Singapore

Singapore is one of the most densely populated countries in the world. The annual growth rate for 2002 was 0.8%, including resident foreigners. Singapore has a varied linguistic, cultural, and religious heritage. Malay is the national language, but Chinese, English, and Tamil also are official languages. English is the language of administration and also is widely used in the professions, businesses, and schools.

The government has mandated that English be the primary language used at all levels of the school systems, and it aims to provide at least 10 years of education for every child. In 2002, primary and secondary school students totaled about 497,500, or 12% of the entire population. In 2001, enrollment at the universities was 37,983 (full-time, part-time, and post-graduate) and 53,599 at the polytechnics. The Institute of Technical Education for basic technical and commerce skills has almost 16,200 students. The country's literacy rate is 94%.

Singapore generally allows religious freedom, although religious groups are subject to government scrutiny, and some religious sects are restricted or banned. Almost all Malays are Muslim; other Singaporeans are Taoists, Buddhists, Confucianists, Christians, Hindus, or Sikhs.

Although Singapore's history dates from the 11th century, the island was little known to the West until the 19th century, when in 1819, Sir Thomas Stamford Raffles arrived as an agent of the British East India Company. In 1824, the British purchased Singapore Island, and by 1825, the city of Singapore had become a major port, with trade exceeding that of Malaya's Malacca and Penang combined. In 1826, Singapore, Penang, and Malacca were combined as the Straits Settlements to form an outlying residency of the British East India Company; in 1867, the Straits Settlements were made a British Crown Colony, an arrangement that continued until 1946.

The opening of the Suez Canal in 1869 and the advent of steamships launched an era of prosperity for Singapore as transit trade expanded throughout Southeast Asia. In the 20th century, the automobile industry's demand for rubber from Southeast Asia and the packaging industry's need for tin helped make Singapore one of the world's major ports.

In 1921, the British constructed a naval base, which was soon supplemented by an air base. But the Japanese captured the island in February 1942, and it remained under their control until September 1945, when the British returned.

In 1946, the Straits Settlements was dissolved; Penang and Malacca became part of the Malayan Union, and Singapore became a separate British Crown Colony. In 1959, Singapore became self-governing, and, in 1963, it joined the newly independent Federation of Malaya, Sabah, and Sarawak--the latter two former British Borneo territories--to form Malaysia.

Indonesia adopted a policy of "confrontation" against the new federation, charging that it was a "British colonial creation," and severed trade with Malaysia. The move particularly affected Singapore, since Indonesia had been the island's second-largest trading partner. The political dispute was resolved in 1966, and Indonesia resumed trade with Singapore.

After a period of friction between Singapore and the central government in Kuala Lumpur, Singapore separated from Malaysia on August 9, 1965, and became an independent republic.

Singapore's strategic location on major sea lanes and industrious population have given the country an economic importance in Southeast Asia disproportionate to its small size. Upon independence in 1965, Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government adopted a pro-business, pro-foreign investment, export-oriented economic policy framework, combined with state-directed investments in strategic government-owned corporations. Singapore's economic strategy proved a success, producing real growth that averaged 8.0% from 1960 to 1999. The economy picked up after the 1997 regional financial crisis, with a growth rate of 9.4% for 2000, but then fell back in tandem with the economic slowdown in the United States, Japan, and the European Union, as well as the worldwide electronics slump, so that GDP fell by 2.4% in 2001. The economy rebounded in 2002, up 2.2%, but economic conditions remain challenging.

Singapore's largely corruption-free government, skilled work force, and advanced and efficient infrastructure have attracted investments from more than 3,000 multinational corporations (MNCs) from the United States, Japan, and Europe. Foreign firms are found in almost all sectors of the economy. MNCs account for more than two-thirds of manufacturing output and direct export sales, although certain services sectors remain dominated by government-linked corporations.

