Contents:
Introduction
Foreign Direct Investment
Domestic Savings
Population Growth
Continuous Learning and Education
Macroeconomic Stability
Conclusion
Reference
Introduction
Singapore, a small country that is governed by members of People Action Party (PAP) has seen one of the largest growth in the economy throughout the world with the current nominal GDP of $296.98 Billion (USD). An impressive growth from 1965 where it was 0.94 billion (Worldbank, 2018). Singapore started afresh in the 1960s after having differences in economy and political views from Malaysia (History SG, 2014). The separation handicapped Singapore as it had close to no natural resources and with poor economic status. The advantageous point Singapore could rely on was its location. Using its location to its advantage along with strategic planning and strong economic policies, this land of a little more than 5 million people with an area of more than 700 km2 has successfully built and integrated itself into the global markets, resulting in one of the highest living of standards in the world. I will be discussing a few of the policies that Singapore has successfully implemented and go through the results (Prime, 2012)
Foreign Direct Investment
As Singapore started of initially with poor economy, it had to rely on Foreign Direct Investment (FDI). To attract other countries, Singapore had to concentrate on building infrastructure that is friendly for foreign countries and its people. Another factor that could have also attracted FDI is affordable housing, a clean environment, low crime rate compared to other countries, quality services provided, efficient and non-corrupt government. Benefits that was provided to foreign investor was tax discounts, flexible restrictions on investment services from government (Prime, 2012).
Domestic Savings
Singapore also has been wise and shrewd in making financial choices and one such example is its domestic savings rate which is one of the highest in the world reaching up to 40% on average for more than 30 years (Trading Economics, 2018). The strategy created to achieve high saving rate was what is called the Central Provident Fund (CPF), a pension scheme. CPF is mandatory for every working citizen in Singapore and it has to be contributed monthly. The CPF is divided into 3 accounts and they are Ordinary account, Special account, and Medisave account. The Ordinary account is used for mainly housing and retirement needs. The Special account is used for just retirement needs and the Medisave account is used for healthcare expenses (Ministry of Manpower, 2017).
Population Growth
As Singapore’s economy continues to grow, it will demand a larger population to maintain the growth and productivity. This is only possible if the local population carries on growing but Singapore birth rate has been on a decline for the past 10 years. The total population of Singapore in 2016 was 5.61 million out of which 1.64 million were non-resident and 0.52 million were Permanent Residents (PR) (Channel NewsAsia, 2017). As Singaporeans women are now more focused on building their career young, the priority to have a child is optional. Another reason why Singaporean couples are avoiding to have a family of their own is because of the cost of living here. Raising a child can be very expensive especially for couples who has low-income jobs (Tan, 2015). In 2017, Singapore’s population has come to a point that the ratio of one elderly aged 65 and above to Singaporean aged 64 and below is 1:4.4. the rate the is projected by 2030 is 1:2.4 (Channel NewsAsia, 2017). However, the government has came out with an incentives programme called Baby Bonus Scheme where is will thank newborn parents by providing some amount of money depending on the amount of child is born and open a Medisave account for the baby with $3,000 in it. Fully paid leave is also granted to new born parents where maternity leave can reach up to 16 weeks and paternity leave could reach up to two weeks (Ministry of Manpower, 2018).
Continuous Learning and Education
The government of Singapore more specifically the Ministry of Education (MOE) has done an exceptional job in building a very quality and high standard education system according to Programme for International Student Assessment (PISA). Singapore has been classified as being one of the world high-performing education system by PISA (Prime, 2012). Education in Singapore is considered very important to everyone but it could be expensive. Hence to ensure that money does not compromise education for kids, MOE offers financial assistance schemes to lower income families. Also to motivate students to perform better, MOE awards students an Edusave Merit Bursary (EMB) which provides student who are in the top 25% of their level or course a monetary award. The bursary is aimed towards students whose per capita income is below $1,725. Another way that MOE rewards student who perform exceptionally is through scholarships. Apart from academics, MOE is now focusing on development of students in other aspects such as talents, arts, sports, etc (Ministry of Education, 2018). To improve further and help every Singaporean continue learning, the Ministry of Manpower (MOM) introduced national movement programme called SkillsFuture, this is to encourage lifelong learning and give Singaporeans the opportunity to learn something new. This program is beneficial as it allows Singaporean to boost their resume with the skills that they have acquired (Ministry of Manpower, 2018). In my opinion, this program is a very good opportunity for Singaporeans especially those in their silver years as they have the luxury of time to spend learning something new and in the event they decide to join the workforce, they will be up to date with new things being implemented in the world.
