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Overview of the Economy of Singapore and Suggestions on How to Improve It

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Introduction

An economy is the state of a country or region in terms of the production and consumption of goods and services, and the supply of money. Today, Singapore is one of the top-ranking countries in terms of economy. However, this was not always the case. In 1965, Singapore’s nominal GDP per capita was around USD$500. Today, Singapore’s nominal GDP is about USD$59000, with the highest amount of about USD$85000. Singapore is a very small country, with a land area of about 719. 9 km²: about 140000 times smaller than the USA. However, our economy is still able to be compared to bigger countries, such as the United States of America. How is this so, and does Singapore’s land space affect the economy in any way? Singapore being a small country has tried many ways to raise the economy, some of which were to establish the Economic Development Board, which overlooks business strategies to help Singapore to grow economically. Another way was to use Singapore’s geographical location to our advantage and build a trade harbour. Singapore is ranked one of the top maritime capitals in the world, which hence contributed to a lot of the growth of Singapore’s economy. Singapore also encourage foreign trade and investments from other countries to come to Singapore to start-up businesses.

Singapore’s past

After Singapore gained independence in 1965, it faced major economic issues, such as severe unemployment, poverty, and overcrowding. Singapore was infamous for its opium dens, gang-ridden streets, and racial tensions. Education was also not widely available, resulting in half of the population being illiterate. All these factors affected Singapore’s economy negatively. Furthermore, as Singapore was a small country, it frequently went unnoticed by the bigger countries, and since land in Singapore was very limited, we did not have enough space to build infrastructure. Hence, Singapore had to venture into different routes to try to overcome its small size, and raise Singapore’s economy.

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Ways of Improving Economy

One method that Singapore used was to establish the Economic Development Board (EDB) and Singapore Tourist Promotion Board (STPB) to lead an investment drive and make Singapore an attractive tourist destination for foreigners travelling to the country. Initially, the Economic Development Board’s task was to build infrastructure for the industrial development. One example was to transform Jurong from a swampland to an industrial estate. After Singapore’s independence, the Economic Development Board’s task changed to exporting, manufacturing, internationalisation and attracting foreign investments. This led to Singapore’s growth in its economy in terms of savings and investments. As a result of this financial drive, by 1992, Singapore’s capital stock increased 33 fold. Singapore also used her geographical location to their advantage. Singapore is located at the mouth of the Malacca Strait. Almost 40% of the world’s trade used to pass through there. The 190 kilometres of coastline featured natural deep-water ports. The island is located along important shipping routes in Southeast Asia. Hence, many traders used to pass by Singapore and we act as an entrepot for traders to trade their goods, which then brings revenue in as a result. Investments in education have also been made to provide a more skilful workforce to contribute to improving Singapore’s economy. Singapore’s port initially had 2 main functions. One was to provide quality products that were in demand to international markets. Secondly, Singapore was the gateway to the aforementioned international markets. Malaysia supplied Singapore with products and Singapore would export the products to elsewhere. Singapore served as the primary source of foreign products to the surrounding countries. Since we only have a small population of approximately 5 million, we have a very small domestic market.

Therefore, we had to result to free trade to attract foreign traders to come to our port to trade their goods. As a result, Singapore has become one of the world’s largest trading establishments. Singapore is also the largest foreign investors in big countries like China, India and Indonesia, thus taking the 10th position in the world’s largest foreign investors. This then attracts multinational companies (MNCs) to set up their headquarters or regional centres in Singapore, which then increases Singapore’s economy. Singapore’s land space is also very limited, therefore Singapore had to maximise the use of the limited land space. Singapore only has about 720 km² of land to spare, therefore we conserve our land space by building upwards. Infrastructure such as HDB flats and hotels in Singapore had to be built vertically to allow for more residents or foreigners to stay in one building. This allows more space for other infrastructure such as recreational activities to be built. This is why bungalows and landed properties cost an arm and a leg because it takes up the same amount of space or even more just for one family to stay in. Another way Singapore overcomes its limited land space is land reclamation. This is especially important for a growing city like Singapore where the population is continuously growing and the demand for more space is increasing. It is predicted that by 2030, Singapore’s land space would increase by over 100 square kilometres. Through this method, Singapore would be able to better manage their land space and more infrastructures can also be built. Singapore also focused on building tourist infrastructure to attract more tourists to visit Singapore. One of which is the airports. Singapore is the regional hub of the Southeast Asia which serves for more than 62 million travellers a year. This generates a lot of revenue for Singapore, which had led neighbouring countries to improve their airports.

Therefore, Singapore’s airport is always ranked one of the top few among more than 500 different airports around the world. Not only that, but Singapore is constantly expanding its airport to better facilitate the massive amount of people that pass through each year. Singapore finished building its third terminal in just 2010 and had already completed building their fourth terminal in 2017. But Singapore also has plans to build a mega terminal by 2030 which has a land area of around 1000 hectares. It can accommodate an additional 50 million passengers and up to 70 million passengers a year. All this adds up to 3% of the Singapore economy and provides jobs for 77000 people. Hence, Singapore decided to focus on building tourist infrastructure to attract more tourists to come to Singapore. Singapore improved on our healthcare systems as well. Within the next five years, Singapore will build an additional six more general and community hospitals, four new polyclinics and more nursing homes and eldercare centres around Singapore, on top of an already large number of healthcare centres. This makes it more convenient for all citizens to seek urgent healthcare needs. Singapore’s healthcare system is also inexpensive and affordable for all people from different financial backgrounds. This is made possible through funding from the government, such as Medisave and Medifund, to allow healthcare to be more affordable, especially for people of lower socioeconomic status.

On top of that, the quality of healthcare that Singapore provides is of such high quality that people from other countries travel to Singapore to seek medical attention from hospitals in Singapore. These people that travel here to seek medical attention are mostly foreigners that do not have high-quality medical services and low medical bills in their homelands at the same time. In comparison to the USA that spends about $9000 per capita on healthcare spending, Singapore only spends about $4000 per capita for the same or even higher quality of healthcare. The low prices featured in Singapore makes it more attractive to foreigners, hence travelling here to be medically treated. This also adds on to Singapore’s health tourism, as more and more foreigners start coming to Singapore to seek medical attention. Thus, revenue is earned from both healthcare services and tourism, which helps in the development and growth in Singapore’s economy.

Conclusion

In conclusion, Singapore’s small size affects its economy to a certain extent as there is limited land space to build infrastructure or the country is too small and goes unnoticed. However, Singapore uses specific methods to give Singapore an advantage over other countries to grow in the economy. For example, by using the landfill method to increase land space, or by building high-rise infrastructure to save land space etcetera. Singapore also used many ways of improving their economy. For example, attracting foreign company to start businesses in Singapore. These methods used to improve Singapore’s economy has helped to overcome the size disadvantage of this small island.

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