Economic

Transformation
Dr. Sng Hui Ying

1
Brief History of
Singapore

2
 Founded by Stamford Raffles in 1819 to
be a trading post of the East India
Company
 Became colony of the British Empire in
1867
 Attained self-rule in 1959
 Part of Malaysia for two years (1963-65)
 Attained independence in 1965

3
Transshipment
point of regional
and international
trade
• Chinese network
• Southeast Asian
network
• European and
Indian Ocean
network

4
 Under-developed economy that depended
greatly on entrepot trade and British military
base
 Lacking in skills and capital, especially in the Singapore
manufacturing sector
in 1950s and
 Housing shortages
 High unemployment rate
1960s
 Social and economic instability in 1950s and
1960s

5
 No. of Stikes Man-days Lost
600 1,000,000
946,354
man-days 900,000
lost
500
800,000

700,000
400

Industrial 600,000

Unrest before 300

275 410,889
500,000

1965 200
man-days
lost
400,000

300,000

116 200,000
100 strik
es 100,000

0 0
1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996

6
 "It was bewildering. There were strikes about
nothing. There were communist-inspired riots almost
Dr Albert every day and everywhere. In the beginning one has
Winsemius’ to very careful about passing any judgement - one
does not know the country, one does not know the
first people, one does not know the men and women who
impression of are trying to steer this rudderless ship. But after a
couple of months the pessimism within our
Singapore commission reached appalling heights. We saw how a
country can be demolished by unreal antitheses. The
(1960) general opinion was: Singapore is going down the
drain, it is a poor little market in a dark corner of Asia."

7
An Overview of
the Singapore
Economy

8
  Our constraints
 Small land size: 724.2 sq km
Key  25% bigger than it was during independence (thanks
to reclamation)
Characteristics  One large island and 64 small islands

of the  China: 9,597,000 sq km; Shanghai: 6,341 sq km

 Japan: 378,000 sq km; Tokyo: 2,194 sq km
Singapore  Small population size: 5.69 mil (total), 4.04 mil
Economy (residents)
 China: 1,439 mil; Shanghai: 27.1 mil; Japan: 126.5
mil; Tokyo: 13.9 mil
 Lack of natural resources

9
  Our key advantage is our location
Key  Strategically located along the major trade
Characteristics routes between India/Middle East and
China/North Asia
of the  Located in Southeast Asia
Singapore  Total population 661 mil (2020 estimate), GDP
US$3.32 tril (2020 estimate)
Economy

10
11
 How do our constraints and
advantages shape our
development strategies?
 How have our constraints and
advantages change over time?

12
 Export-oriented industrialization
 Market-oriented pro-business stance as a driver
of growth
 Investment in human capital
 Investment in physical capital Key
 Investment in social capital Development
 Capitalize on our geographical advantages
Strategies
 Prudent fiscal and monetary policies
 Efficient bureaucracy
 From 1990s: regionalization and service hub

13
 1965 NOW

• Export-Oriented
Industrialization
• International Trading
Emporium
Economic  Old Entrepot Trade
• International Shipping,
Structural  British Military
Base
Aviation and
Telecommunication Hub
Transformation • International Financial
Hub
• International Tourism Hub
• Regional Education Centre
• Regional Healthcare
Centre

14
 National Income 1965 1975 1985 1995 2005 2015 2020

GDP at 2015 Price

10,926 31,004 64,459 147,142 244,706 423,444 453,821
(S$m)
Per Capita GDP at 2015
5,790 13,703 23,560 41,748 57,365 76,503 79,816
Price (S$)

 In the last 55 years,

(1) A high-  Singapore’s GDP increased by 41 times
income  Real GDP grew at an average 7.0% per
country with annum
a slowing  Per capita GDP increased by 13 times

growth rate  The increase in absolute affluence in Singapore

also translates into an increase in relative
affluence of Singapore in the world.

15
 Singapore's GDP at Current Market Price (S$ mil)
550,000

500,000

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0
1965
1967
1969

1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
1971
1973
1975
1977
1979

2011
2013
2015
2017
2019
Source: www.singstat.gov.sg
16
 GDP, current prices, USD (bil)
22,000

20,000

18,000
United States
16,000 China
Japan
14,000
Germany
12,000
United Kingdom
10,000 Korea, Rep.
Australia
8,000
Indonesia
6,000 Thailand
4,000 Singapore
Malaysia
2,000

0
1990

1992

1994

1998
1996

2000

2002

2004

2008
2006

2010

2012

2014

2018
2016
Source: The World Bank, World Development Indicators

17
 GDP based on PPP, current International Dollar (bil)
26,000

24,000

22,000

20,000 China
United States
18,000
Japan
16,000
Germany
14,000 Indonesia
12,000 United Kingdom
10,000 Korea, Rep.

