Singapore Country Profile 2007 - International University of Japan

Country Profile 2007

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

                                                                t                                                                      Sembawang




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

                                    Tuas                 Jurong                                                                                                                                       Bedok
                                                                                                                                    Queenstown                             Geylang
                                            Sembilan Strait                                Panjang
                             Pulau Pesek                                                                                                                                                                                                        t
                                                                                                                                       Telok                                                                                           r   ai
                                                                          Pulau Seraya                                                                                                                                              St
                       Pulau Ayer Chawan                                                                                                                                                                                      re
                                                                    Pulau Ayer Merbau                                                                                                                                     o
                                                                                                                                                                                                                   g   ap                           Main road
                                                           Pulau Bakau                                                                                           Keppel harbour                                n
                                                                                                          ro k             Sentosa                       Buran Darat
                                                                                                                                                                                                          Si                                        Main railway
                                                           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 Sudong                                                                                                        Pulau Sakijang Bendera
                                                                                                                      Pulau Sebarok                                                                                                                 Urban areas
                                                                                                                                                                                                                                                    April 2007
                                                   Pulau Pawai
                                                                                                                                                                                                                                     0 km            2.5            5         7.5      10

© The Economist Intelligence Unit Limited 2007
                                                                           Pulau Senang                                                                                                                                              0 miles                  2.5               5
Comparative economic indicators, 2006

                  Gross domestic product                                                                        Gross domestic product per head
                  (US$ bn)                                                                                      (US$ '000)

   South Korea                                                                                  Singapore

     Indonesia                                                                                  Hong Kong

        Taiwan                                                                                 South Korea

      Thailand                                                                                        Taiwan

    Hong Kong                                                                                        Malaysia

      Malaysia                                                                                       Thailand

     Singapore                                                                                      Indonesia

    Philippines                                                                                 Philippines

       Vietnam                                                                                       Vietnam

                  0         200          400          600          800        1,000                         0.0         5.0       10.0         15.0         20.0     25.0    30.0
                  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)

       Vietnam                                                                                      Indonesia

     Singapore                                                                                       Vietnam

    Hong Kong                                                                                   Philippines

      Malaysia                                                                                       Thailand

     Indonesia                                                                                       Malaysia

    Philippines                                                                                South Korea

   South Korea                                                                                  Hong Kong

      Thailand                                                                                  Singapore

        Taiwan                                                                                        Taiwan

              0.0            2.0         4.0          6.0          8.0         10.0                         0.0        2.0      4.0      6.0          8.0     10.0    12.0   14.0
                  Sources: Economist Intelligence Unit estimates; national sources.                             Sources: Economist Intelligence Unit estimates; national sources.

Country Profile 2007                                                                                              © The Economist Intelligence Unit Limited 2007
Singapore                                                                                                              1



                                                 3    Basic data

                                                 4    Politics
                                                 4    Political background
                                                 6    Recent political developments
                                                 8    Constitution, institutions and administration
                                                 9    Political forces
                                                 13   International relations and defence

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

                                                 21   The economy
                                                 21   Economic structure
                                                 22   Economic policy
                                                 28   Economic performance
                                                 29   Regional trends

                                                 30   Economic sectors
                                                 30   Agriculture
                                                 30   Mining and semi-processing
                                                 30   Manufacturing
                                                 32   Construction
                                                 33   Financial services
                                                 34   Other services

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

                                                 39   Regional overview
                                                 39   Membership of organisations

                                                 43   Appendices
                                                 43   Sources of information
                                                 44   Reference tables
                                                 44         Population
                                                 44         Labour force
                                                 45         Transport statistics
                                                 45         National energy statistics

© The Economist Intelligence Unit Limited 2007                                   Country Profile 2007
2                                                                                                  Singapore

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

Country Profile 2007                      © The Economist Intelligence Unit Limited 2007
Singapore                                                                                                                         3

                                                 Basic data
                              Land area          6,994 sq km (including smaller islands)

                            Population           3.6m (mid-2006 government estimate; 4.5m 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 2006: S$1.59:US$1.
                                                 Exchange rate on April 30th 2007: S$1.53:US$1

                                     Time        Eight hours ahead of GMT

                      Public holidays            January 1st (New Year!s 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 2007                                             Country Profile 2007
4                                                                                                                        Singapore

                                     Singapore is a parliamentary democracy led by the People!s 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 sustained economic growth
                                     and an ability to restrict any expansion in support for the weak and divided
                                     opposition parties. Extra-parliamentary protest is also tightly controlled. 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 Lee!s 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 most recent general election was held on
                                     May 6th 2006, and as in previous contests, the PAP won almost all the
                                     parliamentary seats.

