi has adopted a more conciliatory tone
towards Singapore than his predecessor, Mahathir
Mohamad (island, bridge, water supply)
9PRINCE MODEL SINGAPORE
Between being loved and being feared, I have
always believed Machiavelli was right. If nobody
is afraid of me, Im meaningless. Lee
Kuan Yew, Oct 6,1997
Positive influence
Government
USA
PAP
Law
Lee Kuan Yew
Lee Kuan Yew Clan
Gov-Link- Companies
SEA
Malaysia
Negative influence
10Singapore s Ethnicity and religions
Repartition of population among religions of population
Buddhists 42,5
Muslims 15
Christians 15
Taoists 8,5
Hindus 4
Others 15
Singapore Department of
Statistics_2003
11SURVEY 2004
12SURVEY 2004
13Transparency International Corruption
Perceptions Index 2003
Country rank Country CPI 2003 score
1 Finland 9.7
2 Iceland 9.6
3 Denmark 9.5
3 New Zealand 9.5
5 Singapore 9.4
18 Ireland 7.5
18 USA 7.5
20 Chile 7.4
21 Israel 7.0
21 Japan 7.0
23 France 6.9
23 Spain 6.9
40 Hungary 4.8
41 Lithuania 4.7
41 Namibia 4.7
50. Costa Rica 4.3
50. Greece 4.3
14ERC
- Since 2001 the government authorities launched
the Economic Review Committee - A reflexion on how to face the structural and
conjectural difficulties? Why? To limit the loss
of competitiveness and maintain investment flows - Mesures taken since 2003 stimulate
entrepreneurship and innovation and privatization
of Government Linked Companies ( lay offs, fiscal
policy favorable to enterprise and employers) - CONCLUSION STRONG POLITICAL STABILITY
15AGENDA
Basic data
Economic issues
Financial issues
Political issues
OUTLOOK
OUTLOOK
OUTLOOK
Natural and technical features
SWOT,RATINGS AND CONLUSION
16GDP Growth
Sourcewww.singstat.gov.sg
17GDP per Capita
Sourcewww.singstat.gov.sg
- In 2003
- USA 35 000 USD/Capita
- EUROPE25 000 USD/Capita
- In 2003
- China970 USD/capita
- Thailand2000 USD/capita
18Repartition of GDP in 2003
Source www.dree.org/singapour
19Repartition of the Labor force
Sourcewww.singstat.gov.sg
20Inflation VS Interest rates
21Exchange Rate SG VS USD
22Trade Balance
www.cofacerating.com
23Economic panorama
- Exportselectronic,pharmaceutical
products,petrochemical - Financial center
- Shipping and airways hub
- Tourism (7.57 million tourists)
- Regional center for multinational
- 1 USD1.7 SD
- 4.4 unemployment.
- 64 active population
- 5 GST
24Economic outlook(1)
- Structural analysis
- Economy characterized by
- A growing GDP per capita symbol of a prosper
development - Strong openness ratio (Three times its GDP)
- Strongly Asia and US oriented.
25Economic outlook(2)
- Current economic situation analysis
- The 2001 economic slowdown and the electronic
crisis hit very hard Singapore(-2 in GDP, the
strongest slump since 1965). As a result the
government launched a policy mix which aimed at
softening the monetary policy and loosening
budget restrictions in order to revamp the
economy. Nevertheless because of its very degree
of openness and its small domestic market, the
measures were ineffective and the SRAS did not
help the economy to recover. Unemployment
rocketed to almost an all time high at 6 - The government is trying to maintain a
competitive parity with the US dollar (still its
principal trading partner). Also thanks to a
controlled inflation and a boost of the world
economy, growth is back ( 5 in 2002) and
investment also as well as FDI.
26A result FDI
27AGENDA
Basic data
Economic issues
Financial issues
Political issues
OUTLOOK
OUTLOOK
OUTLOOK
Natural and technical features
SWOT,RATINGS AND CONLUSION
28Central government finance
- Current situation
- Total revenue15 of the GDP
- Total expenditure16 of the GDPgt Very low
deficit (1.1 of the GDP). - surplus decrease trend(there was a surplus of up
to 8.6 of the GDP in 1994).
Source DREE
29Domestic borrowing
- Historical budgetary surplusgt Domestic
borrowinggt Domestic capital receipt 5
Billion SG (3 Billion US) gt 10 of
the central government revenue.
30Trade balance
- Trade balance in 2004
- Exports 152 Billion US (180 of the GDP)
- Imports 135 Billion US (160 of the GDP)gt
Trade balance 17 Billion US (20 of
the GDP).
31Trade partners
- Major exports to
- USA
- Malaysia
- Hong Kong
- Japan
- Major imports to
- USA
- Japan
- Malaysia
- PR of China
- The major partners (USA and Malaysia) represent
less than 15 of the global volume.gt Quite low
dependence between Singapore and its main
partnersgt Good trade balance stability
32High and stable trade surplus
- Trade balance surplusgt Increase of
international reserves - International reserves gt 80 Billion US in 2002
(and growing) almost 1 year of GDP about 9
month of imports.
