Singapore Country Profile 2005 - International University of Japan

Page created by Michael Wood
 
CONTINUE READING
Country Profile 2005

Singapore
This Country Profile is a reference work, analysing the
country's history, politics, infrastructure and economy. It is
revised and updated annually. The Economist Intelligence
Unit's Country Reports analyse current trends and provide a
two-year forecast.

The full publishing schedule for Country Profiles is now
available on our website at http://www.eiu.com/schedule

The Economist Intelligence Unit
15 Regent St, London SW1Y 4LR
United Kingdom
The Economist Intelligence Unit
The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing
operations across national borders. For over 50 years it has been a source of information on business
developments, economic and political trends, government regulations and corporate practice worldwide.
The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its
latest analysis is updated daily; through printed subscription products ranging from newsletters to annual
reference works; through research reports; and by organising seminars and presentations. The firm is a
member of The Economist Group.

London                                 New York                               Hong Kong
The Economist Intelligence Unit        The Economist Intelligence Unit        The Economist Intelligence Unit
15 Regent St                           The Economist Building                 60/F, Central Plaza
London                                 111 West 57th Street                   18 Harbour Road
SW1Y 4LR                               New York                               Wanchai
United Kingdom                         NY 10019, US                           Hong Kong
Tel: (44.20) 7830 1007                 Tel: (1.212) 554 0600                  Tel: (852) 2585 3888
Fax: (44.20) 7830 1023                 Fax: (1.212) 586 0248                  Fax: (852) 2802 7638
E-mail: london@eiu.com                 E-mail: newyork@eiu.com                E-mail: hongkong@eiu.com

Website: www.eiu.com

Electronic delivery
This publication can be viewed by subscribing online at www.store.eiu.com
Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases
and as direct feeds to corporate intranets. For further information, please contact your nearest Economist
Intelligence Unit office

Copyright
© 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor
any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior permission
of The Economist Intelligence Unit Limited.
All information in this report is verified to the best of the author's and the publisher's ability. However, the
Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it.
ISSN 0269-7041

Symbols for tables
"n/a" means not available; "–" means not applicable

Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.
IA                                                        Johor
                                                                                                                                                                                                  MALAYSIA
                  S
               AY                                                              Baharu

         L
      MA
                                                                t                                                                      Sembawang

                                                                                                                                                                 Jo
                                                           Strai

                                                                                                                                                                   ho
                                                       hor

                                                                                                                                                                      r
                                                     Jo

                                                                                                                                                                    Str
                                                                                                                                                                        a
                                                                                                                                                                          it
                                                                                        Woodlands
                                                      Namazie
                                                       Estate                                                                                 Yishun
                                             Sarimbun                       Kranji
                                             Res.                                                                                                       Sungi
                                                                                                                                                       Seletar
                                                                                                                                                                   Seletar                                      Pulau Ubin
                                           Murai                                                                                                                                                                                                    Pulau
                                                                                                                                                         Res.                                                                                      Tekong              Pulau Tekong
                                           Res.                                                                                                                                                      Pulau
                                                                                                                                                                                     Punggol                                                        Kechil
                                                                                                                                                                                                   Serangoon
                                                                                                      Seletar Res.                                                                                             Serangoon
                                                                                                                                     Lower                                                                      Harbour            Changi
                                                                                   Bukit        Upper Pierce                         Pierce
                                                                                  Panjag        Res.                                 Res.      Ang Mo Klo                                               Pasir Ris
                           Poyan Res.                                                                                                                                          Hougang
                                                          Bulim
                                                                                                                                                                                                                                  Changi
                                                                                                                                                                    Serangoon                                                  International
                                                                                                 SINGAPORE                                                                                              Tampines
                    Tangeh Res.                                                                                                                                                                                                   Airport
                                                                                                                                                                   Bishan
                                                                                          Clementi                                   Mac Richie Res.
                                                                                                                                                       Toa Payoh

                                    Tuas                 Jurong                                                                                                                                       Bedok
                                                                                                                                                                                         Katong
                                                                                                                                    Queenstown                             Geylang
                                                                                            Pasir
                                            Sembilan Strait                                Panjang
                             Pulau Pesek
                                                                                                                                       Telok                                                                                                  it
                                                                                                                                                                                                                                         ra
                                                                          Pulau Seraya                                                                                                                                              St
                        Pulau Ayer Chawan                                                                                                                                                                                     re
                                                                    Pulau Ayer Merbau                                                                                                                                     o
                                                                                                                                                                                                                   g   ap                          Main road
                                                           Pulau Bakau                                                                                           Keppel harbour                                n
                                                                                                Se
                                                                                                     ba
                                                                                                          ro k             Sentosa                       Buran Darat
                                                                                                                                                                                                          Si                                       Main railway
                                                                                                                 Ch
                                                           Pulau Busing                     Pulau                     an
                                                                                                                           ne                                                                                                                      Mass rapid transit
                                                                                             Bukum                              l                                 Pulau Seringat                                                                   system (MRT)
                                                                 Pulau Hantu                                                                                      Pulau Tembakul
                                                                                                                                                                Pulau Sakijang Pelepah                                                             Main airport
                                                                                        Pulau Semakau
                                                                                                                                                            Pulau Sakijang Bendera
                                        Pulau Sudong                                                                  Pulau Sebarok                                                                                                                Urban areas
                                                                                                                                                                                                                                                   May 2005
                                                   Pulau Pawai
                                                                                                                                                                                                                                     0 km           2.5            5         7.5      10

' The Economist Intelligence Unit Limited 2005
                                                                           Pulau Senang                                                                                                                                              0 miles                 2.5               5
Comparative economic indicators, 2004

                  Gross domestic product                                                                        Gross domestic product per head
                  US$ bn                                                                                        US$ ’000

    South Korea                                                                                 Singapore

        Taiwan                                                                                  Hong Kong

     Indonesia                                                                                 South Korea

     Hong Kong                                                                                        Taiwan

       Thailand                                                                                      Malaysia

       Malaysia                                                                                      Thailand

     Singapore                                                                                      Indonesia

    Philippines                                                                                 Philippines

       Vietnam                                                                                       Vietnam

                  0      100       200     300      400      500        600    700                              0        5          10        15         20           25      30
                  Sources: Economist Intelligence Unit estimates; national sources.                             Sources: Economist Intelligence Unit estimates; national sources.

                  Gross domestic product                                                                        Consumer prices
                  % change, year on year                                                                        % change, year on year

     Singapore                                                                                       Vietnam

     Hong Kong                                                                                      Indonesia

       Vietnam                                                                                  Philippines

       Malaysia                                                                                South Korea

    Philippines                                                                                      Thailand

       Thailand                                                                                 Singapore

        Taiwan                                                                                        Taiwan

     Indonesia                                                                                       Malaysia

    South Korea                                                                                 Hong Kong

                  0            2          4            6            8           10                          -2               0            2          4            6            8
                  Sources: Economist Intelligence Unit estimates; national sources.                             Sources: Economist Intelligence Unit estimates; national sources.

