SWOT Analysis of Singapore
Singapore’s compulsory bilingual education (Dixon, 2005), coupled with our three-quarter Chinese demographic (Singapore Demographics Profile, 2018), has made the majority of us well-versed in both Chinese and English. As such, this has boosted our position as the middleman of trade, especially since we are geographically positioned in the middle of American and Chinese trade routes (The Singapore Advantage, n.d.). This unique advantage we have over the rest of the Asia-Pacific region has put us on a valuable pedestal that has bridged international markets in our economic favour.
The People’s Action Party’s transparent and uncorrupted governance has allowed us to thrive; juxtaposed against the corrupt governments of our neighbours – Malaysia (1MDB: Case riveted Malaysia, 2016) and Indonesia (Corruption Continues to Plague Indonesia, n.d.). In other words, Lee Kuan Yew – founding father of Singapore – capitalised on this opportunity and weaknesses of the other countries in the region to propel Singapore into first world status by portraying it as a safehaven and oasis amidst the convoluted civil strife in the ASEAN region. Being the sixth least corrupt country in the world (Singapore 6th-least corrupt country in the world, 2018), coupled with our hardline approaches on criminal activities like drugs (Au Yong, 2016) or terrorism as evidenced by the existence of the Internal Security Act, Singapore’s efficient and clean governance has served as a catalyst for our exponential economic growth in the recent years.
Singapore ranks 1st in the world as the best place to do business with a score of 87.34 and investors require an unprecedented short average of two and a half days to set up a company (Doing Business in Singapore, 2017). Singapore is also said to be “the economy with the most business-friendly regulation”, being able to resolve “a commercial dispute in … just 150 days, the shortest time in the world” (Shaffer, 2016). Entrepreneurship is encouraged by the government, with support schemes such as the Productivity and Innovation Credit Scheme which provide benefits like “400% tax deductions (or) allowances on up to $400,000 of spending per year in each of the six qualifying activities” (Productivity and Innovation Credit Scheme, 2017).
Occupying 721.5km2 in 2017 (Total Land Area of Singapore, 2018), Singapore is the 20th smallest country in the world by land size (Top 100 smallest countries by area, 2018). Naturally, this results in the severe lack of natural resources, with “no metals … and coal, oil and natural gas in very limited supply; even water is considered “scarce”” (Gray, 2017). This inherently puts us at a significant disadvantage as compared to resource abundant countries like Dubai with her oil. As such, Singapore is not self-sustainable; our international pseudo-symbiotic diplomatic ties with other countries are undermined by our neediness to survive. Local politicians are then forced to strife for a Hobbesian world while maintaining a siege mentality – a Sisyphean task by any yardstick.
Treading along similar faultlines, Singapore’s export-oriented economy (MIT Insights, 2012) has placed her in a very vulnerable global orientation. While export substitution industrialisation is not inherently bad per se, Singapore’s over reliance on it is; the conservative local mindsets juxtaposed against the constant need for “new macroeconomic policies … flexible enough to deal with changes on the world market” (Krainara, 2007) has engendered some tensions in the economy. Unfortunately, this also means that Singapore’s livelihood is subject to global demand; it is the in hands of whom do not share our national interests. Coupled with the fact that Singapore is losing her competitiveness in the world, and by extension, the Asian Pacific region, as acknowledged by Mr Ho Kwon Ping – executive chairman of Banyan Tree Holdings – who mentioned that the “relative advantages, such as location and cost, which Singapore used to compete on do not last forever” (Lee, 2015), the importance of building proprietary advantages is greater than ever.
With rapid advances in the science and technology sectors, there is now greater emphasis being placed on Artificial Intelligence and its role in future-ready smart nations than ever before. Singapore could potentially benefit from this as she is “well-placed to integrate innovation and technologies into the wider economy ahead of other large companies”. (Teng, 2018) According to research done by Accenture, AI could potentially “create up to US$215 billion in gross value added (GVA) in Singapore by 2035″. (Businesses in Singapore will Benefit Most from AI, 2017). This is due to a combination of multiple factors, with the first being Singapore’s forward thinking government being an early adopter of AI (Singapore thriving hub for AI, 2017). Because of this, a significant financial investment has been sunk into developing Singapore’s digital infrastructure, with $2.82 billion worth of infocomm technology contracts being awarded in 2016 alone. In doing so, the Government hopes to attract already scarce AI talents to Singapore, in hopes of bringing companies and researchers together to perform deep, inspired research, eventually improving business practices” (AI Singapore, 2017). Moreover, the Singaporean education system places a lot of emphasis on scientific education which starts as early as Primary 3 (Koh and Lee, n.d.) which has produced a nationwide of students who were ranked No. 1 globally for science in the Programme for International Student Assessment (Davie, 2016). Ergo, the future generation will be no stranger to the predominantly scientific world which stands Singapore in good stead for the future.
