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| Executive Travel: Singapore |
Vital Statistics
Serena Ng
09/01/2005
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When china joined the World Trade Organization in 2001, political leaders in
Singapore saw both a threat and an opportunity. A new era of explosive
growth in
China threatened to lure away from Singapore, a tiny
island-nation in Southeast
Asia, many of the for-eign investors it had
courted and nurtured over the past three decades. But if
it reacted to
China’s move deftly, Singapore could potentially leverage China’s
regional dominance to reap substantial rewards for years to
come.
DEMOGRAPHICS
Population: Singapore’s people are largely descendants of immigrants from the
Malay Peninsula, China and the Indian subcontinent. In June 2004, Singapore had
a population of 4.2 million, of which 76.7 percent were Chinese, 14 percent
Malay and 7.9 percent Indian.
language: There are four official languages—Chinese, Malay, Tamil and
English.
Literacy: 92.5 percent of those over the age of 15 can read and write.
Religion: 42.5 percent are Buddhist, 14.9 percent Muslim, 14.6 percent
Christian, 8.5 percent Taoist and 4 percent Hindu. Source: The World Factbook, Central Intelligence Agency |
Singapore
responded by embarking on a determined effort to
swiftly restructure its
economy. It slashed corporate and personal tax
rates by approximately 20
percent, reduced employers’ mandatory pension
fund contributions to help them
lower capital costs and added laws to
ensure greater intellectual property
protection.
At the same
time, government representatives set about
convincing multinational
companies and potential investors that Singapore
remained a prime place
to do business even with the rapid rise of China. Their
proposition was
this: Perform your low-end or volume manufacturing in China if
you
must, but use Singapore as an Asian hub for high-end activities such as
manufacturing assembly, research and development, and value-added
services like
project management and regional technical and after-sales
support.
Having
emerged relatively unscathed from the Asian
currency crisis of the late 1990s
and now successfully capitalizing on
China’s newfound economic might, Singapore
is eager to prove that it is
a favorable place to invest and do business.
The country’s strategy is
working, but the transition has not been painless. As
electronics
heavyweights such as Seagate and Hewlett-Packard move their
manufacturing activities up the value chain and beef up their
investments in
Singapore, disk drive makers Maxtor and Western Digital
have opted to shift
entire production lines to lower-cost areas in
China and neighboring Malaysia,
eliminating 8,000 jobs between them.
On a broader scale, Singapore’s
economy, which has for decades
been largely reliant on manufacturing and
exports, slipped into a brief
recession in 2001 as the global economy slowed.
But by 2002 it was back
on an upward trajectory, and last year chalked up over 8
percent GDP
growth.
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