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Country Profile 2005 Singapore This Country Profile is a reference work, analysing the country's history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit's Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at http://www.eiu.com/schedule The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom
The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: london@eiu.com E-mail: newyork@eiu.com E-mail: hongkong@eiu.com Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 0269-7041 Symbols for tables "n/a" means not available; "–" means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.
IA Johor
MALAYSIA
S
AY Baharu
L
MA
t Sembawang
Jo
Strai
ho
hor
r
Jo
Str
a
it
Woodlands
Namazie
Estate Yishun
Sarimbun Kranji
Res. Sungi
Seletar
Seletar Pulau Ubin
Murai Pulau
Res. Tekong Pulau Tekong
Res. Pulau
Punggol Kechil
Serangoon
Seletar Res. Serangoon
Lower Harbour Changi
Bukit Upper Pierce Pierce
Panjag Res. Res. Ang Mo Klo Pasir Ris
Poyan Res. Hougang
Bulim
Changi
Serangoon International
SINGAPORE Tampines
Tangeh Res. Airport
Bishan
Clementi Mac Richie Res.
Toa Payoh
Tuas Jurong Bedok
Katong
Queenstown Geylang
Pasir
Sembilan Strait Panjang
Pulau Pesek
Telok it
ra
Pulau Seraya St
Pulau Ayer Chawan re
Pulau Ayer Merbau o
g ap Main road
Pulau Bakau Keppel harbour n
Se
ba
ro k Sentosa Buran Darat
Si Main railway
Ch
Pulau Busing Pulau an
ne Mass rapid transit
Bukum l Pulau Seringat system (MRT)
Pulau Hantu Pulau Tembakul
Pulau Sakijang Pelepah Main airport
Pulau Semakau
Pulau Sakijang Bendera
Pulau Sudong Pulau Sebarok Urban areas
May 2005
Pulau Pawai
0 km 2.5 5 7.5 10
' The Economist Intelligence Unit Limited 2005
Pulau Senang 0 miles 2.5 5Comparative economic indicators, 2004
Gross domestic product Gross domestic product per head
US$ bn US$ ’000
South Korea Singapore
Taiwan Hong Kong
Indonesia South Korea
Hong Kong Taiwan
Thailand Malaysia
Malaysia Thailand
Singapore Indonesia
Philippines Philippines
Vietnam Vietnam
0 100 200 300 400 500 600 700 0 5 10 15 20 25 30
Sources: Economist Intelligence Unit estimates; national sources. Sources: Economist Intelligence Unit estimates; national sources.
Gross domestic product Consumer prices
% change, year on year % change, year on year
Singapore Vietnam
Hong Kong Indonesia
Vietnam Philippines
Malaysia South Korea
Philippines Thailand
Thailand Singapore
Taiwan Taiwan
Indonesia Malaysia
South Korea Hong Kong
0 2 4 6 8 10 -2 0 2 4 6 8
Sources: Economist Intelligence Unit estimates; national sources. Sources: Economist Intelligence Unit estimates; national sources.
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 1
Contents
Singapore
3 Basic data
4 Politics
4 Political background
5 Recent political developments
7 Constitution, institutions and administration
9 Political forces
12 International relations and defence
14 Resources and infrastructure
14 Population
15 Education
16 Health
17 Natural resources and the environment
17 Transport, communications and the Internet
19 Energy provision
20 The economy
20 Economic structure
21 Economic policy
27 Economic performance
28 Regional trends
29 Economic sectors
29 Agriculture
29 Mining and semi-processing
29 Manufacturing
31 Construction
31 Financial services
33 Other services
34 The external sector
34 Trade in goods
36 Invisibles and the current account
36 Capital flows and foreign debt
37 Foreign reserves and the exchange rate
38 Regional overview
38 Membership of organisations
41 Appendices
41 Sources of information
42 Reference tables
42 Population
43 Labour force
43 Transport statistics
43 National energy statistics
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 20052 Singapore
44 Productivity
44 Business costs
44 Government finances
45 Money supply
45 Interest rates
45 Gross domestic product
45 Gross domestic product by expenditure
46 Gross domestic product by sector
46 Prices and earnings
47 Agricultural production and fish catch
47 Manufacturing production
47 Miscellaneous manufacturing statistics
47 Net investment commitments in manufacturing by sector
48 Investment commitments by country of origin
48 Construction statistics
48 Financial sector assets and liabilities
48 Stockmarket indicators
49 Retail sales
49 Tourism
50 Exports
50 Imports
51 Trade volume indices
51 Major exports and imports
51 Main trading partners
52 Balance of payments, IMF series
53 Balance of payments, national series
54 Foreign reserves
54 Exchange rates
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 3
Singapore
Basic data
Land area 6,82.3 sq km (including smaller islands)
Population 3.5m (mid-year 2004 government estimate; 4.2m including non-residents)
Climate Tropical
Weather (altitude ten metres) Hottest month, May, 24-32°C (average daily minimum and maximum); coldest
month, January, 23-30°C; driest month, July, 70 mm average rainfall; wettest
month, December, 244 mm average rainfall
Languages English, Chinese, Malay and Tamil
Measures The metric system is now predominant
Currency Singapore dollar (S$)=100 cents. Average exchange rate in 2004: S$1.690:US$1.
Exchange rate on May 9th 2005: S$1.642:US$1
Time Eight hours ahead of GMT
Public holidays January 1st (New Yearrs Day); Chinese New Year; end of Ramadan; Good
Friday; Hari Raya Haji; May 1st (Labour Day); Vesak Day; August 9th (National
Day); Deepavali; December 25th (Christmas Day)
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 20054 Singapore
Politics
Singapore is a parliamentary democracy led by the Peoplers Action Party (PAP).