Singapore faces the threat of transnational and cyber terrorism. As a consequence of the loss Islamic State’s foothold, coupled with their subsiding and shrinking sphere of influence, in the Middle East (Ward, 2017), South-East Asia has been of “considerable interest” to the terrorist group due to the sheer concentration of Muslims that makes the region home to the world’s largest Muslim population (Terror threat in Singapore’s backyard, 2017) – Indonesia, Malaysia and Singapore to name a few. In recent years, the “pace of individuals being radicalised by extremist propaganda is accelerating” with the number of Singaporeans that were radicalised by online propaganda in 2017 being 5 times greater as compared to previous years (Mokhtar, 2017). Singapore being a light bulb shining in the darkness of the ASEAN region for being a “major regional and global financial capital” and a “hub for international multinational corporations”, amongst a plethora of other reasons, has made us an “Iconic Terrorist Target” (Singh, 2017), especially in the eyes of the Islamic State. The recent introduction of the SGSecure movement with their signature “Not If, But When” slogan has reaffirmed all suspicions about a potential terrorist attack. As a multi-racial and multi-cultural society, the rise in terrorism – especially that prefaced off religion – could sow sentiments of distrust and hatred amongst Singaporeans, breaking apart the social cohesion that is a fundamental factor to our country’s prosperity and will topple our economy.
One main factor of Singapore’s success is the failure of our surrounding neighbours, but this has changed with time. The rising competition from our Asian neighbours are starting to pose a threat, such as India and Indonesia, with Gross Domestic Product growth rates superseding Singapore at 7.1% and 5.0% respectively (GDP growth, n.d.). As regional economies begin to advance, there is the propensity for them to attempt to become key hubs for trade and investment, which directly threatens Singapore’s reputation as a key port and hub in the region.
Current World Events and Resulting Trends
The main global policy discussed in this paper is the Belt and Road Initiative, formerly known as the One Belt One Road policy up till 2016 (Shepard, 2017). In short, the convoluted trillion dollar project is the result of Chinese President Xi Jinping calling for the building of a 21st-century Silk Road in a double-pronged fashion: the land-based Silk Road Economic Belt (SREB) and the ocean-based Maritime Silk Road (MSR) that primarily serves to connect China and Europe (Cai, 2017). The sheer magnitude of this ambitious project impacts “65% of the world’s population”, taps on “three-quarters of global energy resources” and contributes 40% of the global Gross Domestic Product. While potentially a Trojan horse for expanding China’s sphere of influence, strengthening her geopolitical clout and deepening diplomatic ties around the world, the Belt and Road Initiative makes it “easier for China to trade with the world” (Cai, 2017) by establishing “interlinking trade deals and infrastructure projects throughout Eurasia and the Pacific” (Griffiths, 2017). Despite President Xi’s constant reminder that the Belt and Road Initiative is meant to “create a big family of harmonious co-existence” (Huang, 2017), many international skeptics claim that China is merely trading excess resources and money for political leverage in other countries through Chinese ports, infrastructure and most importantly, presence (Roy, 2017). Land corridors in the Belt and Road Initiative span all the way from Western China to Europe using the New Eurasian Land Bridge, from Northern China to Eastern Russia using the China-Mongolia-Russia Corridor and the Bangladesh-China-India-Myanmar Economic Corridor, which runs from southern China to Myanmar, just to name a few (Ramasamy, Yeung, Utoktham & Duval, 2017). Most relevant to us would be the China-Indochina Peninsula Corridor which spans from Southern China to Singapore (Ramasamy, et. al, 2010): arguably our only lifeline to global relevance. China’s bottomless coffers have provided them with endless resources that have helped them create and indefinitely further their economic cause – something Singapore cannot afford to do. With that, China would dominate the global trade market in the near future and become the next global hub for maritime and land trade to be the dominant economic force just North of Singapore. Not only will this divert all trade volume from Singapore’s port, but render a significant source of our Gross Domestic Product irrelevant and useless.
