Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview
Singapores economy is highly industrialized. Singapore’s biggest sector is the manufacturing sector, followed by the wholesale and retailsector, business services, transport and communication and financial services. The electronics and petrochemical industries are dominant. The services sector contributes almost three quarters of the GDP and employs three quarters of theactive population. The industrial sector represents a quarter of the GDP. The primary sector is almost nonexistent (except for the cultivation of orchids, vegetables and fish foraquariums). Singapore does not have any mineral resources. Singapore is a regional trading hub. The Port of Singapore is amongst the worlds biggest and is the second traffic center for container transshipment, behind Hong Kong.
Singapores economy was particularly affected by the international financialcrisis, because of its very extreme financialization, and its large degree of openness, andthus its dependence on international trade. While GDP growth was above 7.5% from2004 to 2007, it dropped sharply in 2009 (-1.3%).Boosted by the regional economic recovery which fuelled a sharp increase in exports, aswell as by the resumed vigor of domestic demand, Singapores growth reached anexceptional degree of 15% of the GDP in 2010.Singaporean growth should probably slow down in 2011 and reach a more sustainablelevel.The strong recovery context allowed the government to put an end to the exceptional taxmeasures adopted in order to combat the crisis.The present priorities are to channel this strong growth, contain the hike in real estateprices and fight against inflation pressures.Mid-term objectives of promoting innovation and research and productivity gains areagain pursued.
IN order to maintain its competitive position despite the growth of salaries, thegovernment seeks especially to promote activities with high added value (such asbiotechnology, R&D and pharmaceutical products) in the manufacturing and servicesectors.The level of per capita wealth in Singapore is amongst the highest in the region.After a long period of full employment, unemployment has appeared, especially due tostructural economic chances (outsourcing of low-skilled work) and worsened during thecrisis.Singapore’s economics decreased in 2010 and now remains at around 2% of the activepopulation.
Singapore has based its economic development on a proactive strategy to attract FDI and trade openness. According to the World Bank, Singapore is the country where it is easiest to do business. Favorable lending to foreign investors, simple regulatory system, tax incentives, high-quality industrialreal estate park, political stability and absence of corruption make Singapore an attractive destination forinvestment. According to the UNCTAD, Singapore leads the list of the most attractive countries in the world, togetherwith the United States, but the performance of its City is comparatively low in terms of receiving FDI. UnitedStates is by far the biggest investor, followed by Japan, Europe, China and India. FDI flows have decreased and are expected to recover slowly in the coming years.
Singapore is open to foreign investment and offers tax incentives to companies after they register withEconomic Development Board. Singapore continues to maintain monopolies in certain sectors (financial services, professionalservices, media and telecommunications). Government linked corporations play a dominant role in the domestic economy and to a large extent, oninvestment.
Singapore is the easiest country in which to do business Singapore has excellent telecommunication, financial,and transport infrastructures, and its strategiclocation at the crossroads of maritime routes and proximity to the big markets is an advantage. Singapore offers tax concessions and easy loan conditions as part of investment incentives.
The lack of transparency in administrative incentives and the non-internationalization of theSingaporean dollar are investment hindrances. Despite being a free port, tariff protection for industrial firms is not provided. The dominant role of semi-public companies could hinder investments in some sectors.
A real warehouse and crossroads of international trade, Singapore is highly dependent onexternal trade, which represents more than 400% of the GDP (2007-2009). The strategy adopted by the country is to promote export while being careful to minimizebarriers to imports. Singapore signed the Asian Free Trade Area agreements (AFTA in the ASEAN context) andseveral bilateral agreements. Singapore imports machinery and equipment, mineral fuels, chemical products, foodcommodities and consumption goods from Malaysia, United States, China, Japan, SouthKorea, Indonesia and Saudi Arabia. Singapore exports machinery and equipment (electronic), consumptiongoods, pharmaceutical products and mineral fuels to Malaysia, Indonesia, HongKong, China, the United States, Japan and Australia. Singapore shows a high trade surplus, a trend which should continue in the coming years.
Visit us to download for related reports Market Opportunities of products and Services in Singapore. Export and investment sector opportunities in Singapore. Overview of Trade Regulations, Customs and Standards Singapore.Singaporean Investment guide for beginners. Business and Project Financing in Singapore. Business Travel Advisory in Singapore.
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