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Singaporean Economy And Its Phases By Talha Lodhi

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Singaporean Economy And Its Phases By Talha Lodhi

  1. 1. SINGAPOREAN ECONOMY THROUGH DIFFERENT PHASES
  2. 2. SEQUENCE <ul><li>CHALLENGES IN DEVELOPMENT </li></ul><ul><li>ISSUES BETWEEN ’65 ’79 </li></ul><ul><li>REMEDIAL MEASURES </li></ul><ul><li>FRUITS OF THE POLICIES – ’79 </li></ul><ul><li>CHALLANGES BETWEEN ’79 – ’85 </li></ul><ul><li>REMEDIAL PROPOSALS </li></ul><ul><li>RESULTS </li></ul><ul><li>RECESSION ’86 </li></ul><ul><li>REDRESSAL </li></ul><ul><li>ECONOMIC DIVERSIFICATION </li></ul><ul><li>ASIAN FINANCIAL CRISIS OF 90’S </li></ul><ul><li>KNOWLEDGE-BASED ECONOMY </li></ul>
  3. 3. CHALLENGES IN DEVELOPMENT <ul><li>Singapore underwent three distinct economic development phases. </li></ul><ul><ul><li>Each having its own problems arising out of geo-economic changes occurring within the region and globally. </li></ul></ul><ul><li>The phases are </li></ul><ul><ul><li>FY’65 – FY’79 </li></ul></ul><ul><ul><li>FY’79 – FY’85 </li></ul></ul><ul><ul><li>FY’86 – FY’98 </li></ul></ul>
  4. 4. ISSUES BETWEEN ’65 – ‘79 <ul><li>Separation from Malaysia in ’65. </li></ul><ul><ul><li>Resulted in a huge economic crisis. </li></ul></ul><ul><ul><li>Loss of a major local market. </li></ul></ul><ul><li>Regional confrontation with Indonesia. </li></ul><ul><ul><li>Disruption of regular trade route. </li></ul></ul><ul><li>Withdrawal of British troops. </li></ul><ul><ul><li>Approx. 40 thousand locals rendered unemployed. </li></ul></ul><ul><li>Corruption at its peak. </li></ul><ul><ul><li>No investment possible under the circumstances. </li></ul></ul>
  5. 5. REMEDIAL MEASURES <ul><li>Attracting Foreign Investment for </li></ul><ul><ul><li>Development of Industrial and Financial sectors. </li></ul></ul><ul><ul><li>‘ labor intensive’ technological growth </li></ul></ul><ul><ul><ul><li>To reduce unemployment </li></ul></ul></ul><ul><li>“ Tax incentive” policies initiated. </li></ul><ul><ul><li>Tax holidays </li></ul></ul><ul><ul><li>Double tax deduction schemes, </li></ul></ul><ul><ul><li>Duty-free import of almost 96% of items. </li></ul></ul><ul><li>Investment in infrastructure </li></ul><ul><ul><li>Better port facilities, </li></ul></ul><ul><ul><li>Utility services i.e. provision of water and electricity, </li></ul></ul><ul><ul><li>Communication system in-land and out-land. </li></ul></ul><ul><ul><li>Cont’d…. </li></ul></ul>
  6. 6. <ul><li>Establishment of National Corporations. </li></ul><ul><ul><li>In areas lacking private sector expertise or capital or both. </li></ul></ul><ul><ul><li>Like Singapore Airline, Shipping Authority, Neptune-Orient Airline, Development bank of Singapore. </li></ul></ul><ul><ul><li>Run on corporate lines with complete autonomy. </li></ul></ul><ul><ul><li>To fund the government spending from its generated income revenue. </li></ul></ul><ul><ul><li>Employs local workforce. </li></ul></ul><ul><ul><li>Boost communication activities. </li></ul></ul>
  7. 7. FRUITS OF THE POLICIES – ‘79 <ul><li>Unemployment reduced to 3.3% </li></ul><ul><li>Average growth rate of 10% . </li></ul><ul><li>Manufacturing increased to 27% of the total GDP. </li></ul><ul><li>Diversified economy. </li></ul><ul><ul><li>Roots in all the major segments </li></ul></ul><ul><ul><ul><li>Transport. </li></ul></ul></ul><ul><ul><ul><li>Manufacturing. </li></ul></ul></ul><ul><ul><ul><li>Financial services. </li></ul></ul></ul><ul><ul><ul><li>Trade. </li></ul></ul></ul>
  8. 8. CHALLANGES BETWEEN ’79 – ‘85 <ul><li>New countries with low labor costs emerging in the region. </li></ul><ul><ul><li>Offering competitive tax rebates. </li></ul></ul><ul><ul><li>Strong contender for MNC’s investment. </li></ul></ul><ul><li>With unemployment having dropped sharply, </li></ul><ul><ul><li>Tighter labor market. </li></ul></ul><ul><ul><li>Very low vacancy to unemployment ratio </li></ul></ul>
