This document provides an overview of Singapore's history and economic development from the 1800s to 2008. Key points include: - Singapore was founded as a British trading port in 1819 and gained independence in 1965. - Its early economy centered around entrepôt trade and it developed industrialization in the 1960s-70s. - It transformed into a major Asian financial and shipping hub by the 1990s and 2000s, ranking highly on prosperity and competitiveness. - The economy consists of clusters like petrochemicals, finance, logistics, IT, biopharma, tourism, and education that the government continues developing. - By 2008 Singapore had reached a high level of prosperity but then

1. L/O/G/O
Case Study:
Remaking Singapore Syndicate 5
Muhammad Ridwan – 29112555
Machadi Dhana – 29112303
Mahammad Khadafi – 29112324
Pedro Putu Wirya – 29112565
Seto Kusparyanti – 29112306
Yuliani Dewi Risanti – 29112321
Rahdianto Maulana – 29112554

2. Singapore At Glance
• Previously, part of
Sriwijaya Kingdom
• Found by Raffles: 1819
• Sovereignity: 1958
• Area: 710 km2
• Currency: SGD
• Legislature: parliement

3. Early Modern Singapore
• Britain made Singapore as an important trading center and port with
policy of duty free trade which proved beneficial.
• Singapore developed a classic entrepot economy, which funneled
exports and imports to surronding region, mostly tin and rubber from
Malaya.
• During World War II, Singapore was tranformed into Britain’s
principal naval and air base in Asia, got captured by Japan in 1941,
and backed to Britain in 1945 with devastation condition.
• Singapore reconstruction took 4 years, in 1949 Singapore condition
returned to pre-war levels.

4. The Period of 1958 - 1964
• In 1946 Singapore became a separate Crown Colony; and first
election was held in 1948 for 6 of 25 Council Seats.
• Due to communist threats, British imposed the 1948 Internal
Security Act (ISA), a detention without trial for persons suspected of
being ‘threats to security’
• Full sovereignity was granted in 1958, with constitution of
unicameral parliamentary democracy.
• In 1963, Singapore and Malaya formed Federation of Malaysia
• Singapore GDP declined by 4% in 1964 after the Indonesia agent
bombed a Singaporean hotel and seized fishing boats as a part of
its “konfrontasi” with malaysia.
• In 1965, Malaysia ejected Singapore

5. The Period of 1965 - 1970
• In 1965, Lee Kuan Yew became Singapore’s first Prime Minister and
his People’s Action Party (PAP) winning all seats in parliament.
• New Policy to create a Singaporean identity that would unite the
country’s diverse ethnic groups (62% Chinese, 16% Indians, 14%
Malays, 8% Others):
– Four official languages (English, Malay, Mandarin Chinese, Tamil) was taught in
school.
– Compulsory service in the Singapore Armed Force (SAF) to create a shared
experience across society.
• Policy of Internal Security Act was still retained.

6. The Period of 1965 - 1970
• Orderliness and cleanliness were hallmark of the new Singaporean
society, and strictly enforced by the goverment.
– High taxes of cars to avert traffic jam and pollution
– Alarm for taxi, if it overspeeding
– Fines for littering, smoking, and failing to flush public toilet
– Long hair men prohibited in government
– Mass media was driven to favor government
• To create jobs and provide housing, government create two boards.
1. Housing Development Board (HDB) in 1960, to build 10,000 low and middle
income housing units per year.
2. Economic Development Board (EDB) in 1961, to support job creation by
attracting investment, like Jurong Industrial Estate

7. The Period of 1965 - 1970
• Other entities:
– Public Utility Board in 1963, to oversee the supply of water, electricity, and gas
– Port of Singapore in 1964
• Central Provident Fund (CPF), a social security plan introduced in
1955, was relaxed in 1968 to allow low income citizens to buy low
cost HDB.
• Government-Linked Companies (GLCs) were formed
– Keppel, Sembawang, Jurong Shipyard for ship building and repairing industry
– Neptune Oriental Lines (NOL) for shipping line
– Singapore Refining Company, an oil joint venture company togehter with Caltex
and BP
• GLCs were forced to compete on same terms with foreign rivals
because government provided initial capital but no special support
or protection.

