How is Singapore affected by globalisation?

22nd June 2015

22nd June 2015

What is Singapore’s situation right now?

• Disease outbreaks e.g. SARS, bird flu• Rise of China and India as competitors• Economic slowdown in other countries • Ageing population • Maturing domestic economy• Transnational terrorism• Integration of new

migrants

Biggie question… • How does Singapore

earn enough money to survive in the world?

• How can Singapore remain competitive?

Strategies for survival

• Diversifying the economy• Nurturing growth of Small and Medium Enterprises

(SME)• Venturing abroad• Expanding market reach through economic cooperation • Managing resources efficiently

– Developing people– Attracting foreign talent– Managing the environment

1. Diversifying the economy • Singapore aims to be a centre for technology-

intensive, high value-added manufacturing activities such as chemical engineering and pharmaceuticals.

• On top of that, Singapore also venture into other areas like Life Sciences, which involves the study of genetics and development of new medical treatments using gene therapy, new drugs and food products that have been genetically modified. This would also involve setting up supporting institutions.

• Other market sectors include being a regional hub for services such as healthcare and education.

1. Diversifying the economy For example, organizations such as Agency for Science, Technology and Research (A*STAR) was set up to build up Singapore’s research and development (R&D) capability. Many research institutes have been set up by A*STAR to undertake research in different areas.

1. Diversifying the economy Diversifying the economy helps to generate jobs for Singaporeans, it also helps to reduce Singapore’s dependence on a single industry or market. This means that even if one sector of the economy slows down, other sectors can help Singapore’s economy.

2. Nurturing growth of Small and Medium Enterprises (SMEs)

SMEs make up a large percentage of businesses in the Singapore economy. They provide jobs and support the operations of TNCs by supplying them with components in the manufacturing process.

• For example, Spring Singapore is being set up to help the development of SMEs in Singapore.

• In Spring Singapore, they offer financial aids to new companies that are being set upso that they will be able survive for the first five years. They also offer help to existing companiesin forms of capabilities development or branding assistance.

2. Nurturing growth of Small and Medium Enterprises (SMEs)

Another example would be tax exemption for new companies on their first $100 000 income for up to three years. These are different ways in which the government supports SMEs to grow.

2. Nurturing growth of Small and Medium Enterprises (SMEs)

With strong government support, it creates a competitive environment to help nurture the growth of SMEs in Singapore, without hindering any foreign investment opportunities. With the growth of SMEs, Singapore will continue to attract investments as a regional manufacturing and service hub and sustain its economy.

2. Nurturing growth of Small and Medium Enterprises (SMEs)

3. Venturing abroadDue to limited land and labour resource, Singapore has to look beyond its national boundary to achieve further growth. There are two ways in which Singapore ventures abroad – regionalisation and investing in new markets.

By regionalisation, Singapore can invest in nearby countries that have abundant land, lower labour costs and new markets. Singapore companies provides the investments while host countries provide land and labour for Singapore companies. This would benefit both Singapore and its partners economically.

3. Venturing abroadFor example, Singapore cooperated between Singapore and India to set up an International Tech Park in Bangalore, India. It was a joint venture between Singapore and Indian businesses where Singapore companies invested while India provided skilled IT professionals.

Singapore High Commissioner in International Tech Park

Thus, in this case, host countries were able to benefit economically and Singapore was able to sustain its economy through internationalization. This will further help Singapore sustain its economy.

3. Venturing abroad

4. Expanding market reach through economic cooperation

Due to Singapore’s small domestic market, there is a need to establish trade ties with countries around the world to enable local companies to sell their goods to a larger market.

One way to expand the market reach is for the government to sign Free Trade Agreement (FTA) with other countries. FTA will help to bring countries about a closer economic collaboration.

For example, Singapore has FTA with the ASEAN countries, New Zealand and even Japan .

4. Expanding market reach through economic cooperation

Singapore has also cooperated with other countries in the setting up of Special Economic Zones (SEZs) such as Bintan, Batam and Karimun in Indonesia. This functions as zones of rapid economic growth by using tax and business incentives to attract foreign investment.

4. Expanding market reach through economic cooperation

Through FTAs and SEZs, Singapore is able to reach out to greater market and obtain economic cooperation with the neighbouring countries. This helps to generate more revenue which will allow Singapore’s economy to grow.

4. Expanding market reach through economic cooperation

5. Managing resources efficiently• Developing people

– Promoting local entrepreneurship and technopreneurship

– Promoting continuous learning among the workforce• Attracting foreign talent• Managing the environment

– Managing limited land resources– Cooperation with regional and international

organisation– Public education

5. Managing resources efficiently• Singapore is a small country and it is important that

the resources available are well managed and used. By managing resources, Singapore can maximise its opportunities in a globalised world.

5. Managing resources efficientlyWorkforceThe only resource Singapore has is people and it is important that the workforce is skilled and there are enough skilled labourers to meet the demand of the growing economy. Promoting local entrepreneurship or developing the local workforce through training are ways that can increase Singapore’s workforce.

Example for Workforce• For example, Singapore promotes entrepreneurship by

amending bankruptcy laws to allow entrepreneurs who have failed to start a business again.

• Singapore has also set up Singapore Workforce Development Agency (WDA) to equip people with better skills to tackle the globalising economy, thereby promoting continuous learning.

• Singapore also has embarked on SkillsFuture, which encourages Singaporeans to pick up new skills as part of lifelong learning.

5. Managing resources efficiently

Attracting Foreign Talent• As Singapore is experiencing a declining birth

rate and it requires new skills in a knowledge-based economy, there is a need to attract foreign talent to meet its manpower needs.

• Foreign talent has the advantage of bringing along overseas business contacts. Thus drawing foreign talent will help create more business opportunities and jobs in Singapore.

5. Managing resources efficiently

Example of Attracting Foreign Talent• For example, Singapore has been increasing the

number of citizenship granted for foreigners interested to stay in Singapore due to economic benefits.

• In 2001, there was 6500 people granted citizenship. However, in 2005, the number nearly doubled to 12900 people.

• This is done through attractive education and housing packages for foreign talents.

5. Managing resources efficiently

Managing the environment• The land area of Singapore is only about 680

square kilometer and it is important that there is proper planning for land use. Land planning is a challenge as not all the land can be developed.

• Singapore also needs to take care of its environment so that future generations can continue to enjoy the clean and green environment enjoyed by the present generation.

5. Managing resources efficiently

Example of Managing the environment• For example, water catchment areas already take up

40% of the land area. Height restrictions imposed by airports on buildings limit how high some of the buildings can be.

• The government needs to think about the long term benefits for decisions regarding the use of land.

• There are also public campaigns and education to spread awareness among Singaporeans to take care of the environment.

5. Managing resources efficiently

• With the correct management of people and resources, Singapore can become more productive and efficient, thereby ensuring a sustainable development and progress for Singapore.

5. Managing resources efficiently

In Short… • Diversifying the economy• Nurturing growth of Small and Medium Enterprises

(SME)• Venturing abroad• Expanding market reach through economic

cooperation • Managing resources efficiently

– Developing people– Attracting foreign talent– Managing the environment

• Explain how economic cooperation with other countries is an effective way for Singapore to manage challenges in a globalising world. [5]

• Explain two other strategies used by Singapore to manage challenges in a globalising world. [10]

• Explain how the promotion of continuous learning among the workforce contributes to the efficient management of resources.

• Explain two other strategies that contributes to the efficient management of resources.

• Explain how careful land planning helps Singapore to manage the environment. [5]

• Explain two other ways that Singapore manages the environment. [10]