Controversies arise regarding the establishment of the Singapore. Many historians believe the founding of Singapore was as early as 7th century, while others believe Indians prince was to credit on an establishment of the “Singapura” also referred to us lion city in 1299. Additionally, historians believe that before the Javanese attack in 1377, there was trading Centre existing in 13th and 14th centuries. No one was living in Singapore during the establishment of the trading Centre in British East Indian Company by Sir Stanford Raffles. The Sultan Joho gave up island at the Malaya state; in southern of the peninsula. There was an incorporation of Penang and Malacca in 1826 to form settlement up to World War II (Abshire, 2011). After the trading Centre expansion to the city of Singapore, Chinese traders occupied the city.
The political system refers to system of the government in a country. The Democratic political system is whereby every citizen as an equal right in working for the government. A citizen can also elect a representative who makes and amend the law (Derudder, 2012). There is also the deliberate democracy where citizen approaches a decision considering some option. Finally, democratic socialism ensures voting of socialistic policies.
Republic political systems are the ruling government subject to its citizen. Another political system is the monarchy which involves discretion and enforcement of the law. Thus, the monarchy dictates the governance of the nation. Dictatorships system require small group of people to run the government (Tremewan, 2016). Communism is where citizen decides their activities and where they live. Similarly, the communism is almost to an authoritarian political system.
The economic system is important when matching the structure of the power. Traditional economic system encourages participation of every individual thus preserving tradition. Command economic system is decentralized control or federal system. The system tends to grow when they find themselves with plenty of the resources. In this system, surplus resources are affordable. In market economic system, government does not control the resources; the free trade. Socialism market system is more of the command economic system (Tremewan, 2016). The market economy and politics prevents government becoming too controlling. Mixed economy system involves free trade on the particular critical area.
Common law comprises legal system which pursues clarification from the previous decision of court. It entails past practices, tradition, and legal precedents. Judicial courts rely on Code law which dictates the business transaction and conduction. Theoretical law correlates with the teaching of the religion. Muslim nationals have adoption of the Sharia law with the civil code and common law.
Singapore has a workforce of 2.2 million from 2000 who are proficient in the English speaking, making its attractive for investors (Tremewan, 2016). Singapore has a dynamic economy where there is property protection right. Additionally, Singapore issue of corruption is minimal due to the provision of law. Social amenities such as health, public housing are owned by the government which encourages global trade investment.
Singapore is a democratic state with freedom of speech and assembly, which encourages the manufacture of chemical and electronics and provision of services. Since independence (1965), Singapore is under one party (people’s action party) which embraces liberalization in an economy (Hill & Lian, 2013). Singapore in 2015 was leading globally in the ranking on the enforcement of the contract and 24th in the registration of property.
According to the United Nations in 2005, Singapore totaled to 4,296,000 in population. 8% of the population comprises people who are over 65 years of ages and 20% under 15 years. Singapore is thought to be urban, and according to the United Nations, the annual population change was 0.6% in 2005-2010 (Crane, Kawashima, & Kawasaki, 2016). While the population density was 17,946 per so mi, Singapore comprises 76.8% Chinese who are predominant, 8% Indians (including Sir Lankas, Bangladeshis, and Pakistanis) and about 15% Malays (Crane, Kawashima, & Kawasaki, 2016). There is a guarantee of the freedom of religion in the Singapore Constitution. Singapore comprises 15% Islam, and 15% Christians, 4%Indians are Hindus and a small percentage of Jewish, Sikh, Jain and Zoroastrian (Crane, Kawashima, & Kawasaki, 2016). However, there is a prohibition of the Jehovah’s and unification church.
Mercantilism is one of classical theory, stating that gold determines the country’s wealth. The main aim of the approach is to have a surplus by encouraging export and decreasing the import. Although the mercantilism is old theory, Singapore still favors exports and discourages import by combining restrictions, protectionist policies and domestic-theory subsidies (Kojima, 2010). Imports restrictions lead to high prices for the foreign products.
