Economy of Singapore
On 27 May 1961, Malaya’s Prime Minister, Tunku Abdul Rahman, made a surprise proposal of a Federation of Malaysia, comprising existing Federation of Malaya, Singapore, Brunei, and the British Borneo territories of North Borneo and Sarawak. The UMNO leaders believed that the additional Malay population in the Borneo territories would offset Singapore’s Chinese population. The British government, for its part, believed that the merger would prevent Singapore from becoming a haven for communism. To secure the mandate of the people, the PAP called for the 1962 Merger Referendum, which provided different terms for merger with Malaysia, but no options for avoiding it. In general, bilateral relations with other ASEAN members are strong; however, disagreements have arisen, and relations with neighbouring Malaysia and Indonesia have sometimes been strained.
In 2016, Singapore students topped both the Program International Student Assessment (PISA) and the Trends in International Mathematics and Science Study (TIMSS). In the 2016 EF English Proficiency Index taken in 72 countries, Singapore place 6th and has been the only Asian country in the top ten. In recent years, the country has been identified as an increasingly popular tax haven for the wealthy due to the low tax rate on personal income and tax exemptions on foreign-based income and capital gains. Australian millionaire retailer Brett Blundy and multi-billionaire Facebook co-founder Eduardo Saverin are two examples of wealthy individuals who have settled in Singapore (Blundy in 2013 and Saverin in 2012). In August 2016, The Straits Times reported that Indonesia had decided to create tax havens on two islands near Singapore to bring Indonesian capital back into the tax base.
What is SG stand for?
Singapore’s name comes from ‘Singa Pura’ which means Lion City in Sanskrit. According to the Sejarah Melayu (Malay Annals), a Sumatran prince called Sang Nila Utama landed on Temasek (Singapore’s old name) and saw a Lion which is called ‘Singa’ in Malay. Thus he gave the island a new name, ‘Singapura’.
The rapidly growing economy of India, especially the high technology sector, is becoming an expanding source of foreign investment for Singapore. The United States provides no bilateral aid to Singapore, but the US appears keen to improve bilateral trade and signed the US-Singapore Free Trade Agreement. From 1819, it served as a trading port for British ships on their way to India.
In addition, China has been Singapore’s largest trading partner since 2013, after surpassing Malaysia. Singapore and the United States share a long-standing close relationship, in particular in defence, the economy, health, and education. Singapore has also pushed regional counter-terrorism initiatives, with a strong resolve to deal with terrorists inside its borders.
However, a sizeable pro-communist wing of the PAP was strongly opposed to the merger, fearing a loss of influence, and hence formed the Barisan Sosialis, splitting from the PAP. This was because the ruling party of Malaya, United Malays National Organisation (UMNO), was staunchly anti-communist and would support the non-communist faction of PAP against them.
Being a major trading hub and its close proximity to its neighbour Malaysia, Singapore was prone to many foreign influences, both from Britain and from other Asian countries. Chinese and Indian workers moved to Singapore to work at the harbour. The country remained a British colony until 1942.
Singapore has the world’s eleventh largest foreign reserves, and one of the highest net international investment position per capita. There are more than 7,000 multinational corporations from the United States, Japan, and Europe in Singapore. There are also approximately 1,500 companies from China and a similar number from India. Roughly 44 percent of the Singaporean workforce is made up of non-Singaporeans.
Malaysia and Singapore have clashed over the delivery of fresh water to Singapore, and access by the Singapore Armed Forces to Malaysian airspace. Border issues exist with Malaysia and Indonesia, and both have banned the sale of marine sand to Singapore over disputes about Singapore’s land reclamation. Some previous disputes, such as the Pedra Branca dispute, have been resolved by the International Court of Justice. Piracy in the Strait of Malacca has been a cause of concern for all three countries. Close economic ties exist with Brunei, and the two share a pegged currency value, through a Currency Interchangeability Agreement between the two countries which makes both Brunei dollar and Singapore dollar banknotes and coins legal tender in either country.
To this end, the country has stepped up co-operation with ASEAN members and China to strengthen regional security and fight terrorism, as well as participating in the organisation’s first joint maritime exercise with the latter. It has also given support to the US-led coalition to fight terrorism, with bilateral co-operation in counter-terrorism and counter-proliferation initiatives, and joint military exercises. Despite their successes in governing Singapore, the PAP leaders believed that Singapore’s future lay with Malaya due to strong ties between the two nations. It was thought that the merger would benefit the economy by creating a common market which will support new industries, solving the ongoing unemployment woes in Singapore.
