SINGAPORE

COUNTRY OVERVIEW

LOCATION AND SIZE.

Singapore is a city-state in Southeast Asia, located about 137 kilometers (85 miles) north of the Equator. It consists of 1 major island and 59 small islands. Singapore lies at the center of a major sea route connecting the Far East to Asia, Europe, and the Middle East, which gives the country its strategic importance. It is separated from Malaysia to the north by the narrow Johore Strait and from Indonesia to the south by the wider Singapore Strait. The country has a land area of 637.5 square kilometers (247 square miles), but no land boundaries, and its total coastline is 193 kilometers (120 miles). The territory of Singapore covers a slightly smaller area than that of New York City.

POPULATION.

The population of Singapore, which is entirely urban, was estimated at 4,151,264 in July 2000. In 2000, the birth rate stood at 12.79 per 1000 people, a low level attributed to urbanization and birth control policies, and the death rate stood at 4.21 per 1000. The estimated population growth rate is 3.54 percent. Such a high rate is due to the high net immigration rate, which stood at 26.8 immigrants per 1000 people. These immigrants form a large community of foreign temporary workers estimated at about 10 percent of the total population. Singapore has one of the highest population densities in the world, with about 6,500 people per square kilometer (or 16,800 per square mile).

The Singaporean population is diverse and represents 3 major ethnic groups. Ethnic Chinese make up almost 77 percent of the population, Malays make up 14 percent, Indians 7.6 percent, and other ethnic groups 1.4 percent. Around 18 percent of the population is below the age of 14, and just 7 percent is older than 65. The current ethnic distribution was formed in the 19th century when the British administration encouraged people to migrate to Singapore from neighboring Malacca, the Indonesian islands, India and especially China.

In 1957, Singapore's population was approximately 1.45 million, and there was a relatively high birth rate. Aware of the country's extremely limited natural resources and small territory, the government introduced birth control policies in the late 1960s. In the late 1990s, the population was aging, with fewer people entering the labor market and a shortage of skilled workers. In a dramatic reversal of policy, the Singapore government now plans to introduce a "baby bonus" scheme in 2001 that will encourage couples to have more children.

Singapore wants to limit the inflow of illegal immigrants. The effect of drugs and drug trafficking is another important issue, since Singapore lies near the "Golden Triangle," an area between Burma, Laos, and Thailand that is the world's largest producer of illicit drugs such as opium. Singapore is among the few countries in the world to have adopted the death penalty for possession and sale of drugs. New chronic diseases like AIDS are also of great concern to the Singaporean government, since the country is a busy tourist destination.

OVERVIEW OF ECONOMY

Manufacturing and services are the 2 main features of the modern Singaporean economy, but the economy's main economic engine is its seaport, one of the world's busiest. Singapore also has one of the largest commercial shipping registers in the world.

In 1819, when the British East India Company leased this territory from the Sultan of Johore to establish a trade and communication post, it was a small settlement in a swampy area. However, the British administration quickly cleared jungles, reclaimed marshes, and established a merchant seaport. This port expanded into a major regional trading post due to its strategic and convenient location along the main sea route connecting the Far East to British India and to Europe. The rise of Singapore as a communication hub would prove a foundation for its future prosperity.

As a free port and a major British naval base in East Asia, Singapore enjoyed a special status within the British protectorate for a long time. In 1959, Singapore achieved full self-governance, and in 1963, it joined the Federation of Malaysia. However, sharp political disagreements arose with the federal government, and in 1965, Singapore left the Federation and became an independent state. Having a small territory and no natural resources, the government staked everything on the transformation of the country's economic base from a trade mediator and regional transport hub to a manufacturing center, specializing in capital-intensive industries, high technologies, and financial services. Singapore's government promoted a free-market economy and export oriented industrialization (EOI), combined with a measure of state intervention, subsidized credits to selected industries, and high public investment in applied research and certain export targets. Export to the international market promoted efficient use of resources and generated hard currency, which was necessary for catching up with further development of technologies and industrial innovation. This policy brought unprecedented economic expansion, with an annual average growth rate of 6.4 percent from the 1960s through the 1980s. This development transformed Singapore into one of the "economic tigers" of Asia.

There are different interpretations about the causes of this high performance. A World Bank report argued that this success was because of a mix of private investors and available human resources. Others argue that state initiatives and government economic policies were important. In Singapore's transformation, the Economic Development Board, which is the government agency responsible for the formulation and implementation of economic and industrial development strategies established in 1961, played a crucial role.

