Background providing tax incentives for foreign investments. They

of CountrySingapore is a small island city-state located between
Malaysia and the islands of Indonesia. Also referred to as Little Red Dot
because of its size, no one believed that it would survive being expelled from
Malaysia in 1965, not even the then-prime minister, the late Mr Lee Kuan Yew.

Today with a population of about 5.607 million and a GDP of 52,960.71 USD in
2016, Singapore has proven to the world that size does not matter, it is the
hard work and spirit that do. When Singapore was expelled by Malaysia, it was a
small fishing village But like every country faces problems, Singapore is
undergoing what the government has termed as “Midlife Crisis”. Facing problems
like a rapidly ageing population, low fertility rate, high dependency on
Foreign labour, increase in housing costs etc.Describe
the Key Elements of the Singapore “competitiveness” modelThe primary aim of Singapore’s new government. It emphasized
on the following key elements:Investment in Government-Owned
CorporationForeign Direct Investment:
Singapore provided MNCs with enough incentives to invest in it and to
improve the nation’s employment, technology and managerial expertise. FDI was
thus considered a central component to Singapore’s growth model.Pro-Business Environment: The
Singaporean government provided everything to establish a business for
foreigners and MNCs in turn getting FDI. After years of effort, Singapore
became the “easiest place to do business” for 10 years to only becoming the
second in 2016. It invested in basic infrastructure,
creating an educated labour force, as
well as providing tax incentives for
foreign investments. They also focused a lot on providing an efficient and
simple process for new firms to incorporate. The government reduced cooperate
taxes for firms, who had their headquarters in the country. Singapore also
invested heavily in the best education to train high skilled labour. The workforce
was globally competitive due to the bilingual language system including English
and a mother tongue.Trade:
Singapore entered several Free Trade Agreements as they knew that being a port
of trade, this would make it more lucrative to traders around the world.

Several shipping companies in fact use Singapore as their trading port because of
these agreements. They had agreements with countries like United States, India,
China and have been negotiating with EU for some time.Monetary PolicySavingsTargeting Productivity and
Innovation Do you
see any current threats that might de-rail that model?The vision and growth plan that PM Lee Kuan Yew had was
very successful in the beginning for at least 40-45 years, as the 50th
National Day was closely approaching, there was a lot of pressure on the government
to make changes to this method.Singapore was heavily depending on foreign workers to
meet the labour demands. The employers from companies turned to low cost labour
from neighbouring countries. This led to foreign workers composing 1/3 of the
workforce. This led to Singaporeans complaining about the increase of
foreigners given the country’s limited resources. According to them the costs
had increased but they did not see jobs increasing.Another thing that concerned the citizens was the overdependence
on MNCs. They were pessimistic about the nation’s ability to create domestic
global firms. Around 99% of Singaporean Businesses were Small and Medium Sized enterprises.

These were weaker and found it hard to compete with the MNCs.Singapore also depended a lot on foreign investments, overtime
this had to the economy using the investments as a crutch and they managed and
controlled it. Singapore being a trade driven society was sensitive to
changes in global demand. The financial crisis effected the global demand and
this reduced orders from major trading partners and this also posed a negative
effect for the economy.Asian countries like Malaysia and Indonesia, China had
sufficient low-cost labour. Companies could produce similar quality products at
cheaper costs. Singapore is losing its competitive and comparative advantage. Singapore is also facing demographic issues like a
rapidly aging society and low fertility rates as well as issues like increasing
costs of living and income inequality. Singaporeans felt stressful and
unsatisfied with the government’s current policies. This would lead to some retaliation
and lack of respect for the government rules. The Singaporean started thinking
that they needed a new ruling party and this led to PAP losing a lot of votes
and power in the election of 2011. Things have changed since then with a slight
increase in 2015 general elections but there are still mild protests still.Given that the nation has a lack of space and resources.

Singapore has to rely on more innovative ways to stay strong and make its place
in the society like The NewWater Plant which recycles water from sewages etc.

and turns it into clean drinking water, to make sure that one day, Singapore
can become self-reliant. Singapore has to counter this disadvantage using its size
and innovative strategies. The old methods can be used as a guide but as they
say like medicines with time even old methods will no longer have any effects.How (if
at all), must the Singapore model be adapted to meet the demands of the global
economy and its own population?In my opinion, the Singaporean model cannot be applied
anywhere else because there are different factors that played a vital role in
the success of Singapore. Singapore is a small island country and when it had
been expelled by Malaysia, the first Prime Minister Late Lee Kuan Yew was
already looked up to as a leader. The people were ready to follow him and he
was a visionary. He squashed any chances of corruption even before the seeds
were planted. The citizens of new Singapore were scared and needed someone who
will protect them. PM Lee did this. This could be clearly seen as Singaporeans
flocked to his memorial service and came to streets to pay their final
respects. Singapore had the right timing and did not really have a
government set up and it was untrodden land, so with the right guidance of
Prime Minister Late Lee Kuan Yew, Singapore grew so rapidly.

In my opinion, I feel that if it was Singapore today, it
would have been much harder to make a big change. The older generation had seen
the war and chaos and were really hardworking people. The children of today
have been very lucky to have never seen a country where people struggled to
survive, families were ripped apart etc. But this also means that they do not
know that Singapore was not always so developed and they expect more out of the
government than the pillow that they have already been provided.