Country Profile 2005                                                                  www.eiu.com                                        © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                              1

                                                 Contents

                                                 Singapore

                                                 3    Basic data

                                                 4    Politics
                                                 4    Political background
                                                 5    Recent political developments
                                                 7    Constitution, institutions and administration
                                                 9    Political forces
                                                 12   International relations and defence

                                                 14   Resources and infrastructure
                                                 14   Population
                                                 15   Education
                                                 16   Health
                                                 17   Natural resources and the environment
                                                 17   Transport, communications and the Internet
                                                 19   Energy provision

                                                 20   The economy
                                                 20   Economic structure
                                                 21   Economic policy
                                                 27   Economic performance
                                                 28   Regional trends

                                                 29   Economic sectors
                                                 29   Agriculture
                                                 29   Mining and semi-processing
                                                 29   Manufacturing
                                                 31   Construction
                                                 31   Financial services
                                                 33   Other services

                                                 34   The external sector
                                                 34   Trade in goods
                                                 36   Invisibles and the current account
                                                 36   Capital flows and foreign debt
                                                 37   Foreign reserves and the exchange rate

                                                 38   Regional overview
                                                 38   Membership of organisations

                                                 41   Appendices
                                                 41   Sources of information
                                                 42   Reference tables
                                                 42         Population
                                                 43         Labour force
                                                 43         Transport statistics
                                                 43         National energy statistics

© The Economist Intelligence Unit Limited 2005                     www.eiu.com                        Country Profile 2005
2                                                                                                  Singapore

                       44   Productivity
                       44   Business costs
                       44   Government finances
                       45   Money supply
                       45   Interest rates
                       45   Gross domestic product
                       45   Gross domestic product by expenditure
                       46   Gross domestic product by sector
                       46   Prices and earnings
                       47   Agricultural production and fish catch
                       47   Manufacturing production
                       47   Miscellaneous manufacturing statistics
                       47   Net investment commitments in manufacturing by sector
                       48   Investment commitments by country of origin
                       48   Construction statistics
                       48   Financial sector assets and liabilities
                       48   Stockmarket indicators
                       49   Retail sales
                       49   Tourism
                       50   Exports
                       50   Imports
                       51   Trade volume indices
                       51   Major exports and imports
                       51   Main trading partners
                       52   Balance of payments, IMF series
                       53   Balance of payments, national series
                       54   Foreign reserves
                       54   Exchange rates

Country Profile 2005              www.eiu.com                  © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                         3

                                                 Singapore
                                                 Basic data
                              Land area          6,82.3 sq km (including smaller islands)

                            Population           3.5m (mid-year 2004 government estimate; 4.2m including non-residents)

                                 Climate         Tropical

  Weather (altitude ten metres)                  Hottest month, May, 24-32°C (average daily minimum and maximum); coldest
                                                 month, January, 23-30°C; driest month, July, 70 mm average rainfall; wettest
                                                 month, December, 244 mm average rainfall

                             Languages           English, Chinese, Malay and Tamil

                              Measures           The metric system is now predominant

                              Currency           Singapore dollar (S$)=100 cents. Average exchange rate in 2004: S$1.690:US$1.
                                                 Exchange rate on May 9th 2005: S$1.642:US$1

                                     Time        Eight hours ahead of GMT

                      Public holidays            January 1st (New Yearrs Day); Chinese New Year; end of Ramadan; Good
                                                 Friday; Hari Raya Haji; May 1st (Labour Day); Vesak Day; August 9th (National
                                                 Day); Deepavali; December 25th (Christmas Day)

© The Economist Intelligence Unit Limited 2005                    www.eiu.com                                   Country Profile 2005
4                                                                                                                     Singapore

                                     Politics
                                     Singapore is a parliamentary democracy led by the Peoplers Action Party (PAP).
                                     Formerly a British colony, Singapore briefly became part of the Federation of
                                     Malaya, Sarawak and Borneo (Sabah) in 1963, but achieved full independence
                                     in 1965. Since then the PAP, guided by the ideas of Lee Kuan Yew, prime
                                     minister from 1959 to 1990, has dominated politics in the country. The success
                                     of the PAP has been founded on a combination of rapid economic growth and
                                     an ability to restrict any expansion in support for the weak and divided
                                     opposition parties. In 1990 Mr Lee was replaced as prime minister by Goh
                                     Chok Tong. Mr Goh was initially seen simply as a short-term appointment, as a
                                     placeholder for Mr Leers eldest son, Lee Hsien Loong, but stayed in office for
                                     almost 14 years. In August 2004 he finally handed over the leadership to Lee
                                     Hsien Loong, but remains in the cabinet as senior minister. The new prime
                                     minister may call an election later in 2005.

                                     Political background
    History before independence      The Malacca Sultanate ceded Singapore to the British East India Company in
                                     1819, through the efforts of Stamford Raffles. The island was soon brought
                                     under the control of the British government, which surrendered to the
                                     Japanese in 1942, but regained control in 1945. The 1955 election returned a
                                     Labour Party government, which eventually reached agreement with the UK
                                     over full internal self-government. Mr Leers PAP won the 1959 election, and a
                                     referendum in 1962 revealed overwhelming support for a merger with Sabah,
                                     which was implemented in September 1963. However, tensions in the
                                     federation soon became evident. Singapore withdrew and became an
                                     independent country in 1965.

    Political development, 1965-90   The PAP easily won the first post-independence election in 1968, and, through a
                                     combination of rapid economic growth and the maintenance of a weak and
                                     divided opposition, Mr Leers party has dominated politics in Singapore ever
                                     since. From 1968 to 1981 all members of parliament (MPs) were PAP members,
                                     and the only opposition outside of parliament came from a small group of
                                     maverick professionals, many of them lawyers. Two opposition MPs were later
                                     elected, with a representative of the Workersr Party (WP), J B Jeyaretnam,
                                     winning a seat in a by-election in 1981, and Chiam See Tong of the Singapore
                                     Democratic Party (SDP) entering parliament in 1984. Despite these apparent
                                     breakthroughs, the opposition has remained marginal, and there have never
                                     been more than four elected opposition members in parliament.
                                     When the previous rapid rates of economic growth began to slow in 1985-86,
                                     the government reacted by making efforts to build a more consultative
                                     political system, creating institutions such as the Economic Committee. From
                                     1986 there was limited decentralisation of decision-making through the
                                     establishment of town councils. However, the PAP kept hold of the real levers
                                     of power, with institutional changes generally regarded as a ploy to bolster
                                     PAP support, rather than as a mechanism for the development of alternative

Country Profile 2005                                  www.eiu.com                 © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                                5

                                                 centres of power. Life remained difficult for any individuals or groups thought
                                                 to be against the PAP, with the government often suing dissident figures for
                                                 libel. Using this method, prominent opposition members were made
                                                 bankrupt, or forced to leave the country.
                                                 Important recent events

                                                 March 2000
                                                 The prime minister, Goh Chok Tong, announces that a "speakersr corner" will be set
                                                 up, along with new neighbourhood councils.
                                                 November 2001
                                                 The Peoplers Action Party (PAP) takes 75.3% of the votes cast in the general election,
                                                 and 82 out of the 84 directly elected seats in parliament.
                                                 January 2002
                                                 The government reveals that it is holding 12 Singaporeans and one Malaysian on
                                                 terrorism charges.
                                                 May 2002
                                                 The PAP takes a political gamble with the 2002/03 (April-March) budget, which
                                                 benefits business and the higher paid, rather than the poor.
                                                 January 2003
                                                 The government unveils a white paper on dealing with terrorism.
                                                 August 2003
                                                 Mr Goh confirms his plan to step down once Singaporers economy stabilises, in
                                                 effect stating that he will not be the prime minister ahead of the next general
                                                 election (due in 2007).
                                                 November 2003
                                                 The Computer Misuse Act is passed into law. It allows the authorities to take pre-
                                                 emptive measures against hackers planning attacks in Singapore by checking
                                                 computer networks.
                                                 January 2004
                                                 The new prime minister of Malaysia, Abdullah Badawi, visits Singapore twice during
                                                 January, signalling a warming of ties between the two countries.
                                                 August 2004
                                                 Lee Hsien Loong takes over as prime minister. He reshuffles the cabinet, with
                                                 Mr Goh becoming senior minister.