8,000 Australia
Thailand
6,000
Malaysia
4,000
Singapore
2,000

0
1990

1992

1994

1998
1996

2000

2002

2004

2008
2006

2010

2012

2014

2018
Source: The World Bank, World Development Indicators 2016

18
 Per Capita GDP, current prices, USD
80,000

70,000

United States
60,000
Singapore

50,000 Australia
Germany

40,000 United Kingdom

Japan
30,000 Korea, Rep.
Malaysia
20,000 China
Thailand
10,000 Indonesia

0
1990

1992

1994

1998
1996

2000

2002

2004

2008
2006

2010

2012

2014

2018
2016
Source: The World Bank, World Development Indicators

19
 Per Capita GDP (PPP), current International Dollar
120,000

100,000
Singapore
United States
80,000 Germany
Australia
United Kingdom
60,000
Japan
Korea, Rep.
40,000 Malaysia
Thailand
China
20,000
Indonesia

0
1990

1992

1994

1998
1996

2000

2002

2004

2008
2006

2010

2012

2014

2018
2016
Source: The World Bank, World Development Indicators

20
 Per Capita GDP (PPP), current International Dollar
160,000

140,000 Luxembourg
Singapore
120,000 Qatar
Ireland
100,000 United States
Germany
80,000 Australia
United Kingdom
60,000 Japan
Korea, Rep.
40,000 Malaysia
Thailand
20,000 China
Indonesia
0
1990

1992

1994

1998
1996

2000

2002

2004

2008
2006

2010

2012

2014

2018
2016
Source: The World Bank, World Development Indicators

21
 500,000 25

400,000 20

Singapore’s 300,000 15
GDP and
GDP Growth 200,000 10

Rates
100,000 5
• Average Growth Rate
(1965-1994) = 9.1%
0.1
• Average Growth Rate 0 0
(1995-2020) = 4.8% -0.6 -1.1
-2.2
-100,000 -5
-5.4

-200,000 -10
1965
1967
1969

1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
1971
1973
1975
1977

2001
2003
2005
2007
1979

2009
2011
2013
2015
2017
2019
Real GDP Growth Rate (%) GDP in Chained (2015) Dollars (S$m)

22
 How should Singapore adapt
to a slower growth trend?

23
 GDP by Industry
1965 1975 1985 1995 2005 2015 2020
(as % of GDP)
Goods Producing
25 33 33 32 31 24 24
Industries
Services Producing
66 61 60 58 61 66 67
Industries

 Singapore economy was dominated by services

producing industries (SPI) in 1965 with goods
(2) producing industries (GPI) contributing to only 25%
of GDP.
Production  Singapore’s effort in promoting industrialization
Structure of propelled this ratio to the high of 36% in early
1980s.
Singapore  Manufacturing’s contribution to GDP increased
from 14% in 1965 to around 25% in the 1980s.
 The fortunes of GPI and SPI reversed from mid-
1980s onwards as the finance and insurance
industry and the business services industry
expanded.

24
 70%

60%

50%
Share of GDP
Singapore’s
“X-shaped” 40%
production
structure
30%

20%
1965
1967
1969

1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
1971
1973
1975
1977

2001
2003
2005
2007
1979

2009
2011
2013
2015
2017
2019
GDP by Goods Producing Industries GDP by Services Producing Industries

25
 % of GDP
Goods Producing Industries 24%
Manufacturing 21%
Construction 3%
Utilities 1%
Other Goods Industries 0%
GDP by Services Producing Industries 67%
Industry, Wholesale & Retail Trade 17%
2020 Finance & Insurance 15%
Business Services 13%
Other Services Industries 10%
Transportation & Storage 5%
Information & Communications 5%
Accommodation & Food Services 1%
Source: CEIC Database

26
 What are the factors behind the
rise in the share of SPI?
 How does an increasing share of
SPI affect Singapore’s trade, job
creation, vulnerability to external
volatility, and economic growth?

27
 Agriculture Industry Manufacturing Services
Singapore
1960 4 18 12 78
1992 0 38 28 62
2019 0 24 20 70
Hong Kong 0 6 1 89
Structure of Indonesia 13 39 20 44

Output (% of Malaysia
Philippines
7
9
37
30
21
18
54
61
GDP), 2019 Thailand 8 33 25 59
Japan 1 29 21 69
Germany 1 27 19 63
USA 1 19 11 77

Sources: 1960 and 1992 data from Peebles and Wilson (1996).
2019 data from World Development Indictors (The World Bank).
Note: Manufacturing is a sub-set of Industry.
Data for Japan are for 2018.

