Ettore Cola
ETTORE COLA
IBUS-705 Global Business Management /Fall 2021
Dr. Tatiana Kostova
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Country analysis: Singapore
Introduction
Singapore is an island city-state located at the edge of the Malaysian peninsula in the Straits of
Malacca. This location makes Singapore the gateway to the southeast Asian markets. Modern
Singapore was founded by the British empire in 1819 as a trading colony. In August 1965
Singapore became independent as the Republic of Singapore. Subsequently, Singapore grew
as one of the world’s most prosperous countries (PWC & HSBC, 2013).
Economic performance and competitiveness
Singapore ranks among the wealthiest and most developed economies in the world, it has one
of the highest UNDP’s human development indexes in Asia, with a score of 0.938 (B. Stiftung,
2020). Its real GDP (PPP) of $528.1 billion (2017) is comparable with OECD countries.
Singapore’s GDP has been growing constantly in the last decades and the forecast predicts an
increase of 6-7% in 2021 (SDS, 2021). Furthermore, it has a low unemployment rate of 2.25%
(2019) and a virtually zero in ation rate of 0.5% (2019) (CIA, 2021) (Appendix 4).
The city-state has a total population of 5,866,139 (July 2021), which is divided among three
major ethnic groups: Chinese 74.3%, Malay 13.5%, and Indian 9% (CIA, 2021). Migrants
coming from nearby countries such as China, India, and Malaysia have always played an
important role in the economic growth of the country. Moreover, Singapore’s aging population
is driving the government into loosening restrictions on foreign immigration of all skill levels to
support the increasing elderly population. However, only highly skilled workers are encouraged
to stay in the country (B. Stiftung, 2020). For western companies this could be an opportunity
to bring some high skilled talents from abroad in a new founded branch or subsidiary on the
island.
Singapore's economy is mainly divided into four sectors: Manufacturing, Wholesale/Retail
Trade, Financial Services, and Business Services. The country depends heavily on exports, in
particular consumer electronics, information technology products, and pharmaceuticals.
Singapore’s main export partners are China 15%, Hong Kong 13%, and Malaysia 9% while
main import partners are: China 16%, Malaysia 11%, and The United States 9%. Major
companies in Singapore include two Fortune 500 rms Wilmar International and Flextronics
International but also Singapore Airlines and Singapore Telecommunications Limited (Singtel).
In 2019 Singapore was able to attract $92 billion in FDI in ows in 2019 reaching a FDI stock
around $1.7 trillion. Singapore is the 5th largest recipient of FDI in ows in the world (Santander
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Trade Markets, 2021). The city-state ranks as the most competitive country in the world, with a
score of 84.8, on the Global competitiveness index.
Institutional conditions
Singapore has an open and free-market economy with an almost corruption-free environment,
It is ranked 3rd in the world in the corruption perception index, and the taxes are relatively low,
the individual income tax rate is 22%, while the top corporate tax rate is 17% making the citystate an attractive hub for businesses.
Singapore is ranked as the most economically free country in the world with an overall score of
89.7 (Heritage Foundation, 2021). The country’s rule of law recognized and enforced property
rights e ectively, the juridical system is fair and reliable, furthermore, the government actively
enforces its strong anti-corruption laws. However, government-linked companies, controlled by
the People’s Action Party-controlled Temasek Holdings, play an important role in many key
sectors producing nearly two-thirds of the country's GDP. The high concentration of
government-linked companies is a potential risk for Singapore’s economy, making it less
resilient to crisis and creating concerns about nepotism and cronyism (B. Stiftung, 2020).
Singapore’s many trade agreements, 25 preferential trade agreements with a trade-weighted
average tari rate of 0% and 182 non-tari measures in e ect, make the country appealing for
companies willing to start a business in Southeast Asia. In the nancial sector, the government
maintains its ownership but it has been opening the domestic market to foreign banks (B.
Stiftung, 2020).
Governance quality in Singapore is among the highest in the world. It ranks highest on ve of
the dimensions of the World Bank index: Political Stability and Absence of Violence,
Government E ectiveness, Regulatory Quality, Rule of Law and Control of Corruption (World
Bank, 2021). However, the country has a low percentile score on “Voice and Accountability”,
this is probably due the governing political party being in power since 1959, making it di cult
to di erentiate between government bodies and the political party. Moreover, the city-state
authorities have deprived individuals of rights to justice using laws that allow detention without
trial, for instance, the Internal Security Act (ISA) enables detention orders to be revived every
two years, which technically permits the state to re-arrest the same people over and over (B.
Stiftung, 2020) (Appendix 3).
With an overall score of 84.8 Singapore was rated as the most competitive country in the world
in 2019. The city-state's strengths are its solid enabling environment and markets. Compared
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to other Asian countries such as South Korea and Japan, Singapore still doesn’t have a top-tier
innovation ecosystem and so it lacks skilled workers which explains the need for constant
immigration of high skilled labor force from abroad (Appendix 1) (WEF, 2019).
Cultural characteristics
Through the lens of Hofstede’s 6-D Model Singapore lies in the Confucian Asian cluster, which
makes the country’s culture similar to nations such as China, Taiwan, Japan, and South Korea.
