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, Singapore was faced with a lack of physical resources and a small domestic market. In response, 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 8.0% from 1965 to 2010. The worldwide electronics slump in 2001 and the outbreak of severe acute respiratory syndrome (SARS) in 2003 dealt blows to the economy, but growth bounced back each time, driven by world demand for electronics, pharmaceuticals, other manufactured goods, and financial services, particularly in the economies of its major trading partners--the United States, the European Union, Japan, and China, as well as expanding emerging markets such as India. 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 Singapore economy grew a staggering 14.5% in 2010, the second-highest rate in the world that year.
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 26.7% and 67.5%, respectively, of Singapore's gross domestic product in 2010. The electronics and biomedical manufacturing industries lead Singapore's manufacturing sector, accounting for 31.5% and 19.4%, respectively, of Singapore's manufacturing output in 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 and Genting International's Resort World Sentosa opened their doors in early 2010.
To maintain its competitive position despite rising wages, the government seeks to promote higher value-added activities in the manufacturing and services sectors. It also has opened, or is in the process of opening, the financial services, telecommunications, and power generation and retailing sectors to foreign service-providers and greater competition. The government also has pursued cost-cutting measures, including tax cuts and wage and rent reductions, to lower the cost of doing business in Singapore. The government is actively negotiating eight free trade agreements (FTAs) with emerging economic partners and has already concluded 18 FTAs with many of its key trade partners, including one with the United States that came into force January 1, 2004. As a member of the Association of Southeast Asian Nations (ASEAN), Singapore is part of the ASEAN Free Trade Area (AFTA), and is signatory to ASEAN FTAs with China, Korea, Japan, India, and a joint agreement with New Zealand and Australia. Singapore is also a party to the Transpacific Strategic Economic Partnership Agreement, which includes Brunei, Chile, and New Zealand.
Trade, Investment, and Aid
Singapore's total trade in 2010 amounted to $661.58 billion, up 20.7% from 2009. In 2010, Singapore's imports totaled $310.39 billion, and exports totaled $351.18 billion. Malaysia was Singapore's main import source country, as well as its largest export market, absorbing 11.9% of Singapore's exports, followed by Hong Kong (11.7%). Other major export markets include the United States (6.4%), China (10.3%), and Indonesia (9.4%). Singapore was the 13th-largest trading partner of the United States in 2010. Re-exports accounted for 48.1% of Singapore's total sales to other countries in 2010. Singapore's principal exports are petroleum products, food and beverages, chemicals, pharmaceuticals, electronic components, telecommunication apparatus, and transport equipment. Singapore's main imports are aircraft, crude oil and petroleum products, electronic components, consumer electronics, industrial machinery and equipment, motor vehicles, chemicals, food and beverages, electricity generators, and iron and steel.
Singapore continues to attract investment funds on a large scale despite its relatively high-cost operating environment. The United States leads in foreign investment, accounting for 11.2% of new actual investment in the manufacturing sector in 2008. As of 2009, the stock of investment by U.S. companies in the manufacturing and services sectors in Singapore reached about $76.86 billion (total assets). The bulk of U.S. investment is in electronics manufacturing, oil refining and storage, and the chemical industry. About 1,500 U.S. firms operate in Singapore.
The government also has encouraged firms to invest outside Singapore, with the country's total direct investments abroad reaching $233.74 billion by the end of 2009. China was the top destination, accounting for 16.0% of total overseas investments, followed by the United Kingdom (12.3%), Malaysia (8.1%), Hong Kong (6.0%), Thailand (5.6%), Indonesia (6.8%), Australia (6.6%), and the United States (3.6%).
As of December 2010, Singapore had a total labor force of about 3.1 million. The National Trades Union Congress (NTUC), the sole trade union federation, comprises almost 99% of total organized labor. Extensive legislation covers general labor and trade union matters. The Industrial Arbitration Court handles labor-management disputes that cannot be resolved informally through the Ministry of Labor. The Singapore Government has stressed the importance of cooperation between unions, management, and government ("tripartism"), as well as the early resolution of disputes. There have been no strikes since 1986.