The country's major export products are electronic goods, machinery, and equipment produced by major multinational corporations. Tourism is important. In 1996, Singapore hosted 4,795 international and regional conventions and received more than 7 million tourists, providing revenues of about 9 percent of gross domestic product (GDP). Finance and business services are other important sectors of the economy, accounting for almost 30 percent of GDP in 1996. Transport and communications contributed an estimated 10 percent of GDP in 1996.

The Singapore government is persistent in the promotion of initiatives to keep the country competitive in the international arena. One of these initiatives is IT2000, which depends on a vision of Singapore as an "Intellectual Island" where information technologies penetrate all aspects of life. Another initiative is Jurong Town Corporation, which offers ready-built factories and manages 33 industrial parks housing 7,000 companies. The government supported the selected sectors in manufacturing and other industries through different means. It owns the Government-Linked Companies (GLCs) that operate as commercial entities. Singapore has the second highest number of state-controlled firms (45 percent) in the world, higher than Korea or Japan.

One of the important features of the Singaporean economy is that the financial sector has been guided by conservative fiscal policies. In 1998, in response to the 1997 Asian financial crisis, the Singapore government announced financial reforms to improve the country's international competitiveness, which included further liberalization of the financial sector and tax initiatives.

High economic performance and development kept unemployment at a low level during the last decades of the 20th century in all sectors of the economy including manufacturing, tourism, and finance. In 1999 unemployment was just 3.2 percent (by comparison, unemployment in the United States was 4.2 percent in the same year). Because of the speed of its economic expansion, Singapore began to experience shortages of skilled labor in the late 1990s and early 2000s.

POLITICS, GOVERNMENT, AND TAXATION

Singapore is a parliamentary democracy with a president as the constitutional head of state. The president plays a ceremonial role in the political life of the country and until 1991 was elected by the parliament. In 1991, the constitution was amended, allowing citizens to vote for their president in direct popular elections. Current president S. R. Nathan took office for a 6-year term in 1999. Singapore's unicameral (one house) parliament has 83 members elected by popular vote. Executive power rests with the cabinet, led by the prime minister who is responsible to the parliament.

Several political parties have been active since Singapore's independence in 1965. Five of these parties have a high profile and influence in the country. These are: People's Action Party (PAP); National Solidarity Party (NSP); Singapore Democratic Party (SDP); Singapore People's Party (SPP); and Worker's Party (WP). Unlike many neighboring countries, the Communist Party does not have mass support in Singapore, and there has been no violent confrontation with communists. The military has never been an influential force in the political arena of the country. Politically, Singapore has remained remarkably stable and nearly untouched by political violence since independence.

Since the end of World War II, the major issues shaping political competition in Singapore have been the promotion of political stability, economic growth, and maintaining a balance among the 3 main ethnic groups. The PAP came to power spreading an ideal of national consolidation, economic growth, and state paternalism. It has remained the country's dominant political force for the past 40 years, controlling parliament in every election since independence. The PAP's strong man, Lee Kuan Yew, became prime minister in 1959 when Singapore acquired self-governance, and retained this position until 1990. After his resignation, Goh Chok Tong, Lee's chosen successor, became the new prime minister. One of the unique features of Singaporean political development is the governing by a single party since gaining independence in 1965. This has led prominent human rights groups to criticize the Singaporean government over its failure to promote and protect the political and civil rights of its citizens.

Since the early 1960s, under the leadership of both Lee Kuan Yew and then Goh Chok Tong, the Singapore government has promoted a free-market and export-oriented economy. This policy has been successful and the country has experienced unprecedented economic growth and prosperity. Leading technocrats were able to capture major trends in technological change in the modern world and utilize the benefits of globalization. In 1992, as a member of the Association of South East Asian Nations (ASEAN), Singapore created a regional free trade zone, to be known as the ASEAN Free Trade Zone (AFTA). Singapore managed to minimize the negative effects of the oil crisis of 1979 and the Asian financial meltdown in 1997.

