Singapore – Economic Growth and Development Part I

By M. Isi Eromosele

Singapore is a highly developed and successful free market economy in which the state plays a minimal role. It has an open business environment, relatively corruption-free and transparent, stable prices and one of the highest per capita gross domestic products (GDP).

Singapore is one of the Asia-Pacific region’s most open economies, serving as a major financial center and as an important production and research hub for pharmaceuticals and electronics.

Singapore’s dependence on overseas demand meant its economy was particularly affected by the global financial crisis with the economy contracting 1.3 percent in 2009 but it also means it is now very well positioned for a rebound.

The main driver is the manufacturing sector, which expanded 46 percent in 2010, thanks to gains in biomedical production, as well as strong growth in the electronics cluster, which benefited from healthy worldwide demand. The services sector benefited from tourism inflows after the opening of two casino resorts last year.

Singapore’s strategic location on major sea lanes and its industrious population have given the country an economic importance in Southeast Asia disproportionate to its small size.

Upon independence in 1965, 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 7.9% from 1965 to 2009.

The global financial crisis of 2008 and 2009 had a sharp impact on Singapore’s open, trade-oriented economy. Singapore saw its worst two quarters of contraction in late 2008 and early 2009, but quickly recovered with strong performance in later quarters. The official growth figures for 2010 are between 13% and 15%.

Singapore’s largely corruption-free government, skilled work force, and advanced and efficient infrastructure have attracted investments from more than 7,000 multinational corporations from the United States, Japan, and Europe.

Also present are 1,500 companies from China and another 1,500 from India. Foreign firms are found in almost all sectors of the economy. Multinational corporations account for more than two-thirds of manufacturing output and direct export sales, although certain services sectors remain dominated by government-linked companies.

Manufacturing (including construction) and services are the twin engines of the Singapore economy and accounted for 26.3% and 69.1%, respectively, of Singapore’s gross domestic product in 2009 and 2010. The electronics and biomedical manufacturing industries lead Singapore’s manufacturing sector, accounting for 30.6% and 20.8%, respectively, of Singapore’s manufacturing output in 2009 and 2010.

To inject new life to the tourism sector, the government in April 2005 approved the development of two casinos that resulted in investments of more than U.S. $5 billion. Las Vegas Sands’ Marina Bay Sands Resort opened for business in April 2010, while Genting International’s Resort World Sentosa opened its doors in February 2010.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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