Singapore has enjoyed virtually full employment for long periods of time. In tandem with the global economic crisis and the economy’s contraction, resident unemployment reached as high as 4.8%. However, the overall and resident unemployment rates dipped to 2.2% and 3.1%, respectively, by the end of 2010 due to the Singapore Government’s job-saving measures and a gradually improving global economy. Some of Singapore's unemployment is attributable to structural changes in the economy, as low-skill manufacturing operations have moved overseas. Since 1990, the number of foreign workers in Singapore has increased rapidly, helping meet some labor shortages. Foreign workers comprise 35.8% of the labor force; the great majority of these are unskilled workers.
Transportation and Communications
Situated at the crossroads of international shipping and air routes, Singapore is a center for transportation and communication in Southeast Asia. Singapore's Changi International Airport is a regional aviation hub served by 80 airlines. A third terminal opened in January 2008, and a dedicated low-cost terminal for budget airlines has operated since 2006. The Port of Singapore is the world's second-busiest for containerized transshipment traffic after Shanghai. The country also is linked by road and rail to Malaysia and Thailand.
Telecommunications and Internet facilities are state-of-the-art, providing high-quality communications with the rest of the world. Singapore is rolling out a nationwide broadband network that promises high-speed Internet connections at lower prices. Sixty percent of the country was covered as of the end of 2010. Eighty-one percent of the country’s inhabitants have household Internet access. Government-linked companies and organizations operate all domestic broadcast television channels and almost all radio stations. Only one radio station, the BBC World Service, is completely independent. Cable subscribers have access to numerous foreign news channels. The print media is dominated by a company with close ties to the government. Daily newspapers are published in English, Chinese, Malay, and Tamil.
GDP (2010 nominal prices): $222.7 billion.
Annual real growth rate: 8.8% (2007), 1.5% (2008), -0.8% (2009), 14.5% (2010).
Per capita GDP (2010): $43,867.
Natural resources: None.
Agriculture (under 0.5% of GDP): Products--poultry, orchids, vegetables, fruits, ornamental fish.
Manufacturing (22.2% of real GDP): Types--electronic and electrical products and components, petroleum products, machinery and metal products, chemical and pharmaceutical products, transport equipment (mainly aircraft repairs/maintenance, shipbuilding/repair and oil rigs), food and beverages, printing and publishing, optical and photographic equipment, plastic products/modules, instrumentation equipment.
Trade (2010): Exports--$351.18 billion: petroleum products, food/beverages, chemicals, pharmaceuticals, industrial machinery and equipment, electronic components, telecommunication apparatus, transport equipment. Major markets--Malaysia (11.9%), Indonesia (9.4%), Hong Kong (11.7%), EU (9.8%), China (10.3%), United States (6.4%), and Japan (4.7%). Imports--$310.39 billion: aircraft, crude oil and petroleum products, electronic components, radio and television receivers/parts, motor vehicles, chemicals, food/beverages, iron/steel, electricity generators. Major suppliers--EU (12.3%), Malaysia (11.7%), United States (11.2%), China (10.8%), and Japan (7.9%).
According to the constitution, as amended in 1965, Singapore is a republic with a parliamentary system of government. Political authority rests with the prime minister and the cabinet. The prime minister is the leader of the political party or coalition of parties having the majority of seats in Parliament. The president, who is chief of state, previously exercised only ceremonial duties. As a result of 1991 constitutional changes, the president is now supposed to be elected and exercises expanded powers over legislative appointments, government budgetary affairs, and internal security matters.