Theory states that the countries should not have import restriction or government policy. The absolute advantages arise when one country can produce the products at a lower price because of the specialization.
Absolute advantages look at the absolutes productivity while the comparative advantages focus on the relative productive (Kojima, 2010). Comparative advantages state even if the country has two specializations in producing both products, it will concentrate on what it can produce better.
Theory encourages exporting cheap products due to the presence of land, capital and cheap labor .country import the goods that are highly in demand, and they are short of in terms of supply. And so, the cost of the resources is the determinants of the supply and demands.
Trading is important in the economy of the Singapore. There is the balance between the imports and exports which totals to 326% of gross domestic product (GDP) and 0.0% on tariff rate (Chua, 2010). The financial sector is highly competitive with government owning in some area and opening foreign banks. The government spending is 18.2% on the GDP in past three years (Kojima, 2010). Total domestic income totals to 13.4%, comprising 17% corporate tax and 22% individual income tax rate (Chua, 2010).
Foreign investment helps in the assessment of the markets to the countries where they have restriction or policies to access the domestic market (Kojima, 2010). Additionally, FDI helps in the reduction of the cost of the production. For the beginners, FDI offers the source of revenue and an external capital. One of the principal disadvantages of the FDI is the instability and unpredictability in the developing countries. The Foreign direct investment contributes to economy growth of Singapore (Kojima, 2010). Stable political environment and investment climate, enables Singapore to have a high inflow of institutions and global investors: contributing to the FDI.
Singapore enjoys the benefits of being a member of the regional economic blocs. Economic bloc entails free trade of the member group both at region and globally. Abolishing barrier such as quotas or tariffs, enables trading between the member states. For example, the NAFTA trade panels (Unit, 2010). Singapore is a member of an Asian-pacific economic cooperation APEC, Pacific economic cooperation Council (PECC), ASEAN free trade area (AFTA) and East Asia (Unit, 2010). The monetary policy of Singapore is reviewed annually to ensure consistent with economic and market conditions. However, there is setback in Singapore signing of the trans-pacific partnership due to the president trump vowing to ruin the agreement.
Foreign exchange market contributes significantly to the national economy of the Singapore (Koh, 2010). Rise in an economy is because trading currency maintains the market equilibrium. The official Singapore currency is dollar which has a symbol of SGD. Singapore’s Foreign exchange was US$383 billion three years ago and foreign exchange globally increased from 5.7% three years ago to 7.9%. Monetary Authority of Singapore (MAS) is responsible for Singapore exchange rate (Diener, Ng, Harter, & Arora, 2010). Additionally, it is the financial institution of giving dollar coins and banknotes.
The purpose of the monetary policy in Singapore (MAS) is to ensure price stability in an efficient and sustainable economic growth. The key exchange rate in Singapore is dollar, which is better than other currencies of competitors and trading partners, MAS ensures the short-term fluctuations are manageable in the foreign markets. Additionally, MAS controls and ensures domestic selling rates are well below United States interest rates. From 1981, the domestic inflation has been 1.9% which is relatively low over the past twenty years (Diener, Ng, Harter, & Arora, 2010). The fiscal policy, flexible product and sound financial system are the key factors for the Singapore’s active economy status.
However, currently there are social, economic and culture issues in Singapore. Social and culture is due to large intake of the foreign nationals to make for the workforce; the lower shortages of labor. Great property value appreciation attracts foreigners and thus contributes to lack of accommodation. Another issue is lack of the assimilation of foreigners by the Singapore citizens (Kojima, 2010). Therefore, the government is trying to integrate the communities to work together harmoniously. Due to the parent working on the long hours, there is an increase in the juvenile delinquency (Chua, 2010). Once the child gets trouble with Singapore legal system, then they are delinquents. Singapore lacks drugs rehab; therefore, there is an increase in the repeat of the drug usage among the teenagers. Singapore experiences an increase in the old age suicide rate; due to the depression and disease with no adequate retirement benefits. Singapore has a lower population due to higher divorces rate. Divorce results in the rise of the family issues such as troubled young generation who engage in the drugs.