Formerly a British colony, Singapore briefly became part of the Federation of
Malaya, Sarawak and Borneo (Sabah) in 1963, but achieved full independence
in 1965. Since then the PAP, guided by the ideas of Lee Kuan Yew, prime
minister from 1959 to 1990, has dominated politics in the country. The success
of the PAP has been founded on a combination of rapid economic growth and
an ability to restrict any expansion in support for the weak and divided
opposition parties. In 1990 Mr Lee was replaced as prime minister by Goh
Chok Tong. Mr Goh was initially seen simply as a short-term appointment, as a
placeholder for Mr Leers eldest son, Lee Hsien Loong, but stayed in office for
almost 14 years. In August 2004 he finally handed over the leadership to Lee
Hsien Loong, but remains in the cabinet as senior minister. The new prime
minister may call an election later in 2005.
Political background
History before independence The Malacca Sultanate ceded Singapore to the British East India Company in
1819, through the efforts of Stamford Raffles. The island was soon brought
under the control of the British government, which surrendered to the
Japanese in 1942, but regained control in 1945. The 1955 election returned a
Labour Party government, which eventually reached agreement with the UK
over full internal self-government. Mr Leers PAP won the 1959 election, and a
referendum in 1962 revealed overwhelming support for a merger with Sabah,
which was implemented in September 1963. However, tensions in the
federation soon became evident. Singapore withdrew and became an
independent country in 1965.
Political development, 1965-90 The PAP easily won the first post-independence election in 1968, and, through a
combination of rapid economic growth and the maintenance of a weak and
divided opposition, Mr Leers party has dominated politics in Singapore ever
since. From 1968 to 1981 all members of parliament (MPs) were PAP members,
and the only opposition outside of parliament came from a small group of
maverick professionals, many of them lawyers. Two opposition MPs were later
elected, with a representative of the Workersr Party (WP), J B Jeyaretnam,
winning a seat in a by-election in 1981, and Chiam See Tong of the Singapore
Democratic Party (SDP) entering parliament in 1984. Despite these apparent
breakthroughs, the opposition has remained marginal, and there have never
been more than four elected opposition members in parliament.
When the previous rapid rates of economic growth began to slow in 1985-86,
the government reacted by making efforts to build a more consultative
political system, creating institutions such as the Economic Committee. From
1986 there was limited decentralisation of decision-making through the
establishment of town councils. However, the PAP kept hold of the real levers
of power, with institutional changes generally regarded as a ploy to bolster
PAP support, rather than as a mechanism for the development of alternative
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 5
centres of power. Life remained difficult for any individuals or groups thought
to be against the PAP, with the government often suing dissident figures for
libel. Using this method, prominent opposition members were made
bankrupt, or forced to leave the country.
Important recent events
March 2000
The prime minister, Goh Chok Tong, announces that a "speakersr corner" will be set
up, along with new neighbourhood councils.
November 2001
The Peoplers Action Party (PAP) takes 75.3% of the votes cast in the general election,
and 82 out of the 84 directly elected seats in parliament.
January 2002
The government reveals that it is holding 12 Singaporeans and one Malaysian on
terrorism charges.
May 2002
The PAP takes a political gamble with the 2002/03 (April-March) budget, which
benefits business and the higher paid, rather than the poor.
January 2003
The government unveils a white paper on dealing with terrorism.
August 2003
Mr Goh confirms his plan to step down once Singaporers economy stabilises, in
effect stating that he will not be the prime minister ahead of the next general
election (due in 2007).
November 2003
The Computer Misuse Act is passed into law. It allows the authorities to take pre-
emptive measures against hackers planning attacks in Singapore by checking
computer networks.
January 2004
The new prime minister of Malaysia, Abdullah Badawi, visits Singapore twice during
January, signalling a warming of ties between the two countries.
August 2004
Lee Hsien Loong takes over as prime minister. He reshuffles the cabinet, with
Mr Goh becoming senior minister.
April 2005
The government agrees to build two casinos in Singapore. The decision is politically
controversial, and opposed by many civic groups.
Recent political developments
Political development, 1991-97 In 1990 the prime minister since 1959, Lee Kuan Yew, stepped down, to be
replaced by the supposedly more liberal Mr Goh. Mr Lee remained in the
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 20056 Singapore
cabinet as senior minister, and his influence behind the scenes was still
enormous: there was talk of Mr Goh surrendering the chair for parts of cabinet
meetings. It was therefore not clear who took the decision to hold an early
general election in 1991, but Mr Goh took the blame for the PAPrs relatively
poor showing, with the party winning just 61% of the vote. The opposition
parties in effect conceded defeat in advance, contesting only 40 of the 81 seats.
Perhaps reassured that their vote could not end PAP rule, 37% of those voting
supported the opposition (with 2% of votes going to independents). A hesitant
process of cultural liberalisation (for example, on cinema films) was
subsequently reversed, although there was no official crackdown on dissidents.
Mr Goh remained in power, and as the months passed his position within the
PAP appeared to strengthen.
In the January 1997 election the PAP performed better, winning 65% of the vote.
This was partly owing to an increase in group representation constituencies
(GRCs); in these constituencies political parties are required to formulate five- to
six-candidate tickets, which is difficult for the opposition parties with their
limited resources and support. The PAPrs performance was also boosted by the
explicit link made between the timing of the upgrading of Housing
Development Board estates and the loyalty demonstrated by individual
constituencies to PAP MPs. Mr Goh later said that this tactic was the "single
most important factor" in the increase in the PAPrs share of the vote.
