Despite its small domestic market, Singapore's economy is heavily engaged in the global marketplace. You might find it interesting that it is ranked as the world's second most open economy by the Heritage Foundation's Index of Economic Freedom. It is also one of the most stable in macroeconomic terms with zero foreign debt, high government revenue and a consistent positive surplus. During the 1997 Financial Crisis, while most of its neighbours' economies were sliding, Singapore was relatively doing better off.
The economy is driven by exports in electronics manufacturing and machinery. Financial services and tourism are other key sector in the economy. Being a major cargo seaport also compensates for its small population and lack of natural resources.
Key Industries
The manufacturing sector contributes anywhere between 20-30% to Singapore's GDP annually. The major industries include electronics (semi-conductors, precision-engineering, etc.), pharmaceutical, chemicals, construction, and ship-building. At the last quarter of 2007 until the second quarter of 2008, the manufacturing industry's growth became sluggish. The slowdown can be attributed to various factors such as the weakening of the US dollar, general slow down of major economies and in turn, decrease in overseas demand.
On the other hand, key industries under the services sector such as wholesale and retail, petroleum refinery, financial and business services remain strong. Tourism and ICT have also been on the rise. Since 2004, the service producing industry consistently contributes about 40-50% to GDP. You may access official time-series statistics here.
It is important to highlight Singapore's financial services industry. Its business-supportive environment and political stability has attracted many multi-national banking and investment firms. In the process, the knowledge, technology and skills that MNCs bring are transferred into the domestic market. You can expect every major bank and investment firm from the US or Europe operating extensively in Asia to be headquartered in Singapore. Perhaps Singapore's only direct Asian competitor in the business of "attracting MNCs" is Hong Kong.
Natural Resources
Located at the southernmost tip of the Malaysian peninsula and with a land area smaller than that of New York's, Singapore has no significant natural resources. While Singapore operates the third largest oil refinery in the world, the raw materials come from overseas, specifically Saudi Arabia.
It has been said that Singapore's true natural resource is its people. The country has one of the highest qualities in higher education worldwide even outranking Germany and France in the 2008 Global Competitiveness Report (GCR). This factor is an essential part to the country's economic success. As the economy boomed, foreign and local companies had access to a pool of an educated workforce and eventually, a burgeoning consumer market.
Infrastructure
Being a a commercial and military seaport during the colonial era meant Singapore already had a well-developed infrastructure in place. The post-colonial government went on to improve and expand the country's transport, communications, industrial, and housing systems. Along with Germany and Switzerland, Singapore is now one of the most "connected" countries according to the GCR 2008.
By land, Singapore is served by 3,297 kilometres of paved highways, 138.2 kilometres of rail (mass rapid transit and light rail combined), and island-wide bus and taxi operations. You can count on the transport system to be efficient, safe, and punctual.
By air, Changi International Airport is connected to 182 cities in 57 countries. It handles more than 4,000 weekly flights transporting passengers and cargo worldwide. By sea, the Port of Singapore (PSA Corporation) gives shippers a choice of over 200 shipping lines and access to some 600 ports in 123 countries. At any one time, there can be as many as 1,000 ships docked making it the busiest container port in the world.
The telecommunications system is no less remarkable. There are about one-thousand two-hundred twenty-five (1,225) mobile phone subscribers per 1,000 of the population. With the government's effort to drive internet-usage, 99% of the population is now online. In hotspots such as coffee chains, fast-food restaurants, the stretch of Orchard Road and Changi Airport, you can use a national wifi service called Wireless@SG for free.
Business premises for industrial and commercial operations are readily available for your use. The Jurong Town Corporation (JTC) has over 7,000 hectares of industrial land and 4 million square metres of built industrial space strategically located to suit your business type. For commercial businesses, choice of high-rise and low-rise offices in the Central Business District or other parts of town are available. If you need to buy or lease a commercial space, you can do so by contacting a real state agent (TODO).
GDP
Singapore's GDP is at US$161,348.8 million with a per capita income of US$35,163. To put into perspective, Singapore has twice the GDP per capita of Thailand, Malaysia, Indonesia, and the Philippines - combined. Singapore's GDP is growing at an annual rate of 7.7% while the annual inflation rate remains low at 2.1%. Since the 1980, the economy experienced two minor slow downs, the first was in 1998 and another in 2001. However, with the restructuring of Wall Street in September 2008, Singapore cut its growth forecast to less than 4%. You may access official time-series statistics here.