8. The Period of 1965 - 1970
• Government policy, on contrary with others recommendation:
– Export-led economic growth; differ with UN study of import substition strategy
– Welcomed foreign direct investment, when many nations in Southeast Asia
viewed western firms as vestige of colonialism
– Exchange rate was close to market rates, free convert fee for Singapore Dollar,
and low duties of exports and imports.
• EDB open foreign offices in another countries, pursuing
multinational companies that sold to worldwide markets.
– By late 1969, 7 major firms, including National Semiconductor and Texas
Instruments, had plants in Singapore
• Economy problems:
– Unemployment rate remained over 10% in 1967
– British pull out its army in 1970, which contributed at the loss of 18% GDP based
on military expenditure and 20% of employment

9. Becoming an Asian Tiger
• 1960 – 1965: GDP Growth 5.8%
• 1966 – 1973: GDP Growth 12.9%, the highest rate in the world due to
foreign investment inflow, export-oriented manufacturing and external trade
all grew rapidly.
• Monetary policy:
– Maintenance of very low inflation
– Keeping its foreign exchange rate a level below IMF standard  preparation for the global
shocks; in 1991, Singapore’s reserves of foreign currency reached S$59 billion
• Port of Singapore, as world’s fourth busiest, became the most important
income for government  first priority
– Built the region’s first container freight terminal in 1972
– Introduced 24-hour berthing service
– British naval dockyards were converted into ship repair center
• British navy refueling facilites were transformed into the largest petroleum
refining center in Asia.

10. Becoming an Asian Tiger
• In 1973, peak of an economic boom, guest unskilled workers appeared.
• Shortly after, first international oil shock was happened.
– Two digit growth of GDP ended
– Real GDP growth fell from 11.2% to 6.1%
– Compounded annually from 1973-1979, economy grew at 7.1%, far exceeding world average
• Second international shock was happened.
– Recession in many countries in 1979 - 1980
– Singapore’s real GDP grew by more than 9%
– Lee government initiated large wage increase, between 14% - 20%  policy to encourage
factories to use higher technology and not relocate to other countries
• The large wage increase impacted on the real GDP of Singapore grew 8,4%
from 1980 – 1984.

11. Recession and Reform
• In 1985 a deep recesion with declining 1,4% real GDP was
accompanied by a sharp rise in unemployment, weak external
demand, low profit and much-reduced investment in manufacturing.
• The 1979 overambitious wage policy impact the structural
deficiencies in the economy, growth of labour productivity hadn’t
keep pace with the rising wages, which had seriously eroded the
nation’s cost position in Asian economies.
• The Economic Committe recommended
– The government lessen its extensive managerial and development role to allow
the private sector more freedom
– Flexibility in wage-setting and reduction of the high mandatory CPF contribution
in order to stimulate domestic demand
– Scaling back the mandatory contribution to the social security fund to 35% from
its peak at 50% in 1984-1985

12. Recession and Reform
• The economic recovery had been begun by the end of 1986, which
was sustained in 1987, when the real GDP growth rate of 9,8% and
in 1988 high export growth and domestic demand led to 11,5% real
growth.
• Fast growth in 1989 and 1990
– Manufacturing sector (led by electronics components) grew by 9%
– Financial services grew by 15%, accounted for 28% of GDP and employed 11%
of labor force.

13. Recession and Reform
• The strong world trade growth assisted the impresive performance
of Singapore such as:
a) The manufacturing sector led by electronic component grew by 9,5% in
1990
b) Singapore had become Asia’s third most important financial center.
c) Singapore also was the world’s third largest oil-trading center.
d) Chiangi airport was voted the world best airport for the third straight
year.
e) Singapore airlines named the best airline in the world and profitable.
• Singapore tension with Indonesia and Malaysia had recede enough
by the late 1980s for three countries to announce establishment of a
“growth triangle” (Singapore, Malaysia state of Johor and Riau
islands of Indonesia).

14. Singapore Maturing : 1991 to 2008
• In the early 1991 Goh’s new goverment issued a long range plan called The
Next Lap which the plan plotted long run social and economic goals.
• During the 1990s, the Singaporean goverment implemented a number of
policy initiatives motivated by the experiences of recession in 1985 and
following up on the vision set out by “Next Lap”
1) EDB set the goal of attracting 500 world class companies to carry out HQ
activities by 2010.
2) PSB was formed to identify and nurture promising SMEs to become Asian MNCs.
3) The “Thinking school, Learning Nation” program was launched to transform
education system.
4) Research centers and advanced training programs were launced in a number of
areas (development of “IT2000”)

15. Singapore Maturing : 1991 to 2008
• Asian financial crisis in 1997-1998
– Exchange rate fell by 16% against US dollar, but appreciated against currencies
of Singapore’s neighbours, increasing its relative cost position in the region
– Stock market fell by 54%
• Committee on Singapore’s Competitiveness was created
in 1997
– Recommend that Singapore reduced its business cost, maintain investor
confidence, and continue to build up the people’s capabilites to ride out the
economic storm.
– Solidify financial system, diversify the economy by developing new markets for
exports and form strategic alliances with regional economies.
– Privatization of the National Computer Board and the opening of government IT
to private sector services

