Singapore’s corruption-free government, skilled workforce and advanced infrastructure have attracted investments from over 3,000 multinational corporations (MNCs). MNCs now account for two-thirds of manufacturing output and direct export sales.
City-state Singapore also ranks third for forex turnover, private wealth market and corporate tax rate by country. How did it get there?
Strategic location
Singapore’s central location and access to some of Asia’s fastest-growing markets is one of the main draws for multinationals looking for an economic center with which they can establish regional headquarters or foreign company structures. Furthermore, its strong legal and regulatory infrastructure make Singapore one of the most business- and investor-friendly economies globally.
Singapore was in dire straits upon attaining independence in 1959, struggling with severe poverty and unemployment among its low-skilled population. Traditional entrepot trade and processing industries could no longer provide enough employment to improve living standards.
To combat this trend, policies aimed to expand manufacturing and financial services. Large inflows of private capital aided by tax incentives and other support measures accelerated growth in these areas. As a result, labor productivity and incomes rose far faster than was possible under more restrictive economic policies; contributing rapidly to an increase in standard of living. In addition, close interactions between local suppliers and multinational corporations generated knowledge spillovers which benefitted local firms directly.
World-class infrastructure
Singapore boasts one of the world’s superior air, sea and land transport systems with fully integrated island-wide transportation networks and global benchmarked facilities for R&D, manufacturing and office/residential complexes. Singapore is also a multicultural nation boasting diverse linguistic heritage; 75% of its multiracial population consisting of Chinese; Malays; and Indians make up its population.
Singapore boasts an advanced legal, regulatory and accounting system with clear rules that foster competition. With its mostly corruption-free government, skilled workforce and advanced infrastructure attracting investments from multinational conglomerates across all economic sectors. MNCs make up two-thirds of manufacturing output and direct export sales, and lead foreign investments into this sector with over 1,300 firms operating out of America alone. Singapore currently has 44 bilateral investment treaties (BITs) in force, protecting investors’ assets against non-commercial nationalization or expropriation by partner countries. Singapore’s financial services industry is overseen by Monetary Authority of Singapore (MAS). It offers strong capabilities such as wealth and asset management, capital markets, foreign exchange derivatives trading, insurance risk financing solutions as well as infrastructure finance / FinTech finance products.
Highly educated workforce
Singapore is well known for its stable government, business-friendly environment, advanced infrastructure and efficient regulatory system – which together attract many multinational companies (MNCs). Foreign firms dominate Singapore’s financial industry in particular.
Even with its advantages, the economy still faces numerous obstacles from labor shortages and slow productivity growth. Therefore, government must continually find new methods to support and sustain economic development.
Education is one area the government is actively focused on. Malaysia’s educational outcomes have earned global praise, evidenced by top rankings in the Programme for International Student Assessment (PISA), which compares 15-year-olds across different subjects.
Singapore’s education system is well known for its rigorousness and competitiveness, with students taking national exams at Primary 6, Secondary 4 and the second year of junior college. This meritocratic system has produced highly educated employees that possess great employability – one reason companies continue to select Singapore as their regional hub.
Clean governance
Singapore’s success can be attributed in large part to its corruption-free government and rule of law, according to President Halimah Yacob. She noted that such practices promote an equal playing field where businesses flourish on merit alone.
Singapore is widely known for its clean government and incorruptible image, helping the country attract massive foreign investments while becoming a trade and finance hub. But this year has put this reputation to the test amid numerous political scandals.
Leaders in this nation have long made environmental sustainability a top priority, through campaigns encouraging citizens to keep toilets, factories, and public buses clean. If an investment would pollute the environment it could even be rejected; such dedication has helped earn it the title of one of the world’s cleanest cities.