The country has continually attracted foreign direct investment and technological transfers from developed countries such as Japan and the United States. One of the important tools in the hands of the government has been its taxation policy and its initiatives. With few exceptions, capital gains are not taxed in Singapore. Both resident and non-resident companies are taxed at the same rate as the corporate tax rate, which stays at 25.5 percent. The typical withholding tax rate on interest payable to non-residents stays at 15 percent, but this could be reduced or even exempted by tax treaties in the future. A Goods and Services Tax (GST) was introduced in April 1994 at 3 percent, but was accompanied by compensatory reductions in direct taxation. Qualified employees may enjoy tax exemptions of 50 percent for up to S$10 million of stock option gains arising over a period of 10 years for stock options granted after June 2000.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Singapore inherited from the colonial era a superior infrastructure and well-developed transport network. After independence, the Singaporean government made many efforts and sizable investments to improve these even further. This small city-state is served by a network of 3,122 kilometers (1,940 miles) of highways, 99 percent of which are paved. In the 1970s and 1980s, there was a steep increase in private car ownership, which led to traffic congestion and rising air pollution. The government reacted swiftly, investing significant sums in public transport, especially the mass transit system. It also restricted private car usage on Singaporean roads, using different measures, including taxes and Certificates of Entitlement. By the 1990s, 83 kilometers (51 miles)

of mass rapid transit system, and 11 kilometers (6 miles) of light rapid transit system had been built, and the country could boast of an excellent public transport system, praised for its safety, quality of service, and punctuality. In 1998, the government launched a S__BODY__.7 billion project to build a new transit line. There were at that time 681,924 registered motor vehicles, including 378,090 cars, 11,410 buses, 133,382 motorcycles and scooters, and other vehicles.

Throughout the colonial era, the port of Singapore was an important military base and commercial seaport. After gaining independence, Singapore maintained its status as an important regional transport hub. Its seaport is believed to be one of the world's busiest ports in tonnage terms, with 140,922 vessels making up a shipping weight of 858 gross tons calling at the port and total container traffic of 15.14 million 20-foot equivalent units. It also has one of the largest commercial shipping registers in the world. Its merchant marine included 891 ships (1,000 gross registered tonnage and over) in 1998. Singapore also houses the third-largest oil refinery in the world with a capacity of 1 million barrels a day (1998). Major petroleum companies, including Shell, ESSO, Caltex, British Petroleum, and Mobil, operate there.

The government has invested heavily in the development of aviation, signing air service agreements with 90 countries, including "open skies" agreements with the United States, New Zealand, and Brunei Darussalam. The Civil Aviation Authority of Singapore (CAAS) oversees and regulates development in this sector. There were 9 airports in Singapore in 1999. The largest is Changi airport (a subsidiary of CAAS), which hosted 61 airlines and handled 23.8 million passengers in 1998 alone, making Singapore one of the major airports in the region. The 47-hectare (116-acre) Changi Airfreight Center handled 1.43 million tons of air freight movement in 1998. The government planned to invest a further S__BODY__.5 billion in upgrading the airport facilities in the first decade of the 21st century. Singapore Airline (SIA) was created in 1972 after the split of Malaysia-Singapore Airline. SIA and its subsidiary, SilkAir, operated 87 aircraft, employed 18,800 people, and carried 12 million passengers a year in 1998. In 1998, SIA was ranked fourth in terms of international freight measured in ton-kilometers, and eighth in international passenger-kilometers.

Singapore is fully reliant on imports of mineral fuel for domestic consumption, and these imports accounted for 9.3 percent of merchandise imports in 1996. This makes the country vulnerable to unfavorable fluctuations in world oil prices. Electric power is produced from fossil fuel at 3 power stations. Electricity production was recorded at 28.586 billion kilowatt-hours (kWh) in 1998.

Telecommunication services in Singapore remain under state control. Telephone service is provided by the state-controlled Singapore Telecom (ST). The country had 54.6 million telephone lines and 1.02 million mobile cellular telephones in 1998. The government has attempted to end ST's monopoly. In 1993, it sold about 7 percent of its share to private companies and, in 1997, ST's monopoly on mobile and pager services came to an end. In 1998, there were 8 Internet service providers in the country and 458.4 computers per 1,000 people, which is more than in the United States. In 2000, the Singapore government announced a S__BODY__.5 billion investment over 3 years into the e-Government Action Plan, which should enable Singaporeans to access a wide range of online services.

