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Over the last decade, Singapore has shown extraordinary economic growth. Today it is considered a high-income economy. The growth is driven by several factors. Some of them are private consumption expenditure, local and external demand, and investments.
Singapore’s leading sectors like as pharmaceutical and petroleum refining industry have the potential to attract other countries to invest. In this article, I will talk about the external factors that have an impact on Singapore. I have added a PESTLE analysis of Singapore. PESTLE is a business tool used to study the macro-environmental factors. It is an acronym for political, economic, social, technological, legal and environmental factors. Let’s see how each of these factors impacts the country.
The political risk in Singapore is quite low. In fact, the Political And Economic Risk Consultancy (PERC) states that the country enjoys the lowest political risk in the continent. It is a democratic country. The people elect representatives to lead the nation. Since its independence, they cherished relative political stability. Today, the stability has translated to peace and a better standard of living. Moreover, It has transformed into improved business opportunities for Singapore.
However, there have been reports about restriction of free speech for opposition parties in Singapore. It is said that the value of free speech for the parties is limited. The defamation laws require opposition parties to be careful that political comments do not lead to costly defamation suits or imprisonment.
The fear of legal suits limits the potential of free speech for opposition parties in Singapore. Another factor is limited dissemination of content. These discourage the opposition parties. As a result, the contribution to free speech activities and inter-party debates is low.
The economy of Singapore is a vibrant free-market economy. It is developing at a very fast pace. The country’s per-capita income is the highest in ASEAN. A corruption-free environment supports the business sector. It is among the most competitive countries. The educated and motivated workers strengthen it. The legal and financial business framework helps as well.
Recently, the government has invested in diversifying the economy. As a result, the tourism, pharmaceutical, and many other industries have flourished. One of the main reasons behind the success is its strategic geographic location. The government is an imperative and active player. It owns substantial productive assets. Cheaper labor cost from neighboring countries helps Singapore save a lot of costs.
Some constraints on Singapore’s economic performance are the following:
- Labor shortages
- Rising labor costs
- Declines in productivity
Socially, Singapore is like any other Eastern country. It still follows traditional family values. It is true that the younger generation has the tendency to follow western culture and values. The residents work hard and fulfill the materialism desire. This urge to do well has increased nation productivity. The business sectors can, therefore, expect higher purchasing power from customers. Reports suggest that most Singaporeans dislike blue collar jobs like construction.
Literacy rate in the country is very high. Primary schooling is compulsory in Singapore. Parents must ensure children’s regular attendance. Good command of English and Chinese languages gives Singaporeans an advantage. It helps to attract international trade and foreign investment.
I can assure that one of the main reasons behind the change in lifestyle and quality of life is the technological advancement.
As you might have guessed, the internet plays a role in Singapore’s advancement. It eased communication and increases connectivity. The cost and time of conducting business lowered. It also boosted the social networking. The residents could easily connect to the rest of the world.
The IT infrastructure in Singapore is praise-worthy. The penetration rate for household broadband internet is over 70%. E-commerce and eB2Cmodels have flourished in turn. More than 10Mbps of broadband internet service is available. The widespread IT infrastructure has encouraged multinational companies to set up regional operations in Singapore. The government is also moving towards an electronic government era.
The government thinks that growth of electronic commerce depends on transparent and market favorable legislations and regulations. Certain legal, regulatory and business settings are needed to support industry development and economic growth.
E-commerce program was launched in 1996. The aim was to develop the e-commerce services. Singapore has introduced some e-commerce policy initiatives. There are cross-border e-commerce laws and policies. Some basic legal and technical infrastructures to support secure e-commerce were available since 1998. Some of them are Electronic Transactions Act, Intellectual Property Rights, Amendments to the Evidence Act, Content Regulation, Tax Issues and Import and Export Procedures.
The Ministry of the Environment and Anti-Pollution Unit works relentlessly to maintain air quality and other environmental factors. Pollution from the transportation is the key problem in Singapore’s urban areas. There was a time when Singapore was among countries with the highest level of industrial carbon dioxide emissions.
Singapore lost almost 30% of its mangrove area. Many species are in danger of extinction.
The Water Pollution Control and Drainage Act helps control water quality. One of the major concerns for Singaporeans is that the country does not have enough water to support their needs. Pollution from the industrial byproducts like oil increases the problem. As a solution, water is recycled after desalination.
As there is a lack of water resources, Singapore is dependent on Malaysian supplied water. A local brand called NEWater supplies sewage water after purifying it using dual-membrane. More solutions to this problem are needed.
After analyzing all these factors, It is clear that Singapore is a remarkable country. It houses talented and motivated people. It also provides great business opportunities. I can conclude that its business success in both domestic and international platforms is highly benefited by government policies. Its enterprise friendly approach boosts business as well. Singapore’s continuing development has made it a major competitor in the international market. The compulsory primary education and hardworking citizen are contributing factors.