Singapore’s economy is undoubtedly a product of globalisation (How Globalisation has Affected Singapore’s Development, 2017) – a double edged sword that can break it apart as easily as it was built up (Tug of More, 2016). A small boat in a stormy sea, Singapore’s economy has been repeatedly battered against the waves of international conflict but has survived thus far. The maritime territorial delimitation dispute over the South China Sea has heightened tensions amongst interconnected economies in the region, including Singapore’s (Sim, 2016). Moreover, Donald Trump’s victory in the 2016 presidential elections in the United States of America has seen her “become increasingly inward-looking” (Trump victory: Towards an inward-looking America, 2016) to benefit itself. President Trump was quick to abandon the Trans Pacific Partnership (TPP) as it was an “attack on America’s business”, making it a “bad deal” (Trump, 2015). The TPP proposes “free trade … between 11 countries”, including Singapore, with hopes of “deepening economic ties” and reducing or eliminating “tariffs … between member countries” to “boost investment flows” and “economic growth” (TPP: What is it, 2013). The withdrawal of the United States – de facto leader of the partnership and world’s biggest economy and trading nation – could severely stunt Singapore’s economic growth. Brexit – Britain’s leave from the European Union (Hutton, 2015) could potentially precedent the leave of other European countries from the EU; this is detrimental to Singapore’s economy as the European Union is her “largest foreign investor and among (her) largest global trading partners” (Singapore’s Relations with Europe, n.d.) The severe weakening of the British Pound as a result of Brexit (Tremethick, 2018) has worsened business for local companies exposed to the British economy. Hence, Singapore’s vulnerability to international oscillations in the global market is a lugubrious but fundamental concern that has to be addressed to buffer hits to our economy and allow us to stay strong despite it all.
Singapore’s status as the “world’s most reputable financial and trading centre with the world’s busiest port” stems from being at the geographical crossroads of international trade routes between the East and West (The Singapore Advantage, n.d.) and contributes 7% to her Gross Domestic Product (Establishment of Maritime Singapore Ecosystem, n.d.). Being a global industry, maritime trade is volatile and constantly affected by international geopolitical issues; Singapore’s ports are being constantly threatened by rival trade routes which are detrimental to our economy and relevance in the global market. The Northern Sea Route is a “shipping lane between the Atlantic Ocean and the Pacific Ocean” that helps connect Asia and Europe that substantially reduces “transportation time, fuel consumption, environmental emission and eliminates piracy risk” (Northern Sea Route, n.d.). Moreover, the proposed Kra Canal is a “deep-water canal cutting through Thailand’s long peninsula to link Indian Ocean with the South China Sea” that will reduce travelling distance by 1200km as compared to utilising the Straits of Malacca (Lim, 2015; Daud, 2017). Both alternative routes: Northern Sea Route and Kra Canal – divert cargo ships from the Straits of Malacca and bypasses Singapore completely. This threatens our maritime trade which may cause a dip in our economy and be a blow to our relevance in the global market.
Singapore seems to be the teenager who hit her growth spurt too early on in life. The economic boom from third to first world status is no doubt a remarkable feat but is starting to plateau in recent years. Our Gross Domestic Product growth rate has been hovering at 0.9% to 1.8% (Singapore GDP Growth Rate, n.d.) for the past few years; Singapore’s Deputy Prime Minister Tharman Shanmugaratnam forewarns an economic growth at the “lower end of the 1% and 2% range” (Low, 2017), which suggests a heavy stagnation in our economy. Evidenced by the decrease in Gross Domestic Product growth rate from 4.7% in 2013, to 2% in 205, and 1.8% in 2016 (Singapore GDP Growth Rate, n.d.), Singapore’s economic prospects look dire when extrapolated into the future. Once dancing alongside economic giants like the United States and the European Union, it seems as though the economic tectonic plates have shifted to favour China at our expense. Amidst unstable global economic times and the diversion of trade volume away from local ports, the liberty to control one’s economy has been stripped from Singapore as we are now at the mercy of the actions of other countries.
