UNIVERSITATEA ,,DUNĂREA DE JOS” DIN GALAȚI

ACADEMIA DE STUDII ECONOMICE DIN MOLDOVA

ADMINISTRAREA AFACERILOR INTERNAȚIONALE
EUROREGIONALE

REFERAT

TRECEREA PE PLAN MONDIAL: ANALIZA DE PIAȚĂ. STUDIU

DE CAZ: SINGAPORE

Studentă: Cristina Laur

Prof. univ.: Zugravu Adrian

CHIȘINĂU 2020

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 Content

1. The international trade system………………………………………..3

1.1. Theoretical approach…………………………………………………………… .3

1.2. Case Study: Singapore……………………………………………….………… .4

1.2.1. Country Overview……………………………………………………… …. .4

1.2.2. International trade system in Singapore …………………………….……..5

2. Economic Environment………………………………………….……5
2.1. Theoretical approach…………………………………………………….…….….5
2.2. Economic Environment in Singapore……………………………….…………..6

3. Political Environment………………………………….……………...6
3.1. Theoretical approach………..…………………………………………………….6

3.2. Political environment in Singapore………………………………….………….7

4. Business Environment………………………………………………..8
4.1. Theoretical approach…………………………………………………………….8

4.2. Business Environment in Singapore……………………………….…………..8

5. Cultural Environment. Hofstede’s dimensions ..……………………...9

5.1. Theoretical approach……………………………………………………………….9

5.2. Cultural environment in Singapore…………………………………….…………9

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 1. The international trade system
1.1. Theoretical approach

A company seeking to do business abroad needs to understand the international trade

system. In attempting to sell abroad, a firm will face various trade restrictions:

Tariff - a tax levied by foreign government against imported-products. It may be designed

to raise revenue (revenue tariff) or to protect domestic companies (protective tariff)

Quota – sets limits on the amount of goods that the importing country will accept in certain
product categories. The purpose is to protect local industry.

Embargo – is the ultimate form of quota in that imports are totally banned.

Exchange control – regulates the amount of available foreign exchange and its exchange
rate against other currencies.

Non-tariff barriers – product standards, etc.

1.2. Case study: Singapore

1.2.1 Country Overview

Over the last decade, Singapore has shown extraordinary economic growth. Today it is
considered a high-income economy. The growth is driven by several factors. Some of them
are private consumption expenditure, local and external demand, and investments. The
strengths of Singapore's current entrepreneurial landscape are a pro-business government, a
vibrant venture capitalist market, and ease of starting a business.
Singapore’s leading sectors like as pharmaceutical and petroleum refining industry have the
potential to attract other countries to invest.

Facts & figures

Percentage of economic growth: 1.7% (2016)
Industrial production growth rate: 1% (2016 est.)
Electricity – production: 41.137.7 billion kWh (2007)
Electricity – production by source:
fossil fuel: 95.3%
hydro: 0%

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nuclear: 0%
other: 3.9% (2014 est.)
Electricity – consumption: 37.420.3 billion kWh (2007)
Electricity – exports: 0 kWh (2007)
Electricity – imports: 0 kWh (2007)
Agriculture – products: rubber, copra, fruit, vegetables; poultry, eggs, fish, orchids,
ornamental fish
Currency: 1 Singapore dollar (S$ or SGD) = 100 cents: 1 SGD= 1,379 USD

LEADING SECTORS IN SINGAPORE:

1. INDUSTRIAL AUTOMATION EQUIPMENT
2. SEMICONDUCTORS
3. AGRICULTURAL
4. AIRCRAFT AND PARTS
5. OIL & GAS
6. COMPUTER HARDWARE, SOFTWARE & PERIPHERALS
7. LABORATORY & SCIENTIFIC INSTRUMENTS
8. TELECOMMUNICATION EQUIPMENT
9. ENVIRONMENT CONTROL
10. MEDICAL DEVICES
11. EDUCATION

