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Singapore Pestle Analysis

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Autor:  Antonio  19 May 2010
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PESTLE Analysis
Politics

The political power is extremely centralized in the government and it is a bureaucratic country. Although the elections are being held often, the offices are mostly assigned instead of elected. The government put efforts in communicating the decisions and policies to the public instead of gathering their opinion. The reason of that is after the “Depoliticize” the power structure in 1965, the government is convinced by a concept that a city state without natural resources, if keeping the political centralized and narrow, the economic and political stability are maintained. The People’s Action Party dominated the Singaporean politics since the independence from leaving the Federal of Malaysia in 1965. Singapore is classed as a “Hybrid” country by the Economist intelligent unit because Singaporean politics is a mixture of bureaucracy and democracy. Also Freedom House rank Singapore as “partly free”. Western democracies considered the Singaporean government is closer to bureaucratic instead of democratic or illiberal and procedural democratic. Some people considered Singaporean government to be social democratic that listens to the opinions and feedback on policies and lawmaking process instead of purely according to the will of government. However some of the policies consist of socialism, for example; the free education and government owned public housing. These policies help the dominance government controlled the local economics and majority of real-estate. However, Singapore is famous for its anti- corruption policies which also are an attraction to foreign investment. Singapore is ranked the least corruption country in Asia and the cleanest country in the world by the Transparent International. The World Bank’s governance indicators also ranked Singapore highly rule on laws, control of corruption and government effectiveness, however the political openness and human rights are lacking.
Also there were huge questions and responses about the salaries of Prime Minister in Singapore. The Prime Minister received a rise in salaries of 60% which equals to $400,000 US Dollars higher than the United States’ President. The response from government defined this is the tool of preventing the corruption and governing efficiency to ensure Singaporean image as a world-class government.
The Singaporean government is being actively involved in economy activities. Also the government has monopolized or semi-monopolized certain industries like: real estate which makes the power of government affect the profitability.
Although the economy is growing rapidly and increase of opportunities of: trade, citizen education level is increased and the society is more complex and the policies so governing of PAP (People Action Party) is being questioned. The prediction of Singapore Politic will be the openness of politics should increase to the public. Because of the illiberal democratic affects the country image and the goodwill of the people and because of the mature economic and slow down of growth which is an impact on the trust worth of the government.
Economics

Singaporean Economy is one of the best performers. GDP (Gross Domestic Product) has been constantly increasing since Singapore became independent. GDP in market Price of Singapore in 2007 was $161,348.8 million (US Dollars) and a growth of 7.5% after a growth of 7.9% in 2006. Also Singapore is ranked the 8th most expensive country by the Global Property Guide. As a city-country, Singapore is focusing on its economic development. Singapore has a well developed and successful free-market economy. The economy highly depends on exports, especially electronics and information technology products. However the global recession in 2001-2003 had huge impacts on the technology sector, another incident of SARS in 2003 has affected the economy of Singapore. However the internal flexibility led to the real GDP growth of 7% in average annually during 2004-2007. The government is trying to boost the share of market in global demand of information technology products. Government is attracting investments in high technological industries, such as: pharmaceuticals and medical technology production.
However, Singapore’s inflation in 2007 was 3.6% and a forecast of 5% in 2008 which is the highest in 16 years and it has a huge impact on costs of food, energy and transportation and the CPI (Consumer Price Index) has been increased accordingly. One of the reasons was the increase of sales taxes from 2% to 7% in July 2007.
The forecast of Singapore growth in GDP 2008 was cut down to 4%-6% because of the risks in recession due to the slowdown in United States, mainly because of the real estate crisis and the stock market. Also the evidences show the slow down of outputs from the foreign drug factories and electronic exporters but the economists believed that even if the recession is happening, Singapore will walk out very quickly, because they estimate the domestic demand can pull it through.
According to Appendix 1, exports in 2007 were $450,587.4 million in current price and it increased 4.4% from 2006 which indicated that the growth is declined sharply from previous years. The growth in 2004 was 20.5%, year 2005 was 14% and year 2006 was 12.8% from previous years. The numbers are insisting of domestic exports, non-oil exports, oil exports and re-exports. Reasons of that may due to the slow down of growth in United States and Europe which affects the technology and manufacturing industries in Asia. As the important transportation port, slowing production and declining demand of shipping indicates the general decline of Asian exports.
The import of Singapore was slightly increased 4.5% and it is by the petroleum products and civil engineering equipment parts. The slowdown is being experienced due to decrease in demand of electronics and technological products, so that imports are slowing down.
The most competitive advantages of Singapore are: free port and free market. High as 99% of imports are duty free in Singapore. However the market in Singapore is very competitive, the exporters have to aware that the after-sell service, because of the Singaporean buying habits are sensitive and the market is competitive.
As the high technology country, Singapore is the first country to use the Electronic Data Interchange(EDI) which use for effectively exchange trading information and this system makes Singapore as an active trading partner, also explained the effective transaction and information exchange can be done on internet. This is an advance technology that implemented by the Singapore government to increase the value of Singapore as a trading center in Asia. (Statistics are retrieved from MTI- Ministry in Trade and Industry Singapore)