- For several years, Singapore has been one of the few countries with an AAA credit rating from the big three, and the only Asian country to achieve this rating.
- Singapore has the world’s eleventh largest foreign reserves, and one of the highest net international investment position per capita.
Thus, Chinese is the main language of many workers such as hawkers, retail assistants, hairdressers, etc. in Singapore today. “SIA tops Asian list among 50 most admired global firms”. Archived from the original on 22 September 2015. Singapore students have excelled in many of the world education benchmarks in maths, science and reading. In 2015, both its primary and secondary students rank first in OECD’s global school performance rankings across 76 countries—described as the most comprehensive map of education standards.
The two countries where most foreigners come from are Malaysia (mostly Malaysian Chinese) and China. In 2009, there may have been 350,000 Malaysians working in Singapore. Many Chinese-speaking foreigners and Chinese-speaking Singaporeans work in services.
After gaining independence abruptly, Singapore sensed the need for immediate international recognition of its sovereignty. The Konfrontasi was ongoing and some UMNO factions strongly opposed the separation; Singapore faced the danger of being attacked by Indonesian military or forcibly reabsorbed into Malaysia on disadvantageous terms. With the help of the Malaysian, Republic of China, and Indian governments, Singapore became a member of the United Nations on 21 September 1965, and the Commonwealth in October that year. The government also has encouraged firms to invest outside Singapore, with the country’s total direct investments abroad reaching $39 billion by the end of 1998. The People’s Republic of China was the top destination, accounting for 14% of total overseas investments, followed by Malaysia (10%), Hong Kong (9%), Indonesia (8%) and US (4%).
He led a delegation to London, but Britain rejected his demand for complete self-rule. He resigned and was replaced by Lim Yew Hock in 1956, whose policies convinced Britain to grant Singapore full internal self-government for all matters except defence and foreign affairs. During the Second World War, Imperial Japan invaded and occupied Singapore, resulting in an interregnum of British colonial rule from 1942 to 1945.
For several years, Singapore has been one of the few countries with an AAA credit rating from the big three, and the only Asian country to achieve this rating. Singapore attracts a large amount of foreign investment as a result of its location, skilled workforce, low tax rates, advanced infrastructure and zero-tolerance against corruption.
After its independence, Singapore had only two infantry regiments commanded by British officers. Considered too small to provide effective security for the new country, the development of its military forces became a priority.
with one recent example being the MATADOR anti-tank weapon. During the 1950s, Chinese communists with strong ties to the trade unions and Chinese schools waged a guerrilla war against the government, leading to the Malayan Emergency. The 1954 National Service riots, Hock Lee bus riots, and Chinese middle schools riots in Singapore were all linked to these events. David Marshall, pro-independence leader of the Labour Front, won Singapore’s first general election in 1955.
Following Japan’s surrender in 1945, Singapore was returned to British control; in 1946, the Straits Settlements were dissolved, and Singapore became a standalone crown colony. Singapore’s port gave her an advantage over her neighbouring countries, being a favourable spot for efficient exports of refined goods and imports of raw material. This meant that industries in Singapore found international markets easily, and cheaper prices for raw goods. Singapore’s growing industrialisation meant that entrepot trade had been extended into processing of imported raw materials into exported finished products—leading to higher value-added goods which brought more income to the island. This ended up being a suitable alternative to a common market to the Malaysian hinterland, although later a form of it ended up being formed with the creation of ASEAN.
Over ten free-trade agreements have been signed with other countries and regions. Despite market freedom, Singapore’s government operations have a significant stake in the economy, contributing 22% of the GDP. The first diplomatic contact with China was made in the 1970s, with full diplomatic relations established in the 1990s. Furthermore, Singapore has positioned itself as a strong supporter of China’s constructive engagement and peaceful development in the region.
In October 2016, the Monetary Authority of Singapore admonished and fined UBS and DBS and withdrew Falcon Private Bank’s banking licence for their alleged role in the Malaysian Sovereign Fund scandal. In 2004, Lee Hsien Loong, the eldest son of Lee Kuan Yew, became the country’s third Prime Minister.
In addition, in October 1971, Britain pulled its military out of Singapore, leaving behind only a small British, Australian and New Zealand force as a token military presence. A great deal of initial support came from Israel, a country unrecognised by Singapore’s neighbouring Muslim-majority nations of Malaysia and Indonesia. The Israeli Defense Force (IDF) commanders were tasked by the Singapore government to create the Singapore Armed Forces (SAF) from scratch, and Israeli instructors were brought in to train Singaporean soldiers.