1.2.2. International Trade System in Singapore

IMPORT TARIFFS
Singapore is generally a free port and an open economy. More than 99% of all imports into
Singapore enter the country duty-free. For social and/or environmental reasons, Singapore
levies high excise taxes on distilled spirits and wine, tobacco products, motor vehicles and
petroleum products.
Singapore levies a 7% Goods and Services Tax (GST). For dutiable goods, the taxable value
for GST is calculated based on the CIF (Cost, Insurance and Freight) value plus all duties
and other charges. In the case of non-dutiable goods, GST will be based on the CIF value
plus any commission and other incidental charges whether or not shown on the invoice. If
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the goods are dutiable, the GST will be collected simultaneously with the duties. Special
provisions pertain to goods stored in licensed warehouses and free trade zones.
TRADE BARRIERS
Singapore maintains one of the most liberal trading regimes in the world, but U.S. companies
face several trade barriers. Singapore maintains a tiered motorcycle operator licensing
system based on engine displacement which, along with a road tax based on engine size,
adversely affects U.S. exports of large motorcycles.
Singapore also restricts the import and sale of non-medicinal chewing gum. For social and/or
environmental reasons, it levies high excise taxes on distilled spirits and wine, tobacco
products, and motor vehicles.
Services barriers include sectors such as pay TV, audiovisual and media services, licensing
of online news websites, legal services, banking, and cloud computing services for financial
institutions.
TRADE RESTRICTIONS
Labels are required on imported food, drugs, liquors, paints and solvents and must specify
the country of origin.
Special import licenses are required for certain goods, including strategic items, hazardous
chemicals, radioactive materials, films and videos, video games, arms and ammunition,
agricultural biotechnology products, food derived from agricultural biotechnology products,
medical devices, prescription drugs, over-the-counter drugs, vitamins with very high dosages
of certain nutrients, and cosmetics and skin care products.
The import of items such as lighters in the shape of pistols or revolvers, firecrackers,
handcuffs, shell casings, and silencers is prohibited.
Generally, the import of goods that the government determines as posing a threat to health,
security, safety and social decency is controlled.
As a member of the United Nations, Singapore implements the Resolutions passed by the
United Nations Security Council (UNSC) through our domestic laws. These include arms
embargoes and sanctions on missiles or nuclear related goods. Activities which contravene
the decisions of the United Nations Security Council (UNSC) in their Resolutions are
prohibited.

2. Economic Environment
2.1. Theoretical approach

In considering foreign markets, the international marketer must study each country’s
economy. Three characteristics reflect the attractiveness of a country as an export market.

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1. The size of the country’s population. Other things being equal, large countries are more
attractive to exporters than small countries.

2. The country’s industrial structure. Four types of industrial structures can be

distinguished:

Subsistence economies – the majority of people engage in simple agriculture. They offer
few opportunities for exporters.

3. The country’s income distribution;

Income distribution is related to the country’s industry structure, but is also affected by the
political system. The international marketer distinguishes countries with five income-
distribution patterns:

• Very low incomes

• Mostly low incomes
• Very low, very high incomes
• Low, medium, high incomes
• Mostly medium incomes

2.2. Economic Environment in Singapore

As a small city state with a small population of just 5.6 million people and with no natural
resources, Singapore has long been careful in managing its human capital, seeing such
management as an important source of competitiveness and strength for the economy.
Singapore's total trade in 2014 amounted to S$982 billion. Despite its small size, Singapore
is currently the fifteenth-largest trading partner of the United States. In 2014, Singapore's
imports totaled $464 billion, and exports totaled $519 billion. Malaysia was Singapore's
main import source, as well as its largest export market, absorbing 18% of Singapore's
exports, with the United States close behind.

SECTORS. To maintain its competitive position despite rising wages, the government seeks
to promote higher value-added activities in the manufacturing and services sectors. It also
has opened the financial services, telecommunications, and power generation and retailing
sectors up to foreign service providers and greater competition.

Banking. Singapore is considered a global financial hub, with Singapore banks offering
world-class corporate bank account facilities. In the 2017 Global Financial Centers Index,
Singapore was ranked as having the third most competitive financial center in the world
after London and New York City

Energy and infrastructure. Singapore is the pricing center and leading oil trading hub in
Asia. The oil industry makes up 5 per cent of Singapore's GDP, with Singapore being one of
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the top three export refining centers in the world. In 2007 it exported 68.1 million tons of
oil.

Income Distribution. The gap between the wealthy and the poor is widening, and in countries
like Singapore, it is increasingly being recognized as a cause for concern.
Singapore’s household net wealth was S$700 billion in 2005 and it grew to more than
S$1,500 billion in 2015, according to the Household Sector Balance Sheet.
Singapore’s wealth gap of 2.72 is relatively narrow compared to other advanced economies,
like USA with ratio of 7.09, Sweden 5.42 and Denmark 4.85.

(The wealth gap is the ratio between the mean and the median wealth in the country).
But despite this, wealth inequality is rising in Singapore.
73 % of Singapore’s wealth is owned by the wealthiest 20%.

3. Political Environment
3.1. Theoretical approach

A company should consider next four factors:

* Attitudes toward international business;

* Political stability;

* Monetary regulations – currency restrictions, fluctuating exchange rate, and exchange

controls, etc.

* Government bureaucracy.

3.2. Political environment in Singapore

The stable political structure with parliamentary democracy, well established judicial
system, and the presence of strong domestic institutions with good corporate governance
practices, have made the Singapore business environment even more attractive to global
investors.

