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Country Profile 2007 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 www.eiu.com/schedule The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom
The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 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 the 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 26 Red Lion Square The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road WC1R 4HQ New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7576 8500 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, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2007 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 Serangoon Kechil 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 t Telok r ai 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 Sudong Pulau Sakijang Bendera Pulau Sebarok Urban areas April 2007 Pulau Pawai 0 km 2.5 5 7.5 10 © The Economist Intelligence Unit Limited 2007 Pulau Senang 0 miles 2.5 5
Comparative economic indicators, 2006 Gross domestic product Gross domestic product per head (US$ bn) (US$ '000) South Korea Singapore Indonesia Hong Kong Taiwan South Korea Thailand Taiwan Hong Kong Malaysia Malaysia Thailand Singapore Indonesia Philippines Philippines Vietnam Vietnam 0 200 400 600 800 1,000 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Sources: Economist Intelligence Unit estimates; national sources. Sources: Economist Intelligence Unit estimates; national sources. Gross domestic product Consumer prices (% change, year on year) (% change, year on year) Vietnam Indonesia Singapore Vietnam Hong Kong Philippines Malaysia Thailand Indonesia Malaysia Philippines South Korea South Korea Hong Kong Thailand Singapore Taiwan Taiwan 0.0 2.0 4.0 6.0 8.0 10.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Sources: Economist Intelligence Unit estimates; national sources. Sources: Economist Intelligence Unit estimates; national sources. Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 1 Contents Singapore 3 Basic data 4 Politics 4 Political background 6 Recent political developments 8 Constitution, institutions and administration 9 Political forces 13 International relations and defence 15 Resources and infrastructure 15 Population 16 Education 17 Health 17 Natural resources and the environment 18 Transport, communications and the Internet 20 Energy provision 21 The economy 21 Economic structure 22 Economic policy 28 Economic performance 29 Regional trends 30 Economic sectors 30 Agriculture 30 Mining and semi-processing 30 Manufacturing 32 Construction 33 Financial services 34 Other services 35 The external sector 35 Trade in goods 37 Invisibles and the current account 37 Capital flows and foreign debt 38 Foreign reserves and the exchange rate 39 Regional overview 39 Membership of organisations 43 Appendices 43 Sources of information 44 Reference tables 44 Population 44 Labour force 45 Transport statistics 45 National energy statistics © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
2 Singapore 45 Productivity 46 Business costs 46 Government finances 46 Money supply 46 Interest rates 47 Gross domestic product 47 Nominal gross domestic product by expenditure 47 Real gross domestic product by expenditure 48 Gross domestic product by sector 48 Prices and earnings 49 Manufacturing production 49 Miscellaneous manufacturing statistics 49 Net investment commitments in manufacturing by sector 49 Investment commitments by country of origin 50 Construction statistics 50 Financial sector assets and liabilities 50 Stockmarket indicators 50 Retail sales 51 Tourism 51 Exports 52 Imports 52 Main composition of trade 52 Main trading partners 53 Balance of payments, national series 54 Balance of payments, IMF series 54 Foreign reserves 54 Exchange rates Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 3 Singapore Basic data Land area 6,994 sq km (including smaller islands) Population 3.6m (mid-2006 government estimate; 4.5m including non-residents) Climate Tropical Weather (altitude ten metres) Hottest month, May, 24-32°C (average daily minimum and maximum); coldest month, January, 23-30°C; driest month, July, 70 mm average rainfall; wettest month, December, 244 mm average rainfall Languages English, Chinese, Malay and Tamil Measures The metric system is now predominant Currency Singapore dollar (S$)=100 cents. Average exchange rate in 2006: S$1.59:US$1. Exchange rate on April 30th 2007: S$1.53:US$1 Time Eight hours ahead of GMT Public holidays January 1st (New Year!s Day); Chinese New Year; end of Ramadan; Good Friday; Hari Raya Haji; May 1st (Labour Day); Vesak Day; August 9th (National Day); Deepavali; December 25th (Christmas Day) © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
4 Singapore Politics Singapore is a parliamentary democracy led by the People!s Action Party (PAP). Formerly a British colony, Singapore briefly became part of the Federation of Malaya, Sarawak and Borneo (Sabah) in 1963, but achieved full independence in 1965. Since then the PAP, guided by the ideas of Lee Kuan Yew, prime minister from 1959 to 1990, has dominated politics in the country. The success of the PAP has been founded on a combination of sustained economic growth and an ability to restrict any expansion in support for the weak and divided opposition parties. Extra-parliamentary protest is also tightly controlled. In 1990 Mr Lee was replaced as prime minister by Goh Chok Tong. Mr Goh was initially seen simply as a short-term appointment, as a placeholder for Mr Lee!s eldest son, Lee Hsien Loong, but stayed in office for almost 14 years. In August 2004 he finally handed over the leadership to Lee Hsien Loong, but remains in the cabinet as senior minister. The most recent general election was held on May 6th 2006, and as in previous contests, the PAP won almost all the parliamentary seats. Political background History before independence The Malacca Sultanate ceded Singapore to the British East India Company in 1819, through the efforts of Stamford Raffles. The island was soon brought under the control of the British government, which surrendered it to the Japanese in 1942, but regained control in 1945. The 1955 election returned a Labour Party government, which eventually reached agreement with the UK over full internal self-government. Mr Lee!s PAP won the 1959 election, and a referendum in 1962 revealed overwhelming support for a merger with Sabah, which was implemented in September 1963. However, tensions in the federation soon became evident. Singapore withdrew and became an independent country in 1965. Political development, 1965-90 The PAP easily won the first post-independence election in 1968, and through a