                                                 April 2005
                                                 The government agrees to build two casinos in Singapore. The decision is politically
                                                 controversial, and opposed by many civic groups.

                                                 Recent political developments
  Political development, 1991-97                 In 1990 the prime minister since 1959, Lee Kuan Yew, stepped down, to be
                                                 replaced by the supposedly more liberal Mr Goh. Mr Lee remained in the

© The Economist Intelligence Unit Limited 2005                     www.eiu.com                                         Country Profile 2005
6                                                                                                                        Singapore

                                     cabinet as senior minister, and his influence behind the scenes was still
                                     enormous: there was talk of Mr Goh surrendering the chair for parts of cabinet
                                     meetings. It was therefore not clear who took the decision to hold an early
                                     general election in 1991, but Mr Goh took the blame for the PAPrs relatively
                                     poor showing, with the party winning just 61% of the vote. The opposition
                                     parties in effect conceded defeat in advance, contesting only 40 of the 81 seats.
                                     Perhaps reassured that their vote could not end PAP rule, 37% of those voting
                                     supported the opposition (with 2% of votes going to independents). A hesitant
                                     process of cultural liberalisation (for example, on cinema films) was
                                     subsequently reversed, although there was no official crackdown on dissidents.
                                     Mr Goh remained in power, and as the months passed his position within the
                                     PAP appeared to strengthen.
                                     In the January 1997 election the PAP performed better, winning 65% of the vote.
                                     This was partly owing to an increase in group representation constituencies
                                     (GRCs); in these constituencies political parties are required to formulate five- to
                                     six-candidate tickets, which is difficult for the opposition parties with their
                                     limited resources and support. The PAPrs performance was also boosted by the
                                     explicit link made between the timing of the upgrading of Housing
                                     Development Board estates and the loyalty demonstrated by individual
                                     constituencies to PAP MPs. Mr Goh later said that this tactic was the "single
                                     most important factor" in the increase in the PAPrs share of the vote.

    Lee Hsien Loong reasserts his    Following the election, the government became increasingly preoccupied with
                        position     the consequences of the 1997-98 Asian financial and economic crises. This
                                     allowed Lee Hsien Loong, the eldest son of Mr Lee and long considered his
                                     fatherrs heir-apparent, to regain some of the political momentum that
                                     dissipated after he was diagnosed with cancer in the early 1990s. The younger
                                     Mr Lee took over the chairmanship of the Monetary Authority of Singapore
                                     (MAS, the central bank) in early 1998 and proved an enthusiastic advocate of
                                     financial sector restructuring. The government saw its domestic political
                                     standing shored up by a couple of years of strong growth, but it remained
                                     generally intolerant of dissent. There were some gestures towards
                                     liberalisationfor example the establishment of a "speakersr corner"
                                     (supposedly modelled on the long-established one in Hyde Park, London) in
                                     2000, and the authorisation of an opposition rally in 2001but life remained
                                     difficult for opposition figures. A veteran opposition politician, J B Jeyaretnam,
                                     faced bankruptcy because of damages resulting from a legal action brought
                                     against him by some PAP members. A rising opposition figure, Chee Soon Juan,
                                     was sidelined by smaller-scale legal action.

        Increased spending buys      As the economy slumped in 2001, the PAP was still firmly in control. Its
      political support in 2001-03   immediate political response to the downturn was a generous budget for fiscal
                                     year 2001/02 (April-March), with spending later increased further by various
                                     supplementary packages. The housing upgrade scheme was deepened and
                                     accelerateda sure-fire vote-winner in a country where a home is often an
                                     individualrs largest financial asset. Towards the end of the year, the government
                                     called an early general election. The opposition parties chose to contest only 29
                                     of the 84 parliamentary seats, and won only two of these. The government was

Country Profile 2005                                   www.eiu.com                   © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                                                          7

                                                 quick to claim that the size of its victory gave it a clear mandate for economic
                                                 reform, and set up a committee to review economic policy. The committee
                                                 published its first responses in April 2002, and many of its recommendations
                                                 (including tax cuts) found their way into the budgets for 2002/03 and 2004/05.
                                                 The budgets were premised on the belief that the key to Singaporers future
                                                 success is maintaining its attractiveness as a business location. The electorate
                                                 was asked to take some short-term pain (for example, through a rise in the
                                                 goods and services taxGST) so that this long-term vision could be realised.

    Mr Lee prepares for the next                 In August 2004 Mr Goh stepped down as prime minister and was replaced by
                        election                 Lee Hsien Loong in a smooth handover of power. Later in August Mr Lee
                                                 reshuffled his cabinet, but the changes were relatively small-scale. Mr Goh
                                                 became senior minister; the displaced elder Mr Lee became "minister mentor in
                                                 the prime ministerrs office". Slightly lower down the rankings, familiar figures
                                                 were very much in evidence: Shanmugan Jayakumar became a deputy prime
                                                 minister, for example. Some slightly more surprising appointments were made
                                                 at a more junior level, but the PAP is still short of new talent.
                                                 Mr Lee does not need to hold an election until 2007, but it is likely to be called
                                                 earlier. The election will be seen as a vote of confidence in Mr Lee, who,
                                                 despite his technocratic skills, has not always been popular. Anything less than
                                                 a 65% share of the vote will be embarrassing for the new prime minister, but
                                                 the PAP is certain to remain firmly in power.

                                                 Election results since independence
                                                                                                          Seats won              Seats won by           % of vote
                                                                                                             by PAP a            other parties         won by PAP a
                                                 Apr 13th 1968                                                   58                          0               84.4
                                                 Sep 2nd 1972                                                    65                          0               69.0
                                                 Dec 23rd 1976                                                   69                          0               72.4
                                                 Dec 23rd 1980                                                   75                          0               75.6
                                                 Dec 22nd 1984                                                   77                          2               62.9
                                                 Sep 3rd 1988                                                    80                          1               61.8
                                                 Aug 31st 1991                                                   77                          4               61.0
                                                 Jan 2nd 1997                                                    81                          2               65.0
                                                 Nov 3rd 2001                                                    82                          2               75.3
                                                 a People's Action Party.
                                                 Sources: Ministry of Information and Arts and the Environment; press reports.