Lee Hsien Loong reasserts his Following the election, the government became increasingly preoccupied with
position the consequences of the 1997-98 Asian financial and economic crises. This
allowed Lee Hsien Loong, the eldest son of Mr Lee and long considered his
fatherrs heir-apparent, to regain some of the political momentum that
dissipated after he was diagnosed with cancer in the early 1990s. The younger
Mr Lee took over the chairmanship of the Monetary Authority of Singapore
(MAS, the central bank) in early 1998 and proved an enthusiastic advocate of
financial sector restructuring. The government saw its domestic political
standing shored up by a couple of years of strong growth, but it remained
generally intolerant of dissent. There were some gestures towards
liberalisationfor example the establishment of a "speakersr corner"
(supposedly modelled on the long-established one in Hyde Park, London) in
2000, and the authorisation of an opposition rally in 2001but life remained
difficult for opposition figures. A veteran opposition politician, J B Jeyaretnam,
faced bankruptcy because of damages resulting from a legal action brought
against him by some PAP members. A rising opposition figure, Chee Soon Juan,
was sidelined by smaller-scale legal action.
Increased spending buys As the economy slumped in 2001, the PAP was still firmly in control. Its
political support in 2001-03 immediate political response to the downturn was a generous budget for fiscal
year 2001/02 (April-March), with spending later increased further by various
supplementary packages. The housing upgrade scheme was deepened and
accelerateda sure-fire vote-winner in a country where a home is often an
individualrs largest financial asset. Towards the end of the year, the government
called an early general election. The opposition parties chose to contest only 29
of the 84 parliamentary seats, and won only two of these. The government was
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 7
quick to claim that the size of its victory gave it a clear mandate for economic
reform, and set up a committee to review economic policy. The committee
published its first responses in April 2002, and many of its recommendations
(including tax cuts) found their way into the budgets for 2002/03 and 2004/05.
The budgets were premised on the belief that the key to Singaporers future
success is maintaining its attractiveness as a business location. The electorate
was asked to take some short-term pain (for example, through a rise in the
goods and services taxGST) so that this long-term vision could be realised.
Mr Lee prepares for the next In August 2004 Mr Goh stepped down as prime minister and was replaced by
election Lee Hsien Loong in a smooth handover of power. Later in August Mr Lee
reshuffled his cabinet, but the changes were relatively small-scale. Mr Goh
became senior minister; the displaced elder Mr Lee became "minister mentor in
the prime ministerrs office". Slightly lower down the rankings, familiar figures
were very much in evidence: Shanmugan Jayakumar became a deputy prime
minister, for example. Some slightly more surprising appointments were made
at a more junior level, but the PAP is still short of new talent.
Mr Lee does not need to hold an election until 2007, but it is likely to be called
earlier. The election will be seen as a vote of confidence in Mr Lee, who,
despite his technocratic skills, has not always been popular. Anything less than
a 65% share of the vote will be embarrassing for the new prime minister, but
the PAP is certain to remain firmly in power.
Election results since independence
Seats won Seats won by % of vote
by PAP a other parties won by PAP a
Apr 13th 1968 58 0 84.4
Sep 2nd 1972 65 0 69.0
Dec 23rd 1976 69 0 72.4
Dec 23rd 1980 75 0 75.6
Dec 22nd 1984 77 2 62.9
Sep 3rd 1988 80 1 61.8
Aug 31st 1991 77 4 61.0
Jan 2nd 1997 81 2 65.0
Nov 3rd 2001 82 2 75.3
a People's Action Party.
Sources: Ministry of Information and Arts and the Environment; press reports.
Constitution, institutions and administration
Parliament Singapore has a parliamentary system of government, although an intolerant
approach to opposition politicians has prevented the development of a
combative multiparty legislature. The single-chamber parliament has 84 elected
MPs. Single-member constituencies elect nine of these, with the remaining 75
returned by 14 GRCs. Parties must field a team of five or six candidates in each
of these GRCs; the winning team is elected en bloc by a first-past-the-post
system, as are individual MPs. In addition to the elected MPs, the constitution
provides for a number of non-constituency MPs (NCMPs) and nominated MPs
(NMPs) to sit in parliament. The first of these provisions, to allow in prominent
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 20058 Singapore
politicians who have failed to win a seat, has in the past rarely been used; the
current parliament has one NCMP, Steve Chia, of the Singapore Democratic
Alliance. NMPsusually eminent professionalsare 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 CongressNTUC) 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 candidateS R Nathanwas deemed appropriate to be Mr Ongrs
successor. As a result, he was declared president without an election.
The presidentrs theoretical right of veto over certain legislation and
appointments is not used. In 1995 a three-judge tribunal ruled that the president
had no power to withhold his assent to any bill that sought to restrict his
powers, and the presidentrs authority over some financial matters (notably
Singaporers foreign-exchange reserves) has subsequently been eroded. This
process was not to the liking of the previous president, Mr Ong, who talked
openly in early 2000 of the sometimes strained relations between himself, the
government and the civil service. (Mr Ong died in February 2002.)
The judiciary The constitution of Singapore states that the judiciary should administer the
law independently of the executive. The chief justice and other Supreme Court
judges are appointed by the president of the republic. The current chief justice
is Yong Pung How, reappointed in 2004, for two years. (In 2006 Mr Yong will
be 80 years old, so will then presumably retire.) In the past the government has
placed restrictions on lawyers, but the growing demands of the commercial
sector, coupled with conditions attached to the free-trade agreements (FTAs)
that Singapore is eager to pursue, are producing a more expansionary attitude
towards training, and towards permitting those trained overseas to practice law.
Major changes to parliamentary practice
1984
The constitution is changed to allow the appointment of non-constituency members
of parliament (NCMPs), with limited voting rights in parliament. In theory, up to
three NCMPs may be appointed, selected from the unsuccessful opposition
candidates who come closest to being returned in general elections. There is
currently only one, Steve Chia.
