A Brief Introduction to Singapore Economy
Singapore is a small wealthy city-state with an open and trade driven economy. It’s a leading global business hub, located at a geographically strategic location where the major east and west shipping routes converge. The country has a stable government, strong rule of law and effective regulatory system. It’s a financial, shipping and trade hub for the Asia Pacific region, and a perfect launchpad for the continent.
World Bank’s Ease of Doing Business reports year-after-year rank Singapore as the best country in the world due to its hassle-free business set-up processes. The corporate tax rate is also just 17 percent, which is the third lowest in the world. Excellent connectivity, strategic location with proximity to world’s largest emerging markets, strong legal system and best quality of life in Asia, are other advantages.
The World Economic Forum’s Global Competitiveness Report (GCR) 2014–15 recently ranked Singapore as the second most competitive economy in the world, which offers the best intellectual property protection, infrastructure and incentives in Asia.
Singapore’s Gross Domestic Product at current market prices ($ million) in 2014 was 390,089.1. The official foreign reserves at the end of the same year was 340,438.1 ($ million).
Singapore is home to most (60-80%) of the world’s largest commodity trading companies, generating more than US$1 trillion in annual turnover. Notably, of the 400 trading firms based in Singapore, more than 30 percent place one or more C-level positions in the country.
Almost a-third of Singapore’s GDP comes from manufacturing including construction, pharmaceuticals, electronics, chemicals, and ship-building. As a global financial hub with over 500 financial institutions, Singapore provides for 25-35% of trade finance for commodities trading in Asia.
Also, the Singapore Exchange is Asia’s most internationalised exchange, the country is the third largest global foreign exchange market, and the largest offshore RMB hub (outside of Greater China). There is also TradeNet, which is the world’s first national single window for trade bringing together more than 35 border agencies. The World Economic Forum’s Enabling Trade Index ranks the city-state tops for its nation-wide Electronic Data Interchange (EDI).
Notably, 30 percent of all Asian trading is conducted through Singapore and the Strait of Malacca is the second largest trade route globally for crude/petroleum transportation. Singapore is fifth in the world and first in Asia in the World Bank’s Logistics Performance Index.
It also has Asia’s best seaport, which along with being the world’s largest bunkering port, has the highest concentration of oil storage in Asia. Singapore’s container ports are the busiest in the world and Changi International Airport is linked to 300 cities in 70 countries, with more than 6,500 weekly flights.
Singapore has been named as the world’s easiest place to do business for eight consecutive years by the World Bank. Singapore has a network of over 70 comprehensive avoidance of double taxation agreements.
Singapore Government’s debt in the fourth quarter of 2015 in $ million was 421,302.1, which was borrowed for further investments. Otherwise, Singapore has had zero foreign debt since last two decades.
The country employs 14,000 people in the commodities sector and has the 4th largest pool of trading talent in the world after London, New York City and Houston. 47% of the Singapore workforce has a tertiary education.
The nation has been ranked first in Asia and seventh globally in Transparency International’s anti-corruption index. Singapore is also Asia’s top arbitration centre, with the Singapore International Arbitration Centre handling more than 200 new cases annually.
Income tax rates are competitive for both companies (17%) and individuals (maximum tax rate of 22%).
Singapore has 1,225 mobile phone subscribers per 1,000 of the population with 18,159.9 million international telephone call minutes in 2014. There is also a free national wifi service available in various hotspots around the city-state called wireless@sg.
Against the sluggish external backdrop, GDP growth in Singapore is forecast to be 1–3% in 2016. The protracted slowdown in China will continue to feature in the region’s outlook, affecting demand for some of Singapore’s external-facing services such as transport and storage activities, accommodation and arts, entertainment and recreational services.
On the other hand, domestic-oriented sectors remain healthy, underpinned by ongoing enhancements to social services and transport infrastructure. But there are some challenges as the restructuring towards productivity-led growth proceeds apace.