If an investor is looking for a place to do business in South Asia, the city of Singapore has a great deal to offer. The World Bank has identified this city-state as the easiest place in the world to do business. The country has the world’s highest percentage of millionaires. One out of every six households in Singapore have disposable wealth in excess of 1 million American dollars. This amazing figure does not include property, businesses or luxury items. Considering the high value of real estate in the country, if that sector was included it would increase the proportion of millionaires substantially. Many analysts consider Singapore to have the best quality of life in Asia. The Economic Intelligent Unit also gives the country this designation, along with the 11th best in the world.
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In the first quarter of 2014 this capitalistic dynamo once gain beat forecasts of slowing economic growth, in many parts of the world. The GDP (Gross Domestic Product) expanded at 4.9%. The manufacturing sector led the way with a 9.8% surge on a year to year basis. Over 25% of the GDP of the country is based on manufacturing. This sector had grown 7% in the last quarter of 2013. Singapore has a well diversified economy overall, despite its small geographic size.
The expansion in the manufacturing sector was largely due to the recovery in the bio-medical industry. Stronger growth was also found in the chemical and transport engineering clusters.
Construction grew an additional 6.7% in the first quarter, just a bit slower than the 7.3% reported at the end of 2013. Finance and insurance saw growth of 5.4%, about half the 10.5% growth represented in the previous quarter.
The only real laggard was in the food service and accommodation industry, which eked out a meager 0.9% increase as compared to 3.4% in the last quarter of 2013.
Singapore is a world leader in several economic areas. The country is the 4th largest financial center in the world as well as the 4th largest foreign-exchange trading center after London, New York and Tokyo. The city-state is the second largest casino gambling market after Macao. It is one of the top 3 oil refining centers in the world. Globally, Singapore is the largest oil rig producer and a major hub for ship repair services. The port is considered one of the five busiest in the world.
The GDP for 2013 in total was 3.7%. This was up from 1.3% in 2012. It shows that the government of Singapore is making progress in the economic restructuring of the country. Singapore is a highly developed trade-oriented market economy. The infrastructure is modern and efficient which makes it well suited to the needs of business and industry. The transportation facilities are top notch and the airports are known for being as some of the best in the world.
Businesses in Singapore are dealing with a number of issues that include rising costs, partly due to the increasing restrictions on cheaper foreign labor. There is no minimum wage in the country, because it has been determined that it would lower the competitiveness of the economy. The government has recently decided to slow the inflow of immigrants. The population of the city state has grown from 1.1 million in 2004 to 5.4 million, just 10 years later. Over 40% of the workplace is comprised of individuals that originated from elsewhere in the world. Despite the huge increase, Singapore has remained stable, with only one riot last year involving 400 foreign workers from South Asia, It was the first such incident in more than 4 decades. Singapore has been independent since 1963.
Singapore has the second freest economy in the world in 2014. A score of 89.4% is just slightly below Hong Kong, that ranks number one with 90.1%. In comparison Australia is ranked 3rd followed by Switzerland, New Zealand and then Canada with 82.%, 81.6%, 81.2%, and 80.2 respectively. All other countries are below 80%. Singapore has improved its score by 1.4% since last year, and has been improving every year since 2010.
In the major indexes of economic freedom which include rule of law, limited government, regulatory efficiency, and open markets, Singapore is now scoring above 90% in all areas.
The GDP of Singapore in PPP (Purchasing Power Parity) stands at $326.5 billion USD (United States Dollars). The economy has grown 4.3% in the last 5 years alone. The per capita GDP (PPP) is now in excess of $60,000 USD. It is the 3rd highest in the world. Unemployment remains low at 2.0%. Inflation at measured by the Consumer Price Index (CPI) is 4.6%. The amount of FDI (Foreign Direct Investment) is now $56.7 billion USD.