                                                 Constitution, institutions and administration
                             Parliament          Singapore has a parliamentary system of government, although an intolerant
                                                 approach to opposition politicians has prevented the development of a
                                                 combative multiparty legislature. The single-chamber parliament has 84 elected
                                                 MPs. Single-member constituencies elect nine of these, with the remaining 75
                                                 returned by 14 GRCs. Parties must field a team of five or six candidates in each
                                                 of these GRCs; the winning team is elected en bloc by a first-past-the-post
                                                 system, as are individual MPs. In addition to the elected MPs, the constitution
                                                 provides for a number of non-constituency MPs (NCMPs) and nominated MPs
                                                 (NMPs) to sit in parliament. The first of these provisions, to allow in prominent

© The Economist Intelligence Unit Limited 2005                              www.eiu.com                                                          Country Profile 2005
8                                                                                                                          Singapore

                                       politicians who have failed to win a seat, has in the past rarely been used; the
                                       current parliament has one NCMP, Steve Chia, of the Singapore Democratic
                                       Alliance. NMPsusually eminent professionalsare now, however, an accepted
                                       (and tamed) part of the parliamentary process.

                       The president   Until 1993 the president was nominated by parliament. In August of that year
                                       Ong Teng Cheong (previously a deputy prime minister and secretary-general of
                                       the National Trades Union CongressNTUC) easily won the first direct election
                                       for the post, against only nominal opposition. Strict eligibility rules severely
                                       restrict the number of Singaporeans who can stand for the post, and in mid-
                                       1999 only one candidateS R Nathanwas deemed appropriate to be Mr Ongrs
                                       successor. As a result, he was declared president without an election.
                                       The presidentrs theoretical right of veto over certain legislation and
                                       appointments is not used. In 1995 a three-judge tribunal ruled that the president
                                       had no power to withhold his assent to any bill that sought to restrict his
                                       powers, and the presidentrs authority over some financial matters (notably
                                       Singaporers foreign-exchange reserves) has subsequently been eroded. This
                                       process was not to the liking of the previous president, Mr Ong, who talked
                                       openly in early 2000 of the sometimes strained relations between himself, the
                                       government and the civil service. (Mr Ong died in February 2002.)

                       The judiciary   The constitution of Singapore states that the judiciary should administer the
                                       law independently of the executive. The chief justice and other Supreme Court
                                       judges are appointed by the president of the republic. The current chief justice
                                       is Yong Pung How, reappointed in 2004, for two years. (In 2006 Mr Yong will
                                       be 80 years old, so will then presumably retire.) In the past the government has
                                       placed restrictions on lawyers, but the growing demands of the commercial
                                       sector, coupled with conditions attached to the free-trade agreements (FTAs)
                                       that Singapore is eager to pursue, are producing a more expansionary attitude
                                       towards training, and towards permitting those trained overseas to practice law.
                                       Major changes to parliamentary practice

                                       1984
                                       The constitution is changed to allow the appointment of non-constituency members
                                       of parliament (NCMPs), with limited voting rights in parliament. In theory, up to
                                       three NCMPs may be appointed, selected from the unsuccessful opposition
                                       candidates who come closest to being returned in general elections. There is
                                       currently only one, Steve Chia.
                                       1987
                                       Nine government parliamentary committees (GPCs) are established; another is
                                       added in 1988. Each GPC includes some five or six MPs and a consultative panel of
                                       up to 12 professional experts from outside parliament. GPCs have proved a
                                       disappointment, failing to question seriously government policy.

                                       1992
                                       The first batch of nominated MPs (NMPs) is co-opted by parliament. A special select
                                       committee can recommend the appointment of individuals to parliament, for terms

Country Profile 2005                                     www.eiu.com                   © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                              9

                                                 of up to two years. Although those appointed, generally well-known professionals,
                                                 do not form an opposition bloc, and cannot vote on some issues, they have
                                                 occasionally offered trenchant criticism of certain aspects of government policy.
                                                 1997
                                                 Constituency boundaries are revised for the January election, increasing the number
                                                 of group representation constituencies (GRCs). The change was at least in part
                                                 motivated by a belief that the opposition would find it harder to contest, or win,
                                                 such large constituencies. After the election, the number of NMPs is raised from six
                                                 to nine.
                                                 2001
                                                 The Political Donations Act comes into force. Candidates must now submit a
                                                 statement about donations and obtain a "certificate of compliance". Anonymous
                                                 donations are limited to S$5,000 (US$2,900) per candidate per year, and donations
                                                 from non-Singaporean individuals or firms are prohibited.
                                                 2002
                                                 Peoplers Action Party (PAP) MPs can now in theory vote freely on what are officially
                                                 deemed to be "matters of conscience" and can ask the party whip for permission to
                                                 vote against the government on other issues. However, unsurprisingly, not many feel
                                                 free to speak their mind.

                                                 Political forces
         The structure of the PAP                The PAP, which portrays itself as the only possible party of government, has a
                                                 variety of internal party bodies, the most important of which is the Central
                                                 Executive Committee (CEC). The membership of the CEC closely mirrors that
                                                 of the cabinet; a new CEC was elected in late 2004 after Mr Lee took over as
                                                 prime minister. Links between the military and the PAP are strong, and several
                                                 successful politicians have graduated from the ranks of the armed forces,
                                                 notably the current prime minister, Mr Lee, and the defence minister, Teo Chee
                                                 Hean. PAP membership is not, however, a prerequisite for career success within
                                                 the civil service.

  The PAP's approach to dissent                  The PAP has been successful in demolishing alternative focuses of opposition
                                                 activity. Labour unions were brought to heel in the 1960s through tough
                                                 legislation. Professional groupings also follow the party line, which helps to
                                                 deter lawyers and others from entering politics on the side of the opposition. A
                                                 disciplinarian approach by university authorities has likewise deterred
                                                 academics from becoming too closely involved in the political process. The
                                                 PAPrs response to the 1987 "Marxist conspiracy" marked the end of involvement
                                                 in politics by the organised churches. As already noted, however, race may
                                                 again be emerging as a focus for dissent and unexpected events also have the
                                                 potential to cause trouble. The debate in early 2005 over whether or not to
                                                 allow the construction of casinos in Singapore was particularly sensitive
                                                 because it gave varying religious and civic groups a common cause.
                                                 PAP members have shown themselves prepared to take out court actions,
                                                 usually in the form of defamation cases, to hurt the opposition. This tactic has

© The Economist Intelligence Unit Limited 2005                     www.eiu.com                                       Country Profile 2005
10                                                                                                           Singapore

                       resulted in the award of significant damages against opposition figures, which
                       has caused either the self-imposed exile of these individuals, or bankruptcy. A
                       law barring those declared bankrupt from serving as MPs has removed these
                       figures from the immediate political arena. The most recent example of this
                       latter form of exclusion was the defamation action taken by senior PAP figures
                       against the secretary-general of the Singapore Democratic Party (SDP), Chee
                       Soon Juan. In early 2005 Mr Chee was ordered to pay a total of S$500,000
                       (US$300,000) in damages.
                       Main political figures

                       Lee Hsien Loong (in the past often referred to as B G Lee)
                       Prime minister since August 2004 and finance minister. Son of Lee Kuan Yew, he had
                       long been prime minister-in-waiting. He has extensive ministerial experience, but
                       does not command the degree of popular respect enjoyed by his father.
                       Goh Chok Tong
                       Senior minister and head of the Monetary Authority of Singapore (MAS, the central
                       bank). Mr Goh, prime minister from 1990 to 2004, is a rather more relaxed political
                       figure than the younger Mr Lee. His foreign policy experience is likely to prove
                       useful, particularly in dealings with Malaysia.
                       Lee Kuan Yew
                       Prime minister from 1959 to 1990 and seen as the "father of the nation". He is no
                       longer senior minister and is beginning to play a much less prominent role in
                       politics. However, he will retain a residual importance, particularly when "moral"
                       issues are being discussed. He is the third highest-ranking person in the cabinet
                       through his post as minister mentor.
                       Tony Tan Keng Yam
                       Currently one of the two deputy prime ministers. Relatively old (65) and unlikely to
                       harbour ambitions for the top job. Chairman of the Peoplers Action Party (PAP).
                       Shunmugan Jayakumar
                       The other deputy prime minister and the minister for law. Minister for foreign affairs
                       until 2004. Also 65, and considered a loyal supporter of Lee Hsien Loong.
                       Teo Chee Hean
                       Mr Teo has in the past been seen as a possible future contender for the prime
                       ministership. He has the important position of minister of defence, but gets less
                       media attention than he used to.