Manufacturing and financial/business services are the twin engines of the Singapore economy and accounted for 24% and 65%, respectively, of Singapore's gross domestic product in 2000. The electronics industry leads Singapore's manufacturing sector, accounting for 42% of Singapore's total industrial output, but the government also is prioritizing the development of the chemicals and biomedical/pharmaceutical industries.

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, or is in the process of opening, the financial services, telecommunications, and power generation and retailing sectors to foreign service providers and greater competition. The government also has pursued cost-cutting measures, including wage and rent reductions, to lower the cost of doing business in Singapore. The government also is actively negotiating free trade agreements with key trading partners, and has concluded one with the United States.

Trade, Investment, and Aid
Singapore's total trade in 2002 amounted to $243 billion, an increase of 3% from 2001, but below the level for 2000. Despite its small size, Singapore is the 12th-largest trading partner of the United States. In 2002, Singapore's imports totaled $117 billion, and exports totaled $126 billion. Malaysia was Singapore's main import source, as well as its largest export market, absorbing 17% of Singapore's exports, with the United States close behind. Re-exports accounted for 47% of Singapore's total sales to other countries in 2002. Singapore's principal exports are petroleum products, food and beverages, chemicals, textile and garments, electronic components, telecommunication apparatus, and transport equipment. Singapore's main imports are aircraft, crude oil and petroleum products, electronic components, radio and television receivers and parts, motor vehicles, chemicals, food and beverages, iron and steel, and textile yarns and fabrics.

Singapore continues to attract investment funds on a large scale despite its relatively high-cost operating environment. The United States leads in foreign investment, accounting for 35% of new commitments to the manufacturing sector in 2002. As of 2002, the stock of investment by U.S. companies in the manufacturing and services sectors in Singapore reached about $27 billion (total assets). The bulk of U.S. investment is in electronics manufacturing, oil refining and storage, and the chemical industry. More than 1,300 U.S. firms operate in Singapore.

The government also has encouraged firms to invest outside Singapore, with the country's total direct investments abroad reaching $53 billion by the end of 2000. China was the top destination, accounting for 15% of total overseas investments, followed by Hong Kong (11%), Malaysia (9.0 %), Indonesia (6.0%), and the United States (5.0%).

The United States provides no bilateral aid to Singapore.

Labor
In 2002, Singapore had a total labor force of about 2.13 million. The National Trades Union Congress (NTUC), the sole trade union federation, comprises almost 99% of total organized labor. Extensive legislation covers general labor and trade union matters. The Industrial Arbitration Court handles labor-management disputes that cannot be resolved informally through the Ministry of Labor. The Singapore Government has stressed the importance of cooperation between unions, management and government ("tripartism"), as well as the early resolution of disputes. There has been only one strike in the past 15 years.

Singapore has enjoyed virtually full employment for long periods of time. Amid an economic slump, the unemployment rate rose to 4.6% in the third quarter of 2002, the highest since Singapore's independence. While the unemployment rate declined to 4.3% by the end of 2002, it is expected to rise again in 2003. Much of the unemployment is structural, as low-skill manufacturing operations move overseas.

The Singapore Government and the NTUC have tried a range of programs to increase lagging productivity and boost the labor force participation rates of women and older workers. But labor shortages persist in the many low-skilled positions in the construction and electronics industries. Foreign workers help make up this shortfall. In 2002, there were about 750,000 foreign workers in Singapore, constituting 35% of the total labor force.

Transportation and Communications
Situated at the crossroads of international shipping and air routes, Singapore is a center for transportation and communication in Southeast Asia. Singapore Changi International Airport is a regional aviation hub served by 65 international airlines and is being expanded with the construction of a third terminal slated for completion in 2006. The Port of Singapore is the world's busiest and ranks in second place globally as a center for containerized transshipment traffic. The country also is linked by road and rail to Malaysia and Thailand.

Telecommunications and telephone facilities are state-of-the-art, providing high-quality communications with the rest of the world. Radio and television stations are all government-owned entities. The print media is dominated by a company with close ties to the government. Daily newspapers are published in English, Chinese, Malay, and Tamil.