Singapore has one of the most well-developed and vibrant economies in the world. It has a very high score in terms of economic freedom where it sits as the second freest in a recent survey.
One of the highest ranked economies
What makes the Singaporean economy so strong is due to several factors. Among them are:
- labor freedom
- business freedom
- policy formulation and implementation
- government integrity
Free-market economy in Singapore
In Singapore, the free-market economy means that it has a several factors put in place to ensure businesses are run effectively. This includes having a transparent legal framework, an open and corruption-free business environment as well as prudent monetary and fiscal policies, among others. In order to promote economic development, the government puts in place industrial policies that are prudent and that which work. Entrepreneurship and productivity is allowed to grow efficiently through well-secured property rights.
Politically, the Singaporean economy is considered to be among the most stable. Although it has a strong and active opposition in parliament, the People’s Action Party has been the ruling party since its independence. Its Prime Minister Lee Hsien Loong has been leading the government since 2004 and this is expected to continue as it has enjoyed a lot of economic freedom since. Although some parts of civil liberties remain questionable, economic liberalization and international trade has been practiced where the economy is very much dominated by services. Besides that, its manufacturing industries have been one of the leading movers of its economies as well, particularly having one of the largest ports in the world. Today, Singapore exports products like computers, integrated circuits and refined petroleum.
Real estate and property
There is a very efficient system in place when it comes to the rights to moveable and real property. These rights are properly implemented and protected with very efficient registration procedures. In fact, Singapore’s intellectual property rights regimes are among the strongest in the world. Couple that with a transparent and independent judicial system, it has constantly been in the list of the least corrupt countries globally.
Crucial Figures of Singaporean Economy
The overall tax burden in Singapore is about 13.6% of the total domestic income. This comes about from the maximum 22% individual income tax and 17% corporate tax. The government has been maintaining a good balance sheet where it has spent a 17.7% of the GDP where the budget surplus averages around 4.1%.
Labour laws and practices
Meanwhile, human resources in Singapore has been quite exciting as well. There is a very transparent and efficient entrepreneurial environment in the country. Hiring and firing processes in Singapore is quite free through its labor laws where it continues to grow the local labor sector.
As for trade, this sector contributes greatly to the economy of Singapore. The combined value of exports and imports in Singapore is more than 300% of the GDP of the country. There are basically no tariffs while Temasek Holdings, a GLC has a lot of investments in corporations that are linked to the government. At the same time, the domestic market has been steadily opened to the foreign banks and this has caused over 95% of the banks in Singapore being foreign owned.
The current situation
In the latest reports, the Singapore economy grew in the first quarter (January to March) of 2018. It grew by 4.3% which was mainly due to the strong growth in the manufacturing industry. This was reported by the Ministry of Trade and Industry based on the numbers of the year before. Just a quarter before that, the economy grew by 3.6%.
Among the markets, the manufacturing sector is the main driver where it expanded slightly more than 10%. In the last quarter of 2017, this sector only grew by 4.8%. This is a very promising number considering that all the clusters in this sector experienced healthy growth. Meanwhile, the highest jumpers in this sector were the electronics and precision engineering areas. In the same quarter, the services sector grew about 3.8% and it is important to note that this makes up about two-thirds of the Singaporean economy. The main areas of growth here include the money markets and the retail sector.