                       George Yong-Boon Yeo
                       Minister for foreign affairs since August 2004. Formerly minister for information and
                       the arts and minister for trade and industry. His ministerial career wobbled in the
                       1990s, possibly owing to his liberal views, but is now revived.

                       Tharman Shanmugaratnam
                       Appointed to the post of acting minister for education in 2003, and confirmed as a
                       full minister in 2004. The post is a politically sensitive one. He is one of the few
                       people to have faced problems with the government (as an official at the MAS) but

Country Profile 2005                     www.eiu.com                     © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                               11

                                                 then to be accepted back into the fold. Has the potential to be a prominent figure in
                                                 the future.
                                                 Chiam See Tong
                                                 The longest-serving opposition member of parliament (MP), returned again by the
                                                 Potong Pasir constituency in the November 2001 election.
                                                 Low Thia Khiang
                                                 Head of the Workersr Party and opposition MP for Hougang. An effective critic of
                                                 government policies.

        The opposition makes no                  Legal action against opposition politicians has helped to keep them divided.
          headway in parliament                  Wrangling within the Singapore Democratic Party (SDP) led the partyrs then
                                                 leader, Chiam See Tong, to leave the party. Mr Chiam retained his seat as a
                                                 Singapore Peoplers Party (SPP) MP in the 1997 and 2001 elections. Low Thia
                                                 Khiang of the Workersr Party (WP) accounted for the other opposition victory at
                                                 the November 2001 election, retaining the Hougang constituency.
                                                 The opposition MPs often put up a creditable performance in parliamentthey
                                                 have provided some interesting criticism of budgets and constitutional issues,
                                                 for examplebut they are unable to force changes to government plans. The
                                                 opportunities for extra-parliamentary protest are limited. This is most clearly
                                                 demonstrated by the fate of the SDP secretary-general, Mr Chee, who has been
                                                 repeatedly fined and (briefly) jailed for speaking in public without a permit. In
                                                 early 2005 Mr Chee was ordered, by the court, to pay damages totalling
                                                 S$500,000. This is likely to bankrupt him and to end his political career
                                                 (bankrupts cannot stand for parliament). Furthermore, his determination does
                                                 not appear to have won him great public support.
                                                 Security risk in Singapore

                                                 Armed conflict
                                                 History suggests that Singapore should be wary of its much larger neighbours. The
                                                 separation from Malaysia in 1965 was painful, and anti-Singaporean sentiment
                                                 sometimes erupts in the Malaysian government and elsewhere. Singapore misplayed
                                                 its hand with Indonesia, getting far too close to the disgraced former president,
                                                 Soeharto, with the result that it has been treated with suspicion by his successors in
                                                 Jakarta. Despite Indonesiars larger size, the main military threat is seen as coming
                                                 from Malaysia. A particular long-standing worry is that the Malaysian state of Johor
                                                 could cut off supplies of water to Singapore, something that would quickly bring the
                                                 country to its knees. To deal with this threat, Singapore has amassed a large amount
                                                 of sophisticated military hardwareincluding 350 light tanks and 125 combat aircraft.
                                                 It is presumed that any move to cut off Singaporers water supplies would be
                                                 countered by Singapore armoured vehicles invading Johor, with the Singaporean air
                                                 force overwhelming its Malaysian counterpart. Since 1998 housing developers have
                                                 been required to build a bomb-shelter in every new house, although the space that
                                                 needs to be allocated for this shelter was reduced in 2001.
                                                 Terrorism
                                                 The government is well aware that Singapore is a tempting target for terrorists.
                                                 Buildings in the central business district or Changi airport could be vulnerable. The

© The Economist Intelligence Unit Limited 2005                     www.eiu.com                                         Country Profile 2005
12                                                                                                                         Singapore

                                    government has responded by detaining a number of people (almost all Singaporean
                                    citizens) under the provisions of the Internal Security Act (ISA). They are accused of
                                    having links to al-Qaida and other terrorist groups in the region, and of plotting to
                                    carry out attacks in Singapore in December 2002. Singapore has also exhorted
                                    Indonesia to be rather tougher with perceived instigators of terrorism; co-operation
                                    between the Singaporean and Malaysian anti-terrorist forces appears to be much
                                    better. Marine piracy will also remain an important problem in the waters
                                    surrounding Singapore. The navies of Singapore and its neighbours are small and the
                                    topography of the areawith a large number of small islandswould seem to favour
                                    the pirates. Singapore is pushing for increased regional co-operation on this issue.
                                    Civil unrest
                                    There has been no civil unrest in Singapore for many years. If there were in future,
                                    the police or armed forces would crack down on it heavily. The authorities view the
                                    most likely fissure lines to be those associated with racethis was the issue that
                                    sparked the well-known 1960s race riots. The government is keen to maintain a
                                    dialogue with representatives of the Malay and Indian communities, but the obvious
                                    Chinese dominance of the government continues to cause resentment. Official
                                    Muslim bodies moved quickly to condemn the alleged terrorists arrested in
                                    December 2001, but the government continues to be riled by criticism from other
                                    groupings. In the longer term, the most likely external trigger for civil unrest remains
                                    increased racial strife in either Malaysia or Indonesia. A prolonged economic
                                    downturn would also significantly increase the risk of civil unrest.
                                    Violent crime
                                    Violent crime is not a problem for business. Guns are not in wide circulation, and
                                    recent murders have been exclusively "domestics", with no business or political
                                    component, although armed robbery is not unknown. (Some firearms sentences
                                    carry a mandatory death sentence.) Other violent crime is generally limited to
                                    vandalism, often alcohol-related.
                                    Drug-smuggling and organised crime
                                    Singapore has long imposed a mandatory death penalty for drug-smuggling, and
                                    has not shirked from carrying it out. Amnesty International, a London-based human
                                    rights organisation, claimed in 2004 that Singapore had the worldrs highest
                                    execution rate per head of population. There is some organised cigarette-smuggling
                                    from Indonesia, and some illicit gaming, but in general Singaporers organised
                                    criminal groups are small, poorly organised and stand no comparison to their
                                    counterparts in, for example, China or Japan. Singaporers police force is also
                                    considered highly effective.