Social

The population in Singapore is stably increasing every year and the total population in 2007 was 4,588,600 and it is ranked the second most densely populated country in the world. Singapore is an international country and it is populated by different ethnic groups. The age structure is a bell shape which concentrated in the age 15-64 years of 76.3% and followed by 0-14 years of 15.2% and the least is over 65 years of 8.5%. It explains a healthy growth of work force and increase of population. Citizens of Singapore enjoy freedom of the choice of religion and multi-language skills are considered to be a pride of Singaporean. There are different ethnic groups so Citizens of Singapore speak: Mandarin, Cantonese, Malay and over 90% of population speak English. The literacy rate is 92.5% of the population in Singapore, the high rate of literacy is due to the government free education policy and the citizen is highly educated which emphasized the work force of Singapore is qualitative. Singapore also has a strong social system which offers social benefits to its citizens, who also are obliged to contribute minimum of 10% of salaries and wages into Central Provident Fund for public pension and retirement fund. The average retire age is 55 years old which is lower than the international average of years 65. These policies indicate the attractive social system of Singapore.
Technological

The main exports of Singapore are electronic and technological products so indicates that Singapore is enjoying a world-class reputation for inventing, adopting and developing new technologies. In this 21st Century, information technology is no longer a choice but a necessity. Information technology is the fundamental to strengthen a country. Singapore offers the quality workforce and the competitiveness make the international companies the confidence to invest in Singapore. The information technologies helped the country to stay ahead and protect the position. Because of Singapore is a city-state and there is no necessity of the countries nearby to use the transport-shipment or the air traffic but they do it by choice, so Singapore applied online procedures since early 1980’s, so the process of goods transporting is more effective and cheaper than the other countries in the region.
Singapore has a three major strategy to become the IT city-state. The first thing they did is equipped every household, office and hotel rooms with broadband, no matter wired or wireless. The country is required by regulation of installing broadband in every new build household. This is the first thing to get the citizen utilized the Information Technology.
The second thing that the government is pushing would be education. Singapore is well-known for the literacy of citizen in Asia and now they want the children to have better ideas about information technologies. Because the Education Ministers believed that once the people are left behind, it will become an inability and as long-term, it turns into disability. The reasons are most of the children in middle-class or above families have better access to information technologies which is unlikely for the poorer children. As the strategy is prepare all the population for the IT world, so the education department does not want anyone to miss out, so they decided to offer IT learning from first grade onwards and also prepare one computer for every two children, so the new generation will become the high-tech generation. Over 78.2% of household in Singapore own at least one computer and almost 71% enjoy access to internet which explained the Singaporean realized the importance of Information Technology. Most of the bank, factory and companies are changing the system to be more high-tech, so the employers would expect higher literacy of IT from the employees just same as the expectation of reading, writing and counting. So the message behind is the government is pushing the higher computer literacy of the population so the more competitive they would be.
The third major thing Singapore doing is the electronic commerce. The development is in the stage of applying the laws and regulation to protect the contracts and enforcement. It is because the importance of protecting every parties in Cyberspace. Also there is no privacy protection, the electronic commerce can not be applied in that country, so the regulation of digital signature ensure the trustworthy of Singapore being the IT hub in Asia.
In 2007, Singapore is ranked 31st of Internet host and the exports are heavily in information technological products and consumer electronic goods. The city-state attracted investment in pharmaceutical and medical technology products, so the biggest selling points of Singapore are high-tech hub and financial center in Asia. The prediction of the country is the advantage of advanced information technology and the leading position is secured. (Numerical information please refer to Appendix 1)
Legal