combination of rapid economic growth and the maintenance of a weak and divided opposition, Mr Lee!s party has dominated politics in Singapore ever since. From 1968 to 1981 all members of parliament (MPs) were PAP members, and the only opposition outside of parliament came from a small group of maverick professionals, many of them lawyers. Two opposition MPs were later elected, with a representative of the Workers! Party (WP), J B Jeyaretnam, winning a seat in a by-election in 1981, and Chiam See Tong of the Singapore Democratic Party (SDP) entering parliament in 1984. Despite these apparent breakthroughs, the opposition has remained marginal, and there have never been more than four elected opposition members in parliament. When the previous rapid rates of economic growth began to slow in 1985-86, the government reacted by making efforts to build a more consultative political system, creating institutions such as the Economic Committee. From 1986 there was limited decentralisation of decision-making through the establishment of town councils. However, the PAP kept hold of the real levers of power, with Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 5 institutional changes generally regarded as a ploy to bolster PAP support, rather than as a mechanism for the development of alternative centres of power. Life remained difficult for any individuals or groups thought to be against the PAP, with the government often suing dissident figures for libel. Using this method, prominent opposition members were made bankrupt or forced to leave the country. Political development, 1991-97 In 1990 the prime minister since 1959, Lee Kuan Yew, stepped down, to be replaced by the supposedly more liberal Mr Goh. Mr Lee remained in the cabinet as senior minister, and his influence behind the scenes was still enormous: there was talk of Mr Goh surrendering the chair for parts of cabinet meetings. It was therefore not clear who took the decision to hold an early general election in 1991, but Mr Goh took the blame for the PAP!s relatively poor showing, with the party winning just 61% of the vote. The opposition parties in effect conceded defeat in advance, contesting only 40 of the 81 seats. Perhaps reassured that their vote could not end PAP rule, 37% of those voting supported the opposition (with 2% of votes going to independents). A hesitant process of cultural liberalisation (for example, on cinema films) was subsequently reversed, although there was no official crackdown on dissidents. Mr Goh remained in power, and as the months passed, his position within the PAP appeared to strengthen. In the January 1997 election, the PAP performed better, winning 65% of the vote. This was partly owing to an increase in group representation constituencies (GRCs); in these constituencies, political parties are required to formulate five- to six-candidate tickets, which is difficult for the opposition parties with their limited resources and support. The PAP!s performance was also boosted by the explicit link made between the timing of the upgrading of Housing Development Board estates and the loyalty demonstrated by individual constituencies to PAP MPs. Mr Goh later said that this tactic was the "single most important factor" in the increase in the PAP!s share of the vote. Lee Hsien Loong reasserts Following the election, the government became increasingly preoccupied with his position the consequences of the 1997-98 Asian financial and economic crises. This allowed Lee Hsien Loong, the eldest son of Mr Lee and long considered his father!s heir-apparent, to regain some of the political momentum that dissipated after he was diagnosed with cancer in the early 1990s. The younger Mr Lee took over the chairmanship of the Monetary Authority of Singapore (MAS, the central bank) in early 1998 and proved an enthusiastic advocate of financial sector restructuring. The government saw its domestic political standing shored up by a couple of years of strong growth, but it remained generally intolerant of dissent. A veteran opposition politician, J B Jeyaretnam, faced bankruptcy because of damages resulting from a legal action brought against him by some PAP members. A rising opposition figure, Chee Soon Juan, was sidelined by smaller-scale legal action. © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
6 Singapore Important recent events January 2002 The government reveals that it is holding 12 Singaporeans and one Malaysian on terrorism charges. May 2002 The People!s Action Party (PAP) takes a political gamble with the budget for fiscal year 2002/03 (April-March), which benefits business and the higher paid, rather than the poor. January 2003 The government unveils a white paper on dealing with terrorism. August 2003 Goh Chok Tong confirms his plan to step down once Singapore!s economy stabilises, in effect stating that he will not be the prime minister ahead of the next general election (due in 2007). January 2004 The new prime minister of Malaysia, Abdullah Badawi, visits Singapore twice during January, signalling a warming of ties between the two countries. August 2004 Lee Hsien Loong takes over as prime minister. He reshuffles the cabinet, with Mr Goh becoming senior minister. April 2005 The government agrees to build two casinos in Singapore. The decision is politically controversial and opposed by many civic groups. September 2005 S R Nathan is sworn in as president for a second term. He does not have to stand for re-election, as would-be challengers are ruled ineligible to stand for this office. May 2006 True to form, the PAP wins a general election, taking 67% of the votes cast and 82 out of 84 parliamentary seats. September 2006 Singapore takes a heavy-handed approach to shows of dissent during the IMF/World Bank meetings in the country, prompting some international criticism. February 2007 Worsening relations with Indonesia precipitate a ban on sand exports to Singapore. Singapore!s refusal to sign an extradition treaty is at the root of the problem. Recent political developments Increased spending buys As the economy slumped in 2001, the PAP was still firmly in control. Its political support in 2001-03 immediate political response to the downturn was a generous budget for fiscal year 2001/02 (April-March), with spending later increased further by various Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 7 supplementary packages. The opposition parties chose to contest only 29 of the 84 parliamentary seats in the 2001 election and won only two of these. The government was quick to claim that the size of its victory gave it a clear mandate for economic reform and set up a committee to review economic policy. The committee published