ECONOMIC SECTORS

Singapore's separation from the Federation of Malaysia in 1965 had advantages and disadvantages. On the one hand, its economic development has been constrained by its small territory, small population, and extremely limited natural resources, and the country has always been fully reliant on the importation of foodstuffs. Yet Singapore has a huge advantage in its location in a major sea route connecting the Far East to South Asia, Europe and the Middle East. The country has a well-trained, well-educated, disciplined labor force and has attracted major multinational corporations from Europe, Japan, and the United States. Many of them, such as Sony, NEC, Matsushita, Texas Instruments, and others, have established their manufacturing and assembly plants or distribution centers there.

Singapore has fully used the advantage of its superior location, reinventing itself as a major communication hub in Southeast Asia. The policy of encouraging private entrepreneurship, giving priority to the development of an export-oriented economy, and encouraging capital intensive industries combined with selective state intervention, brought Singapore unprecedented economic growth from the 1960s through the 1990s. By 2000, industry and services had become the 2 largest sectors of the modern Singaporean economy, contributing 30 percent and 70 percent of GDP, respectively, in 2000. (Agriculture's contribution was negligible.) Although there was a substantial slowing down in economic growth in all sectors of the economy after the 1997 Asian financial crisis, Singapore managed to avoid economic decline like neighboring Indonesia or Thailand.

AGRICULTURE

Agriculture, including fishery, is an insignificant part of Singapore's economy, accounting for just 0.2 percent of GDP and employing 0.2 percent of the workforce. Since the 19th century Singapore has been fully reliant on the import of foodstuffs, obtained from its neighbors. The country has a small fishing industry consisting of a small fleet and marine fish farms. There has been some interest in the greenhouse production of certain fruits and vegetables for domestic consumption, but it has not developed and remains small. Singapore does cultivate orchids for domestic and export markets.

In the late 1990s, Singapore businessmen expressed interest in biotechnology and genetically modified food production. The public outcry in Europe and the United States over genetically modified food has cooled this interest for the time being. Some private entrepreneurs invested in the agricultural sector in neighboring Malaysia and Thailand, aiming to export the products back to Singapore.

INDUSTRY

Singapore belongs to the "New Industrialized States" (NIS), the countries that underwent rapid industrialization from the 1960s to the 1980s. During these 2 decades, Singapore managed to attract technology transfers from the developed world as well as sizable foreign direct investment (FDI). The island has a small mining industry that is of no importance in the national economy.

MANUFACTURING.

Singapore has a diverse, well-established, and economically important manufacturing sector, which contributed 28 percent to GDP and provided employment for 417,300 people, or 21.6 percent of the workforce, in 1999. Since the early 1990s, the manufacturing sector's share in GDP has been slowly declining due to the steady rise in competition from neighboring countries and the expansion of its own service sector. The United States remains the single largest investor in Singapore's economy. In 1999, about 57 percent of FDI commitments came from the United States.

Singapore began its industrial sector in the 1960s, using its superior location and well-trained and educated labor force. The industrial sector initially consisted of electrical assembly, oil refining, and shipping facilities. The electronic sector became the country's most important manufacturing element. This sector underwent a rapid expansion in the late 1960s when Texas Instruments and other multinational corporations established assembly plants in Singapore.

In the 1990s, there was further growth in the manufacturing of different electronic products and computer components. In the late 1990s, Singapore became the world's largest producer of computer disk drives. In 1999, electronics accounted for 43.4 percent of value-added manufacturing in the country, making Singapore vulnerable to downturns in the international market. Most of these goods are produced in foreign-owned plants for export to the United States, Europe, and East Asia. Electronics manufacture was affected by the 1997 Asian financial crisis, although the Singaporean government supported the sector by tax breaks and other initiatives. After 1997, several multinational corporations such as Seagate, Western Digital of the United States, and others laid off staff and began restructuring their production capacity. Some considered moving their manufacturing operations to neighboring countries such as Malaysia, Indonesia, and the Philippines, where wages are lower than in Singapore.

Chemical production, petroleum production, and printing are also important contributors to the country's economy. Singapore has a well-developed chemical and chemical production sector. This sector experienced steady growth in the 1980s and 1990s by attracting substantial FDI. Chemical production contributed 18.1 percent of valued-added manufacturing in 1999.

Petroleum production underwent rapid expansion in the 1960s and 1970s, benefiting from the country's large and efficient seaport and modern oil refining facilities. This sector produces 18.8 million metric tons (20.68 million tons) of distillate fuel oils and 15.7 million metric tons (17.27 million tons) of residual fuel oil, and other petroleum-based products. Singapore has the world's third largest oil-refining industry. Petroleum production contributes 4.4 percent of valued-added manufacturing.