1987
Nine government parliamentary committees (GPCs) are established; another is
added in 1988. Each GPC includes some five or six MPs and a consultative panel of
up to 12 professional experts from outside parliament. GPCs have proved a
disappointment, failing to question seriously government policy.
1992
The first batch of nominated MPs (NMPs) is co-opted by parliament. A special select
committee can recommend the appointment of individuals to parliament, for terms
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 9
of up to two years. Although those appointed, generally well-known professionals,
do not form an opposition bloc, and cannot vote on some issues, they have
occasionally offered trenchant criticism of certain aspects of government policy.
1997
Constituency boundaries are revised for the January election, increasing the number
of group representation constituencies (GRCs). The change was at least in part
motivated by a belief that the opposition would find it harder to contest, or win,
such large constituencies. After the election, the number of NMPs is raised from six
to nine.
2001
The Political Donations Act comes into force. Candidates must now submit a
statement about donations and obtain a "certificate of compliance". Anonymous
donations are limited to S$5,000 (US$2,900) per candidate per year, and donations
from non-Singaporean individuals or firms are prohibited.
2002
Peoplers Action Party (PAP) MPs can now in theory vote freely on what are officially
deemed to be "matters of conscience" and can ask the party whip for permission to
vote against the government on other issues. However, unsurprisingly, not many feel
free to speak their mind.
Political forces
The structure of the PAP The PAP, which portrays itself as the only possible party of government, has a
variety of internal party bodies, the most important of which is the Central
Executive Committee (CEC). The membership of the CEC closely mirrors that
of the cabinet; a new CEC was elected in late 2004 after Mr Lee took over as
prime minister. Links between the military and the PAP are strong, and several
successful politicians have graduated from the ranks of the armed forces,
notably the current prime minister, Mr Lee, and the defence minister, Teo Chee
Hean. PAP membership is not, however, a prerequisite for career success within
the civil service.
The PAP's approach to dissent The PAP has been successful in demolishing alternative focuses of opposition
activity. Labour unions were brought to heel in the 1960s through tough
legislation. Professional groupings also follow the party line, which helps to
deter lawyers and others from entering politics on the side of the opposition. A
disciplinarian approach by university authorities has likewise deterred
academics from becoming too closely involved in the political process. The
PAPrs response to the 1987 "Marxist conspiracy" marked the end of involvement
in politics by the organised churches. As already noted, however, race may
again be emerging as a focus for dissent and unexpected events also have the
potential to cause trouble. The debate in early 2005 over whether or not to
allow the construction of casinos in Singapore was particularly sensitive
because it gave varying religious and civic groups a common cause.
PAP members have shown themselves prepared to take out court actions,
usually in the form of defamation cases, to hurt the opposition. This tactic has
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 200510 Singapore
resulted in the award of significant damages against opposition figures, which
has caused either the self-imposed exile of these individuals, or bankruptcy. A
law barring those declared bankrupt from serving as MPs has removed these
figures from the immediate political arena. The most recent example of this
latter form of exclusion was the defamation action taken by senior PAP figures
against the secretary-general of the Singapore Democratic Party (SDP), Chee
Soon Juan. In early 2005 Mr Chee was ordered to pay a total of S$500,000
(US$300,000) in damages.
Main political figures
Lee Hsien Loong (in the past often referred to as B G Lee)
Prime minister since August 2004 and finance minister. Son of Lee Kuan Yew, he had
long been prime minister-in-waiting. He has extensive ministerial experience, but
does not command the degree of popular respect enjoyed by his father.
Goh Chok Tong
Senior minister and head of the Monetary Authority of Singapore (MAS, the central
bank). Mr Goh, prime minister from 1990 to 2004, is a rather more relaxed political
figure than the younger Mr Lee. His foreign policy experience is likely to prove
useful, particularly in dealings with Malaysia.
Lee Kuan Yew
Prime minister from 1959 to 1990 and seen as the "father of the nation". He is no
longer senior minister and is beginning to play a much less prominent role in
politics. However, he will retain a residual importance, particularly when "moral"
issues are being discussed. He is the third highest-ranking person in the cabinet
through his post as minister mentor.
Tony Tan Keng Yam
Currently one of the two deputy prime ministers. Relatively old (65) and unlikely to
harbour ambitions for the top job. Chairman of the Peoplers Action Party (PAP).
Shunmugan Jayakumar
The other deputy prime minister and the minister for law. Minister for foreign affairs
until 2004. Also 65, and considered a loyal supporter of Lee Hsien Loong.
Teo Chee Hean
Mr Teo has in the past been seen as a possible future contender for the prime
ministership. He has the important position of minister of defence, but gets less
media attention than he used to.
George Yong-Boon Yeo
Minister for foreign affairs since August 2004. Formerly minister for information and
the arts and minister for trade and industry. His ministerial career wobbled in the
1990s, possibly owing to his liberal views, but is now revived.
Tharman Shanmugaratnam
Appointed to the post of acting minister for education in 2003, and confirmed as a
full minister in 2004. The post is a politically sensitive one. He is one of the few
people to have faced problems with the government (as an official at the MAS) but
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 11
then to be accepted back into the fold. Has the potential to be a prominent figure in
the future.
Chiam See Tong
The longest-serving opposition member of parliament (MP), returned again by the
Potong Pasir constituency in the November 2001 election.
Low Thia Khiang
Head of the Workersr Party and opposition MP for Hougang. An effective critic of
government policies.
The opposition makes no Legal action against opposition politicians has helped to keep them divided.
headway in parliament Wrangling within the Singapore Democratic Party (SDP) led the partyrs then
leader, Chiam See Tong, to leave the party. Mr Chiam retained his seat as a
Singapore Peoplers Party (SPP) MP in the 1997 and 2001 elections. Low Thia
Khiang of the Workersr Party (WP) accounted for the other opposition victory at
the November 2001 election, retaining the Hougang constituency.