its first responses in April 2002, and many of its recommendations (including tax cuts) have found their way into subsequent budgets. The budgets were premised on the belief that the key to Singapore!s future success was maintaining its attractiveness as a business location. The electorate was asked to take some short-term pain (for example, through a rise in the goods and services tax) so that this long-term vision could be realised. Mr Goh hands over the helm In August 2004 Mr Goh stepped down as prime minister and was replaced by to Lee Hsien Loong Lee Hsien Loong in a smooth handover of power. Mr Lee then reshuffled the cabinet, but the changes were relatively small-scale. Mr Goh became senior minister; the displaced elder Mr Lee became "minister mentor in the prime minister!s office". Slightly lower down the rankings, familiar figures were very much in evidence: Shanmugan Jayakumar became a deputy prime minister, for example. Some slightly more surprising appointments were made at a more junior level, but the PAP could not conceal a shortage of new talent. An early general election is The PAP!s control of domestic politics remained tight. For example, in held in May 2006 September 2005 S R Nathan was sworn in as president for a second term. He did not have to fight an election, as all his would-be competitors were deemed ineligible to stand for this office. The government has continued to underpin this paternalistic approach with further attacks on the country!s few opposition parties and a more subtle approach to handling the country!s Muslim minority. With economic growth still strong in the first quarter of 2006, Mr Lee decided (as widely expected) to call an early general election (in May 2006). Wholly predictably, the PAP won a massive majority in parliament, taking 82 of the 84 available seats and 67% of the vote. However, the size of the PAP!s majority may overstate the satisfaction of the population with the current government. As usual, the opposition parties found it difficult to contest the multi-member constituencies that return most MPs; those constituencies returning opposition MPs also faced effective economic sanctions, with housing upgrading given lower priority than in areas supporting the government. Since the election, the government has kept up the pressure on opposition parties, with senior PAP figures pursuing a libel action against members of the Singapore Democratic Party (SDP), for example. The SDP!s leader, Mr Chee, has also been briefly imprisoned, along with some supporters. The government has furthermore reverted to its old habit of attacking foreign publications that criticise the government, with the local courts awarding damages against a Hong-Kong-based magazine, Far Eastern Economic Review, in late 2006. However, the government!s heavy-handed approach has not gone unchallenged. Its attempts to stop opposition protests during the IMF/World Bank meetings in Singapore in September 2006 prompted criticism from the World Bank!s president, Paul Wolfowitz, among others. © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
8 Singapore Election results since independence Seats won Seats won by % of vote by PAPa other parties won by PAPa Apr 13th 1968 58 0 84.4 Sep 2nd 1972 65 0 69.0 Dec 23rd 1976 69 0 72.4 Dec 23rd 1980 75 0 75.6 Dec 22nd 1984 77 2 62.9 Sep 3rd 1988 80 1 61.8 Aug 31st 1991 77 4 61.0 Jan 2nd 1997 81 2 65.0 Nov 3rd 2001 82 2 75.3 May 6th 2006 82 2 66.6 a People's Action Party. Sources: Ministry of Information and Arts and the Environment; press reports. Constitution, institutions and administration Parliament Singapore has a parliamentary system of government, although an intolerant approach to opposition politicians has prevented the development of a combative multiparty legislature. The single-chamber parliament has 84 elected MPs. Single-member constituencies elect nine of these, with the remaining 75 returned by 14 GRCs. Parties must field a team of five or six candidates in each of these GRCs; the winning team is elected en bloc by a first-past-the-post system, as are individual MPs. In addition to the elected MPs, the constitution provides for a number of non-constituency MPs (NCMPs) and nominated MPs (NMPs) to sit in parliament. The first of these provisions, to allow in prominent politicians who have failed to win a seat, has in the past only occasionally been used. NMPs"usually eminent professionals"are now, however, an accepted (and tamed) part of the parliamentary process. The president Until 1993 the president was nominated by parliament. In August of that year Ong Teng Cheong (previously a deputy prime minister and secretary-general of the National Trades Union Congress"NTUC) easily won the first direct election for the post, against only nominal opposition. Strict eligibility rules severely restrict the number of Singaporeans who can stand for the post, and in mid- 1999 only one candidate"S R Nathan"was deemed appropriate to be Mr Ong!s successor. As a result, he was declared president without an election. This strange process was repeated in September 2005, when Mr Nathan was sworn in for a second term. The president!s theoretical right of veto over certain legislation and appointments is not used. In 1995 a three-judge tribunal ruled that the president had no power to withhold his assent to any bill that sought to restrict his powers, and the president!s authority over some financial matters (notably Singapore!s foreign-exchange reserves) has subsequently been eroded. This process was not to the liking of the previous president, Mr Ong, who talked openly in early 2000 of the sometimes strained relations between himself, the government and the civil service. (Mr Ong died in February 2002.) Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 9 The judiciary The constitution of Singapore states that the judiciary should administer the law independently of the executive. The chief justice and other Supreme Court judges are appointed by the president of the republic. The chief justice from 1990 to April 2006 was Yong Pung How; his replacement was Chan Sek Keong, formerly the attorney-general. He is serving an initial three-year term. In the past the government has placed restrictions on lawyers, but the growing demands of the commercial sector, coupled with conditions attached to the free-trade agreements (FTAs) that Singapore is eager to pursue, are producing a more expansionary attitude towards training and towards permitting those trained overseas to practice law. An official review, published in August 2006, unveiled a scheme whereby foreign lawyers will initially be allowed to do "offshore" work (for example, on crossborder transactions), before being allowed to deal with domestic issues. Political forces The structure of the PAP The PAP, which portrays itself as the only possible party of government, has a variety of internal party bodies, the most important of which is the Central Executive Committee (CEC). The membership of the CEC includes many familiar faces from the cabinet; a new CEC was elected in late 2004 after Mr Lee took over as prime minister. Links between the military and the PAP are strong, and several successful politicians have graduated from the ranks of the armed forces, notably the current prime minister, Mr Lee, and the minister of defence, Teo Chee Hean. PAP membership is not, however, a prerequisite for career success within the civil service. The PAP's approach to dissent The PAP has been successful in demolishing alternative focuses of opposition activity. Labour unions were brought to heel in the 1960s through tough legislation. Professional groupings also follow the party line, which helps to deter lawyers and others from entering politics on the side of the opposition. A disciplinarian approach by university authorities has likewise deterred academics from becoming too closely involved in the political process. The PAP!s response to the 1987 "Marxist conspiracy" marked the end of involvement in politics by the organised churches. As already noted, however, race may again be emerging as a focus for dissent, and unexpected events also have the potential to cause trouble. The debate in 2005 over whether to allow the construction of casinos in Singapore was particularly sensitive because it gave varying religious and civic groups a common cause and because it also revealed some soul-searching within the PAP. PAP members have shown themselves prepared to take out court actions, usually in the form of defamation cases, to hurt the opposition. This tactic has resulted in the award of significant damages against opposition figures, which has caused either the self- imposed exile of these individuals or bankruptcy. A law barring those declared bankrupt from serving as MPs has removed these figures from the immediate political arena. The most prominent recent target has been Chee Soon Juan, the secretary-general of the SDP. In early 2005 Mr Chee was ordered to pay a total of S$500,000 (US$300,000) in damages to senior PAP figures, for remarks made during the 2001 election campaign. In February 2006 he was declared bankrupt, and later that month he faced contempt-of-court charges over his © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
10 Singapore remarks made during this bankruptcy hearing. Mr Chee was sentenced to a day in jail and told to pay a S$6,000 fine; he refused to pay this fine and served an additional week in jail. In April 2006 Lee Hsien Loong and Lee Kuan Yew demanded an apology from Mr Chee for remarks made in the SDP newspaper, The New Democrat, and Mr Chee was again imprisoned in November 2006 for failure to pay a fine resulting from speaking in public without a permit. The litany of other charges against Mr Chee is long, and he is likely to continue to receive a battering in the courts. Main political figures Lee Hsien Loong (in the past often referred to as B G Lee) Prime minister since August 2004 and minister of finance. Son of Lee Kuan Yew, he had long been prime minister-in-waiting. He has extensive ministerial experience, but does not command the degree of popular respect enjoyed by his father. The result of the 2006 general election was widely seen as a test of his popularity, as much as of the government!s overall success. Goh Chok Tong Senior minister and head of the Monetary Authority of Singapore (MAS, the central bank). Mr Goh, the prime minister from 1990 to 2004, is a rather more relaxed political figure than the younger Mr Lee. His foreign-policy experience has proved useful, but has yet to produce a breakthrough in relations with Malaysia. Lee Kuan Yew Prime minister from 1959 to 1990 and seen as the "father of the nation". He is no longer senior minister and is beginning to play a much less prominent role in politics. However, he will retain a residual importance, particularly when "moral" issues are being discussed. He is the third highest-ranking person in the cabinet through his post as minister mentor. Wong Kan Seng A deputy prime minister since September 2005, replacing Tony Tan. Minister for home affairs since 2004. Praised for his effective handling of the SARS (Severe Acute Respiratory Syndrome) crisis in 2003. Shunmugan Jayakumar The other deputy prime minister and the minister for law. Minister for foreign affairs until 2004. Now 67 and considered a loyal supporter of Lee Hsien Loong, he can have no ambitions for the top job. George Yong-Boon Yeo Minister for foreign affairs since August 2004. Formerly minister for information and the arts and minister for trade and industry. His ministerial career wobbled in the 1990s, possibly owing to his liberal views, but is now revived. Tharman Shanmugaratnam Appointed to the post of acting minister for education in 2003 and confirmed as a full minister in 2004. The post is a politically sensitive one. He is one of the few people to have faced problems with the government (as an official at the MAS), but then to be accepted back into the fold. Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 11 Chee Soon Juan Secretary-general of the Singapore Democratic Party (SDP). Currently the most prominent critic of the government, but cannot hold a parliamentary seat owing to bankruptcy conviction. By profession a neuropsychiatrist. Chiam See Tong The longest-serving opposition member of parliament (MP), returned again by the Potong Pasir constituency in the general election in May 2006. Head of the Singapore People!s Party. Low Thia Khiang Head of the Workers! Party and opposition MP for Hougang. An effective and resilient critic of government policies. The opposition makes no Legal action against opposition politicians has helped to keep them divided. headway in parliament Wrangling within the Singapore Democratic Party (SDP) led the party!s then leader, Chiam See Tong, to leave the party. Mr Chiam retained his seat as a Singapore People!s Party (SPP) MP in the 1997, 2001 and 2006 elections. Low Thia Khiang of the Workers! Party (WP) accounted for the other opposition victory at the November 2001 election, retaining the Hougang constituency (a position he maintained in the May 2006 election). The Singapore Democratic Alliance (SDA) is a loose alliance consisting of the National Solidarity Party, the Singapore Malay National Organisation and the SPP. The opposition MPs often put up a creditable performance in parliament"they have provided some