Singapore has a highly developed market-based economy, and is a
developed nation. It ranks 25th on the Human Development Index[25]
which measures standards of living, and second in the Index of
Economic Freedom. Although Singapore has one of the highest per
capita gross domestic products (GDP) in the world, domestic demand
is relatively low due to the small population. [citation needed]
Singapore is also the fourth largest foreign exchange trading
centre in the world after London, New York and Tokyo[26].
Singapore has been rated as the best business-friendly economy in
the world. According to a World Bank-IFC report, Singapore beats
previous winner New Zealand for the top spot in the 2005/2006
rankings while the United States came in third. Within Asia, Hong
Kong was Singapore's closest competitor at fifth place. They were
evaluated on 10 key parameters that included ease of starting a
business, getting licences, sourcing staff, as well as and
enforcing contracts. [27]
The economy depends heavily on exports produced from refining
imported goods in a form of extended entrepot trade, especially in
manufacturing. Manufacturing contributes around 28% to GDP in 2005.
The manufacturing industry is today well-diversified with
electronics, chemicals, mechanical engineering and biomedical
sciences manufacturing. Along with Hong Kong, South Korea and
Taiwan, Singapore's fast-paced industrialization earned it a place
as one of the four original 'East Asian Tigers'.
In 2001, a global recession and slump in the technology sector
caused the GDP to contract by 2.2%. The Economic Review Committee
(ERC), set up in December 2001, recommended several policy changes
with a view to revitalising the economy. Singapore has since
recovered from the recession, largely due to improvements in the
world economy; the Singaporean economy itself grew by 8.3% in 2004
and 6.4% in 2005.[28] In the long term, the government hopes to
establish a new growth path which will be less vulnerable to the
external business cycle, as compared to the current export-led
model. However, the government is unlikely to abandon efforts to
establish Singapore as Southeast Asia's financial and high-tech
hub. The per capita GDP in 2005 was US$26,833[29] and the
unemployment rate was 2.8% in June 2006, up from 2.5% in January
the same year.[30] 81,500 new jobs were created from January-July
2006, the highest number in a decade within a 6 month period. The
economy is expected to grow by 6.9% in the year 2006 as announced
by the World Bank, after a strong 9.4% growth in the first half of
Year 2006 (Jan-Jul 2006). Initially, Lee Hsien Loong, who is the
current Finance and Prime Minister, had only expected growth to be
between 3-5% for the whole year.
Singapore introduced a Goods and Services Tax (GST) with an initial
rate of 3% on 1 April 1994. This has substantially increased
government revenue by $1.6 billion, stabilising the government's
finances.[31] The government has used revenue from the GST to
reorient the economy around services and value added-goods to
reduce dependence on electronics manufacturing. The taxable GST was
increased to 4% in 2003 and to 5% in 2004.[32]
Singapore is a popular travel destination, making tourism one of
its largest industries. In 2005, a total of 9.05 million tourists
visited Singapore. By 2015, Singapore hopes to achieve about 17
million visitor arrivals. In July 2006, a record high of a total of
913,000 visitors arrived in Singapore, mostly due to the Great
Singapore Sale. Much of its attraction can be attributed to its
cultural diversity that reflects almost 200 years of colonial
history with immigrant cultures originating from Chinese, Malay,
Indian, Eurasian and Arab ethnicities. The Orchard Road district,
which is dominated by multi-storey shopping centres and hotels, is
the centre of tourism in Singapore. Other popular tourist
attractions include the Singapore Zoo and its Night Safari along
with the tourist island of Sentosa. To attract more tourists, the
government decided in 2005 to legalise gambling and to allow two
Integrated Resorts to be developed at Marina South and Sentosa.[33]
Other than the Integrated Resort, many other new developments are
coming up that includes the Singapore Flyer and Gardens by the Bay.
The government said that there are about 10 developments in Marina
Bay currently. There have also been rumours about Singapore being
another destination for Disneyland in the Asia after Hong Kong, and
it has been named 'Singapore Disneyland'. The site of this theme
park would most likely be at Marina Bay. [citation needed]
Food in itself has been heavily promoted as an attraction for
tourists, and is usually promoted by various initiatives undertaken
by the Singapore Tourism Board or the associations it deals with as
one of Singapore's best attractions alongside shopping. The
government organises the Singapore Food Festival in July annually
to celebrate Singapore's cuisine. The multiculturalism of local
food, the ready availability of international cuisine, and their
wide range in prices to fit all budgets at all times of the day and
year helps create a "food paradise" to rival other contenders
claiming the same moniker.