  9. 9. REMEDIAL PROPOSALS <ul><li>Shifting of economic focus. </li></ul><ul><ul><li>From labor intensive to skill oriented. </li></ul></ul><ul><li>Reliance on automated systems </li></ul><ul><ul><li>Reduction of employment in low-cost activities. </li></ul></ul><ul><li>Impartation of Basic technical education to the locals. </li></ul><ul><ul><li>To retain their position in rapidly changing technologically advancement cycle. </li></ul></ul><ul><li>Three year wage correction policy. </li></ul><ul><ul><li>To tackle tight market issue. </li></ul></ul><ul><li>Incentives to attract hi-tech investments in </li></ul><ul><ul><li>Software </li></ul></ul><ul><ul><li>Financial </li></ul></ul><ul><ul><li>Research areas. </li></ul></ul>
  10. 10. RESULTS <ul><li>Resulted in Second Industrial Revolution </li></ul><ul><li>Setting up of Technology oriented industries. </li></ul><ul><li>Trained and educated labor </li></ul><ul><ul><li>Increased investment opportunity. </li></ul></ul>
  11. 11. RECESSION ‘86 <ul><li>Increased Labor costs. </li></ul><ul><li>Slump in Construction Sector. </li></ul><ul><li>High saving rate. </li></ul><ul><ul><li>40% according to CPF policy. </li></ul></ul><ul><ul><ul><li>15% employees </li></ul></ul></ul><ul><ul><ul><li>25% employers </li></ul></ul></ul>
  12. 12. REDRESSAL <ul><li>Decrease in Production costs. </li></ul><ul><li>Decrease in Saving rate. </li></ul><ul><ul><li>Employer share reduced to 10% from 25%. </li></ul></ul><ul><li>Control on government operating expenditure. </li></ul><ul><li>Measures resulting in </li></ul><ul><ul><li>Increased surplus. </li></ul></ul><ul><ul><ul><li>From 2.5 billion SD in'85 to 3 billion SD in '86. </li></ul></ul></ul>
  13. 13. ECONOMIC DIVERSIFICATION <ul><li>Introduction of Service based industry. </li></ul><ul><ul><li>To decrease dependency on the international market's buying power </li></ul></ul><ul><ul><li>To provide a broader base for economy. </li></ul></ul><ul><li>Service industry in parallel to manufacturing. </li></ul><ul><ul><li>Twin pillars of the Economy </li></ul></ul><ul><li>Service Industry involves; </li></ul><ul><ul><li>Financial services </li></ul></ul><ul><ul><li>Medical services </li></ul></ul><ul><ul><li>And educational services. </li></ul></ul><ul><li>Regionalism </li></ul><ul><ul><li>To overcome the brand of a small local market and become a key market player. </li></ul></ul><ul><ul><li>Recognition as Economic hub of Asia Pacific region. </li></ul></ul><ul><li>Tax exemptions for VC and Regional Funds. </li></ul><ul><ul><li>Encouraging setting up of new businesses. </li></ul></ul>
  14. 14. ASIAN FINANCIAL CRISIS OF 90’S <ul><li>Budgetary Deficit, after a very long time. </li></ul><ul><li>Tax rebates offered to redress the situation. </li></ul><ul><li>Business costs cut by 15% </li></ul><ul><ul><li>To improve competitiveness </li></ul></ul><ul><ul><li>10% reduction of employer contribution to CPF. </li></ul></ul><ul><li>Slashing of salary related costs where 45% of the business cost is labor-related. </li></ul><ul><li>Pumping of 12.5 billion SD into the market. </li></ul>
  15. 15. KNOWLEDGE-BASED ECONOMY <ul><li>Knowledge, creativity and innovation are key determinants of long-term competitiveness. </li></ul><ul><li>Attract the best brains for </li></ul><ul><ul><li>Indulgence in research based activities. </li></ul></ul><ul><li>Custom tailored product services </li></ul><ul><li>Knowledge Based Economy - a necessity. </li></ul><ul><ul><li>Increasing cost of setting up new businesses. </li></ul></ul><ul><ul><li>Knowledge driven society with Intellectualism and innovation attracts more businesses. </li></ul></ul><ul><ul><li>Cont’d…. </li></ul></ul>
  16. 16. <ul><li>KBE has resulted in </li></ul><ul><ul><li>Increased job-hopping. </li></ul></ul><ul><ul><li>Realization of importance of Intellectual assets. </li></ul></ul><ul><ul><ul><li>Given more face-value than the fixed equity while calculating the worthiness of a business. </li></ul></ul></ul>

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