Business Environment in Singapore

Tuesday, October 13, 2009

Singapore....best in the world to live, work, do business

I always have some reservations about Singapore. It could be due to the 'friendly war' between the two neighboring countries which used to be one nation.

Singapore has excelled beyond the expectations in so many fronts. We are lagging behind except in fields such as corruptions, crimes etc.

We are envious to the'dot' state achievements...yes, we are, there some things better about Malaysia, however, we are just a country between Singapore and Thailand....that's reality while our slogans keep changing without real meaning....1Malaysia would fade away as the others...and who remember Hadhari (except the images of sleeping PM)? Cemerlang, Gemilang, Terbilang?

Singapore beckons

According to the World Bank's recent Doing Business 2010 report, it takes only three days to launch a business there.

• By Jumana Al Tamimi, Associate Editor
• Published: 00:00 October 13, 2009

• For the fourth year in a row, Singapore has managed to keep its top position as the easiest place to do business in the world despite the global financial crisis.
• Image Credit: Supplied

If patience isn't your best trait, go to Singapore. According to the World Bank's recent Doing Business 2010 report, it takes only three days to launch a business there. This compares to 8.1 days in the East Asia and Pacific region; and 5.7 days in any of the members of the Organisation for Economic Co-operation and Development (OECD).

For the fourth year in a row, the island-state has managed to keep its top position as the easiest place to do business in the world despite the global financial crisis.

However, it has not escaped unscathed. Many economic sectors were hit, particularly trade and tourism. The number of visitor arrivals to Singapore in May 2009 at 730,000 was 13 per cent lower year-on-year, according to official figures.

Yet, the cloud has its silver lining, and the crisis has brought more talent to the country.

"People became scared and careful," said Daisy Goh, Regional Director, Middle East at the Singapore Economic Development Board (EDB).

"It made many Westerners look to Asia for opportunities," she said.

"Many of those who lost their jobs in Europe and America have arrived here searching for a job," she said, adding that the country is carrying out an active strategy to attract talent.

According to official figures, one in three people out of Singapore's total workforce is a foreigner, which makes 33 per cent of the nearly three million labour force in the country foreigners.

Singapore was rated the best place for Asians to live in, having the best city infrastructure in the world.

It is also voted the best place in the world for expatriates to live in, according to some international surveys, followed by the UAE and the US.

The pace of life there seems very fast, and very similar to the developed nations.

Busy airport

The time difference with the rest of the world is not in favour of the Singaporeans, but they prefer not to look at it as an obstacle. Some say, on the contrary, it can be a reason for more cooperation among different countries.

Changi Airport is among the 10 busiest in the world in terms of international passenger movement, whereas some of the best known factories in the world for integrated circuits, pharmaceuticals, petrochemicals and diodes and transistors are based there.

"We are a first world economy in a third world region," Lee Yi Shyan, minister of state for trade and industry and manpower in Singapore, told a group of visiting journalists from the Middle East.

Describing the Singaporean example as "interesting", he added: "People are wondering how we built it," referring to the young country that celebrated its 44 years of independence last August.

Interestingly enough, countries keen to learn more of the Singaporean system include China, which has sent thousands of its officials throughout the past years to Singapore, as well as many countries in the region.

For a country of only 704 square kilometres with a population of nearly 5 million and no natural resources, it has to depend mainly on the human resources element, as well as its strategic geographic location in the east.

"Your geography is your destiny," the EDB's Goh quoted founders of the country as saying.

The geographic location explains why trade and investment constitute the aorta of Singapore's economy.

Overseas investments

Singapore has the world's highest trade to GDP ratio, with imports and exports around 3.5 times its GDP.

In 2008, the country's GDP amounted to $257 billion (Dh943 billion), while total trade amounted to $928 billion.

Official figures also show that foreign direct investment (FDI) increased by 23.4 per cent from $370 billion at the end of 2006 to $457 billion at the end of 2007.

The UK, the Netherlands, the US and Japan top the list of FDI sources.

On the other hand, Singapore's overseas investments rose by 22.1 per cent from $243.7 billion at the end of 2006, to $297.6 billion at the end of 2007. Top countries for Singaporean investments include Vietnam, Indonesia, China and Malaysia.

Other important main economic sources include the energy sector, which makes the country an undisputed oil hub in Asia and one of the world's top three export refining centres.

As for non-oil exports in 2008, electronics, petrochemicals, pharmaceutical are manufactured in Singapore, but not as final products. They are assembled abroad.

Chemicals

Nearly 90 of the world's top pharmaceutical companies are based in Singapore and produce "active ingredients" for these products to be finished abroad, officials explain.

A large chunk of Singapore's 2008 GDP ($179 billion) came from manufacturing with nearly 20 per cent, followed by wholesale and retail trade with 17 per cent, business services with 14 per cent and 13 per cent for financial services, according to official statistics.

With nearly 39 per cent, chemicals manufacturing constituted the largest part of manufacturing output in 2008, amounting to $180 billion. This is followed by electronics with 27 per cent.

In cases of emergencies, expensive small packages of pharmaceutical products or small electronic parts can be shipped any time, Shyan said.

In urgent times, a briefcase with a product worth billions of US dollars will be carried by someone, escorted by a small number of security men who will board a flight to the targeted destination, Shyan said.

"Singapore is doing very well because of people's trust," he added.

"Trust is a very important element in Singapore's brand."

According to surveys, Singapore is Asia's safest country, with the lowest risk index. The risk index takes into consideration political risk, social instability and systemic risk.

Minimising fraud

"We built the environment that makes fraud very difficult, and minimise fraud and corruption," Goh said.

The EDB is the body concerned with building strong relations with the rest of the world through boosting foreign investments and creates sustainable Gross Domestic Product (GDP) for the country by providing good jobs and business opportunities for its people.

A distinguished feature of the organisational structure of Singaporean institutions is the clear specialisation of these organisations, and their different missions.

As an example, the Singapore Cooperation Enterprise (SCE) is mainly concerned with promoting the country's experience and shares it with other interested countries.

These fields include urban planning, enterprise developments, e-government and transport. China tops the potential regions to be followed by South Asia, Africa, Middle East and South America.

The SCE has already initiated contacts with many partners in the Middle East region, which many officials describe as "a young market with potential", that they are interested in entering "through the Middle East".

Several representation offices for Singaporean organisations have been opened in different Arab cities, including Dubai, Abu Dhabi, Doha, Riyadh, Jeddah and Cairo.

Furthermore, a Free Trade Agreement (FTA) was concluded between the EDB and the Gulf Cooperation Council (GCC) and signed in December 2008. After the agreement ratification by all members of the GCC, it will be in effect.

The FTA, which will strengthen bilateral economic relations, is expected to "encourage investment" as well as trade size between the two sides Shyan said, giving the example of halal food, which Singapore hopes to increase its exports of to the region.

While many compare Singapore with Dubai, in many aspects, Singaporean officials believe this is "natural".

"We can't stop people from comparing," said Alvin Lim, Director at the Middle East, North Africa and Central Asia and Latin America at the SCE during a recent meeting with journalists from the Middle East.

"This [comparison] is a benchmark," he added. "It will show where we are on the benchmark."