Singapore – Strategy, Context and Performance By Group 1

Strategies from 1960 to – Emergence of state owned enterprise for promoting industrialization – Economic Development Board(EDB) was formed in 1961 to promote economical development – First economic development strategy came into force in the form of First Development Plan aimed at import-substitution-industrialisation – Jurong Industrial Estate in – Export based labour intensive industrial growth – From all quotas and almost all tariffs were eliminated – To attract foreign investment into labour-intensive industries Export Processing Zones(EPZ) were established with excellent infrastructure at highly subsidized rate duty-free entry of goods destined for re-export – Govt. formed its own labour unions to impose authoritarian control and drastically reduce several remuneration elements – Govt. pursued state entrepreneurship

A number of capital and technology-intensive industries were selected and MNCs were guided here with heavy incentives Five year of tax holiday was given in industries with desired level of technology Monetary Authority of Singapore was established with the aim of turning Singapore into international financial hub To induce shift from unskilled to skilled labour intensive activities govt. introduced high- wage policy Skills Development Fund was introduced to encourage automation, mechanisation, computerisation and R&D. Govt. started favouring projects that were technologically sophisticated and capital and skill intensive Strategies from 1960 to 85

Considering the growth rate of Singapore’s GDP at 7.2% p.a, it was characterized as one of the High Performing Asian Economies (HPAEs) The GDP of Singapore was well above the predicted GDP rates on the basis of relative income level The tax exemption of 40% for pioneer firms up to 10 years encouraged industrialization, hence promoting growth The formation EPZs which allowed duty-free entry for goods to be re- exported and also the availability of excellent infrastructure at subsidized rates attracted 100% foreign-owned subsidiaries 90% tax exemption for the first 5-15 years of export profits was the basic driver for export lead growth By 1983, there were 21 operating EPZs and indigenous companies monitored by EDB

Strategies from1985 to 2000 FDI investment Foreign policies in other countries were less favorable when compared to Singapore during 1980s and foreign investors were attracted Developed port infrastructure to promote Export led growth presence of international financial institutions and infrastructure Manufacturing sectors: electronics, engineering and chemicals Service sector Infrastructural Development: Infrastructural development out of savings Less reliance on oversees borrowings Mobilization of domestic resources 35% during 1980s to 45% during 2000s Singapore’s policy forces the government to invest the debt in the infrastructural activities Singapore identified few ‘sunrise industries’ – Invested in R&D, Software services to position itself as a total business center

Performance GDP growth of Singapore during the period 1985 to 2000 was 8.5 % p.a. Share of manufacturing sector towards GDP was increased to over 25% during the period Share of services started to expand during the period.

Formation of alliance with regional partners and multilateral organisations like WTO, bilateral free trade agreements were signed.(with USA in 2003), 13 were signed by Economic Review committee was established in 2003 with several sub committees. Corporate taxes were reduced to 20 % from 25%.Income tax to 21% in 2006 from 26% in GST was also under operation. To increase domestic spending, CPF requirement was reduced to 9% from 13%. Workforce development agency was established for skill upgradation. Strategies from2000 to 2014

Context and Performance: Attack on USA and subsequent recession in GDP growth fell to -2.3% in Oil prices hike in 2003 and SARS virus affected tourism industry. Emergence of China as manufacturing hub and India as services outsourcing destination. FDI in 2012 has increased to 585 billion$.

Savings rate as % of GDP