interesting criticism of budgets and constitutional issues, for example"but they are unable to force changes to government plans. The opportunities for extra-parliamentary protest are limited. This is most clearly demonstrated by the fate of the SDP secretary-general, Mr Chee, who has been repeatedly fined and (briefly) jailed for speaking in public without a permit, in addition to the punishments for his other misdemeanours. Security risk in Singapore Armed conflict History suggests that Singapore should be wary of its much larger neighbours. The separation from Malaysia in 1965 was painful, and anti-Singaporean sentiment sometimes erupts in the Malaysian government and elsewhere. Singapore misplayed its hand with Indonesia, getting far too close to the disgraced former president, Soeharto, with the result that it has been treated with suspicion by his successors in Jakarta, and relations again deteriorated in early 2007. Despite Indonesia!s larger size, the main military threat is seen as coming from Malaysia. A particular longstanding worry is that the Malaysian state of Johor could cut off supplies of water to Singapore, something that would quickly bring the country to its knees. To deal with this threat, Singapore has amassed a large amount of sophisticated military hardware"including 350 light tanks and over 100 combat aircraft. It is presumed that any move to cut off Singapore!s water supplies would be countered by Singapore armoured vehicles invading Johor, with the Singaporean air force overwhelming its Malaysian counterpart. Since 1998, housing developers have been required to build a bomb shelter in every new house, although the space that needs to be allocated for this shelter was reduced in 2001. © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
12 Singapore 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 government has responded by detaining a number of people (almost all Singaporean citizens) under the provisions of the Internal Security Act (ISA). A particular bogey is the Jemaah Islamiya group, which in April 2007 was reported to have formed an assassination squad. Anti-terrorist co-operation with Indonesia has much improved, as demonstrated by the extradition of a high-level terrorist suspect from Indonesia to Singapore in early 2006, but progress here could be prejudiced by current rows over a proposed extradition treaty between the two countries. Co-operation between the Singaporean and Malaysian anti-terrorist forces appears to be good, despite the ongoing political spats between the two countries. Marine piracy will also remain an important problem in the waters surrounding Singapore, and Singapore has been pressing for better international maritime security practices: the nightmare scenario is a nuclear device on a boat berthed at Singapore. The navies of Singapore and its neighbours are small, and the topography of the area"with a large number of small islands"would seem to favour the pirates. Singapore is pushing for increased regional co-operation on this issue. Civil unrest There has been no civil unrest in Singapore for many years. If there were to be in future, the police or armed forces would crack down on it heavily. The authorities view the most likely fissure lines to be those associated with race"this was the issue that sparked the well-known 1960s race riots. The government is keen to maintain a dialogue with representatives of the Malay and Indian communities, but the obvious Chinese dominance of the government continues to cause resentment. Official Muslim bodies moved quickly to condemn the alleged terrorists arrested in December 2001, and the international furore over Danish newspaper cartoons of the prophet Mohammed in 2005 caused no violence in Singapore. In the longer term, the most likely external trigger for civil unrest remains increased racial strife in either Malaysia or Indonesia. A prolonged economic downturn would also significantly increase the risk of civil unrest. Violent crime Violent crime is not a problem for business. Guns are not in wide circulation, and recent murders have been exclusively "domestics", with no business or political component. Some firearms sentences carry a mandatory death sentence. Other violent crime is generally limited to vandalism, often alcohol-related. Drug-smuggling and organised crime Singapore has long imposed a mandatory death penalty for drug-smuggling and has not shirked from carrying it out. Amnesty International, a London-based human- rights organisation, claimed in 2004 that Singapore had the world!s highest execution rate per head of population. There is some organised cigarette-smuggling from Indonesia and some illicit gaming, but in general Singapore!s organised criminal groups are small, poorly organised and stand no comparison to their counterparts in, for example, China or Japan. The police force is also considered highly effective. Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 13 International relations and defence Relations with Malaysia Singapore has long had a difficult relationship with Malaysia, its closest neigh- remain difficult bour, with a mixture of major and trivial disputes centred around water supply, the position of the Malaysian passport control in the Tanjong Pagar railway station (the station is currently in the centre of Singapore, but the land is still owned by Malaysia), alleged environmental damage resulting from Singaporean land reclamation work and the extent to which the Singaporean air force can overfly Malaysia, among other things. Leaders on both sides have sometimes, intentionally or unintentionally, exacerbated the situation with remarks seen as derogatory to the other country. In early September 2001 an outline agreement on resolving existing disputes was reached between Singapore!s then senior minister, Lee Kuan Yew, and the previous prime minister of Malaysia, Mahathir Mohamad. However, hopes of a speedy resolution quickly receded. In 2003 both governments! attention was diverted by a dispute over whether Singaporean land reclamation was preju- dicing shipping lanes into a Malaysian port, Tanjung Pelepas. (The International Tribunal on the Law of the Sea ultimately ruled in Singapore!s favour.) From early 2004 there was a warming in relations. There were several visits to Singapore by the prime minister of Malaysia, Abdullah Badawi. Mr Abdullah, who replaced Dr Mahathir in November 2003, has adopted a more conciliatory approach towards Singapore. Reciprocal visits were made by Mr Goh (who has been given special responsibility for this issue), by Lee Hsien Loong and, in April 2005, by Lee Kuan Yew. However, agreement on outstanding problems proved to be elusive, and