Singapore has developed high-quality color printing processes, producing several publications for major clients from the United States and Europe. Printing and publishing contributes 4.0 percent of value-added manufacturing (1999). The other manufacturing sectors produce transport equipment, machinery, and fabricated metal products.

SERVICES

TOURISM.

Tourism is an important sector of Singapore's economy, providing employment for 118,900 people. Although Singapore was long known as a tourist destination for sailors, business people, and adventurers, mass tourism began in earnest in the 1970s and 1980s with the increase in international air travel. The number of tourists visiting the country rose steadily throughout the 1980s and 1990s, reaching 7.29 million in 1996. There was a decline of about 1.3 percent in 1997 and 13.3 percent in 1998, due to economic turmoil in the region. In response to this decline, the Singapore Tourism Board started "Tourism Unlimited," a program promoting regional tourism and developing tourist projects near Singapore. In 1999, about 6.96 million tourists visited the country, contributing S$11.2 billion dollars to the national economy.

Singapore promotes itself as a "dream destination," offering excellent service, a multicultural environment, local hospitality, exotic festivals, and tax-free shopping. To boost its competitiveness it has also signed visa-free agreements with most countries in Asia, Europe, and the Americas. According to the national authorities, in 1998 Singapore had 108 hotels with total room capacity of 32,000. Most visitors come from the ASEAN countries, Japan, Taiwan, Australia, the United Kingdom, and the United States. In the 1990s, Singapore reinvented itself as Asia's convention city. In 1996, the capital hosted 4,795 international and regional conventions with 426,000 foreign participants. According to the Union des Associations Internationales, Singapore ranks seventh among the world's major convention cities.

FINANCIAL SERVICES.

The financial and business services sector is one of the most important sectors to the Singapore economy and provides employment for 266,000 people. Finance rests on the traditional foundations of the banking system, investments, insurance, and foreign exchange. There were 154 commercial banks in 1997, although banking was dominated by the "Big Four": the DBS Bank, the United Overseas Bank (UOB), the Overseas Union Bank (OUB), and the Overseas-Chinese Banking Corporation (OCBS). According to the IMF, Singapore is the world's fourth-largest global exchange center. The financial sector, particularly its banking component, has been tightly regulated by the Monetary Authority of Singapore (MAS), prompting sharp criticism from the United States and the World Trade Organization (WTO).

Although the 1997 Asian financial crisis affected the financial sector, there were no major bank collapses or bankruptcies. In 1997, Singapore's benchmark Strait Times Industrial Index (STII) fell 30 percent, leading to the STII being replaced by the simplified Straits Times Index (STI) in August of 1997. In 1999, the STI experienced some recovery due to an upturn in the manufacturing sector. The MAS reinforced its strict policy against internationalizing the Singapore dollar by limiting overseas lending and borrowing by non-residents. This policy restricts use of the currency outside the country for activities unrelated to the domestic economic development. However, economic recovery has improved the Singapore government's fiscal position, and it intends to deregulate and gradually liberalize the financial sector.

The business services sector (including property services, accountancy, and information technology), the fourth-most important economic sector in 1999, experienced difficult times in the late 1990s. During this period, economic recession and declining investments in neighboring countries led to less demand for financial and business services and brought a sharp decline in spending in the property market.

RETAIL.

Singapore's well-developed retail sector provides excellent service to the local population and to foreign tourists. Large, state-of-the-art supermarkets are complemented by thousands of small retail shops where tourists and local consumers can buy different products. Singapore has long been recognized as a major tourist shopping destination offering, among other things, the latest electronic products free of tax. In 1998, there were 281,200 people employed in the wholesale and retail trades. After the decline of 1997 and 1998 this sector recovered, with the value of retail sales up by 12.1 percent and their volume up by 14.1 percent.

INTERNATIONAL TRADE

Since the 1960s, Singapore has adopted a policy of export-oriented industrialization, promoting the export of goods and services in the international markets. It has few barriers against the import of goods and services, although the government's well-known interventionist policy in the regulation and ownership of many Singapore companies has been widely criticized. Singapore more than doubled its exports, from US$52.752 billion in 1990 to US$118.268 billion, in 1995. Exports dipped after 1997, but recovered to reach US$137 billion in 2000. The United States is Singapore's single largest trading partner, accounting for 19 percent of all exports in 1999, primarily from the sale of manufactured electronics and computer peripherals. A large part of these exports originates from U.S.-owned companies, which are traditionally the largest investors in the Singapore economy. Neighboring Malaysia is the second largest export market, accounting for 17 percent of total exports. Hong Kong and Japan are also important export destinations, accounting for 8 percent and 7 percent of exports respectively. Other important partners include Taiwan, Thailand, the United Kingdom, the Netherlands, China, South Korea, and Germany.