33External debts
- Situation in 2003
- Long Term 9 Billion US
- Short Term 5 Billion USgt Total 14 Billion
US Much less than the international
reserves
34Net international reserves
- International reserves - External debts about
70 Billion US 9 months of GDP 7 months of
imports gt Very safe financial situation
35Financial overall situation
- Exceptional financial structure stability
- Large domestic reserves and very low governmental
deficit - Very high international surplus and growing
reserves - gt Extremely strong financial position
One of the best ratings in the world - Singapores strengths in public finances and
external flexibility are substantial and compare
favorably with its AAA peers. gt (Standard
Poors).
36Coface rating 2004
"Investment Grade" "Investment Grade"
Australia A1
Belgium A1
Canada A1
Finland A1
Hong Kong A1
Iceland A1
Japan A1
Luxemburg A1
New Zealand A1
Norway A1
Singapore A1
Spain A1
Sweden A1
Switzerland A1
Taiwan A1
United Kingdom A1
United States A1
37AGENDA
Basic data
Economic issues
Financial issues
Political issues
OUTLOOK
OUTLOOK
OUTLOOK
Natural and technical features
ANALYSIS,SWOT,RATINGS AND CONCLUSION
38Fundamentals and Policies (1)
- Singapore's strong economic performance has been
predicated on its openness to capital and
technology from abroad, an honest and efficient
government as well as a co-operative relationship
between labour and management. Equally important
is a set of sound macroeconomic policies aimed at
maintaining a conducive environment for long-term
investment in the economy. - Fiscal policy in Singapore is directed primarily
at promoting long-term economic growth, rather
than cyclical adjustment or the distribution of
income. As such, the government has refrained
from large unemployment benefits and price
support schemes, preferring to pursue the route
of job creation and free market competition. - High economic growth and the ethos of fiscal
rectitude, which extends throughout the public
sector, have led to budget surpluses averaging 5
of GDP over the past 10 years. Singapore's
prudent fiscal policy has contributed to its high
savings rate. Gross national savings rose from a
modest 11 of GNP in 1965 to over 50 since 1995.
Singapore's high domestic savings rate has
allowed it to achieve one of the highest
investment rates in the world without having to
incur foreign debt. High domestic savings have
also facilitated the maintenance of an ample
stock of foreign reserves. This has served to
boost investor confidence and provided a buffer
against adverse economic shocks.
Sourcehttp//www.mas.gov.sg/masmcm/bin/pt1Overvie
w_of_Singapore_Economy.htm
39Fundamentals and Policies (2)
- Fiscal conservatism, however, has not compromised
the government's commitment to build and maintain
a world-class infrastructure. Over the last three
decades, development expenditure accounted for
around one-third of government expenditure on
average. This does not include the large
investments made by the statutory boards. The
equivalent figure in industrial countries is
5-10. - Because of Singapore's healthy overall fiscal
position, the MAS has been able to concentrate on
its primary goal of ensuring price stability and
preserving confidence in the domestic currency.
Monetary policy in Singapore has been centred on
the exchange rate since 1981. This reflects the
fact that in the small and open Singapore
economy, the exchange rate is the more effective
tool in controlling inflation. Indeed, the system
has proven its ability to deliver on the
objective of maintaining price stability in the
two decades it has been in operation. Its
resilience was reaffirmed during the Asian
crisis, when the flexibility of the system was a
key part of the MAS response to the unfolding
turmoil across regional financial markets.
Sourcehttp//www.mas.gov.sg/masmcm/bin/pt1Overvie
w_of_Singapore_Economy.htm
40Challenges ahead (1)
- Singapore's strong fundamentals have enabled it
to weather the Asian crisis relatively well. But
the collapse in external demand did result in a
sharp slowdown in Singapore's GDP growth in 1998.
The government responded with a package of
short-term measures to help lower business costs.
At the same time, the government took advantage
of the lull in growth to rethink longer-term
economic strategies. Technological advance has
resulted in a globally-integrated marketplace. To
remain competitive in this new global economy,
Singapore has recognised the need to deregulate
closed sectors and shift into a knowledge-based
economy. - The government has already taken steps to
deregulate key sectors of the economy such as the
financial, telecommunications and power sectors.
In the financial services sector, the MAS has
opened the domestic banking and insurance
industries to greater foreign participation. At
the same time, the MAS has also adopted a more
open and consultative approach both in terms of
supervision as well as development of the sector,
and has shifted the emphasis from regulation to
risk-focused supervision. To help promote a more
vibrant and competitive environment, the MAS has
been actively attracting new activities and
players to Singapore. Various initiatives have
been launched to give fund managers greater
access to domestic funds, develop the debt market
and overhaul corporate governance.
Sourcehttp//www.mas.gov.sg/masmcm/bin/pt1Overvie
w_of_Singapore_Economy.htm
41Challenges ahead (2)
- To shift successfully into a knowledge economy,
Singapore must strengthen its IT capabilities.