the two sides promptly found something else to row about: Malaysian plans to build a "half-bridge" to replace the existing causeway between the two countries were abandoned in 2006. (Singapore, for various reasons, does not want to build a bridge connection.) In January 2006 Malaysia started work on this half-bridge, but halted work in April, with the government also saying that possible deals on other areas would now be put on hold. Relations between the two countries were further harmed by remarks made by Lee Kuan Yew in September 2006, in which he accused Malaysia of marginalising its own Chinese community. Malaysian domestic politics suggest that it could take some time before serious discussions start again. Mr Abdullah!s domestic position is not strong, and he will, for example, be unable to concede to Singapore on territorial issues or on the price of water supplied from Malaysia. However, Malaysia may liberalise its domestic aviation industry, something that Singapore has been pressing for. Relations with Indonesia are Singapore also has a difficult relationship with Indonesia. Following the com- not warm plete breakdown of relations in the 1960s, Singapore!s government made great efforts to develop relations with Indonesia!s president, Soeharto, and his regime. To this end, Indonesian islands to the south of Singapore were jointly developed, and Singaporean government-linked companies (GLCs) invested in Indonesia. Singapore also became an important offshore financial centre for the Indonesian Chinese business elite. However, when Soeharto was toppled in 1998, Singapore discovered that such links were a hindrance. Soeharto!s successor, B J Habibie, was openly dismissive of Singapore and its government. © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
14 Singapore After a good start, relations with the next president, Abdurrahman Wahid, deteriorated in late 2000. Relations were then slowly rebuilt, with the signing of two major gas deals in early 2001, but relations with Mr Wahid!s successor, Megawati Soekarnoputri, were businesslike rather than warm. Relations may improve in future. The current Indonesian president, Susilo Bambang Yudhoyono, visited Singapore in early 2005 to sign an investment protection agreement, and there have been one-off extraditions of terrorist suspects between the two countries. However, Singapore has historically been extremely reluctant to sign a proper extradition agreement, and this has caused considerable friction: the Indonesian government believes that Singapore is harbouring a number of corrupt individuals, whom it would like to see returned for trial. Relations may improve following the signing of an extradition treaty in April 2007. A few years ago Singapore started trying to build up relations with individual Indonesian provinces, in the hope of bypassing the political uncertainties of Jakarta, but is now downplaying this approach, as it courts Mr Yudhoyono. Singapore spurs ASEAN into Singapore was a founder member of the Association for South-East Asian action over trade liberalisation Nations (ASEAN), but during the 1990s grew increasingly frustrated with the organisation!s tardy progress on freeing up regional trade. Accordingly, Singapore began to display an increasing enthusiasm for bilateral free-trade agreements (FTAs), the first of which (with New Zealand) was concluded in late 2000. An agreement was reached with Japan in October 2001 and a wide- ranging deal with Australia at the end of 2002. Singapore concluded an FTA with the US in 2003, which came into force in January 2004, and a Comprehensive Economic Cooperation Agreement (CECA) with India in 2005. This bilateral approach initially complicated relations with Singapore!s fellow ASEAN members, but their attitudes towards trade liberalisation are changing. An ASEAN free-trade area (AFTA) has been in place since the start of 2003 and will be significantly deepened over the next few years. The driving force now is fear of the impact of the dynamic Chinese economy; in 2005 ASEAN and China agreed plans to create a free-trade area by 2010. Plans for an ASEAN- India deal are currently stymied by Indian concerns over agricultural imports. Singapore will continue to Despite the expansion of the Chinese economy, Singapore needs no reminding look to the West that its prosperity still depends on continued investment in the island by Western and Japanese multinationals and on the openness of OECD export markets. In the past Singapore has taken a keen interest in the Asia Pacific Economic Co-operation (APEC) forum and the World Trade Organisation (WTO). Occasional differences with developed-country trading partners, for example, over intellectual property rights (IPRs) and restrictions to entry into Singapore!s financial sector, have not been allowed to develop into major problems. Terrorist threat reinforces Singapore!s enthusiasm for the US is motivated by military, as well as economic defence links with US reasons. Given the country!s small size and potentially troublesome neighbours, self-defence remains a priority. Singapore!s military has close links with the US armed forces; particular reassurance is provided by the US navy!s use of Changi Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 15 naval base. (This relationship may, however, increase the risk of Singapore being a terrorist target.) The island is a member of the Five-Power Defence Agreement (FPDA), which groups Singapore with the UK, Australia, Malaysia and New Zealand and provides a convenient forum for joint military exercises. Military co-operation within ASEAN has proved difficult. Although Singapore, Malaysia and Indonesia have been carrying out co-ordinated naval patrols in the Malacca Strait since July 2004, Singapore!s efforts to upgrade this relationship to include, for example, the involvement of other countries, have been rejected by the island-state!s neighbours. In April 2007, however, the Indian government revealed that it was working "quite expeditiously" on a defence agreement with Singapore. Moreover, some progress is being made towards broader regional cooperation"in late 2006 several countries, including Singapore, agreed to improve security ties through the Regional Co-operation Agreement on Combating Piracy and Armed Robbery Against Ships in Asia. The country!s regular armed forces are complemented by some 312,500 reservists. Equipment is modern, and defence spending is high as a proportion of GDP. Resources and infrastructure 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. (In mid-2006 Malays accounted for 13.6% of the total population, and Indians accounted for 8.8%.) Efforts to boost the birth rate In the