Confucian countries are collectivist societies where communication is indirect and con icts are
avoided to preserve the society’s harmony, they have high power distance and long-term
orientation. High scores in power distance and a long-term orientation, mean that the power is
centralized, managers and employees expect to follow directions. The attitude towards people
on a higher hierarchical status is formal and communication is indirect with a selective
information ow. Long-term orientation qualities such as perseverance sustained e orts and
slow results are seen positively. Compared to an Anglo-Custer point of view Singapore would
be seen as a country with high inequalities but with a more pragmatic way of doing business.
However, the high hierarchical distance doesn’t promote an entrepreneurial mindset in the
employees which is becoming more and more important in western businesses. Singapore’s
low score in uncertainty avoidance makes the country's business environment more similar to
Anglo countries. People are more prone to taking risks, try new things and accept innovations.
This mindset makes Singapore a good environment to launch startups and new business ideas
(Hofstede Insights, 2021) (Appendix 2).
Singapore falls into the cluster of high-context cultures in which loyalty to colleagues and
shared code communication are two main characteristics. However, despite being an Asian
country, Singapore’s communications pattern lies between the “lines active” and “reactive”
making the city-state communication culture more similar to Scandinavian countries.
Conclusions
Singapore’s location, institutions stability, low taxation, numerous trade treaties and economic
advancement make the city-state the most stable and reliable place to start a business in
southeast Asia. Similarities between Singapore’s communication culture and western countries
could be an advantage while working in a new economic environment, moreover the country’s
incentives for high skilled workers will increase the market supply of skillful workforce.
However, the collectivist society with a high rate of power distance could be destabilizing for
western companies which are looking for more autonomous and entrepreneurial workers.
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References
Bertelsmann Stiftung. (n.d.). BTI 2020 Singapore Country Report. Https://Www.BtiProject.Org/. Retrieved September 1, 2021, from https://www.bti-project.org/en/
reports/country-report-SGP-2020.html#pos5
Cia.Gov. The World Factbook - The World Factbook. (n.d.). Retrieved September 1, 2021, from
https://www.cia.gov/the-world-factbook/
Hofstede Insights. Country Comparison. (2021, June 21). https://www.hofstede-insights.com/
country-comparison/china,japan,singapore,taiwan/
Santander Trade Markets. Foreign investment in Singapore - Santandertrade.com. (2021).
https://santandertrade.com/en/portal/establish-overseas/singapore/foreigninvestment
PWC & HSBC. (2013). Doing Business in Singapore. https://www.pwc.de/de/internationalemaerkte/doing-business-in-singapore.pdf
Singapore Department of Statistics (SDS). (2021, August). Performance of the Singapore
Economy. Ministry of Trade and Industry Singapore. https://www.singstat.gov.sg/-/
media/ les/news/gdp2q2021.pdf
The Heritage Foundation. (2021). Index of Economic Freedom - Singapore 2021. https://
www.heritage.org/index/pdf/2021/countries/2021_IndexofEconomicFreedomSingapore.pdf
Transparency International. (2019, November 25). Singapore. Transparency.Org. https://
www.transparency.org/en/countries/singapore
UNCTADstat - General Pro le: Singapore. (2021, July 22). UNCTADstat. https://
unctadstat.unctad.org/CountryPro le/GeneralPro le/en-GB/702/index.html
United Nations Conference on Trade and Development. (2021). World Investment Report 2021:
Investing in Sustainable Recovery. United Nations. https://unctad.org/system/ les/
o cial-document/wir2021_en.pdf
World Bank. (n.d.). WGI-Interactive Data Access. Http://Info.Worldbank.Org/Governance/Wgi/.
Retrieved September 1, 2021, from http://info.worldbank.org/governance/wgi/Home/
Reports
World Economic Forum (WEF). (2019). The Global Competitiveness Report 2019. http://
www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
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Appendix 1 - Global Competitiveness Report
World Economic Forum (WEF). (2019). The Global Competitiveness Report
2019. http://www3.weforum.org/docs/
WEF_TheGlobalCompetitivenessReport2019.pdf
Appendix 2 - National Culture (Hofstede)
Hofstede Insights. Country Comparison. (2021, June 21). https://
www.hofstede-insights.com/country-comparison/
china,japan,singapore,taiwan/
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Appendix 3 - Worldwide Governance Indicators
World Bank. (n.d.). WGI-Interactive Data Access. http://Info.Worldbank.Org/
Governance/Wgi/. Retrieved September 1, 2021, from http://
info.worldbank.org/governance/wgi/Home/Reports
Appendix 4 - Economic Indicators
GDP
GDP growth
rate
GDP/capita
$372.088 billion (2019 est.)
0.73% (2019 est.).
3.48% (2018 est.)
4.34% (2017 est.)
$97,341 (2019 est.)
Real GDP (PPP)
$555.193 billion (2019 est.)
Population
5,866,139 (July 2021 est.)
In ation
0.5% (2019 est.)
Unemployment
2.25% (2019 est.)
cia.Gov. The World Factbook - The World Factbook. (n.d.). Retrieved
September 1, 2021, from https://www.cia.gov/the-worldfactbook/
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