Economic history

Why did Singapore prosper in the early 1821?

Free trade

What were Singapore’s economic policies from 1965?

1st period: Heavy emphasis on manufacturing

→ 1965 - Early 1970s (Labour-intensive)

→ Late 1970s to 1980s (Capital Intensive)

2nd Period: Shift towards the Service-Industries (post-industrialisation)

→ 1980s to 21st century (service-oriented)

3rd period: Move towards a Human Capital Sector (post industrialisation)

→ 21st century and beyond (Knowledge Based Economy)

What are labour intensive industries

Assembly plants that require a lot of workers

Provide examples of labour intensive industries

Amoy Canning supplied the SAF with combat rations in the 1960s to 1980s

Bibi & Baba used to supply Macy’s Gap and Marks & Spencer

Why did Singapore move to Labour-intensive industries

1. Entrepot trade

2. Small Factories

3. Joint air defence system accounted for close to 20% of Singapore’s economy → British withdrawal from Singapore

4. Increasing levels of unemployment

How did Singapore attract investments?

1. Open Door policy to MNCs (multi-national corporations)

2. Incentives to attract Foreign Investors

• Cheap labour

• Financial incentives like

a) Pioneer Certificates

b) Training Subsidies

c) Duty-free imports

So how did Singapore make Singapore attractive?

1. Maintain Industrial peace

2. Creation of a ready supply of trained workers

3. Location of industries

Explain maintain industrial peace

New labour law

Set up National Wage Council

• Tripartite body formed

• Number of strikes decreased dramatically

Explain creation of a ready supply of trained workers

Set up technical education in schools (1969, e.g. Institute of Technical Education)

Expand number of training institutes (12 by 1975)

Explain location of industries

Set up Jurong Town corporation

Heavy industries located near the sea

Light industries located in flatted factories

Explain what is late 1970s to 1980s Capital Intensive industries

Shift from labour-intensive to capital-industries that requires MORE MACHINERY AND LESS LABOUR

Move from low to high-technology industries using sophisticated machinery and skilled labour

Shift from low to high value-added industries

Why did Singapore choose to move to capital-intensive industries?

Serious labour shortage

Competition from other countries:Labour costs (wages)

Competition from Other Countries: Productivity

Explain serious labour shortage

More factories → Greater demand for labour

Singapore: Small labour pool → Labour costs increased

Explain competition from other countries: Labour costs (wages)

Other developing countries industrialising: Indonesia and Malaysia

Larger populations:

1. Big supply of labour

2. Low labour costs

3. Discouraged foreign investors from setting up factories in Singapore

Explain competition from other countries: Productivity

Singapore’s productivity lower than competitors: Taiwan, South Korea and Hong Kong

→ Need to upgrade the workers’ skills and knowledge to enhance productivity.

What did singapore do to restructure capital-intensive industries?

Aim to reduce demand for labour → NWC recommended Higher Wages

New focus in education and skills training

Increases emphasis on Research and Development

New and better industrial facilities

How did higher wages help?

1. Employers would be encouraged to reduce labour and mechanise

2. Employees would be encouraged to upgrade skills

So how did the government help encourage these acts?

Provide interest-free loans to purchase new machinery

Subsidised workers’ training fees

New focus in education and skills training - explain what the government did

Set up new industrial training institutes with large foreign companies

Set up Nanyang Technological Institute to train more engineers

Expanded enrolment of engineering students in National University of Singapore (NUS)

Expanded enrolment in Singapore Polytechnic and Ngee Ann Polytechnic

Explain increased emphasis on Research and Development

Role of: Jurong Town Corporation

1. Tax incentives given to manufacturing firms involved in R&D

2. Funds provided to encourage local firms to carry out R&D

AIM: Improve existing products and develop new products

Explain new and better industrial facilities

Aerospace industries in Selatar and Loyang (near changi airport)

Wafer fabrication parks developed in Woodlands, Pasir Ris and Tampines

Petrochemical plants in Jurong Island

Explain the definition of service-oriented economy

Service provision > Manufacturing of goods

Greater emphasis on human capital and education

What are the features of such an economy?

Declining Manufacturing Sector

Large service sector

Increase in amount of information technology

So why did Singapore switch to service-oriented economy?

Increasing wages

Preparing for the future (effects of the Asian Financial crisis)

Explain increasing wages

Wages much higher than other developing economies producing low-valued products → makes sense to move to higher-value added products

Explain preparing for the future (effects of the asian financial crisis)

Asian Financial Crisis showed Singapore’s vulnerability to regional economic instability

Singapore was not going to keep up with low-wages offered by regional companies

So what did singapore do in response?

Move towards High-Technology Industries

1. Differentiate from competitors

2. Move to High-skilled labour (higher wages)

3. Reduces need for low-skilled labour

What were the strategies for future competitiveness in the 1990s to the 21st century?

1. Diversify Singapore’s economy

2. Human intellectual capital as a Key competitive edge

3. Leveraging on science, technology and innovation

4. Role of government as a Business facilitator - Economic Development Board (EDB)

Explain Diversify Singapore’s economy

e.g. Twin-engine

Manufacturing high value added products and provide manufacturing related services (including HQ services) to companies locally and in the region

Moved to be premier services hub in Asia with a global orientation

Reinforced with new high growth hubs services in healthcare, education, media, communications and information technology (IT) services, e-commerce and direct marketing.

Explain Human and Intellectual Capital as a Key Competitive Edge

Working adults

Schools and tertiary institutions

Explain working adults - Explain Human and Intellectual Capital as a Key Competitive Edge

• Framework for culture of lifelong learning and training (CET: Continuing Education and Training)

Schools and tertiary institutions - Explain Human and Intellectual Capital as a Key Competitive Edge

• Multi-faceted ranking system incorporating non-academic-based criteria

  • e.g. science, sports, arts, humanities

• Fostering creative thinking

• Develop entrepreneurial spirit

Explain Leveraging on Science, Technology and Innovation

• Formed National Computer Board (NCB)

  • Aim: establish good knowledge and training of workers in IT-related industries

• Launched IT2000 Masterplan

  • Goal: position Singapore as a global IT hub in Asia-Pacific region

Explain role of government as business facilitator - economic development board (EDB)

Extend grant pioneer status to financial service providers

Grant benefits and other tax incentives for MNCs who set up HQs in Singapore

Form high-technology parks (e.g. Jurong Singapore High Tech Business Park)

Set up partnership with high-tech firms with other countries

Act as the financial centre of Singapore-Johor-Riau (SIJORI) growth triangle.

Problem with industrialisation

1. Rivers and Seas: careless dumping of agricultural, industrial and domestic waste in the Singapore River and Kallang Basin

2. Quality of air: Release of sulphur dioxide from major oil refining centres