The opposition MPs often put up a creditable performance in parliamentthey
have provided some interesting criticism of budgets and constitutional issues,
for examplebut they are unable to force changes to government plans. The
opportunities for extra-parliamentary protest are limited. This is most clearly
demonstrated by the fate of the SDP secretary-general, Mr Chee, who has been
repeatedly fined and (briefly) jailed for speaking in public without a permit. In
early 2005 Mr Chee was ordered, by the court, to pay damages totalling
S$500,000. This is likely to bankrupt him and to end his political career
(bankrupts cannot stand for parliament). Furthermore, his determination does
not appear to have won him great public support.
Security risk in Singapore
Armed conflict
History suggests that Singapore should be wary of its much larger neighbours. The
separation from Malaysia in 1965 was painful, and anti-Singaporean sentiment
sometimes erupts in the Malaysian government and elsewhere. Singapore misplayed
its hand with Indonesia, getting far too close to the disgraced former president,
Soeharto, with the result that it has been treated with suspicion by his successors in
Jakarta. Despite Indonesiars larger size, the main military threat is seen as coming
from Malaysia. A particular long-standing worry is that the Malaysian state of Johor
could cut off supplies of water to Singapore, something that would quickly bring the
country to its knees. To deal with this threat, Singapore has amassed a large amount
of sophisticated military hardwareincluding 350 light tanks and 125 combat aircraft.
It is presumed that any move to cut off Singaporers water supplies would be
countered by Singapore armoured vehicles invading Johor, with the Singaporean air
force overwhelming its Malaysian counterpart. Since 1998 housing developers have
been required to build a bomb-shelter in every new house, although the space that
needs to be allocated for this shelter was reduced in 2001.
Terrorism
The government is well aware that Singapore is a tempting target for terrorists.
Buildings in the central business district or Changi airport could be vulnerable. The
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 200512 Singapore
government has responded by detaining a number of people (almost all Singaporean
citizens) under the provisions of the Internal Security Act (ISA). They are accused of
having links to al-Qaida and other terrorist groups in the region, and of plotting to
carry out attacks in Singapore in December 2002. Singapore has also exhorted
Indonesia to be rather tougher with perceived instigators of terrorism; co-operation
between the Singaporean and Malaysian anti-terrorist forces appears to be much
better. Marine piracy will also remain an important problem in the waters
surrounding Singapore. The navies of Singapore and its neighbours are small and the
topography of the areawith a large number of small islandswould seem to favour
the pirates. Singapore is pushing for increased regional co-operation on this issue.
Civil unrest
There has been no civil unrest in Singapore for many years. If there were in future,
the police or armed forces would crack down on it heavily. The authorities view the
most likely fissure lines to be those associated with racethis was the issue that
sparked the well-known 1960s race riots. The government is keen to maintain a
dialogue with representatives of the Malay and Indian communities, but the obvious
Chinese dominance of the government continues to cause resentment. Official
Muslim bodies moved quickly to condemn the alleged terrorists arrested in
December 2001, but the government continues to be riled by criticism from other
groupings. In the longer term, the most likely external trigger for civil unrest remains
increased racial strife in either Malaysia or Indonesia. A prolonged economic
downturn would also significantly increase the risk of civil unrest.
Violent crime
Violent crime is not a problem for business. Guns are not in wide circulation, and
recent murders have been exclusively "domestics", with no business or political
component, although armed robbery is not unknown. (Some firearms sentences
carry a mandatory death sentence.) Other violent crime is generally limited to
vandalism, often alcohol-related.
Drug-smuggling and organised crime
Singapore has long imposed a mandatory death penalty for drug-smuggling, and
has not shirked from carrying it out. Amnesty International, a London-based human
rights organisation, claimed in 2004 that Singapore had the worldrs highest
execution rate per head of population. There is some organised cigarette-smuggling
from Indonesia, and some illicit gaming, but in general Singaporers organised
criminal groups are small, poorly organised and stand no comparison to their
counterparts in, for example, China or Japan. Singaporers police force is also
considered highly effective.
International relations and defence
Relations with Malaysia Singapore has long had a difficult relationship with Malaysia, its closest
remain difficult neighbour, with a mixture of major and trivial disputes centred around water
supply, the position of the Malaysian passport control in the Tanjong Pagar
railway station (the station is currently in the centre of Singapore, but the land
is still owned by Malaysia), and the extent to which the Singaporean air force
can overfly Malaysia, among other things. Leaders on both sides have
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 13
sometimes, intentionally or unintentionally, exacerbated the situation with
remarks seen as derogatory to the other country.
In early September 2001, after several years of talk about a package of
measures to resolve these disputes, there appeared to have been some progress.
An outline agreement was reached between Singaporers then senior minister,
Lee Kuan Yew, and the previous prime minister of Malaysia, Mahathir
Mohamad. However, hopes of a speedy resolution quickly receded. In 2003
both governmentsr attention was diverted by a dispute over whether
Singaporean land reclamation was prejudicing shipping lanes into a Malaysian
port, Tanjung Pelepas. (The International Tribunal on the Law of the Sea ruled
in Singaporers favour.)
From early 2004 there was a warming in relations. There were several visits to
Singapore by the prime minister of Malaysia, Abdullah Badawi. Mr Badawi,
who replaced Dr Mahathir in November 2003, has adopted a more conciliatory
approach towards Singapore. Reciprocal visits have been made by Mr Goh
(who has been given special responsibility for this issue), by Lee Hsien Loong
and, in April 2005, by Lee Kuan Yew. Although Singapore may be keen to
conclude agreements on the outstanding issues, Malaysian domestic politics
suggest that it could take some time. Mr Badawirs own domestic position is not
strong, and he will, for example, be unable to concede to Singapore on
territorial issues, or on the price of water supplied from Malaysia.