Macroeconomic Stability
To keep up with the fast growing world economy, Singapore’s government has implemented two policies that overlook the macroeconomic in the short-run. They are the fiscal and monetary policy.
The Fiscal Policy main objective is to achieve and sustain long term economic growth. The government embraced three principles which it can use to achieve the objective. First it would look at providing suitable and stable to private sectors to continue growing. Secondly, it will look into supply-side issues that focuses on savings incentive, enterprise, investment. Thirdly, due to the high import leakages, the fiscal policy is lacking in counter – cyclical role. Due to the frugal fiscal policy that Singapore has implemented, it has manage to enjoy budget surplus continuously over the years (Singapore Government Securities, 2018).
The Monetary Policy which is set by Singapore’s central bank, Monetary Authority of Singapore (MAS) is the reason why Singaporeans enjoy has low inflation rate which in turn promotes economic growth for the medium term. The policy is reviewed twice year after which MAS will release the Monetary Policy Statement (MPS) which insights of the movements in the exchange rate and justifies the measures it has taken to maintain or improve it. This keeps the purpose of the monetary policy to be on track by ensuring that it is parallel with the economic fundamental and market conditions (Monetary Authority of Singapore, 2013).
Conclusion
To conclude this discussion, Singapore has enjoyed good economic growth since they gained independence. However, as Singpaore reaches maturity, the growth is bound to decline. To maintain the growth, Singapore government needs to focus on increasing the local population in order to achieve more productivity which will eventually lead to a better GDP growth. In my opinion, the government should look into revising the work-life balance of Singaporean as this may allow married couples to reflect and see the possibilities of having kids. Apart from population growth, Singapore needs to be creative with developing a smart nation which would definitely get more attention from other countries. The seriousness that government takes for education is remarkable. The quality of education system in Singapore should remain highly reputable as long as the government is taking good measures in ensuring the quality remains. The policy that Singapore has implemented to achieve short term macroeconomic sustainability is practical and useful. As the market condition is never predictable, the policies implemented will definitely help in adjusting. The most important point is that it is effective and that could be validated by not just looking at how Singapore has perform when the market conditions are doing well but also during recessions where economies of other country had been severely impacted.
Reference
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Singapore separates from Malaysia and becomes independent …
eresources.nlb.gov.sg
HistorySG is an online resource guide to events that have unfolded in Singapore's history since 1299 to the present. Each event is briefly introduced in a short write-up accompanied by links to related content from the collections of the National Library Board (NLB) as well as that of other agencies and institutions.
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Maternity leave eligibility and entitlement
www.mom.gov.sg
Your maternity leave eligibility and entitlement in accordance to the Government-Paid Maternity Leave or Employment Act.
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Paternity leave – Ministry of Manpower Singapore
www.mom.gov.sg
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Edusave Merit Bursary (EMB) – Ministry of Education
www.moe.gov.sg
All Singaporean students in Government and Government-aided schools, junior colleges/centralised institute, independent schools, specialised schools and the Institute of Technical Education and Polytechnics who are not recipients of any Edusave Scholarship are eligible for the Edusave Merit Bursary, if they are within the top 25% of their level …
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SkillsFuture – Ministry of Manpower Singapore
www.mom.gov.sg
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What is the Central Provident Fund (CPF)
www.mom.gov.sg
What are the CPF accounts, withdrawal age, payout eligibility age and Basic Retirement Sum.
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Fiscal Policy – SGS
www.sgs.gov.sg
Fiscal Policy The main focus of the Government's expenditure is on the delivery of essential public goods and services to Singaporean. The Government spends to assure the nation of a secure future.
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