                                     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 it 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 Lee!s 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 Lee!s 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 Workers! 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

Country Profile 2007                                            © The Economist Intelligence Unit Limited 2007
Singapore                                                                                                                             5

                                                 institutional changes generally regarded as a ploy to bolster PAP support, rather
                                                 than as a mechanism for the development of alternative 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.

  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
                                                 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 PAP!s 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 PAP!s 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 PAP!s share of the vote.

       Lee Hsien Loong reasserts                 Following the election, the government became increasingly preoccupied with
                    his 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
                                                 father!s 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. 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.

© The Economist Intelligence Unit Limited 2007                                                 Country Profile 2007
6                                                                                                                         Singapore

                                    Important recent events

                                    January 2002
                                    The government reveals that it is holding 12 Singaporeans and one Malaysian on
                                    terrorism charges.
                                    May 2002
                                    The People!s Action Party (PAP) takes a political gamble with the budget for fiscal
                                    year 2002/03 (April-March), 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
                                    Goh Chok Tong confirms his plan to step down once Singapore!s economy stabilises,
                                    in effect stating that he will not be the prime minister ahead of the next general
                                    election (due in 2007).
                                    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.
                                    September 2005
                                    S R Nathan is sworn in as president for a second term. He does not have to stand for
                                    re-election, as would-be challengers are ruled ineligible to stand for this office.
                                    May 2006
                                    True to form, the PAP wins a general election, taking 67% of the votes cast and 82 out
                                    of 84 parliamentary seats.

                                    September 2006
                                    Singapore takes a heavy-handed approach to shows of dissent during the IMF/World
                                    Bank meetings in the country, prompting some international criticism.

                                    February 2007
                                    Worsening relations with Indonesia precipitate a ban on sand exports to Singapore.
                                    Singapore!s refusal to sign an extradition treaty is at the root of the problem.

                                    Recent political developments
       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

Country Profile 2007                                             © The Economist Intelligence Unit Limited 2007
Singapore                                                                                                                           7

                                                 supplementary packages. The opposition parties chose to contest only 29 of the
                                                 84 parliamentary seats in the 2001 election and won only two of these. The
                                                 government was 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) have found their way into subsequent
                                                 budgets. The budgets were premised on the belief that the key to Singapore!s
                                                 future success was 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) so that this long-term vision could be realised.

   Mr Goh hands over the helm                    In August 2004 Mr Goh stepped down as prime minister and was replaced by
           to Lee Hsien Loong                    Lee Hsien Loong in a smooth handover of power. Mr Lee then reshuffled the
                                                 cabinet, but the changes were relatively small-scale. Mr Goh became senior
                                                 minister; the displaced elder Mr Lee became "minister mentor in the prime
                                                 minister!s 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 could not conceal a shortage of new talent.

     An early general election is                The PAP!s control of domestic politics remained tight. For example, in
              held in May 2006                   September 2005 S R Nathan was sworn in as president for a second term. He
                                                 did not have to fight an election, as all his would-be competitors were deemed
                                                 ineligible to stand for this office. The government has continued to underpin
                                                 this paternalistic approach with further attacks on the country!s few opposition
                                                 parties and a more subtle approach to handling the country!s Muslim minority.
                                                 With economic growth still strong in the first quarter of 2006, Mr Lee decided
                                                 (as widely expected) to call an early general election (in May 2006). Wholly
                                                 predictably, the PAP won a massive majority in parliament, taking 82 of the 84
                                                 available seats and 67% of the vote. However, the size of the PAP!s majority
                                                 may overstate the satisfaction of the population with the current government.
                                                 As usual, the opposition parties found it difficult to contest the multi-member
                                                 constituencies that return most MPs; those constituencies returning opposition
                                                 MPs also faced effective economic sanctions, with housing upgrading given
                                                 lower priority than in areas supporting the government.
                                                 Since the election, the government has kept up the pressure on opposition
                                                 parties, with senior PAP figures pursuing a libel action against members of the
                                                 Singapore Democratic Party (SDP), for example. The SDP!s leader, Mr Chee, has
                                                 also been briefly imprisoned, along with some supporters. The government has
                                                 furthermore reverted to its old habit of attacking foreign publications that
                                                 criticise the government, with the local courts awarding damages against a
                                                 Hong-Kong-based magazine, Far Eastern Economic Review, in late 2006.
                                                 However, the government!s heavy-handed approach has not gone
                                                 unchallenged. Its attempts to stop opposition protests during the IMF/World
                                                 Bank meetings in Singapore in September 2006 prompted criticism from the
                                                 World Bank!s president, Paul Wolfowitz, among others.

