1. Singapore’s Economic Development
Reasons for Industrial Development (post-war years)

2. Singapore (1960-64) Developmental Strategies
Import substitution strategy
To solve unemployment
Diversify away from dependence of entrepot trade
Establish economic agencies to spearhead development
EDB – 1961 (search for a global market)
Jurong Industrial Estate
replacement of agricultural or industrial imports to encourage local production for local consumption, rather than producing for export markets  meant to generate employment and make the country self-reliant in critical areas such as food, defense, and advanced technology.

3. Singapore (1960-64) Achievements
GDP growth averaged 5.3% p.a. between
Manufacturing sector’s share of GDP grew from 12% in 1960 to 14% in 1964
Ministry of Trade and Industry

4. Singapore (1965-79) Challenges Separation from Malaysia
Aborted import-substitution strategy
Confrontasi – threatened our role as a major trading post for the region
Planned withdrawal of British bases within 5 years (employed 40,000 workers)

5. Singapore (1965-79) Developmental Strategies Export-oriented strategy
Attract foreign investors to Singapore to develop the manufacturing and financial sectors
Enacting the Employment Act to improve labour climate & investment environment
NTUC & NWC – 1972
Promote better labour-management relations
Investment in key infrastructure – JTC
Nationalised companies where private sector lacked expertise (NOL, SIA, DBS, Sembawang Shipyard)

6. Singapore (1965-79) Achievements Growth averaged 10% p.a. over 1965-79
Unemployment rate fell to 3.3% in 1979
Manufacturing sector’s share of GDP grew from 15% in 1965 to 27% by 1979

7. Singapore (1979-85) Challenges
Tight labour market, upward pressures on wages
Emergence of other lower cost developing countries in the region – contenders for MNC investments
Need to restructure the economy towards higher value added activities

8. Economic Industrial Restructuring Restructuring
Changes to economic and service sectors
Transport
Automation of SBS buses in 1970s
Hotel
Food and beverages
Retail
Focuses on changes in the industries

9. Singapore (1979-85) Developmental Strategies Industrial Restructuring
encouraged automation, mechanisation and computerisation
higher value-add
skills intensive
investment promotion policy
Renewed emphasis on manpower development through education and training
3-year wage correction policy to reflect the tight labour market and induce efficient use of labour

10. Reasons for Industrial Restructuring
Increasing competition from rapidly industrialising countries with labour-surplus
Compete with Indonesia & Thailand
What is our comparative advantage?
Protectionism in developed countries
Generalised System of Preferences for developing countries
Unsatisfactory productivity growth rate per worker
Lower than Korea, HK or Taiwan
High reliance on foreign labour
Limited land area does not allow for inflow of foreign workers
Raising productivity through wage increase
NWC  wage increase to force hesitant employers to mechanise and rationalise the use of labour

11. Other Factors? Besides industrial restructuring Role of Government
Centralised political organisation
Foresight – forward planning
Political stability
Physical size
Effective communication
Support facilities – easily integrated

12. Singapore (1979-85) Achievements
Economic growth averaged 6.8% p.a. over
Nominal value-added per manufacturing worker grew by 6.9% p.a. during this period
Proportion of skilled labour rose from 11% to 22% of total labour force

13. Singapore (1986-98) Challenges
A more matured economy with slower growth rate
Resource constraints more binding and faster rising costs
More intense competition – both developed and developing countries
Relatively low technology base on a global basis

14. Singapore (1986-98) Developmental Strategies
Knowledge-intensive Industries (KBE)
Deepen technology base – committed $2 billion from under National Technology Plan and $4 billion under National Science and Technology Plan from
Cluster Development – leverage on synergies at the firm and industry levels – mutually supporting industries were identified and developed to entrench entire cluster’s niche areas (electronic, petrochemical

15. Singapore (1986-98) Developmental Strategies
Promoting manufacturing and services as Twin Pillars of the economy – to diversify sectoral and market dependency, reduce vulnerability, promote broader based economy (pioneer status, investment allowances were extended to investments in service sectors)
Regionalisation – encouraged leveraging on the potential of the Asian markets to overcome local resource / market constraints

16. Singapore (1986-98) Achievements GDP growth averaged 8.4% p.a.
Share of financial and business services sectors in total GDP grew from 20% to 26%
Between , the number of research scientists and engineers grew by 13% to reach 12,655
Value of high-tech domestic exports expanded from $24 billion in 1990 to $62 billion in 1998
Stock of direct overseas investments increased by 19% p.a. from 1990 to 1998

17. Singapore (1998 onwards) Challenges
July 1997 – Devaluation of Thai baht – regional crisis
After picking up in , hit by another recession 2001.
September 11
Outbreak of SARS

18. Singapore (1998 onwards)
Our Response – a series of cost cutting measures
June $2 billion off-budget package
Nov 1998 – $10.5 billion
2001 – another 2 off-budget packages to help businesses and workers to tide over the sharp downturn
July - $2.2 b
$11.3 b

19. Singapore (1998 onwards) Looking beyond the crisis
Singapore to upgrade, transform and revitalise the economy
Economic Review Committee (Dec 2001) to review and formulate a blueprint to restructure the economy
Government policies
Entrepreneurship & innovation
Internationalisation of Singapore companies
Raise productivity
Preparing workers to adapt to changes

20. Knowledge-based Economy
Talent and Education
Innovation and Entrepreneurship
Re-inventing businesses and industries in the face of global competition
Life-long learning
Upgrading to higher end manufacturing operations and innovative services
A conducive fiscal, regulatory framework to encourage innovation and competition

21. Contributions by Foreign Companies
Provide jobs for Singaporeans
By setting up labour-intensive industries
Establish markets which Singapore lacks
Not inhibited by Singapore’s small market
Export to their home market & established markets
Skills and technology which Singapore needs
New generation of Singaporeans acquire technological and managerial skills required to operate & maintain sophisticated process
Capital
investment

22. Recap - Account for the following:
“Singapore’s economy has grown at a growth rate of 8.5% from , except for the years 1964,1975, 1985 & 86, when the economy grew at more than 5% annually.”
From the Statistical Singapore Newsletter, Vol 18, No. 4 April 1996

23. What are the more important factors ensuring economic development?
List the various factors under each category:
Political
Social
Economic
Internal
External