The United States and Japan are the largest suppliers of imports to Singapore, with both countries supplying 17 percent of imports. Malaysia remained one of the traditional sources of imports, accounting for 16 percent

of the total. Major imports from Malaysia include consumer goods like foodstuffs and raw materials. China (5 percent), Thailand (5 percent), Taiwan (4.0 percent), Saudi Arabia (3 percent), and Germany (3 percent) are other major sources of imports. In 2000, the value of imports totaled US$127 billion.

Singapore's government considers the development of free trade as an important factor for the country's future economic growth. Singapore strongly supported free trade negotiations between the members of the Asia Pacific Economic Cooperation organization (APEC), which tried to remove trade barriers between member countries, including the United States, Canada, Japan, Australia, and others. Singapore also strongly supported the creation of a regional free trade zone for the Association of South East Asian Nations (ASEAN), to be known as the ASEAN Free Trade Zone (AFTA). In 2001, Singapore announced its intention to discuss bilateral free-trade arrangements with Australia, Canada, Japan, and the United States.

Singapore's international trade rose during the last 3 decades of the 20th century, when the country managed its trade balance to achieve a trade surplus of US$10 billion by 2000. Singapore demonstrated its immunity to the sharp oil price rises in 2000 and 2001; however, it faces increasing competition from neighboring countries and has become vulnerable to changes in global market demands for electronic products. Nevertheless, political and economic uncertainty in neighboring Indonesia, the Philippines, and Thailand have strengthened Singapore's position, confirming its image as one of the most stable and business-friendly countries in the region.

MONEY

Over the last 2 decades, the value of the Singapore dollar showed remarkable stability because of the country's steady economic growth. During this period of unprecedented growth, Singapore managed to avoid high inflation or economic recession. The Asian financial crisis

of 1997 did affect Singapore's economy, but the country was able to avoid the political and economic calamities that brought high inflation and sizable recession to neighboring Indonesia and Thailand. There was slowdown of the Singapore economy in 1997 and 1998, affecting all sectors and bringing a small rise in inflation. In 1999 and 2000, the country overcame the difficulties and produced significant growth. Inflation stabilized at about 0.4 percent and GDP growth at about 5.5 percent in 1999.

According to the IMF classification, the Singapore dollar is a freely floating currency determined by the foreign exchange market. The Monetary Authority of Singapore (MAS), which acts as the central bank, closely monitors the exchange rate and ensures the stability of the currency against international currency speculators. Due to the regional economic downturn, the value of the Singapore dollar declined slightly against the U.S. dollar, from 1.4174 in 1995 to 1.6733 in January 2000. This stability was supported by Singapore's huge stocks of foreign reserves, the world's largest in per capita terms (US$23,864 per head against US$14,070 per head in Hong Kong). These foreign reserves are even larger than those of the United States. Singapore is also the world's fourth-largest global exchange center after London, New York, and Tokyo, with Chase Manhattan Bank, Citibank, Deutsche Bank, Morgan Guaranty, and others, operating in this market.

Singapore has a single stock market, which until 1997 was known as the Strait Times Industrial Index (STII). In August 1997, it was replaced by the Straits Times Index (STI). In 1997 and 1998 the STI was affected by the regional recession, recovering in 1999 and 2000. According to the Singapore Exchange (SGX) statistics, 388 companies, representing total capitalization of S$389.5 billion (US$236 billion), were listed in the SGX main board in December 2000.

POVERTY AND WEALTH

Extraordinary economic growth during the past 3 decades brought wealth and prosperity to Singapore. This

growth was impressive during the 1980s and 1990s. In 1959, when Singapore gained self-governance, its per capita GDP was just US$400. In 2000, Singapore was ranked fifth in the world in terms of per capita GDP, ahead of the United States, Canada, and the United Kingdom. In 2000, the per capita GDP, figured at purchasing power parity, was US$26,500. A Central Provident Fund, to which employers and employees pay compulsory contributions, provides benefits in case of work injury, old age, and disability. Most people live in small apartments in high-rise buildings.