                                    International relations and defence
         Relations with Malaysia    Singapore has long had a difficult relationship with Malaysia, its closest
                 remain difficult   neighbour, with a mixture of major and trivial disputes centred around water
                                    supply, the position of the Malaysian passport control in the Tanjong Pagar
                                    railway station (the station is currently in the centre of Singapore, but the land
                                    is still owned by Malaysia), and the extent to which the Singaporean air force
                                    can overfly Malaysia, among other things. Leaders on both sides have

Country Profile 2005                                   www.eiu.com                     © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                           13

                                                 sometimes, intentionally or unintentionally, exacerbated the situation with
                                                 remarks seen as derogatory to the other country.
                                                 In early September 2001, after several years of talk about a package of
                                                 measures to resolve these disputes, there appeared to have been some progress.
                                                 An outline agreement was reached between Singaporers then senior minister,
                                                 Lee Kuan Yew, and the previous prime minister of Malaysia, Mahathir
                                                 Mohamad. However, hopes of a speedy resolution quickly receded. In 2003
                                                 both governmentsr attention was diverted by a dispute over whether
                                                 Singaporean land reclamation was prejudicing shipping lanes into a Malaysian
                                                 port, Tanjung Pelepas. (The International Tribunal on the Law of the Sea ruled
                                                 in Singaporers favour.)
                                                 From early 2004 there was a warming in relations. There were several visits to
                                                 Singapore by the prime minister of Malaysia, Abdullah Badawi. Mr Badawi,
                                                 who replaced Dr Mahathir in November 2003, has adopted a more conciliatory
                                                 approach towards Singapore. Reciprocal visits have been made by Mr Goh
                                                 (who has been given special responsibility for this issue), by Lee Hsien Loong
                                                 and, in April 2005, by Lee Kuan Yew. Although Singapore may be keen to
                                                 conclude agreements on the outstanding issues, Malaysian domestic politics
                                                 suggest that it could take some time. Mr Badawirs own domestic position is not
                                                 strong, and he will, for example, be unable to concede to Singapore on
                                                 territorial issues, or on the price of water supplied from Malaysia.

   Relations with Indonesia are                  Singapore also has a difficult relationship with Indonesia. Following the com-
                     not warm                    plete breakdown of relations in the 1960s, Singaporers government made great
                                                 efforts to develop relations with Indonesiars president, Soeharto, and his
                                                 regime. To this end, Indonesian islands to the south of Singapore were jointly
                                                 developed, and Singaporean government-linked companies (GLCs) invested in
                                                 Indonesia. Singapore also became an important offshore financial centre for the
                                                 Indonesian Chinese business elite. However, when Soeharto was toppled in
                                                 1998, Singapore discovered that such links were a hindrance. Soehartors
                                                 successor, B J Habibie, was openly dismissive of Singapore and its government.
                                                 After a good start, relations with the next president, Abdurrahman Wahid,
                                                 deteriorated in late 2000. Relations were then slowly rebuilt, with the signing
                                                 of two major gas deals in early 2001, but relations with Mr Wahidrs successor,
                                                 Megawati Soekarnoputri, were businesslike rather than warm. However,
                                                 relations may improve in future. The current Indonesian president, Susilo
                                                 Bambang Yudhoyono, visited Singapore in early 2005 to sign an investment
                                                 protection agreement. It is hoped that Indonesiars parliament will agree to an
                                                 extradition agreement between the two countries later this year. In the past few
                                                 years Singapore has tried to build up relations with individual Indonesian
                                                 provinces, in the hope of bypassing the political uncertainties of Jakarta, but
                                                 this trend may be reversed if Mr Yudhoyonors presidency is a success.

  Singapore spurs ASEAN into                     Singapore was a founder member of the Association for South-East Asian
action over trade liberalisation                 Nations (ASEAN) but during the 1990s grew increasingly frustrated with the
                                                 organisationrs tardy progress on freeing up regional trade. Accordingly,
                                                 Singapore began to display an increasing enthusiasm for bilateral FTAs, the first
                                                 of which (with New Zealand) was concluded in late 2000. An agreement was

© The Economist Intelligence Unit Limited 2005                    www.eiu.com                                      Country Profile 2005
14                                                                                                                        Singapore

                                      reached with Japan in October 2001 and a wide-ranging deal with Australia at
                                      the end of 2002. Singapore concluded an FTA with the US in 2003, which came
                                      into force in January 2004. This bilateral approach initially complicated
                                      relations with Singaporers fellow ASEAN members, but their attitudes towards
                                      trade liberalisation are changing. An ASEAN free-trade area (AFTA) has been in
                                      place since the start of 2003, and will be significantly deepened over the next
                                      few years. The driving force now is fear of the impact of the dynamic Chinese
                                      economy; in late 2004 ASEAN and China set out plans for a free-trade deal.

      Singapore will continue to      Despite the expansion of the Chinese economy, Singapore needs no reminding
               look to the West       that its prosperity still depends on continued investment in the island by
                                      Western and Japanese multinationals, and on the openness of OECD export
                                      markets. In the past Singapore has taken a keen interest in the Asia Pacific
                                      Economic Co-operation (APEC) forum and the World Trade Organisation (WTO).
                                      Occasional differences with developed-country trading partners, for example,
                                      over intellectual property rights (IPRs) and restrictions to entry into Singaporers
                                      financial sector, have not been allowed to develop into major problems.

        Terrorist threat reinforces   Singaporers enthusiasm for the US is motivated by military as well as economic
           defence links with US      reasons. Given the countryrs small size, and potentially troublesome neigh-
                                      bours, self-defence remains a priority. Singaporers military has close links with
                                      the US armed forces; particular reassurance is provided by the US Navyrs use of
                                      Changi naval base. (This relationship may, however, increase the risk of
                                      Singaporers being a terrorist target.) The island is a member of the Five-Power
                                      Defence Agreement (FPDA), which groups Singapore with the UK, Australia,
                                      Malaysia and New Zealand, and provides a convenient forum for joint military
                                      exercises. Military co-operation within ASEAN has proved elusive, however.
                                      Singapore, Malaysia and Indonesia have been carrying out co-ordinated naval
                                      patrols in the Malacca Strait since July 2004, but Singaporers efforts to upgrade
                                      this relationship to include, for example, the involvement of other countries,
                                      have been rejected by the island-staters neighbours. The countryrs regular
                                      armed forces are complemented by some 250,000 reservists, who undergo
                                      training "in camp" of up to 40 days per year. Equipment is modern and defence
                                      spending is high as a proportion of GDP.

                                      Resources and infrastructure

                                      Population
     Racial issues are of concern     Ethnic issues have been of concern in Singapore since the race riots that just
                                      predated independence in 1965. Although the government has allowed the
                                      Chinese to consolidate their dominance over the political system and much of
                                      business, it has also encouraged individual ethnic groups to form their own
                                      associations, provided these constitute no challenge to the government. In early
                                      2001, amid signs of growing racial intolerance in Malaysia, the government
                                      started a more formal dialogue with the Malay community in Singapore, and
                                      this has continued. Racial tensions have continued, however, and could be

Country Profile 2005                                    www.eiu.com                   © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                                            15

                                                 exacerbated by a slowdown in economic growth. (In mid-2004 Malays
                                                 accounted for 13.7% of the total population and Indians accounted for 8.4%.)