© The Economist Intelligence Unit Limited 2007                                               Country Profile 2007
8                                                                                                                                                    Singapore

                                       Election results since independence
                                                                                                 Seats won             Seats won by               % of vote
                                                                                                    by PAPa            other parties             won by PAPa
                                       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
                                       May 6th 2006                                                     82                         2                   66.6
                                       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
                                       politicians who have failed to win a seat, has in the past only occasionally been
                                       used. 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 Ong!s
                                       successor. As a result, he was declared president without an election. This
                                       strange process was repeated in September 2005, when Mr Nathan was sworn
                                       in for a second term.
                                       The president!s 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 president!s authority over some financial matters (notably
                                       Singapore!s 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.)

Country Profile 2007                                                                        © The Economist Intelligence Unit Limited 2007
Singapore                                                                                                                             9

                         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 chief justice from
                                                 1990 to April 2006 was Yong Pung How; his replacement was Chan Sek Keong,
                                                 formerly the attorney-general. He is serving an initial three-year term. 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. An official review, published in August 2006,
                                                 unveiled a scheme whereby foreign lawyers will initially be allowed to do
                                                 "offshore" work (for example, on crossborder transactions), before being
                                                 allowed to deal with domestic issues.

                                                 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 includes many
                                                 familiar faces from 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 minister of defence,
                                                 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
                                                 PAP!s 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 2005 over whether to allow the
                                                 construction of casinos in Singapore was particularly sensitive because it gave
                                                 varying religious and civic groups a common cause and because it also
                                                 revealed some soul-searching within the PAP. 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 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 prominent recent target has been Chee Soon Juan, the
                                                 secretary-general of the SDP. In early 2005 Mr Chee was ordered to pay a total
                                                 of S$500,000 (US$300,000) in damages to senior PAP figures, for remarks made
                                                 during the 2001 election campaign. In February 2006 he was declared
                                                 bankrupt, and later that month he faced contempt-of-court charges over his

© The Economist Intelligence Unit Limited 2007                                                 Country Profile 2007
10                                                                                                           Singapore

                       remarks made during this bankruptcy hearing. Mr Chee was sentenced to a day
                       in jail and told to pay a S$6,000 fine; he refused to pay this fine and served an
                       additional week in jail. In April 2006 Lee Hsien Loong and Lee Kuan Yew
                       demanded an apology from Mr Chee for remarks made in the SDP newspaper,
                       The New Democrat, and Mr Chee was again imprisoned in November 2006 for
                       failure to pay a fine resulting from speaking in public without a permit. The
                       litany of other charges against Mr Chee is long, and he is likely to continue to
                       receive a battering in the courts.
                       Main political figures

                       Lee Hsien Loong (in the past often referred to as B G Lee)
                       Prime minister since August 2004 and minister of finance. 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. The
                       result of the 2006 general election was widely seen as a test of his popularity, as
                       much as of the government!s overall success.
                       Goh Chok Tong
                       Senior minister and head of the Monetary Authority of Singapore (MAS, the central
                       bank). Mr Goh, the prime minister from 1990 to 2004, is a rather more relaxed
                       political figure than the younger Mr Lee. His foreign-policy experience has proved
                       useful, but has yet to produce a breakthrough in relations 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.
                       Wong Kan Seng
                       A deputy prime minister since September 2005, replacing Tony Tan. Minister for
                       home affairs since 2004. Praised for his effective handling of the SARS (Severe Acute
                       Respiratory Syndrome) crisis in 2003.
                       Shunmugan Jayakumar
                       The other deputy prime minister and the minister for law. Minister for foreign affairs
                       until 2004. Now 67 and considered a loyal supporter of Lee Hsien Loong, he can
                       have no ambitions for the top job.

                       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
                       then to be accepted back into the fold.

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Singapore                                                                                                                                 11

                                                 Chee Soon Juan
                                                 Secretary-general of the Singapore Democratic Party (SDP). Currently the most
                                                 prominent critic of the government, but cannot hold a parliamentary seat owing to
                                                 bankruptcy conviction. By profession a neuropsychiatrist.

                                                 Chiam See Tong
                                                 The longest-serving opposition member of parliament (MP), returned again by the
                                                 Potong Pasir constituency in the general election in May 2006. Head of the Singapore
                                                 People!s Party.