Singaporean Exports
The main industries of Singapore are bio-medical, chemicals, financial services, construction, electronics, oil drilling equipment, petroleum refining, rubber processing, food and beverages, ship repair and offshore platform construction.
Singapore is the 14th largest exporter in the world and the 15th largest importer. The country has the highest trade to GDP ratio in the world at 407.9%.
Exports total over $500 billion USD. Machinery and equipment lead the list. Electronics, telecommunications, pharmaceuticals, chemicals, and refined petroleum products round out the major exports. Major export partners include Malaysia with 12.2% of the total trade followed by Hong Kong at 10.9%, China at 10.7%, and Indonesia at 10.5%. Next is the United States, Japan, Australia and South Korea at 5.5%, 4.6%, 4.2%, and 4% respectively.
Import partners in trade are Malaysia with 10.6% of the total, followed by China with 10.3% and the United States at 10.2%. Next in line are South Korea, Japan, Indonesia, Saudi Arabia, and the United Arab Emirates. The percentages are 6.8%, 6.2%, 5.3%, 4.5%, and 4.1% respectively.
The major goods that are imported which equals more than $300 billion USD include machinery and equipment, chemicals, consumer goods, foodstuffs, and mineral fuels.
Tourism is an important component of the economy with over 10 million visitors arriving annually. It also has become a medical tourist hub, with hundreds of thousands arriving from overseas on an annual basis. In addition, it has become a major education hub with close to 100,000 foreign students in attendance. Near a quarter of the university level student population is from abroad.
Singapore Management University
As can be seen, the country is running a sizable trade surplus and maintains a AAA credit rating both domestically and internationally. It is the only country in Asia to receive this high rating from all three of the major credit ranking companies. Foreign reserves as of 2011 were in excess of $200 billion USD. The country possesses the 11th largest holdings in the world. Government revenues and expenses are in somewhat balance. The only mark on its excellent economic record is the amount of public debt, which is in excess of 100% GDP. (118.2% was the 2011 estimate).
Singapore has one of the lowest tax rates in the world at 14.2% of GDP. It is near the top in GDP per-capita in terms of PPP. The economy of Singapore is a major financier of the world. Government linked companies still play a major role in the economy, but it is mostly indirect. The ownership is through the sovereign wealth fund of the country known as Temasek Holdings. This entity holds majority stakes in a number of the country’s largest companies. These include MediaCorp, ST Engineering, Singapore Airlines and SingTel.
Singapore is a country with scarce natural resources, and has an ongoing issue with sufficient water supplies. Part of the problem is the population density which is the 3rd highest in the world. The total area of the country is 716.1 km2 which is equal to 276 square miles. Population density is 7,540/km2 or 19,562 per square mile. This situation has led to ongoing land reclamation projects. 52 square miles of territory have been added in the last 50 years. The country is projected to grow another 40 square miles by 2030.
This island city state is located directly south off the coast of Malaysia, with Indonesia further south across the Singapore Strait.
The country has become a popular tax haven. This is due to the low tax rate on personal income and tax exemptions on foreign based income, as well as capital gains. The average tariff rate for foreign trade is 0% and there are few other barriers. There are more than 7,000 multinational corporations from Europe, Japan and the United States in Singapore. Both China and India have over 1,500 companies each, in Singapore. Numerous foreign firms are found in all sectors of the economy. The country is a large overseas investor. For example, it is the 2nd largest outside world investor in India.
Singapore top individual income tax rate is just 20%. The top corporate rate is 17%. Other taxes do include property and VAT (Value Added Tax). Overall tax revenues make up 13.8% of the total domestic economy. This is a fraction of what exists elsewhere in the developed world. Government expenditures amount to 17% of GDP. The government funds a generous housing and health care subsidy program.
Opening a business in Singapore is relatively easy. It has 3 steps and can be done in 3 days. No minimum capital is required for an investment, or to begin a business. If one is looking for a new investment opportunity, there are few places in the world that have more to offer the entrepreneur than Singapore.
Port of Singapore