   Efforts to boost the birth rate               In the mid-1980s the government abandoned its "stop at two" family limitation
                      have failed                programme, replacing it with tax incentives to "go for three". Fear of future
                                                 labour shortages and increasing aged-dependency ratios prompted the author-
                                                 ities to offer cash payments to mothers on a sliding scale, with younger
                                                 mothers receiving more. There were also efforts to encourage the better-off to
                                                 have more children. Such financial inducements, however, failed to boost the
                                                 birth rate. The population growth rate for Singapore residents fell to 1.5% in
                                                 2004, down from 1.9% ten years earlier.
                                                 The government has now changed its focus, and its shorter-term aim is to attract
                                                 more parents into the labour force. In 2000 it announced that the number of
                                                 childcare places would be boosted by 25% over three years, and the civil service
                                                 was to be allowed more flexible working patterns. The issue remains
                                                 importantthe low birth rate is already contributing to an ageing of the
                                                 population, which has forced the government to raise the amount that
                                                 individuals must hold in their Central Provident Fund (CPF) accounts for
                                                 retirement. To ease the problem in the short term, the government has also taken
                                                 an increasingly relaxed attitude to immigration, particularly of skilled workers.
                                                 City planners therefore continue to work on the assumption that the population
                                                 will increase sharply over the next few decades, despite the low birth rate. At the
                                                 same time, efforts to boost birth rates remain on the agenda. The budget for the
                                                 2004/05 fiscal year (April-March) included plans to provide greater help with
                                                 childcare costs, and maternity leave was extended for some mothers.

                                                 Population by age and ethnic group
                                                 ('000; end-Jun 2004)
                                                                                                       Chinese     Malay   Indian   Others         Total
                                                 0-14                                                    487.3     130.3     68.7     15.9        702.2
                                                 15-29                                                   526.6     107.1     57.9     10.6        701.8
                                                 30-44                                                   717.3     119.9     84.1     20.4        941.8
                                                 45-59                                                   591.1      81.0     51.8     11.6        736.3
                                                 60+                                                     328.1      40.4     30.6      5.8        404.9
                                                 Total                                                 2,650.1     479.3    293.1     64.3      3,486.9
                                                 Note. Totals may not sum owing to rounding.
                                                 Source: Department of Statistics, Monthly Digest of Statistics.

                                                 Education
                School education is              The current state of childrenrs education appears satisfactory. Primary
                    highly efficient             education begins at six, with an emphasis on numeracy and literacy. Secondary
                                                 education starts from the age of 12, when students are streamedspecial and
                                                 express courses take students to Ordinary Level examinations in four years;
                                                 other courses allow an extra year. Pupils then spend two years in a junior
                                                 college or three years in a centralised college, preparing for the Advanced Level
                                                 exams, which determine whether or not they can proceed to tertiary education.

© The Economist Intelligence Unit Limited 2005                               www.eiu.com                                            Country Profile 2005
16                                                                                                                        Singapore

              University education     The National University of Singapore (NUS) was founded in 1980, merging the
                                       University of Singapore with Nanyang University. It has around 22,000
                                       undergraduate students and 8,000 graduate students. The Nanyang
                                       Technological Institute became the Nanyang Technological University (NTU) in
                                       1991. This second-string institution offers courses with a more vocational bent.
                                       The private-sector Singapore Management University opened in 2000.
                                       Plans for a fourth university, unveiled in 2002, were abandoned in early 2003.
                                       Instead, the plan is now to create 3,500 additional university places by adding
                                       facilities to the two main existing national universities, NUS and NTU. The NUS
                                       is to have two new campuses, one dedicated to scientific research at Buona
                                       Vista, and one for medicine at Outram. More importantly, 2,000 of the new
                                       places are to be awarded to polytechnic students, the group for which the
                                       fourth, abandoned, university had been planned.

      There is a desire to increase    The school system has a high international reputation, but will not be immune
                        "creativity"   to change. The government is concerned that the traditional basis of rote
                                       learning and written examinations is stifling the creativity seen as necessary for
                                       success in a modern developed economy. There have therefore been various
                                       moves to "revitalise" education, including substantial investment in information
                                       technology (IT) for schools. The curriculum is being modified, and methods of
                                       assessing pupils other than examinations are to be introduced.

     Islamic schools are a point of    There is also a long-standing debate about the merits of insisting that each
                           friction    pupil become competent both in English and in a "mother tongue" (Chinese,
                                       Tamil or Malay). It is hard to be certain whether this twin-track approach has
                                       reduced overall standards. A separate battle continues about the fate of the
                                       madrasahs, Islamic schools that exist outside the main school system. The
                                       government wants them to improve their relatively poor exam pass rates, but is
                                       unlikely to push them too hard, given current worries about terrorism:
                                       Singapore madrasahs are seen as bastions of mainstream, moderate Islam.
                                       Debate has also focused on the use of "Singlish"English mixed with local
                                       dialectswhich the government wants to discourage.

                                       Health
      The public sector dominates      The healthcare system is a hybrid of public and private provision. The private
              hospital healthcare      sector provides around 70% of primary healthcare, but only 20% of hospital
                                       care, the bulk of which comes from state-run facilities. There are three general-
                                       purpose government hospitals, three specialised hospitals and a number of
                                       specialist centres. Treatment is good, but there has sometimes been a reluctance
                                       to use some of the most modern techniques, primarily for reasons of cost.

 The CPF provides some health          Each member of the CPF has two or three accounts to which both employer
                    insurance          and employee contribute. One is the Medisave Account, withdrawals from
                                       which constituted around 3.6% of total CPF withdrawals in 2004. Medisave
                                       Accounts are designed to cover the basic hospital costs of individuals and their
                                       families; funds can be used to buy cover from the private sector or from the
                                       principal public health insurance scheme, Medishield, in case of long-term

Country Profile 2005                                    www.eiu.com                   © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                             17

                                                 treatment. Individuals are also permitted to use Medisave funds to purchase an
                                                 additional state scheme, Medishield Plus, or private insurance policies. In 2001
                                                 a new Medishield scheme was launched, targeted at the elderly. Charges in
                                                 public hospitals are largely determined by the class of ward.

                                                 Natural resources and the environment
    A new Green Plan is drafted                  Primary industries have never been important in Singapore. However,
                                                 attention has long been given to the one natural resource that Singapore is
                                                 capable of promotinga relatively clean and pleasant environment. In 1991 a
                                                 broad-brush National Green Plan was published, committing the government
                                                 to limiting carbon dioxide emissions, phasing out controlled
                                                 chloroflourocarbons (CFCs) and improving procedures for the storage,
                                                 handling and transportation of hazardous products.
                                                 There has been progress towards some of these targets, with the import of
                                                 CFCs, for example, banned in January 1996. The Green Plan has also been
                                                 complemented by more specific schemes in areas such as water conservation
                                                 and recycling. Leaded petrol was phased out in 1998 and diesel has a low
                                                 sulphur content. New pollution regulations came into force in January 2001,
                                                 and existing industries were given up to three years to comply with these.
                                                 However, Singapore remains vulnerable to environmental degradation from
                                                 elsewheresuch as smog from forest fires in Indonesia.
                                                 The next Green Plan, to 2012, was officially released in August 2002. Three "key
                                                 thrusts" were identified:
                                                 •    "quality living environment"setting new air pollution policies, promoting
                                                 the use of natural gas, maintaining the quality of coastal and inland water,
                                                 reducing the need for landfill through recycling; and keeping down ambient
                                                 noise levels;
                                                 •     "working in partnership with the community"developing a community-
                                                 centred approach and ensuring public feedback; and
                                                 •     "doing our part for the global environment"working to enhance
                                                 international and regional environmental governance.
                                                 These rather broad, if laudable, objectives are complemented by a few specific
                                                 targets. By 2012 natural gas is to account for 60% of electricity generation; 25% of
                                                 water supply will come from "non-traditional" sources (for example,
                                                 desalination); and 50% of solid waste will be recycled.