28
 Value -added
(% of total) Employment (% of total)
($ mil)
Computer, Electronic &
38,996 43 80,074 22
Optical Products
Chemicals & Chemical
10,971 12 18,692 5
Products
Value-added Pharmaceutical &
Biological Products
8,521 9 8,515 2

and Machinery & Equipment 8,211 9 61,052 17

Other Manufacturing
Employment Industries
6,989 8 19,569 5

in Food, Beverage &

Tobacco
4,205 5 31,357 9

Manufacturing Other Transport

Equipment
4,166 5 55,557 15

Sector, 2020 Fabricated Metal

Products
2,121 2 33,068 9
Refined Petroleum
1,473 2 4,647 1
Products

Electrical Equipment 1,159 1 8,308 2

Source: www.singstat.gov.sg

29
 Expenditure on GDP (as % of
1965 1975 1985 1995 2005 2015 2020
GDP)
Private Consumption 79 60 45 41 40 37 33

Government Consumption 10 10 13 8 10 10 12

Gross Fixed Capital Formation 21 35 41 33 23 27 21

Net Exports of Goods &
-11 -9 0 17 30 27 32
Services

(3) 1. Private consumption expenditure declined steadily

declining over the years
Expenditure • 33% of GDP in 2020, one of the lowest in the
world and much lower than the 68% registered
structure of by the USA (source: U.S. BEA)
Singapore’s 2. Government consumption expenditure has
remained very stable in the last 53 years without
GDP showing any perceptible increasing trend
3. Gross fixed capital formation increased steadily
during the earlier years of development, hit a peak
of 46% of GDP in mid-1980s, and began its long
descend thereafter
4. Net exports turned from deficit to surplus from mid
1980s onward; now a significant contributor to GDP

30
 100%

80%

60%

Share of GDP
40%
Singapore’s
GDP by 20%

Expenditure 0%
1965
1967
1969

1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
1971
1973
1975
1977

2001
2003
2005
2007
1979

2009
2011
2013
2015
2017
2019
-20%

-40%
Private Consumption Government Consumption
Gross Fixed Capital Formation Net Exports

31
 National Income 1965 1975 1985 1995 2005 2015 2020

GNI at Current Market Price

3,080 13,852 41,201 125,363 200,687 394,551 411,757
(S$m)
GDP at Current Market Price
2,984 13,729 40,863 124,463 212,723 423,444 469,096
(S$m)
Net Income From Abroad
96 124 338 900 -12,036 -28,893 -57,339
(S$m)

 GDP: The market value of final goods and services

produced in Singapore within a given period of
(4) GNI, GDP time.
and NIFA  GNP: The market value of final goods and services
produced by labor and property supplied by the
Singaporeans within a given period of time.
 GNI: Similar to GNP but includes indirect business
taxes.
 GNI – GDP = NIFA
 NIFA: Net Income From Abroad. Net income
includes the net labor income and net property and
entrepreneurial incomes.

32
 been
negative
NIFA has

since 2000
NIFA (S$m)

-40,000
10,000

-60,000
-30,000
0

-20,000

-50,000
-10,000

-70,000
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
33
 (% of GDP)
Net Income
from Abroad

-10%
-2%
0%

-12%
2%

-4%

-14%
-8%
-6%
4%

1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
34
 National Income 1965 1975 1985 1995 2005 2015 2020
Gross National Saving
367 4,079 16,839 62,702 95,231 186,511 188,595
(S$m)
As % of GDP 12 30 41 50 45 44 40
Gross Fixed Capital
625 4,790 16,668 41,305 49,326 115,271 100,742
Formation (S$m)
As % of GDP 21 35 41 33 23 27 21

(5) High 1. Gross National Savings as % of GDP increased

rapidly in the earlier years and remains very
savings rate high till today; 40% in 2020
and declining • High levels of corporates’ and households’
savings and government’s budget surplus
investment
rate 2. Gross fixed capital formation (GFCF) as % of
GDP increased rapidly in the earlier years,
peaked in early 1980s at 46%, declines
gradually thereafter

35
 rates
investment
savings and
Singapore’s

0%
20%

10%
50%

40%
60%

30%

1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
GNS/GDP
1989
1991
1993
1995
1997
1999
GFCF/GDP

2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
36
 Merchandise Trade 1965 1975 1985 1995 2005 2015 2020

Total Trade (S$m) 6,811 32,028 107,996 343,828 717,997 915,219 969,112

As % of GDP 228 233 264 276 338 216 207

Trade Balance (S$m) -803 -6,513 -7,639 -8,799 49,370 68,414 62,177

As % of GDP -27 -47 -19 -7 23 16 13

 Total merchandise trade (exports plus

(6) We are imports) in Singapore is very large relative to
the size of her GDP; 207% of GDP in 2020
very trade  Second highest in the world after Hong Kong
dependent (323%)
 Vietnam (201%), Slovenia (164%) , Slovak
Republic (163%), Belgium (160%) (source: The
World Bank)