The unicameral Parliament consists of 87 members elected on the basis of universal adult suffrage, and up to nine "nominated" members of Parliament (NMPs). In addition, a constitutional provision assures at least nine opposition members in Parliament, even if fewer than nine actually are elected; these are known as non-constituency members of Parliament (NCMPs). The president appoints nominated members of Parliament from among nominations by a special selection committee. Nominated members of Parliament enjoy the same privileges as members of Parliament but cannot vote on constitutional matters or expenditures of funds. The maximum term of Parliament is 5 years. NMPs serve for 2½-year terms. In the May 7, 2011 general election, the governing People's Action Party (PAP) won 81 of the 87 elective seats of the 12th Parliament. The opposition Workers' Party won the remaining six seats. There are three NCMPs in the 12th Parliament, two from the Workers' Party and one from the Singapore People’s Party. Voting has been compulsory since 1959.
Judicial power is vested in the High Court and the Court of Appeal. The High Court exercises original criminal and civil jurisdiction in serious cases as well as appellate jurisdiction from subordinate courts. Its chief justice, senior judge, and 12 judges are appointed by the president. Appeals from the High Court are heard by the Court of Appeal. The right of appeal to the Privy Council in London was abolished effective April 1994.
Principal Government Officials
Prime Minister--LEE Hsien Loong
Deputy Prime Minister--TEO Chee Hean
Deputy Prime Minister--Tharman SHANMUGARATNAM
Community Development, Youth and Sports (Acting)--CHAN Chun Sing
Defense--NG Eng Hen
Education--HENG Swee Keat
Environment and Water Resources--Vivian BALAKRISHNAN
Foreign Affairs--K. SHANMUGAM
Health--GAN Kim Yong
Home Affairs--TEO Chee Hean
Information, Communications and the Arts--YAACOB Ibrahim
National Development--KHAW Boon Wan
Trade and Industry--LIM Hng Kiang
Transport--LUI Tuck Yew
Prime Minister’s Office--LIM Swee Say, S. ISWARAN
Ambassador to the United Nations--K. V. Vanu Gopala MENON
Ambassador to the United States--CHAN Heng Chee
Singapore maintains an embassy in the United States at 3501 International Place NW, Washington, DC 20008 (tel. 202/537-3100, fax 202/537-0876).
The ruling political party in Singapore, reelected continuously since 1959, is the People's Action Party (PAP), headed by Prime Minister Lee Hsien Loong. The PAP has held the overwhelming majority of seats in Parliament since 1966, when the opposition Barisan Sosialis Party (Socialist Front), a left-wing group that split off from the PAP in 1961, resigned from Parliament, leaving the PAP as the sole representative party. In the general elections of 1968, 1972, 1976, and 1980, the PAP won all of the seats in an expanding Parliament.
Then-Workers' Party Secretary General J.B. Jeyaretnam (who died in 2008) became the first opposition party member of Parliament in 15 years when he won a 1981 by-election. Opposition parties gained small numbers of seats in the general elections of 1984 (2 out of 79), 1988 (1 of 81), 1991 (4 of 81), 1997 (2 of 83), 2001 (2 of 84), 2006 (2 of 84), and 2011 (6 of 87). Meanwhile, the PAP's share of the popular vote in contested seats decreased from 75% in 2001 to 60.1% in 2011. In the 2011 election, opposition parties together contested 82 of the 87 seats, the largest number ever.
Type: Parliamentary republic.
Constitution: June 3, 1959 (amended 1965 and 1991).
Independence: August 9, 1965.
Branches: Executive--president (chief of state, 6-yr. term); prime minister (head of government). Legislative--unicameral 84-member Parliament (maximum 5-yr. term). Judicial--High Court, Court of Appeal, subordinate courts.
Political parties: People's Action Party (PAP), Workers' Party (WP), Singapore People's Party (SPP), Singapore Democratic Party (SDP), Singapore Democratic Alliance (SDA), National Solidarity Party (NSP), Reform Party.
Suffrage: Universal and compulsory at 21.
Central government budget (FY 2010): Total expenditures U.S. $33.1 billion (46.37 billion Singapore dollars).
Defense (FY 2010): 4.5% of gross domestic product.
National holiday: August 9.
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