Additionally, there is no attempt to integrate and cultivate various cultural differences in Singapore. The primary objective of the Singapore schools is to bring together all students in the global economy to avoid friction among different cultures (Crane, Kawashima, & Kawasaki, 2016). For effective reduction of the resistance among the workforce and embrace cooperation, Singapore government should encourage multiculturalism.
Low birth rate is posting an economic problem in Singapore. Singapore government offers $18,000 for the family with more than five children. In 2015 total fertility rate was 1.24, declining from a projection of 2.1 rates (Farole & Akinci, 2011). And so, Singapore will face weaker economic growth and low labor force in future. There is an issue of the aging population and rising of life expectancy. Self-funded central provident funds (CPF) offer the social safety to Singaporeans, but it is unsatisfactory to meet the wants for self-employed and low-income families. In the year 2017, Singapore faces uncertainties in the external environment, thus lowering the economic growth. Difficulties and challenges in the Singapore market are due to China restructuring economy of Beijing, hence decreasing the demand from China. Furthermore, US presidential Donald Trump and Brexit election create major tasks to the economy of the Singapore.
Singapore aviation and national carriers are facing stiff competition from the East and Southeast Asia and Middle East airports and carriers. Also, emerging of the physical infrastructure and trade route in trans-Asia, Arctic and Asian countries are eroding the position of the Singapore in trans-shipment, regional entrepot, and logistics centers. At the global recession (Kojima, 2010), Singapore business is facing problem in the restructuring of the industry to curb the high operational cost, weak productivity, and policies restricting the accessing of the foreign labor. The anticipation of innovation elevation is slow. Therefore, the exports sector is declining as result of high cost of labor, high manufacturing cost, and land shortages. Similarly, the Singapore corporate earnings are weak thus property market level remains constant. Although there is an encouragement of innovation of small and large business fiscal incentives, it will be for long-term results.
Conclusion
Globalization, favorable environment, government, culture and strong economic partnership have made the contribution to the growth of the Singapore economy. Currently, they are facing some problem with the globalization and culture change. The president Donald Trump pulling out of trans-pacific partnership (TPP) would cause a problem to Singapore being one of the free-trade blocks. Reports suggest that Singapore would like to emphasis on the regional ties for economic growth in future (Farole & Akinci, 2011). There is also cultural change; where the Singapore would move away from a focus on the education. Finally, Singapore will encourage the partnership of small and large firm to improve access to the capital and support digitization on the small companies
References
Abshire, J. (2011). The history of Singapore. ABC-CLIO.
Chua, B. (2010). Singapore as model. In Planning innovations, knowledge experts (pp. (pp. 29-54)). na.
Crane, D., Kawashima, N., & Kawasaki, K. (2016). Crane, D., Kawashima, N Global culture: Media, arts, policy, and globalization. Routledge.
Derudder, B. (2012). International handbook of globalization and world cities. Edward Elgar Publishing.
Diener, E., Ng, W., Harter, J., & Arora, R. (2010). Diener, E., Wealth and happiness across the world: material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. Journal of personality and social psychology, 99(1), 52.
Farole, T., & Akinci, G. (2011). Special economic zones: progress, emerging challenges, and future directions. World Bank Publications.
Hill, M., & Lian, K. (2013). The politics of nation building and citizenship in Singapore (Vol. 10). Routledge.
King, R., Marginson, S., & Naidoo, R. (2011). King, R., Marginson, S., & Na Handbook on globalization and higher education. Edward Elgar Publishing.
Koh, A. (2010). Tactical globalization: Learning from the Singapore experiment. Peter Lang.
Kojima, K. (2010). Direct Foreign Investment: A Japanese Model of Multi-National Business Operations. Routledge.
Tremewan, C. (2016). The political economy of social control in Singapore. Springer.
Unit, E. (2010). The Malaysian economy in figures. Kuala Lumpur: Prime Minister’s Department.
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