mid-1980s the government abandoned its "stop at two" family limitation have failed programme, replacing it with tax incentives to "go for three". Fear of future labour shortages and increasing aged-dependency ratios prompted the author- ities to offer cash payments to mothers on a sliding scale, with younger mothers receiving more. There were also efforts to encourage the better-off to have more children. Such financial inducements, however, have failed to boost the birth rate. The fertility rate reached a record low of 1.24 children per resident female in 2004 and remained at this level in 2005-06. The fertility rate has now been below the notional replacement rate of 2.1 since 1976. In recent years, the government has given greater emphasis to making life easier for working parents"this approach should have more immediate gains, if it attracts more women back into the labour force. In 2000 it announced that the number of childcare places would be boosted, and that the civil service would be allowed more flexible working patterns. Recent government budgets have also extended subsidies available for childcare. The issue remains important"the low birth rate is already contributing to an ageing of the population, which has © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
16 Singapore forced the government to raise the amount that individuals must hold in their Central Provident Fund (CPF) accounts for retirement. To ease the problem in the short term, the government has also taken an increasingly relaxed attitude to immigration, particularly of skilled workers, even though this has caused some resentment among Singaporeans. City planners therefore continue to work on the assumption that the population will increase sharply over the next few decades, despite the low birth rate. In December 2006 the minister for national development, Mah Bow Tan, told parliament that the country!s population might increase by over 40%, from 4.5m to 6.5m, over the next 40-50 years. Population by age and ethnic group ('000; end-Jun 2006) Chinese Malay Indian Others Total 0-14 477.2 126.2 74.0 21.0 698.1 15-29 534.8 115.7 65.2 14.0 729.6 30-44 708.1 114.4 91.0 29.5 942.8 45-59 643.2 93.5 58.7 15.1 810.6 60+ 350.1 40.6 30.5 5.9 427.3 Total 2,713.2 490.5 319.1 85.5 3,608.5 Note. Totals may not sum owing to rounding. Source: Department of Statistics, Monthly Digest of Statistics. Education School education is The current state of children!s education appears to be satisfactory. Primary highly efficient education begins at six, with an emphasis on numeracy and literacy. Secondary education starts from the age of 12, when students are streamed"special and express courses take students to Ordinary Level examinations in four years; other courses allow an extra year. Pupils then spend two years in a junior college or three years in a centralised college, preparing for the Advanced Level exams, which determine whether or not they can proceed to tertiary education. University education is The National University of Singapore (NUS) was founded in 1980, merging the stepped up University of Singapore with Nanyang University. It has around 22,000 undergraduate students and 8,000 graduate students. The Nanyang Technological Institute became the Nanyang Technological University (NTU) in 1991. This second-string institution offers courses with a more vocational bent. The private-sector Singapore Management University opened in 2000. Co- operation agreements also exist with a number of foreign universities, although one of these, with the US!s John Hopkins University, was wound up in 2006. Plans for a fourth university, unveiled in 2002, were abandoned in early 2003. Instead, the plan is now to create 3,500 additional university places by adding facilities to the two main existing national universities, NUS and NTU. The NUS is to have two new campuses, one dedicated to scientific research at Buona Vista and one for medicine at Outram. More importantly, 2,000 of the new places are to be awarded to polytechnic students, the group for which the fourth, abandoned university had been planned. Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 17 There is a desire to increase The school system has a high international reputation, but will not be immune "creativity" to change. The government is concerned that the traditional basis of rote learning and written examinations is stifling the creativity seen as necessary for success in a modern developed economy. There have therefore been various moves to "revitalise" education, including substantial investment in information technology (IT) for schools. The curriculum is being modified, and methods of assessing pupils other than examinations are to be introduced. Islamic schools are a point There is also a longstanding debate about the merits of insisting that each pupil of friction become competent both in English and in a "mother tongue" (Chinese, Tamil or Malay). It is hard to be certain whether this twin-track approach has reduced overall standards. A separate battle continues about the fate of the madrasahs, Islamic schools that exist outside the main school system. The government wants them to improve their relatively poor exam pass rates, but is unlikely to push them too hard, given current worries about terrorism: Singapore madrasahs are seen as bastions of mainstream, moderate Islam. Debate has also focused on the use of "Singlish""English mixed with local dialects"which the government wants to discourage. 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 3.1% of total CPF withdrawals in 2006. Medisave Accounts are designed to cover the basic hospital costs of individuals and their families; funds can be used to buy cover from the private sector or from the principal public health insurance scheme, Medishield, in case of long-term "catastrophic illness" treatment. Individuals are also permitted to use Medisave funds to purchase an additional state scheme, Medishield Plus, or private insurance policies. In 2002 a new ElderShield scheme was launched, targeted at the elderly. A government endowment fund, Medifund, covers the costs of poorer Singaporeans who are unable to pay for their treatment. Charges in public hospitals are largely determined by the class of ward. Natural resources and the environment A new Green Plan is drafted Primary industries have never been important in Singapore. However, attention has long been given to the one natural resource that Singapore is capable of promoting"a relatively clean and pleasant environment. In 1991 a broad-brush National Green Plan was published, committing the government to limiting carbon dioxide emissions, phasing out controlled chloroflourocarbons (CFCs) © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