Relations with Indonesia are Singapore also has a difficult relationship with Indonesia. Following the com-
not warm plete breakdown of relations in the 1960s, Singaporers government made great
efforts to develop relations with Indonesiars president, Soeharto, and his
regime. To this end, Indonesian islands to the south of Singapore were jointly
developed, and Singaporean government-linked companies (GLCs) invested in
Indonesia. Singapore also became an important offshore financial centre for the
Indonesian Chinese business elite. However, when Soeharto was toppled in
1998, Singapore discovered that such links were a hindrance. Soehartors
successor, B J Habibie, was openly dismissive of Singapore and its government.
After a good start, relations with the next president, Abdurrahman Wahid,
deteriorated in late 2000. Relations were then slowly rebuilt, with the signing
of two major gas deals in early 2001, but relations with Mr Wahidrs successor,
Megawati Soekarnoputri, were businesslike rather than warm. However,
relations may improve in future. The current Indonesian president, Susilo
Bambang Yudhoyono, visited Singapore in early 2005 to sign an investment
protection agreement. It is hoped that Indonesiars parliament will agree to an
extradition agreement between the two countries later this year. In the past few
years Singapore has tried to build up relations with individual Indonesian
provinces, in the hope of bypassing the political uncertainties of Jakarta, but
this trend may be reversed if Mr Yudhoyonors presidency is a success.
Singapore spurs ASEAN into Singapore was a founder member of the Association for South-East Asian
action over trade liberalisation Nations (ASEAN) but during the 1990s grew increasingly frustrated with the
organisationrs tardy progress on freeing up regional trade. Accordingly,
Singapore began to display an increasing enthusiasm for bilateral FTAs, the first
of which (with New Zealand) was concluded in late 2000. An agreement was
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 200514 Singapore
reached with Japan in October 2001 and a wide-ranging deal with Australia at
the end of 2002. Singapore concluded an FTA with the US in 2003, which came
into force in January 2004. This bilateral approach initially complicated
relations with Singaporers fellow ASEAN members, but their attitudes towards
trade liberalisation are changing. An ASEAN free-trade area (AFTA) has been in
place since the start of 2003, and will be significantly deepened over the next
few years. The driving force now is fear of the impact of the dynamic Chinese
economy; in late 2004 ASEAN and China set out plans for a free-trade deal.
Singapore will continue to Despite the expansion of the Chinese economy, Singapore needs no reminding
look to the West that its prosperity still depends on continued investment in the island by
Western and Japanese multinationals, and on the openness of OECD export
markets. In the past Singapore has taken a keen interest in the Asia Pacific
Economic Co-operation (APEC) forum and the World Trade Organisation (WTO).
Occasional differences with developed-country trading partners, for example,
over intellectual property rights (IPRs) and restrictions to entry into Singaporers
financial sector, have not been allowed to develop into major problems.
Terrorist threat reinforces Singaporers enthusiasm for the US is motivated by military as well as economic
defence links with US reasons. Given the countryrs small size, and potentially troublesome neigh-
bours, self-defence remains a priority. Singaporers military has close links with
the US armed forces; particular reassurance is provided by the US Navyrs use of
Changi naval base. (This relationship may, however, increase the risk of
Singaporers being a terrorist target.) The island is a member of the Five-Power
Defence Agreement (FPDA), which groups Singapore with the UK, Australia,
Malaysia and New Zealand, and provides a convenient forum for joint military
exercises. Military co-operation within ASEAN has proved elusive, however.
Singapore, Malaysia and Indonesia have been carrying out co-ordinated naval
patrols in the Malacca Strait since July 2004, but Singaporers efforts to upgrade
this relationship to include, for example, the involvement of other countries,
have been rejected by the island-staters neighbours. The countryrs regular
armed forces are complemented by some 250,000 reservists, who undergo
training "in camp" of up to 40 days per year. Equipment is modern and defence
spending is high as a proportion of GDP.
Resources and infrastructure
Population
Racial issues are of concern Ethnic issues have been of concern in Singapore since the race riots that just
predated independence in 1965. Although the government has allowed the
Chinese to consolidate their dominance over the political system and much of
business, it has also encouraged individual ethnic groups to form their own
associations, provided these constitute no challenge to the government. In early
2001, amid signs of growing racial intolerance in Malaysia, the government
started a more formal dialogue with the Malay community in Singapore, and
this has continued. Racial tensions have continued, however, and could be
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 15
exacerbated by a slowdown in economic growth. (In mid-2004 Malays
accounted for 13.7% of the total population and Indians accounted for 8.4%.)
Efforts to boost the birth rate In the mid-1980s the government abandoned its "stop at two" family limitation
have failed programme, replacing it with tax incentives to "go for three". Fear of future
labour shortages and increasing aged-dependency ratios prompted the author-
ities to offer cash payments to mothers on a sliding scale, with younger
mothers receiving more. There were also efforts to encourage the better-off to
have more children. Such financial inducements, however, failed to boost the
birth rate. The population growth rate for Singapore residents fell to 1.5% in
2004, down from 1.9% ten years earlier.
The government has now changed its focus, and its shorter-term aim is to attract
more parents into the labour force. In 2000 it announced that the number of
childcare places would be boosted by 25% over three years, and the civil service
was to be allowed more flexible working patterns. The issue remains
importantthe low birth rate is already contributing to an ageing of the
population, which has forced the government to raise the amount that
individuals must hold in their Central Provident Fund (CPF) accounts for
retirement. To ease the problem in the short term, the government has also taken
an increasingly relaxed attitude to immigration, particularly of skilled workers.