                                                 Low Thia Khiang
                                                 Head of the Workers! Party and opposition MP for Hougang. An effective and
                                                 resilient 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 party!s then
                                                 leader, Chiam See Tong, to leave the party. Mr Chiam retained his seat as a
                                                 Singapore People!s Party (SPP) MP in the 1997, 2001 and 2006 elections. Low
                                                 Thia Khiang of the Workers! Party (WP) accounted for the other opposition
                                                 victory at the November 2001 election, retaining the Hougang constituency (a
                                                 position he maintained in the May 2006 election). The Singapore Democratic
                                                 Alliance (SDA) is a loose alliance consisting of the National Solidarity Party, the
                                                 Singapore Malay National Organisation and the SPP.
                                                 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
                                                 addition to the punishments for his other misdemeanours.
                                                 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, and relations again deteriorated in early 2007. Despite Indonesia!s larger size,
                                                 the main military threat is seen as coming from Malaysia. A particular longstanding
                                                 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 over 100 combat aircraft. It is presumed that
                                                 any move to cut off Singapore!s 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.

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12                                                                                                             Singapore

                       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
                       government has responded by detaining a number of people (almost all Singaporean
                       citizens) under the provisions of the Internal Security Act (ISA). A particular bogey is
                       the Jemaah Islamiya group, which in April 2007 was reported to have formed an
                       assassination squad. Anti-terrorist co-operation with Indonesia has much improved,
                       as demonstrated by the extradition of a high-level terrorist suspect from Indonesia to
                       Singapore in early 2006, but progress here could be prejudiced by current rows over
                       a proposed extradition treaty between the two countries. Co-operation between the
                       Singaporean and Malaysian anti-terrorist forces appears to be good, despite the
                       ongoing political spats between the two countries. Marine piracy will also remain an
                       important problem in the waters surrounding Singapore, and Singapore has been
                       pressing for better international maritime security practices: the nightmare scenario is
                       a nuclear device on a boat berthed at 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 to be 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, and the international furore over Danish newspaper cartoons of the
                       prophet Mohammed in 2005 caused no violence in Singapore. 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. 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 world!s highest execution
                       rate per head of population. There is some organised cigarette-smuggling from
                       Indonesia and some illicit gaming, but in general Singapore!s organised criminal
                       groups are small, poorly organised and stand no comparison to their counterparts in,
                       for example, China or Japan. The police force is also considered highly effective.

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Singapore                                                                                                                             13

                                                 International relations and defence
            Relations with Malaysia              Singapore has long had a difficult relationship with Malaysia, its closest neigh-
                    remain difficult             bour, 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), alleged environmental damage resulting from
                                                 Singaporean land reclamation work and the extent to which the Singaporean
                                                 air force can overfly Malaysia, among other things. Leaders on both sides have
                                                 sometimes, intentionally or unintentionally, exacerbated the situation with
                                                 remarks seen as derogatory to the other country.
                                                 In early September 2001 an outline agreement on resolving existing disputes
                                                 was reached between Singapore!s 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 governments! attention was
                                                 diverted by a dispute over whether Singaporean land reclamation was preju-
                                                 dicing shipping lanes into a Malaysian port, Tanjung Pelepas. (The International
                                                 Tribunal on the Law of the Sea ultimately ruled in Singapore!s 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 Abdullah,
                                                 who replaced Dr Mahathir in November 2003, has adopted a more conciliatory
                                                 approach towards Singapore. Reciprocal visits were 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. However, agreement on outstanding problems
                                                 proved to be elusive, and the two sides promptly found something else to row
                                                 about: Malaysian plans to build a "half-bridge" to replace the existing causeway
                                                 between the two countries were abandoned in 2006. (Singapore, for various
                                                 reasons, does not want to build a bridge connection.) In January 2006 Malaysia
                                                 started work on this half-bridge, but halted work in April, with the government
                                                 also saying that possible deals on other areas would now be put on hold.
                                                 Relations between the two countries were further harmed by remarks made by
                                                 Lee Kuan Yew in September 2006, in which he accused Malaysia of
                                                 marginalising its own Chinese community. Malaysian domestic politics suggest
                                                 that it could take some time before serious discussions start again.
                                                 Mr Abdullah!s 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. However, Malaysia may liberalise its domestic aviation
                                                 industry, something that Singapore has been pressing for.