The government is tightening entry conditions for foreign workers while encouraging
foreign entrepreneurs and investing heavily in developing the human capital of indigenous
workers and encouraging businesses to upgrade their technology and production methods.

As part of that investment effort, the government has lent strong backing to small and
medium-sized enterprises (SMEs). They account for over half of total enterprise value and
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employ nearly 70% of the workforce. Their rise, though, has been largely driven by
government policy which has funded them and boosted the growth of their domestic market.

In the last years, the government has brought local SMEs into R&D with cash incentives to
help them develop innovation.

Personal income taxes in Singapore range from 0% to 20% for incomes above S$320,000.
There are no capital gains or inheritance taxes in Singapore. Singapore’s corporate tax rate is
17% with exemptions and incentives for smaller businesses. Singapore has a single-tier
corporate income tax system, which means there is no double-taxation for shareholders.
Singapore Goods and Services Tax (GST) consist of 7%.

4. Business Environment
4.1. Theoretical approach

Business norms and behavior also vary from country to country. Business executives need
to be briefed before negotiating in another country. Ex. Arab businessmen are accustomed
to talking business in close physical proximity with other persons – in fact almost nose to
nose.

4.2. Business Environment in Singapore

• Singaporean businessmen are generally open and cosmopolitan in their outlook;

• Discussions about religion, racial issues and politics are not welcomed;
• English is the working language, while the official ones are Chinese, Malay and
Tamil;
• Conducting business on Fridays should be avoided, especially with Malay
associates(Muslim ones)
• The inviting party of a business social event usually pick up the bill;
• Singaporeans are normally punctual for their appointments and expect the same with
others
• Gift giving is a common way of expressing thanks (small business-related gifts like a
pen with the company logo would be sufficient).

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 5. Cultural Environment
5.1. Theoretical approach

Each nation has its own values, customs and taboos.

In order to analyze different cultures and identify cultural similarities and particularities,
international marketers are using 4 dimensions developed by Geert Hofstede.

1. Power distance index (PDI) means the extent to which less powerful people of
society accept and expect that power is distributed unequally. For ex. Small PDI
country does not accept inequalities among people, powerful people try to look less
powerful than they are. The middle class is large. The average of this index is 55,
Arabic countries – 80, China -80, highest score Guatemala 95, USA 40, Germany 33,
Sweden 31, smallest Austria 11.

2. Individualism/Collectivism shows the degree to which individuals are integrated in

different groups. The higher is the index, the less important are relationships and ties
between people and the more people are expected to look after themselves. Identity is
based on individual interests. The average is 42, highest score USA -91, UK -89,
Australia -90, France -71, the lowest score – Guatemala – 6, Panama -11, Venezuela -
12, China 20, Greece -35, Arab countries – 38, Portugal -27, Japan -46.

3. Masculinity/Feminity. Refers to the distribution of roles between the genders in

society. This index shows what values (masculine or feminine) are dominant in a
society. A masculine society is focused on material success and performance, money
are important. In the family fathers and mothers have different roles. In a feminine
society relationships are important, helping others etc. The world average – 50, the
highest Japan-95, Austria -79, UK – 68, USA-62, the lowest – Sweden-5, Norway –
8, Denmark – 16, France-43, Canada – 52.

4. Uncertainty avoidance index (UAI) shows how comfortable society is with

uncertainty and ambiguity. Strong UAI – do not trust changes, short term oriented
.What is different is dangerous, society is stressed, high bureaucracy. The world
average – 62, highest Guatemala – 101, Uruguay – 100, Portugal – 94, Poland – 93,
Belgium – 94, USA- 46, the lowest Jamaica – 13, Denmark – 23, Sweden – 29, UK –
35.

5.2. Cultural Environment in Singapore

• Power Distance 74 - High inequality, because of Confucian background(the

Chinese),which is based on the principle of stability of society expressed by unequal
relationships between people.
Power is centralized and managers rely on their bosses and rules.
• Individualism 20 - It is a collectivist country, as people belong to in-groups (families,
clans or organizations)who look after each other in exchange for loyalty
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• Masculinity 48 – It is in the middle of scale but more on Feminine side, which means
that the softer aspects of culture like sympathy and consensus are valued and
encouraged
• Uncertainty Avoidance 8 – In Singapore people abide by many rules not because they
have need for structure but because of high fines. Singaporeans call their society
a”Fine Country. You’ll get a fine for everything”
• Long Term Orientation 72 - Shows cultural qualities supporting long-term investment
such as perseverance, sustained efforts, slow results, ordering relationship by status
and having a sense of shame(Confucian teaching)
• Indulgence 46 – Could not be determined if it is indulgent or restrained because of the
intermediate score.

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