City planners therefore continue to work on the assumption that the population
will increase sharply over the next few decades, despite the low birth rate. At the
same time, efforts to boost birth rates remain on the agenda. The budget for the
2004/05 fiscal year (April-March) included plans to provide greater help with
childcare costs, and maternity leave was extended for some mothers.
Population by age and ethnic group
('000; end-Jun 2004)
Chinese Malay Indian Others Total
0-14 487.3 130.3 68.7 15.9 702.2
15-29 526.6 107.1 57.9 10.6 701.8
30-44 717.3 119.9 84.1 20.4 941.8
45-59 591.1 81.0 51.8 11.6 736.3
60+ 328.1 40.4 30.6 5.8 404.9
Total 2,650.1 479.3 293.1 64.3 3,486.9
Note. Totals may not sum owing to rounding.
Source: Department of Statistics, Monthly Digest of Statistics.
Education
School education is The current state of childrenrs education appears satisfactory. Primary
highly efficient education begins at six, with an emphasis on numeracy and literacy. Secondary
education starts from the age of 12, when students are streamedspecial and
express courses take students to Ordinary Level examinations in four years;
other courses allow an extra year. Pupils then spend two years in a junior
college or three years in a centralised college, preparing for the Advanced Level
exams, which determine whether or not they can proceed to tertiary education.
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 200516 Singapore
University education The National University of Singapore (NUS) was founded in 1980, merging the
University of Singapore with Nanyang University. It has around 22,000
undergraduate students and 8,000 graduate students. The Nanyang
Technological Institute became the Nanyang Technological University (NTU) in
1991. This second-string institution offers courses with a more vocational bent.
The private-sector Singapore Management University opened in 2000.
Plans for a fourth university, unveiled in 2002, were abandoned in early 2003.
Instead, the plan is now to create 3,500 additional university places by adding
facilities to the two main existing national universities, NUS and NTU. The NUS
is to have two new campuses, one dedicated to scientific research at Buona
Vista, and one for medicine at Outram. More importantly, 2,000 of the new
places are to be awarded to polytechnic students, the group for which the
fourth, abandoned, university had been planned.
There is a desire to increase The school system has a high international reputation, but will not be immune
"creativity" to change. The government is concerned that the traditional basis of rote
learning and written examinations is stifling the creativity seen as necessary for
success in a modern developed economy. There have therefore been various
moves to "revitalise" education, including substantial investment in information
technology (IT) for schools. The curriculum is being modified, and methods of
assessing pupils other than examinations are to be introduced.
Islamic schools are a point of There is also a long-standing debate about the merits of insisting that each
friction pupil become competent both in English and in a "mother tongue" (Chinese,
Tamil or Malay). It is hard to be certain whether this twin-track approach has
reduced overall standards. A separate battle continues about the fate of the
madrasahs, Islamic schools that exist outside the main school system. The
government wants them to improve their relatively poor exam pass rates, but is
unlikely to push them too hard, given current worries about terrorism:
Singapore madrasahs are seen as bastions of mainstream, moderate Islam.
Debate has also focused on the use of "Singlish"English mixed with local
dialectswhich the government wants to discourage.
Health
The public sector dominates The healthcare system is a hybrid of public and private provision. The private
hospital healthcare sector provides around 70% of primary healthcare, but only 20% of hospital
care, the bulk of which comes from state-run facilities. There are three general-
purpose government hospitals, three specialised hospitals and a number of
specialist centres. Treatment is good, but there has sometimes been a reluctance
to use some of the most modern techniques, primarily for reasons of cost.
The CPF provides some health Each member of the CPF has two or three accounts to which both employer
insurance and employee contribute. One is the Medisave Account, withdrawals from
which constituted around 3.6% of total CPF withdrawals in 2004. Medisave
Accounts are designed to cover the basic hospital costs of individuals and their
families; funds can be used to buy cover from the private sector or from the
principal public health insurance scheme, Medishield, in case of long-term
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 17
treatment. Individuals are also permitted to use Medisave funds to purchase an
additional state scheme, Medishield Plus, or private insurance policies. In 2001
a new Medishield scheme was launched, targeted at the elderly. Charges in
public hospitals are largely determined by the class of ward.
Natural resources and the environment
A new Green Plan is drafted Primary industries have never been important in Singapore. However,
attention has long been given to the one natural resource that Singapore is
capable of promotinga relatively clean and pleasant environment. In 1991 a
broad-brush National Green Plan was published, committing the government
to limiting carbon dioxide emissions, phasing out controlled
chloroflourocarbons (CFCs) and improving procedures for the storage,
handling and transportation of hazardous products.
There has been progress towards some of these targets, with the import of
CFCs, for example, banned in January 1996. The Green Plan has also been
complemented by more specific schemes in areas such as water conservation
and recycling. Leaded petrol was phased out in 1998 and diesel has a low
sulphur content. New pollution regulations came into force in January 2001,
and existing industries were given up to three years to comply with these.
However, Singapore remains vulnerable to environmental degradation from
elsewheresuch as smog from forest fires in Indonesia.
The next Green Plan, to 2012, was officially released in August 2002. Three "key
thrusts" were identified:
• "quality living environment"setting new air pollution policies, promoting
the use of natural gas, maintaining the quality of coastal and inland water,
reducing the need for landfill through recycling; and keeping down ambient
noise levels;
• "working in partnership with the community"developing a community-
centred approach and ensuring public feedback; and
• "doing our part for the global environment"working to enhance
international and regional environmental governance.
These rather broad, if laudable, objectives are complemented by a few specific
targets. By 2012 natural gas is to account for 60% of electricity generation; 25% of
water supply will come from "non-traditional" sources (for example,
desalination); and 50% of solid waste will be recycled.