Social polarization is visible in education. The social prestige of a good education is traditionally very high in Singapore society. Private schools are very expensive and those who can spend a considerable part of their income on providing the best education for their children. Although the government is trying to encourage the development of a "knowledge society," education is not compulsory, and the poorer members of Singaporean society are disadvantaged, while the wealthy send their children to leading British, Australian, and North American universities.

In Singapore's society, as elsewhere, some people acquire wealth while others need to work hard merely to maintain a decent life. There are no statistics on the distribution of income, and therefore it is difficult to assess socio-economic and social division in the country. Traditionally, recent immigrants, both legal and illegal, have been the most disadvantaged members of the society. There is evidence, too, that social polarization exists along ethnic lines, with the ethnic Chinese community considered better off than the Malay community. In formulating social policy, the government has to take the importance of ethnic issues into consideration. The Singapore government supports such traditional values as a strong work ethic and the importance of family, promoting them as "Asian values" in opposition to the perceived "individualism" of Western societies. The National Council of Social Services, with the help of 150 voluntary bodies, provides most of the welfare services to individuals and families in need. The government also provides services for families in distress, with mandatory

counseling in cases of family violence, monthly subsidies for working mothers with children in child-care centers, and financial assistance to low-income families. All residents, regardless of social status, are eligible for low-cost medical care.

WORKING CONDITIONS

In 1998, Singapore's labor force was 1.932 million people, with the unemployment rate about 3.2 percent, or 61,700 people. Over the last 3 decades of the 20th century, unemployment has never been high, thanks to the country's robust economic performance across almost all sectors of the economy. Singapore's economy experienced 2 difficult years in 1997 and 1998, when unemployment rose, but since the beginning of economic recovery in 1999 and 2000 there has been strong demand in the labor market. The Employment Act established a 44-hour working week, although there is no official minimum wage or unemployment compensation.

Singapore's economy demands a highly trained and flexible workforce. The government strongly promotes the acquisition of different skills, supporting several higher education centers, and vocational and technical institutes. Facing shortages in the workforce, the government encourages women to work by providing different initiatives and support for working mothers. Women made up about 40 percent of the workforce in 1999. Due to the nature of the labor market and the nation's growing prosperity, there is no child labor problem. The law prohibits employment of children under age 12. Due to labor shortages, there is a growing number of foreign workers in Singapore, unskilled and concentrated in the service and construction sectors.

The activities of trade unions are allowed in the country within the framework of the Societies Act, labor laws, and other regulations. According to the U.S. State Department, in the late 1990s there were 255,020 union members, organized into 83 unions. Most of them are affiliated with the National Trades Union Congress (NTUC), which is closely associated with the ruling People's Action Party. Strikes, slow-downs, and other workers' protests are rare in Singapore. Collective bargaining is common in management-labor relations, but most disagreements are solved through informal consultations and, in disputed cases, through the Industrial Arbitration Court.

The rise of the "new economy" caused a surge in demand for information technology (IT) workers. It is expected that, with annual growth of 10 percent in the IT sector, manpower in this area will need to more than double from 95,000 in 2000 to 220,000 in 2008. The government intends to develop the existing workforce rather than rely on immigration for the acquisition of skilled personnel in the sector. To facilitate retraining, in April 2000 the Ministry of Manpower and the Infocomm Development Authority jointly launched the Strategic Manpower Conversion Program, emphasizing information technologies and "technopreneurship."

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1819. Sir Thomas Stamford Raffles of the British East India Company leases a small territory from the Sultan of Johore and founds Singapore.

1821. First large group of Chinese migrants arrive from Xiamen.

1826. Singapore is incorporated into the Straits Settlements, a British colony.

1860. First census indicates a population of 80,792 in Singapore.

1858. Straits Settlements become a British Crown colony under the jurisdiction of the Colonial Office in London.

1914. Indentured labor system abolished.

1921. Singapore becomes a principal naval base for the British Navy in East Asia.

1942. The country is occupied by Japan during World War II.

1945. Allied forces liberate Singapore from Japanese occupation.

1946. Singapore becomes a Crown colony separate from Malaysia.

1955. A new constitution is adopted, introducing a measure of self-government.

1959. Singapore gains full self-governance under Prime Minister Lee Kuan Yew.

1961. Establishment of the Economic Development Board, a government agency responsible for the formulation and implementation of economic and industrial development strategies.

