Officially known as the Republic of Singapore, Singapore is an island nation in Southeast Asia with a free market economy that is highly developed. Consequently, this has contributed to the nation’s classification as the most open economy in the globe and other desirable classifications. The government and the private sector both have firms that play a crucial role in the economy. Naturally, due to its favorable investment climates and political stability, the nation has been a beneficiary of massive investments from investors all around the world.
The nation’s position as the wealth management center for the region is cemented by things like exportation of several goods such as electronics and chemicals. In return, the exports grant Singapore much-needed capital to buy materials it does not naturally have. Since the country has water problems, agriculture is not that well-developed compared to other sectors, which is why the nation depends on the agro-technology park.
In 2016, the value of exports stood at $329.7 billion with the major export goods being machinery and equipment, chemicals such as pharmaceuticals, refined petroleum goods, and electronics and communication. Imports stood at $282.9 billion and included things like consumer goods, foodstuffs, mineral fuels, and a few others. From the imports and exports, it is clear that the biggest industries in Singapore include electronics, chemicals, petroleum refining, financial services, and oil-drilling equipment.
Biggest Industries in Singapore
Currently, Singapore is considered a global financial center due to the excellent financial services offered by their banks and other financial institutions. In fact, in the Global Financial Centers Index of 2017, the nation was third in terms of the competitiveness of their financial sectors. Only New York City and London were ranked above. The services offered by the financial institutions include things like internet banking, multiple currency support, savings accounts, checking accounts, wealth management systems, and many more attractive services.
However, the sector has come under criticisms from organizations such as the Human Rights Watch. According to this organization, the nation’s financial sector also offers its services to criminals and corrupt people such as the billions from Burma after revenues obtained from state gas went missing. Despite these criticisms, the sector is still successful and continues to attract people and firms that used to bank their money and assets with Swiss banks. This attraction of new assets from Swiss banks is made even easier by a laxity in the secrecy that the Swiss are famed for and increased taxation by the Swiss government. One of the largest Swiss banks, Credit Suisse, moved one of its heads to Singapore.
Naturally, the government is working hard to make sure that the sector is even more developed. A report released in 2017 by the Monetary Authority of Singapore (MAS) outlined the government’s plan. In the plan, the government aims for a number of goals such as to be the global leader in wealth management. To achieve these goals, the government is going to develop relevant areas such as building private market funding policies that will allow Asian firms to access investors, increase the bankability of infrastructure projects in Asia, and other strategies.
Energy and Infrastructure
Singapore is crucial in Asia as it is both a primary hub of oil trading in Asia as well as the pricing center. On its own, the oil industry contributes about 5% of the total gross domestic product (GDP). This high contribution is because Singapore is within the global top three countries that have export refining centers. In 2017, the nation’s oil exports stood at around 68.1 million tons. As a result of the oil exporting sector, other sectors such as the chemical industry and manufacturing of gas and oil equipment have also been promoted.
Looking at the market share, 70% of the world’s needs for jack-up rigs and Floating Production Storage Offloading (FPSOs) units conversion are met by Singapore. As of 2007, about 20% of the world’s ship repair needs are met by Singapore as well, which translated to jobs for around 70,000 people. To improve the sector even more, the country is expanding underground caverns that store petroleum products. By expanding the sectors, there will be more opportunities for investors in the sector from all over the world.
However, the oil sector, like any other sector, is not constant. In the last three years, there has been a downturn in the industry that led to a reduction in the number of projects. However, with the prediction that the next two years will be better, new projects are expected.
In the region, Singapore has the largest biotechnology facilities. The government has been able to bring foreign investors through several ways such as the provision of incentives to willing investors and millions of dollars have been pumped into improving the sector. For example, the leading drug makers known as GSK invested a whopping $300 million for the development of a plant for producing pediatric vaccines. Between 2011 and 2015, the nation has pumped around $16.1 billion into the sector.
Several international companies have established their manufacturing bases in Singapore. These firms include the likes of MSD, Novartis, Abbott, and others. Foreign firms wishing to pour investment in Singapore are able to take advantage of both of the main “Biotech Parks.” These parks provide benefits such as tax breaks, infrastructure, and incentives to these firms.
Tourism and Medical Tourism
Tourism is another important sector to the economy. In 2014, an estimated 15 million tourists visited the nation. In a bid to expand the sector, the government legalized casinos recently in 2005. Aside from the traditional tourism, Singapore has also established itself as a medical tourism center. Every year, approximately 200,000 people visit the country in order to receive healthcare. The target is to have at least one million medical tourists and generate about $3 billion every year.
Information and Communications Technologies
Information and communications technologies (ICT) is also another crucial sector that has contributed to the success of the economy. The sector is strictly controlled and regulated by the government. The transport sector is also strictly regulated since the nation is small and congestion due to cars is easy. Owners of private cars have to pay exorbitant prices to drive the vehicles.