Transport, communications and the Internet
A slightly more relaxed Singapore has considered deeply the problems of car usage. The government
approach to car ownership has taken various measures to limit this, including implementing a variety of
taxes and introducing certificates of entitlement (COEs). A number of these
documents are released each month through auction; those wanting to put a
motor vehicle on the road must bid for them. The 2002/03 budget reduced car
taxes and promised a slight increase in the number of COEs (in return for
© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 200518 Singapore
higher usage charges); the budget for 2003/04 cut vehicle taxes by a further
3-5%; and the budget for 2004/05 saw the Additional Registration Fee (ARF)
paid when a car is first registeredlowered from 130% to 110% of its Open
Market Value (OMV). The 2005/06 budget introduced no new initiatives, but
forecast that tax collection from motor vehicles would fall in this fiscal year.
Although the government is now taking a more relaxed approach to motor
vehicle ownership, the cost of running a car remains high compared with most
other developed countries.
Charges have long been levied on cars entering the central area. This "pay by
use" approach was extended in April 1998, when electronic road pricing (ERP),
which uses a smart-card system to charge cars as soon as they enter restricted
areas, was introduced on the East Coast Expressway. ERP was imposed on other
highways later in the year and, despite some initial problems, has proved a
success for the authorities.
Public transport is efficient Public transport is famously effective. A complex bus network benefits from the
continuing programme of road upgrading. The Mass Rapid Transport (MRT)
system is a much-envied underground and overground commuter railway
system; existing lines are being extended and new lines built. Light Rail Train
(LRT) lines are also being run into some areas of the country that are not served
by the MRT.
Changi must cope with the Changi airport is regarded by many as the worldrs best airport. It currently has
needs of budget airlines two terminals, and in December 1996 the government announced approval for
a third. This is scheduled to open in 2006. The threat of low-cost airlines being
established in neighbouring countries has also resulted in Singaporers
government acknowledging the need for Changi to accommodate these new
carriers, and a new dedicated terminal is being built. This is also due to open in
2006. Furthermore, with SIA facing greater competition from both low-cost
airlines and foreign airlines to which the government has granted greater
landing rights at Changi, SIA has formed its own low-cost airline, Tiger Airways.
The Ireland-based Ryanair also has a stake. Other Singapore-based budget
airlines include Jetstar Asia (in which Qantas has a stake) and Valuair.
The airportrs development is closely linked to the fortunes of the national
carrier, Singapore Airlines (SIA). SIA is one of the worldrs leading medium-sized
airlines, and has sought alliances to extend its international reach. Its most
notable acquisition so far has been a 49% share in a British airline, Virgin
Atlantic; it has also tried to develop links with Australasian airlines, but got its
fingers burnt by the New Zealand governmentrs de facto renationalisation of Air
New Zealand (in 2001), in which it had a substantial stake. Despite these
setbacks, in May 2005 the Australian government appeared to be on the brink
of agreeing to an "open-skies" deal with Singapore, something that would give
SIA access to the lucrative Australia-US routes.
SingTel remains dominant in Telecommunications are regarded as too important to be left wholly to the
telecoms private sector. In the highly successful "privatisation" of Singapore Telecom
(SingTel) in 1993, only around 7% of the companyrs share capital was sold,
although the governmentrs share has been further watered down since. Despite
Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005Singapore 19
the governmentrs heavy presence in terms of ownership, attempts are being
made to increase competition in the market. SingTelrs monopoly on basic
services (for example, telephone lines) ended in 2000. Starhub was the first
competitor in 2000, having been promised that a duopoly would be
maintained until April 2002. However, in June 2000 an additional licence was
awarded to Singapore Cable Vision (which resulted in the governmentrs paying
compensation to Starhub). Competition in mobile telephone services has for
some time been intense, following the ending of SingTelrs monopoly in mobile
telephone and pager services in April 1997. In 2001 SingTel bought the second
largest Australian telecoms firm, Optus. It has made several other overseas
acquisitions. A significant development in early 2005 was the awarding of
more power to the Infocomm Development Authority (IDA), the sectorrs
regulator. The IDA will now be able to force existing telecoms licence holders
to share their infrastructure.
IT initiatives continue The government has been active in developing Singapore as a "wired" economy.
Among its initiatives has been the establishment of a broadband network,
Singapore ONE ("One Network for Everyone"), designed to enable Singaporeans
to access a wide range of official and commercial online services through
terminals in public places and in homes. There are no signs that the
governmentrs enthusiasm for electronic projects is flagging. In June 2000 it
announced an "e-government action plan", pledging S$1.5bn (US$866m) over
the following three years to invest in such activities as putting more
government services online. The government has also launched an "electronic
commerce plan" to drive the pervasive use of electronic commerce in Singapore,
and to strengthen Singaporers position as an international e-commerce hub.
This effort appears to be paying off, although some other countries in the region
(notably South Korea) are more advanced in IT usage. In 2004, 74% of
Singaporers households had access to a computer and 65% had Internet access.
Energy provision
The electricity market is Major changes have been under way in power generation and distribution.
opened up to competition Until early 2001 the Public Utilities Board (PUB) ran a monopoly. The system
now has a new regulator, the Energy Market Authority. The generating sector is
gradually being opened up to competition, with existing public-sector
generators sold off. Electricity supplies to larger customers have already been
opened up to competition, with competition allowed in the whole market
since 2003.
Despite government efforts to discourage excessive use of electrical power,
consumption has continued to rise. According to the latest annual data, total
electricity sales were 33.2bn kwh in 2004, up by 3.7% on the 2003 level. Piped
gas sales fell slightly in 2004, after rising in 2002 and 2003. Liquid petroleum
gas (LPG) sales rose slightly.
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