   Relations with Indonesia are                  Singapore also has a difficult relationship with Indonesia. Following the com-
                     not warm                    plete breakdown of relations in the 1960s, Singapore!s government made great
                                                 efforts to develop relations with Indonesia!s 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. Soeharto!s
                                                 successor, B J Habibie, was openly dismissive of Singapore and its government.

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14                                                                                                                       Singapore

                                      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 Wahid!s successor,
                                      Megawati Soekarnoputri, were businesslike rather than warm.
                                      Relations may improve in future. The current Indonesian president, Susilo
                                      Bambang Yudhoyono, visited Singapore in early 2005 to sign an investment
                                      protection agreement, and there have been one-off extraditions of terrorist
                                      suspects between the two countries. However, Singapore has historically been
                                      extremely reluctant to sign a proper extradition agreement, and this has caused
                                      considerable friction: the Indonesian government believes that Singapore is
                                      harbouring a number of corrupt individuals, whom it would like to see
                                      returned for trial. Relations may improve following the signing of an extradition
                                      treaty in April 2007. A few years ago Singapore started trying to build up
                                      relations with individual Indonesian provinces, in the hope of bypassing the
                                      political uncertainties of Jakarta, but is now downplaying this approach, as it
                                      courts Mr Yudhoyono.

  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
                                      organisation!s tardy progress on freeing up regional trade. Accordingly,
                                      Singapore began to display an increasing enthusiasm for bilateral free-trade
                                      agreements (FTAs), the first of which (with New Zealand) was concluded in late
                                      2000. An agreement was 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, and a
                                      Comprehensive Economic Cooperation Agreement (CECA) with India in 2005.
                                      This bilateral approach initially complicated relations with Singapore!s 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 2005 ASEAN and
                                      China agreed plans to create a free-trade area by 2010. Plans for an ASEAN-
                                      India deal are currently stymied by Indian concerns over agricultural imports.

      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
                                      Singapore!s financial sector, have not been allowed to develop into major

        Terrorist threat reinforces   Singapore!s enthusiasm for the US is motivated by military, as well as economic
           defence links with US      reasons. Given the country!s small size and potentially troublesome neighbours,
                                      self-defence remains a priority. Singapore!s military has close links with the US
                                      armed forces; particular reassurance is provided by the US navy!s use of Changi

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Singapore                                                                                                                              15

                                                 naval base. (This relationship may, however, increase the risk of Singapore
                                                 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 difficult. Although Singapore,
                                                 Malaysia and Indonesia have been carrying out co-ordinated naval patrols in
                                                 the Malacca Strait since July 2004, Singapore!s efforts to upgrade this
                                                 relationship to include, for example, the involvement of other countries, have
                                                 been rejected by the island-state!s neighbours. In April 2007, however, the
                                                 Indian government revealed that it was working "quite expeditiously" on a
                                                 defence agreement with Singapore. Moreover, some progress is being made
                                                 towards broader regional cooperation"in late 2006 several countries, including
                                                 Singapore, agreed to improve security ties through the Regional Co-operation
                                                 Agreement on Combating Piracy and Armed Robbery Against Ships in Asia.
                                                 The country!s regular armed forces are complemented by some 312,500
                                                 reservists. Equipment is modern, and defence spending is high as a proportion
                                                 of GDP.

                                                 Resources and infrastructure

     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. (In mid-2006 Malays accounted for 13.6% of the total
                                                 population, and Indians accounted for 8.8%.)

   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, have failed to boost
                                                 the birth rate. The fertility rate reached a record low of 1.24 children per resident
                                                 female in 2004 and remained at this level in 2005-06. The fertility rate has now
                                                 been below the notional replacement rate of 2.1 since 1976.
                                                 In recent years, the government has given greater emphasis to making life easier
                                                 for working parents"this approach should have more immediate gains, if it
                                                 attracts more women back into the labour force. In 2000 it announced that the
                                                 number of childcare places would be boosted, and that the civil service would
                                                 be allowed more flexible working patterns. Recent government budgets have
                                                 also extended subsidies available for childcare. The issue remains important"the
                                                 low birth rate is already contributing to an ageing of the population, which has

© The Economist Intelligence Unit Limited 2007                                                   Country Profile 2007
16                                                                                                                                            Singapore