16. Singapore Maturing : 1991 to 2008
• 9/11, terrorist attack in New York in 2001
– Internal Security Act was used to arrest several dozen members of radical Islam
group, which heightened the insecurity of Singaporeans, as well as strained the
social cohesion between moslem and others.
– The IT and telecommunications industries crashed
– GDP growth worsened from 8.3% in 1997 to – 2.4% in 2001, the worst GDP
decline ever recorded
• In March 2003, the spread of SARS virus worlwide
– Took a heavy toll of business tourism, which accounted about 5% of GDP
– Transport related business also dropped 70% for inbound, 80% for outbound
– Singapore Airlines suffered its first loss, impacted on having to lay off 414
employees
– HDB shed 3,000 of its 8,000 staff for restructuring exercise

17. Singapore Maturing : 1991 to 2008
• Economic Review Committee (ERC) was created
• Short term adjustments to improve the relative cost
position of companies
– CPF was cut to 13%, and even 9% for older worker
– Monthly salary cap for computing reduced from S$6,000 to S$4,500
– Rental rates for government owned industrial space were lowered
– Government related fees were frozen and fee increases deffered
– Taxes were shifted to goods and services tax, similar to VAT
– In 2004, foreign sourced income and domestic investment income from financial
instruments were exempted from tax
– In 2005, the corporate tax rate was reduced to 20%

18. Singapore Maturing : 1991 to 2008
• Long term adjustments
– Expanding economic ties with countries in the wider region (spanning India,
China, Japan, and Australia) to enhance Singapore’s regional hub status
– Promoting new export industries in education, healthcare and professional
services
– Building stronger private companies through promoting entrepreneurship
– Attracting global talent
– Facilitating economic restructuring through worker education and skills retraining

19. Singapore Maturing : 1991 to 2008
• Policy, based on ERC reports
– FTA with US in 2003
– GLCs, including Temasek Holding, became more active investor abroad
– Workforce Development Agency was created in 2003 to lead efforts on
upgrading worker’s skill
– In science policy, National Research Foundation was created in 2006, with
iN2015 and i-Gov2010 program, to develop the IT infrastructure and the use of e-
service by government
– Ministry of Information, Communications, and the Arts (MICA) planned to
transform Singapore into ‘vibrant global city for information and the arts’
• International film makers in Singapore
• Singapore Media Academy was set up
• International media organizations, like CNBC and MTV
• Museums
– Marina Bay area was turned into exicitin environment of business, tourists, and
residents

20. Singapore Maturing : 1991 to 2008
Temasek Holding Geographic Portfolio

21. Singapore Maturing : 1991 to 2008
Temasek Holding Sectors

22. Singapore Maturing : 1991 to 2008
Prosperity Growth

23. Singapore in 2008
• By 2008, Economics of Singapore grew. This can be seen in the
achievement that had been reached :
 Singapore ranked 4th in the prosperity league of countries (behind
Norway, but ahead U.S. and Hongkong).
 The ratio of working age people to pensioners had dropped
 Labour productivity stood at 96% of the OECD average
 Singapore trade was well over 400% of GDP
 Foreign investment had reached historic highs
 The world’s best environment in term of rules and regulation for
conducting business, non existent corruption
 National University of Singapore (NUS) was ranked 30th globally
 Ranked 9th in spending on R&D and 13th on the number of researchers
in the workforce
 Ranked 16th on the intensity of local competitiveness
 Become home for a large number of Asian regional HQ for multinational
companies

24. Singapore in 2008
Singaporean FDI

25. Singapore in 2008
Singapore Patents

26. Singapore in 2008

27. Singapore in 2008
Singapore Patents

28. Singapore in 2008

29. Singaporean Clusters
The Singaporean economy consisted of a portofolio of clusters, which
shall be developed further by government policy.
 Petrochemical
Accounted for 10,3% of Singaporean industrial output  the 3rd largest
manufacturing sector.
 Finance
This industry contributed 13% to Singapore GDP in 2008 (growth rate
7,3%).
 Logistics
The largest container port in the world (owned by Temasek Holding;
3,6% of market share).
 Information technology
IT services and electronics manufacturing accounted for 8,9% of GDP
and employed more than 90.000 workers.

30. Singaporean Clusters
 Biopharmaceuticals
The domination of production with the highest value added of all
Singaporean non – oil export.
 Tourism
The “Uniquely Singapore” campaign and also tourism board
invested about $90 millions to entice visitors from target market.
 Education
Singapore was hoping to become a global education hub by
setting up the Singapore Education Services Center for
foreign students in Singapore.

31. What’s Next
 In 2008, Singapore entered recession as the result of the
global financial crisis.
 Financial services and logistics clusters became the first
to be shaken.
 New policy by Prime Minister, formed an Economic
Strategies Committe (ESC) to provide recommendation
to reach sustainable future growth.

32. L/O/G/O
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