Before Singapore become independent in 1965, it has been part of Federation of Malaysia and British colony. After independent, Singapore kept the British legal System, imported the common law and Westminster model of parliament government, although some modifies are done to suit in Singapore. The Singapore’s Constitution is a supreme written law. It indicates the basic freedoms of individual and the structure and organization of Singapore’s Executive, Legislation and Judiciary. A highlight of Singaporean Legal System is the strong anti- corruption law. In Singapore, the penalty for any person convicted in a corruption can be either receives a fine up to $100,000 or up to five year of imprisonment or both. If the incidences involved of government contracts or parliament member or a member of public service, the penalty of imprisonment will increase to 7 years. Because of the law is well operating, so the rate of corruption is one of the lowest in the world and the country is enjoying a corruption-free environment. With the stable law system in Singapore, it is a good country to invest in.
Environmental

Singaporean Government wanted to deliver and sustain a clean and healthy environment and water resources for all Singaporeans (Ministry of environment and water resources). The government is focusing on Air, Water, Land and energy/climate change.
Singapore is making effort in eliminating the air pollution by setting regulation and standards of stringent emission, promotion of energy efficiency and introducing natural energy. The country achieved in “Good” range for at least 85% if the days in PSI (Pollutant Standards Index) from year 2003 to 2006 and also the pollutant level are managed to stayed within the USEPA(United States Environmental Protection Agency) standard. There are two strategies for Stationery and Mobile sectors. For the Stationery sector, the government is working on the city planning and locations of the factories to reduce the impact of air pollution to the country. For the Mobile sector, the government is reducing the emission of vehicles and applying the newest regulation of emission on diesel vehicles, so that encourage the drivers use more public transportation or using environmental friendly cars and energy then the emission will be reduced sharply.
Water is a scarcity in the globe, especially in this island state, the main source of water is rainwater and the government is building more catchment to collect the rainwater. However the land used for the catchment is huge and Singapore is lack of land so the government seeks for other ways of getting potable water. The government is developing the technology of purifying and desalination of sea water. A desalination plant worth 119 million U.S dollars has been running since September 20005. The plant is capable to produce 114 million liters of potable water per day with the price of 46 US dollars a liter which wiped off the threats of price increase of Malaysia. Due to the agreement signed when Singapore is part of Federation of Malaysia that Singapore can draw 1,277 million liters water from Johor River with a price of less than 1 cent per 3,800 liters until 2011. However, Malaysia is considering either increase the price of water or forbidden Singapore drawing water from the river. If the country can use and manage the water wisely, the rainwater from catchment and the desalination is enough for the population of 4.5 million.
Singapore has a most efficient solid waste management, as an island-state, Singapore is lack of land so the percentage of landfill the waste is eliminated to only 4% of the non-incinerable waste and another 45% is cinerated. Because of the land is scarce and running out, so the land for cinerate waste is becoming less and the government is trying to recycling the waste as much as possible and use other ways to solve the wastage problem and the target is zero landfill wastage and 60% of recycling by year 2012. On the other hand, the Singapore government is operating a “waste to energy” plant which uses the wastage to supply the 2%-3% electricity needs of the country in 2006. This plant resolved the problem with the land and energy which also implements the image of Singapore with green city and high-tech hub of Asia.

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