Singapore's GDP is dominated by its services sector contributing about US$110,448 million. The goods-producing sector (manufacturing, construction, utilities) during the same period contributed about US$49,352 million while minor activities like agriculture, fishing, quarrying, and ownership of dwellings sum up to SS$7,014 million. Finally, taxes on products account for around US$11,558 million in GDP. You may access official time-series statistics here.
Public Debt
Since 1995, the Singapore government has maintained zero foreign debt while its current domestic debt amounts to about US$175,500 million. This includes registered stocks and bonds, treasury bills, and advanced payments for its operations. However, for a government whose total revenue in 2007 was close to US$28 billion, Singapore is one of the least countries to worry about public debt.
Government Revenue, Revenue Sources and Surplus
The Singapore government's total revenue is estimated at almost US$28 billion. Total government revenue includes all receipts credited to the Consolidated Revenue Account and Development Fund Account, interest income, investment income (domestic and overseas), and capital receipts. You may view a detailed report by the Ministry of Finance's budget report here.
As with most governments, Singapore earns the bulk of its revenue from taxes--income, property, excise duties, customs duties, and GST amongst others. When combined, the Singapore government's tax revenue is roughly US$21 billion. Investments (portfolio, FDI, etc.) and the corresponding interest and dividends come in next bringing in about US$5.4 billion. China is currently the single largest destination of Singapore FDI in Asia at US$21,700 million.
Other revenue sources are fees and charges collected from licenses and permit; rental of residential, business, local and overseas quarters; fines and forfeitures; and capital receipts from sale of capital goods such as land to name a few. Combined, they amount to around US$3.8 billion of government revenue.
Singapore's total government expenditure (operational and development) amounts to about US$23 billion and left with a surplus of approximately US$4.5 billion (2.6% of GDP). To put into perspective, Canada has around US$12 billion surplus. For a small city-state, Singapore earns almost one-fourths of a G7 nation's income.
Currency Strength
About US$13,890 million (approx SG$19,733 million) worth of paper money, coins, and demand deposits is circulating in the economy. The Singapore dollar has been consistently appreciating against major currencies including the US dollar, British pound, and Japanese yen. Its record with the Euro is less uniform. For your reference, below is a break-down of the Singapore dollar's performance in the last two and a half months (figures in SGD):
Export and Import Industries
Singapore's main export industries are machinery and equipment, electronics, petroleum products, and chemicals. Machinery and electronics in the form of circuits, computer parts, telecommunications equipment, and other consumer electronics posts a revenue of US$67,237 million. As previously mentioned, Singapore has no oil reserves but operates the 3rd largest refinery in the world. Its petrol products earns about US$44,540 million while its chemical and pharmaceutical products earns around US$31,709 million in a year. Its other export industries include: food, beverages and tobacco, crude materials, animal and vegetable oils, manufactured goods, other items such as photographic and scientific apparatus.
Its top three exports are also its main imports costing: machinery and electronics - US$146,703 million; petroleum products (crude) US$57 million; and chemical and pharmaceutical - US$16,800 million. With its small domestic economy, Singapore imports everything from everywhere starting with food to clothing and everything in between.
Main Import Partners
In Asia, Singapore's main import partner is its closest neighbour, Malaysia followed by China. In 2007, Singapore imported goods from these countries amounting to US$36,500 million and US$33,800 million, respectively. In the West, the United States holds the top spot at US$33,400 million worth of imports while in the Middle East, with Saudi Arabia at US$10,400 million. Below is a table that summarizes Singapore's import activities with other regions/countries (figures in SGD):
Main Export Partners
Singapore's main import partners also happen to be its main export partners except for Saudi Arabia being replaced by the United Kingdom. During the same period, Singapore exported goods to these countries amounting to: Malaysia - US$317,200 million; China - US$29,600 million; United States - US$30,148 million; and United Kingdom - US$8,123 million. Below is a table that summarizes Singapore's export activities with other regions/countries (figures in SGD):
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