 Trade balance was in deficit since independent

till 1997; trade surplus since 1998

37
 As % of GDP 1965 1975 1985 1995 2005 2015 2020
Exports 101 93 123 135 180 116 110
Domestic Exports n.a. 55 80 79 98 56 50
Oil n.a. n.a. 39 11 25 17 13
Non-oil n.a. n.a. 41 68 73 39 37
Re-exports n.a. 38 43 55 83 60 60
Imports 128 140 141 142 157 100 97

1. Singapore pursued an export-oriented

(6) We are industrialization policy since independence and
the success of this policy is reflected in the
very trade domestic exports (DX) figures
• 31% of GDP in 1970; increased steadily in the 1970s;
dependent peaked at 100% of GDP in 1980; fluctuate between
70% and 100% of GDP till 2013. Dropped
significantly to 50% in 2020
2. Since 1918, entrepot trade had been, and still is,
an important pillar of the economy
• Re-exports was 65% of total exports in 1969;
fluctuated between 45% and 55% in recent years
3. Share of imports had always been large

38
 300,000

250,000

200,000

Greater S$mn 150,000

Volatility in 100,000

Recent Years
50,000

2020
1980
1982
1984

1988
1990
1992
1994

1998
1986

1996

2000
2002
2004

2008
2006

2010
2012
2014

2018
2016
Domestic Exports Domestic Exports: Oil
Domestic Exports: Non Oil Re Exports

39
 Others China
Australia 14% 14%
2%

India

Our major
2%
Vietnam Hong Kong

export
3% 12%
Thailand

markets,
4%
Korea

2020 5%

Japan
United States
11%

5%
Taiwan
5% Malaysia
Indonesia 9%
6% EU
8%

Source: SingStat

40
 Should we be concerned
about the plateauing of
domestic export of
merchandise goods?

41
 Trade in Services (S$m) 2000 2005 2010 2015 2020
Total Trade 96,452 167,533 273,930 432,922 497,057
Exports of Services 44,855 75,905 136,872 210,623 258,791
Imports of Services 51,598 91,628 137,057 222,300 238,267
Trade Balance -6,743 -15,723 -185 -11,677 20,524

 Annual growth in total trade in services averaged

(7) Trade in 9.7% between 2000 and 2019
Services  Trade in services fell sharply in 2020 by 14%
 Exports of services: -13%
 Imports of services: -16%
 In comparison, trade in goods fell by 5%

 Total trade in services was 54% of total trade in

merchandise trade in 2019; 21% in 2000
 Trade balances of services in deficit for most years

42
 300,000

250,000

200,000

(7) Strong S$ mil 150,000

Growth in 100,000

Services 50,000
Trade
0

-50,000

2020
2004
2005

2007
2008
2000

2002
2003

2006

2009
2001

2014
2015

2017
2018
2010

2012
2013

2016

2019
2011
Balance Exports Of Services Imports Of Services

43
 Exports of Services Imports of Services
$258.8 bil $238.3 bil

24% 28% 30% 29%

(7) Trade in
3%
8% 4%
16% 11%
Services, 9% 7%
12% 9% 10%

2020
Transport Transport
Financial Business Management
Advertising & Market Research Telecom, Computer & Info
Business Management Charges For The Use Of IP
Telecom, Computer & Info R&D
Travel Travel
Others Others

44
 Exports of Services Imports of Services
$296.3 bil $284.0 bil

21% 23%
29% 31%

7%
(7) Trade in 9%
14%
6%
8%

Services, 10% 10% 8%

11%
13%

2019
Transport Transport
Financial Travel
Advertising & Market Research Business Management
Business Management Charges For The Use Of IP
Travel Telecom, Computer & Info
Telecom, Computer & Info R&D
Others Others

45
 80,000

70,000

60,000

50,000

40,000

(7) Trade in 30,000

Services, 20,000

2020, $ mil 10,000

Exports Imports

46
 (8)

1.9%
Historically

(excl. 1973 and 74) =

(1965 – 2020) = 2.5%
low inflation

• Average inflation rate

• Average inflation rate
Annual Inflation Rate (%)

-5
0
5
20
25

10
15

1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
47
 Inflation, Average Consumer Prices (%)
45

40

35

30

Inflation Rate 25

Lower than 20

World’s 15

Average 10

-5

2020
1980
1982
1984

1988
1990
1992
1994

1998
1986

1996

2000
2002
2004

2008
2006

2010
2012
2014

2018
2016
World Singapore

Source: IMF, WEO Apr 2021

48
 (9) Low

Rate (%)
Unemployment

0
2
3
6
9

4
5
7
8
10

1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
Overall Unemployment Rate (%)
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Resident Unemployment Rate (%)

2017
2019
49
 What are the factors that
underline Singapore’s
economic competitiveness?
 How has COVID-19 changed
the economic prospect of
Singapore?

50
THE END

51