1963. Singapore joins the Federation of Malaysia.

1965. Singapore withdraws from the Federation of Malaysia and becomes independent.

1965. Singapore joins the United Nations.

1967. Singapore becomes a founding member of the Association of South East Asian Nations (ASEAN).

1970. Independent Monetary Authority of Singapore is established.

1971. Final withdrawal of British troops from Singapore.

1973. Last major ties with Malaysia renounced.

1979. Government begins a program of economic restructuring in response to the shock of the oil crisis.

1987. English is made the language of instruction in schools.

1990. Lee Kuan Yew resigns.

1991. The constitution is amended to allow Singapore citizens to directly elect their president.

1995. Huge losses made by a Singapore-based derivatives trader causes the collapse of Barings, the oldest British banking group.

1997. The ruling People's Action Party wins parliamentary elections, capturing 81 of 83 parliamentary seats.

1998. In response to the 1997 Asian financial crisis, the government announces financial reforms to improve the country's international competitiveness.

1999. The "Industry 21" Program, a new economic blueprint for the development of Singapore in the 21st century, is launched.

FUTURE TRENDS

Singapore has benefited from the globalization of the world economy and experienced 3 decades of extraordinary economic growth, which has brought prosperity and confidence to the people of this small city-state. Able to withstand economic turmoil such as the 1997 Asian financial crisis and the surge in world oil prices at the beginning of the 21st century, Singapore has proved that its economy has grown on a sustainable and strong basis. Inflation remains under control and the Singaporean exchange rate is stable. The quality of life has improved steadily and society has benefited from rising prosperity. The government's policies aim to maintain political and social stability by promoting economic growth from capital-and skill-intensive technologies, although it has been criticized for restricting freedom of press and associations, and for its interventionist economic policies.

In the long term, Singapore needs to maintain its international edge against growing competition from neighboring countries. It is also exposed to economic, political, and environmental developments in the neighboring countries of Indonesia and Malaysia. Continuous political turmoil and social unrest in Indonesia might threaten Singapore by causing an influx of refugees and regional instability. Recent forest fires in the Indonesian part of Borneo brought air pollution to dangerous levels, affecting tourism and the health of the Singapore population.

DEPENDENCIES

Singapore has no territories or colonies.

BIBLIOGRAPHY

The East Asian Miracle: Economic Growth and Public Policy. Washington, DC: The World Bank, 1993.

Economist Intelligence Unit. Country Profile: Singapore. London: Economist Intelligence Unit, 2001.

Economist Intelligence Unit. Country Report: Singapore. London: Economist Intelligent Unit, January 2001.

Eliot, Joshua, and Jane Bickersteth. Singapore Handbook. NTCPublishing Group, 1999.

Kuan Yew, Lee. From Third World to First: The Singapore Story: 1965-2000. New York: HarperCollins Publishers, 2000.

Monetary Authority of Singapore. <http://www.mas.gov.sg>.Accessed October 2001.

Peebles, Gavin, and Peter Wilson. The Singapore Economy. NewYork: Edward Elgar, 1996.

Singapore Exchange. <http://www.ses.com.sg>. AccessedOctober 2001.

Singapore Government Web Site. <http://www.gov.sg>. AccessedOctober 2001.

Singapore: Selected Issues. IMF Staff Country Report No. 00/83. Washington, DC: International Monetary Fund, July 2000.

Singapore: Your Compelling Global Hub for Business and Investment. <http://www.sedb.com/edbcorp/index.jsp>. Accessed October 2001.

U.S. Central Intelligence Agency. World Factbook 2001. <http:// www.odci.gov/cia/publications/factbook/index.html>. Accessed September 2001.

—Rafis Abazov

CAPITAL:

Singapore.

MONETARY UNIT:

Singapore dollar (S$). One dollar equals 100 cents. There are coins of 1, 5, 10, 20, 50 cents, and 1 dollar. There are notes of 2, 5, 10, 20, 50, 100, 500, 1,000, and 10,000 dollars.

CHIEF EXPORTS:

Machinery and equipment (including electronics), chemicals, and mineral fuels.

CHIEF IMPORTS:

Machinery and equipment, mineral fuel, chemicals, and foodstuffs.

GROSS DOMESTIC PRODUCT:

US$109.8 billion (2000 est.).

BALANCE OF TRADE:

Exports: US$137 billion (2000 est.). Imports: US$127 billion (2000 est.).