Tutorial 3: Case Study —Singapore Inc.
Tutor: YU Shu Feb 15th 2013
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• Objectives for today’s discussion • To think about Singapore’s competitive advantage by undertaking a country analysis • To identify several of the key institutions that have made Singapore unique • To see the critical role of savings and investment • To evaluate Singapore’s new strategy in the context of a slow growing, intensely competitive global economy
• How do you explain Singapore’s economic performance since 1965? - Bsp2005 Tutorial introduction.? How, in particular, have business-government relations contributed? • What is the role of saving and investment? • Do you approve of Singapore’s new strategy for getting the economy growing?
Singapore’s economic growth record
• How could a small island-city, with no resources in a complicated and unstable part of the world, have managed this? • And can it continue to grow in the next generation?
• How do you explain Singapore’s economic performance since 1965?
• Lee Kuan Yew’s successful strategy
• • • • • • • • • • Create jobs Create public housing Adopt Singapore’s strategy to export-led growth Create the Economic Development Board Weaken unions Eliminated extraneous regulations of business Controls the environment Controls the cars Controls the corruption Controls the security and immigration
• How, in particular, have business-government relations contributed?
• Government’s right to control
• Government sector’s salary structure & job switching system • Business-government relations: Serve the interests of business, encourage foreign direct investment
key institutions that have made Singapore unique
• • • • • • • Housing Development Board (HDB) Central Provident Fund (CPF) Economic Development Board Jurong Town Corporation (JTC) SPRING Monetary Authority of Singapore (MAS) A*STAR
Saving & Investment
• What is the role of saving and investment?
• Maintain a high rate of savings made it possible for Singapore to finance its own development without having to depend on foreign loans.
• Do you approve of Singapore’s new strategy for getting the economy growing? • Singapore’s growth has slowed significantly—-Why & how to fix it? • Three broad problems: • With world economic growth slowing, there was excess capacity and exports have been difficult to increase. • It is faced with sharp low-end competition from Malaysia and China. • It is trying to supplement its FDI base with local entrepreneurship. • Do Singaporeans have entrepreneurial talent? • If so, will they stay in Singapore or move to a more open environment, like the US?
• Government cut corporate taxes from 24.5% to 22% and personal income taxes from 26% to 22% • A rise in the goods and services tax from 3% to 5% • Build a more entrepreneurial and vibrant culture