18 Singapore and improving procedures for the storage, handling and transportation of hazardous products. There has been progress towards some of these targets, with the import of CFCs, for example, banned in January 1996. The Green Plan has also been complemented by more specific schemes in areas such as water conservation and recycling. Leaded petrol was phased out in 1998, and diesel has a low sulphur content. New pollution regulations came into force in January 2001, and existing industries were given up to three years to comply with these. However, Singapore remains vulnerable to environmental degradation from elsewhere"such as smog from forest fires in Indonesia. The next Green Plan, to 2012, was officially released in August 2002. Three "key thrusts" were identified: • "quality living environment""setting new air pollution policies, promoting the use of natural gas, maintaining the quality of coastal and inland water, reducing the need for landfill through recycling and keeping down ambient noise levels; • "working in partnership with the community""developing a community- centred approach and ensuring public feedback; and • "doing our part for the global environment""working to enhance international and regional environmental governance. These rather broad, if laudable objectives are complemented by a few specific targets. By 2012 natural gas is to account for 60% of electricity generation; 25% of water supply will come from "non-traditional" sources (for example, desalination); and 50% of solid waste will be recycled. Considerable progress has already been made on recycling water and on desalination. The government has been promoting the use of potable recycled water, branded as Newater, and claims to have invested S$2.7bn (US$1.6bn) in outsourced water projects between 2002 and 2005. A major desalination plant was opened by a local company, Hyflux, in Tuas in late 2005, and in January 2007 the government announced substantial new funding for water research centres. Transport, communications and the Internet A slightly more relaxed The government has considered deeply the problems of car usage. It has taken approach to car ownership various measures to limit this, including implementing a variety of taxes and introducing certificates of entitlement (COEs). A number of these documents are released each month through auction; those wanting to put a motor vehicle on the road must bid for them. The budget for fiscal year 2002/03 (April-March) reduced car taxes and promised a slight increase in the number of COEs (in return for higher usage charges); the budget for 2003/04 cut vehicle taxes by a further 3-5%; and the budget for 2004/05 saw the Additional Registration Fee (ARF)"paid when a car is first registered"lowered from 130% to 110% of its Open Market Value (OMV). Subsequent budgets contained no new initiatives, but the cost of a medium-sized car is now only about half of what it was a decade ago. Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007
Singapore 19 The emphasis now seems to be changing to a "pay per usage" approach. Charges have long been levied on cars entering the central area, but this approach was extended significantly in April 1998, when electronic road pricing (ERP), which uses a smart-card system to charge cars as soon as they enter restricted areas, was introduced on the East Coast Expressway. ERP was imposed on other highways later in the year and, despite some initial problems, has proved to be a success for the authorities. Public transport is efficient Public transport is famously effective. A complex bus network benefits from the continuing programme of road upgrading. The Mass Rapid Transport (MRT) system is a much-envied underground and overground commuter railway system; existing lines are being extended and new lines built. Light Rail Train (LRT) lines are also being run into some areas of the country that are not served by the MRT. Substantial expansion of the MRT and LRT networks is planned. Changi must cope with the Changi airport is regarded by many as the world!s best airport. It currently has needs of budget airlines two full-service terminals. The threat of low-cost airlines being established in neighbouring countries has also resulted in the government acknowledging the need for Changi to accommodate these new carriers, and a new terminal dedicated to budget airways opened in March 2006. Another full-service terminal is being built at Changi and is scheduled for completion in 2008. The government accepts that budget airways will have a major role in regional air travel. The national carrier, Singapore Airlines (SIA), has formed its own low- cost airline, Tiger Airways, with Indigo Partners (a US-based private-equity firm) and Irelandia Investments (the investment firm of Tony Ryan, owner of Ryanair, a budget airline based in Ireland). Other Singapore-based budget airlines include Jetstar Asia (in which an Australian airline, Qantas, has a 49% stake) and Valuair. The government!s investment arm, Temasek Holdings, appears to be hedging its bets: it has significant stakes in both Tiger Airways and JetStar Asia. Despite the growth of budget carriers, Changi!s development is still closely linked to the fortunes of SIA. SIA is one of the world!s leading medium-sized airlines and has sought alliances to extend its international reach. Its most notable acquisition so far has been a 49% share in a British airline, Virgin Atlantic; it has also tried to develop links with Australasian airlines, but got its fingers burnt by the New Zealand government!s de facto renationalisation of Air New Zealand (in 2001), in which it had a substantial stake. Another setback was the decision by the Australian government in February 2006 not to give SIA access to the lucrative Australia-US routes. SingTel remains dominant in Telecommunications are regarded as too important to be left wholly to the telecoms private sector. In the highly successful "privatisation" of Singapore Telecom (SingTel) in 1993, only around 7% of the company!s share capital was sold, although the government!s share has been further watered down since. Despite the government!s heavy presence in terms of ownership, attempts are being made to increase competition in the market. SingTel!s monopoly on basic services (for example, telephone lines) ended in 2000. Starhub was the first competitor in 2000, having been promised that a duopoly would be maintained until April 2002. However, in June 2000 an additional licence was © The Economist Intelligence Unit Limited 2007 www.eiu.com Country Profile 2007
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