Opportunities and Threats of Globalisation
Globalisation, defined by the Oxford dictionary as “the process by which businesses or other organizations develop international influence or start operating on an international scale”, has brought about massive success for Singapore, but it also poses multiple threats to Singapore as well. Singapore’s intimacy with global economies means that it is vulnerable to “shocks to the global economy”. In addition, the recent influx of foreign talent, means that it has become harder for locals to secure high-paying jobs, despite the government’s best efforts to maintain a steady quota of employed locals. As such, there is a “widening income disparity” in Singapore’s society (How Globalisation has Affected Singapore’s Development, 2017).
Increased interaction between countries as a result of globalisation has allowed the success of certain industries such as tourism in Singapore. With the high movement of people across countries through improved transport like aeroplanes, tourism has become a viable source of income for Singapore. At an all time high of “16.4 million in 2016” generating “$24.8 billion” in tourism receipts (Lim, 2017), tourism contributes “4 per cent to Singapore’s gross domestic product”, forming a “key service sector” that reinforces Singapore’s “status as a vibrant global city”, according to the Singapore Tourism Board (2017). As a country highly dependent on the global market, tourism creates an alternative source of income for Singapore.
Heightened global competition and integration as a result of globalisation is a “creator of jobs and booster of workers’ wages” according to Prime Minister Lee Hsien Loong, which increases the overall standard of living for Singaporeans. (Toh, 2017) The global pressure to not rest on our laurels built upon by our founding fathers, reinforced by the Singaporean “integration into the world economy”, has promoted Singapore’s “economic growth, development, and poverty reduction” (IMF Staff, 2001). An economy globally “open to trade and investment” has “achieved … substantial increases in living standards for its people” through trade liberalization, Singaporeans included. As a result, Singapore’s GDP per capita has risen to “equivalent to 417 percent of the world’s average” (Singapore GDP Per Capita, n.d.), making Singaporeans one of the most affluent people in the world.
Globalisation has increased not only immigration, but also emigration, which is particularly disadvatageous in Singapore’s case. The Singaporean exposure to the influence of other countries, be it politically, social or economical, has “reduced the theoretical centrality of the nation-state”, Gereffi (1996) argues, or in extremity, the state, shorn of its regulatory role in economic exchanges, is seen to be an “anachronistic irrelevancy” (Ohmae, 1995). The convoluted potential threat globalisation engenders against personal and global liberties is sugar-coated by Shapiro (1994) as heralding a more emancipatory “post-sovereign ethics”, but acknowledges that there is a significant decline of nationhood as a result of globalisation. As Pieterse (1994) argues, globalisation can “engender absentee patriotism and long-distance nationalism”, but is contradicted by common knowledge and supported by Guehenno (1995), who argues that globalisation is the “end of the nation-state”. The loss of national identity as a result of globalisation and Singaporean transmigration, in the certainty of the fluidity of identities, as Li and Findlay (1996) point out, create unresolved tensions between the competing demands on allegiance and attachment. As illustrated by Kong (1999), Singaporean transmigrants renegotiate their “ethnic identity to fit their frameworks and worldviews”, hence reducing national identity in Singaporeans overseas.
Based on the study of Singapore Population Overview, “the number of immigrants and PRs in Singapore was 31.7% in 2007 has risen to 34.6% in 2008” (Economic effects of globalisation in singapore, n.d). This rapid increase of population due to migrancy, necessitates more social infrastructure in order to cope with and assimilate the new population. With a “tougher job market” (Lee, 2016, January 19), there would be competition between Singaporeans and migrants for jobs. In addition, social stigma and “us vs them” (The Motion Machine, 2013) , are potential problems for the government.
However, globalisation has caused a widening income gap in Singapore, due to ‘”the high growth, low inflation and high employment of this period led to overly optimistic predictions and many flawed business plans. “(Newsweek article (January 2001). In a new economy, in addition to the advancement of technology, industries are incentivised to outsource, which leads to “the poor and uneducated become obsolete and unemployment, leading to the widening income diversity”.