                                                 Transport, communications and the Internet
        A slightly more relaxed                  Singapore has considered deeply the problems of car usage. The government
     approach to car ownership                   has taken various measures to limit this, including implementing a variety of
                                                 taxes and introducing certificates of entitlement (COEs). A number of these
                                                 documents are released each month through auction; those wanting to put a
                                                 motor vehicle on the road must bid for them. The 2002/03 budget reduced car
                                                 taxes and promised a slight increase in the number of COEs (in return for

© The Economist Intelligence Unit Limited 2005                     www.eiu.com                                       Country Profile 2005
18                                                                                                                        Singapore

                                      higher usage charges); the budget for 2003/04 cut vehicle taxes by a further
                                      3-5%; and the budget for 2004/05 saw the Additional Registration Fee (ARF)
                                      paid when a car is first registeredlowered from 130% to 110% of its Open
                                      Market Value (OMV). The 2005/06 budget introduced no new initiatives, but
                                      forecast that tax collection from motor vehicles would fall in this fiscal year.
                                      Although the government is now taking a more relaxed approach to motor
                                      vehicle ownership, the cost of running a car remains high compared with most
                                      other developed countries.
                                      Charges have long been levied on cars entering the central area. This "pay by
                                      use" approach was extended in April 1998, when electronic road pricing (ERP),
                                      which uses a smart-card system to charge cars as soon as they enter restricted
                                      areas, was introduced on the East Coast Expressway. ERP was imposed on other
                                      highways later in the year and, despite some initial problems, has proved a
                                      success for the authorities.

      Public transport is efficient   Public transport is famously effective. A complex bus network benefits from the
                                      continuing programme of road upgrading. The Mass Rapid Transport (MRT)
                                      system is a much-envied underground and overground commuter railway
                                      system; existing lines are being extended and new lines built. Light Rail Train
                                      (LRT) lines are also being run into some areas of the country that are not served
                                      by the MRT.

      Changi must cope with the       Changi airport is regarded by many as the worldrs best airport. It currently has
        needs of budget airlines      two terminals, and in December 1996 the government announced approval for
                                      a third. This is scheduled to open in 2006. The threat of low-cost airlines being
                                      established in neighbouring countries has also resulted in Singaporers
                                      government acknowledging the need for Changi to accommodate these new
                                      carriers, and a new dedicated terminal is being built. This is also due to open in
                                      2006. Furthermore, with SIA facing greater competition from both low-cost
                                      airlines and foreign airlines to which the government has granted greater
                                      landing rights at Changi, SIA has formed its own low-cost airline, Tiger Airways.
                                      The Ireland-based Ryanair also has a stake. Other Singapore-based budget
                                      airlines include Jetstar Asia (in which Qantas has a stake) and Valuair.
                                      The airportrs development is closely linked to the fortunes of the national
                                      carrier, Singapore Airlines (SIA). SIA is one of the worldrs leading medium-sized
                                      airlines, and has sought alliances to extend its international reach. Its most
                                      notable acquisition so far has been a 49% share in a British airline, Virgin
                                      Atlantic; it has also tried to develop links with Australasian airlines, but got its
                                      fingers burnt by the New Zealand governmentrs de facto renationalisation of Air
                                      New Zealand (in 2001), in which it had a substantial stake. Despite these
                                      setbacks, in May 2005 the Australian government appeared to be on the brink
                                      of agreeing to an "open-skies" deal with Singapore, something that would give
                                      SIA access to the lucrative Australia-US routes.

     SingTel remains dominant in      Telecommunications are regarded as too important to be left wholly to the
                       telecoms       private sector. In the highly successful "privatisation" of Singapore Telecom
                                      (SingTel) in 1993, only around 7% of the companyrs share capital was sold,
                                      although the governmentrs share has been further watered down since. Despite

Country Profile 2005                                    www.eiu.com                   © The Economist Intelligence Unit Limited 2005
Singapore                                                                                                                           19

                                                 the governmentrs heavy presence in terms of ownership, attempts are being
                                                 made to increase competition in the market. SingTelrs monopoly on basic
                                                 services (for example, telephone lines) ended in 2000. Starhub was the first
                                                 competitor in 2000, having been promised that a duopoly would be
                                                 maintained until April 2002. However, in June 2000 an additional licence was
                                                 awarded to Singapore Cable Vision (which resulted in the governmentrs paying
                                                 compensation to Starhub). Competition in mobile telephone services has for
                                                 some time been intense, following the ending of SingTelrs monopoly in mobile
                                                 telephone and pager services in April 1997. In 2001 SingTel bought the second
                                                 largest Australian telecoms firm, Optus. It has made several other overseas
                                                 acquisitions. A significant development in early 2005 was the awarding of
                                                 more power to the Infocomm Development Authority (IDA), the sectorrs
                                                 regulator. The IDA will now be able to force existing telecoms licence holders
                                                 to share their infrastructure.

             IT initiatives continue             The government has been active in developing Singapore as a "wired" economy.
                                                 Among its initiatives has been the establishment of a broadband network,
                                                 Singapore ONE ("One Network for Everyone"), designed to enable Singaporeans
                                                 to access a wide range of official and commercial online services through
                                                 terminals in public places and in homes. There are no signs that the
                                                 governmentrs enthusiasm for electronic projects is flagging. In June 2000 it
                                                 announced an "e-government action plan", pledging S$1.5bn (US$866m) over
                                                 the following three years to invest in such activities as putting more
                                                 government services online. The government has also launched an "electronic
                                                 commerce plan" to drive the pervasive use of electronic commerce in Singapore,
                                                 and to strengthen Singaporers position as an international e-commerce hub.
                                                 This effort appears to be paying off, although some other countries in the region
                                                 (notably South Korea) are more advanced in IT usage. In 2004, 74% of
                                                 Singaporers households had access to a computer and 65% had Internet access.

                                                 Energy provision
         The electricity market is               Major changes have been under way in power generation and distribution.
       opened up to competition                  Until early 2001 the Public Utilities Board (PUB) ran a monopoly. The system
                                                 now has a new regulator, the Energy Market Authority. The generating sector is
                                                 gradually being opened up to competition, with existing public-sector
                                                 generators sold off. Electricity supplies to larger customers have already been
                                                 opened up to competition, with competition allowed in the whole market
                                                 since 2003.
                                                 Despite government efforts to discourage excessive use of electrical power,
                                                 consumption has continued to rise. According to the latest annual data, total
                                                 electricity sales were 33.2bn kwh in 2004, up by 3.7% on the 2003 level. Piped
                                                 gas sales fell slightly in 2004, after rising in 2002 and 2003. Liquid petroleum
                                                 gas (LPG) sales rose slightly.

© The Economist Intelligence Unit Limited 2005                    www.eiu.com                                      Country Profile 2005
You can also read