The government is actively promoting
entrepreneurship, especially in the area of
technology, and has set up a fund to co-invest
with the private sector in high-tech start-ups.
Given that human and intellectual capital are key
competitive factors in a knowledge-based economy,
the educational system has been changed so as to
encourage creativity and innovation from young.
The process should continue at the workplace in a
life-long learning environment. As such, various
manpower initiatives have been launched to
encourage the continual retraining and
re-skilling of the workforce. Another important
component of labour market policies is the
efforts that have been invested in attracting
foreign talent to Singapore. Taken as a whole,
these measures will help to position Singapore to
contribute to, and partake of, the benefits of
the new global economy.
Sourcehttp//www.mas.gov.sg/masmcm/bin/pt1Overvie
w_of_Singapore_Economy.htm
42Singapore and Globalization
43Business environment
44Business OK but
45Fiscal Policy
- 1) Fiscal Policy In Singapore, the long-term
objectives of government budgetary policy are - to promote and support sustained,
non-inflationary economic growth - to keep the public sector lean and trim in order
to leave more manpower and financial resources
for the private sector - To maintain a balanced budget ie. to finance
total operating and development expenditures from
operating revenue and - to focus government expenditure in areas which
yield lasting returns, eg. education, healthcare,
infrastructure, housing and programmes to protect
the environment. - Underlying the above objectives are the
recognition of market forces in driving the
economy, financial prudence and emphasis on human
infrastructural investment. - .
Year Of Assessment Tax Rate
1986 and before 40
1987 to 1989 33
1990 32
1991 and 1992 31
1993 30
1994 to 1996 27
1997 to 1998 26
1999 26
2000 26
2001 25.5
2002 24.5
2003 22
Sourcewww.iras.gouv.sg Sourcewww.iras.gouv.sg
Sourchttp//www.iras.gov.sg/about20us/about_over
view.htm
46Tax Policy
- Tax Policy is an integral part of fiscal policy.
The main objectives of tax policy in Singapore
are - Promotion of Economic and Social GoalsTax has
been used to influence behaviour towards
desirable social and economic goals. For
instance, to encourage mechanisation and
automation, the government allows accelerated
capital allowance for most assets used for
business purposes. To encourage Singaporeans to
have more children, tax rebates are given for the
third and fourth child. - The fundamental tenet of Singapore's tax policy
is to keep tax rates low, both for corporations
as well as individuals. Keeping our corporate
rate low will help us to continue to attract a
good share of foreign investment. Keeping our
individual rates low will encourage our people to
work hard. It will also make risk-taking
worthwhile and encourage entrepreneurship.Another
fundamental tenet of our tax policy is to keep
the tax base broad. The aim is to inculcate
awareness among citizens the social
responsibility of paying taxes. For this reasons,
our personal reliefs for individuals are
deliberately kept low. This means that potential
taxpayers would join the tax stream earlier
47CONCLUSIONRISK ASSESSMENT COFACE MAY 2004
ASSETS
WEAKNESSES
- Singapore constitutes a major regional platform
thanks to the quality of its infrastructure and
financial system. - Labour is well trained and highly skilled.
- The economic success has been founded on a policy
of inviting foreign capital and promoting
exports. - The city-state benefits from a comfortable
financial situation thanks to the accumulation of
fiscal and current account surpluses and to ample
foreign exchange reserves. - It enjoys remarkable political stability.
- The economy's extreme sensitivity to fluctuations
in world economic conditions has increased due to
its specialisation in electronics. - The rigidity of the education system and
government framework has tended to stifle
entrepreneurial and innovative spirit. - To remain competitive, the country will have to
adjust to a rapidly changing regional environment.
48RISK ASSESSMENT COFACE MAY 2004
- CONLUSION After enduring an economic slowdown in
2003, partly attributable to the SARS pandemic's
negative impact on sectors involved in
distribution or linked to tourism, Singapore has
been benefiting from more sustained growth. The
economic recovery has been depending on growing
international demand for pharmaceutical and
petrochemical products and an upturn in the
electronics sector, which represents two-thirds
of exports. The accumulation of fiscal
surpluses has afforded the country considerable
leverage in spurring domestic demand via
stimulatory policy. External accounts have
continued to post large surpluses with foreign
debt remaining very low and foreign currency
reserves ample. The banking system has remained
the soundest in the region, especially with banks
continuing to reduce their non performing
loans.With its extreme sectoral specialisation,
Singapore has been diversifying its economy
focusing on biotechnologies and high value-added
services. Moreover, it has been reducing tax
levies to offset a loss of competitiveness in
relation to other countries in the region as well
as to China and India. However, it re-exporter
role has been diminishing and its regional
financial-centre from has been suffering from the
region's persistent political tensions. In the
face of those developments, Singapore has been
adapting its positioning and concluding numerous
trade agreements with major industrialised
countries.