                                       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, even though this has caused some
                                       resentment among Singaporeans. 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. In December 2006 the minister for national
                                       development, Mah Bow Tan, told parliament that the country!s population
                                       might increase by over 40%, from 4.5m to 6.5m, over the next 40-50 years.
                                       Population by age and ethnic group
                                       ('000; end-Jun 2006)
                                                                              Chinese                    Malay       Indian        Others          Total
                                       0-14                                     477.2                    126.2         74.0          21.0         698.1
                                       15-29                                    534.8                    115.7         65.2          14.0         729.6
                                       30-44                                    708.1                    114.4         91.0          29.5         942.8
                                       45-59                                    643.2                     93.5         58.7          15.1         810.6
                                       60+                                      350.1                     40.6         30.5           5.9         427.3
                                       Total                                  2,713.2                    490.5        319.1          85.5       3,608.5
                                       Note. Totals may not sum owing to rounding.
                                       Source: Department of Statistics, Monthly Digest of Statistics.

                School education is    The current state of children!s education appears to be 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.

           University education is     The National University of Singapore (NUS) was founded in 1980, merging the
                       stepped up      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. Co-
                                       operation agreements also exist with a number of foreign universities, although
                                       one of these, with the US!s John Hopkins University, was wound up in 2006.
                                       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.

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Singapore                                                                                                                            17

     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                There is also a longstanding debate about the merits of insisting that each pupil
                       of friction               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.

    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 3.1% of total CPF withdrawals in 2006. 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 "catastrophic
                                                 illness" treatment. Individuals are also permitted to use Medisave funds to
                                                 purchase an additional state scheme, Medishield Plus, or private insurance
                                                 policies. In 2002 a new ElderShield scheme was launched, targeted at the
                                                 elderly. A government endowment fund, Medifund, covers the costs of poorer
                                                 Singaporeans who are unable to pay for their treatment. 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)

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18                                                                                                                    Singapore

                                  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. Considerable progress
                                  has already been made on recycling water and on desalination. The
                                  government has been promoting the use of potable recycled water, branded as
                                  Newater, and claims to have invested S$2.7bn (US$1.6bn) in outsourced water
                                  projects between 2002 and 2005. A major desalination plant was opened by a
                                  local company, Hyflux, in Tuas in late 2005, and in January 2007 the
                                  government announced substantial new funding for water research centres.

                                  Transport, communications and the Internet
        A slightly more relaxed   The government has considered deeply the problems of car usage. It has taken
     approach to car ownership    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 budget for fiscal year 2002/03 (April-March)
                                  reduced car taxes and promised a slight increase in the number of COEs (in
                                  return for 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). Subsequent budgets contained no new initiatives,
                                  but the cost of a medium-sized car is now only about half of what it was a
                                  decade ago.

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Singapore                                                                                                                             19

                                                 The emphasis now seems to be changing to a "pay per usage" approach.
                                                 Charges have long been levied on cars entering the central area, but this
                                                 approach was extended significantly 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 to be 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. Substantial expansion of the MRT and LRT networks is planned.

     Changi must cope with the                   Changi airport is regarded by many as the world!s best airport. It currently has
       needs of budget airlines                  two full-service terminals. The threat of low-cost airlines being established in
                                                 neighbouring countries has also resulted in the government acknowledging the
                                                 need for Changi to accommodate these new carriers, and a new terminal
                                                 dedicated to budget airways opened in March 2006. Another full-service
                                                 terminal is being built at Changi and is scheduled for completion in 2008.
                                                 The government accepts that budget airways will have a major role in regional
                                                 air travel. The national carrier, Singapore Airlines (SIA), has formed its own low-
                                                 cost airline, Tiger Airways, with Indigo Partners (a US-based private-equity firm)
                                                 and Irelandia Investments (the investment firm of Tony Ryan, owner of Ryanair,
                                                 a budget airline based in Ireland). Other Singapore-based budget airlines
                                                 include Jetstar Asia (in which an Australian airline, Qantas, has a 49% stake) and
                                                 Valuair. The government!s investment arm, Temasek Holdings, appears to be
                                                 hedging its bets: it has significant stakes in both Tiger Airways and JetStar Asia.
                                                 Despite the growth of budget carriers, Changi!s development is still closely
                                                 linked to the fortunes of SIA. SIA is one of the world!s 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 government!s de facto renationalisation of Air
                                                 New Zealand (in 2001), in which it had a substantial stake. Another setback was
                                                 the decision by the Australian government in February 2006 not to 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 company!s share capital was sold,
                                                 although the government!s share has been further watered down since. Despite
                                                 the government!s heavy presence in terms of ownership, attempts are being
                                                 made to increase competition in the market. SingTel!s 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

© The Economist Intelligence Unit Limited 2007                                                  Country Profile 2007
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