Secondly, in term of political along with law and regulation, Singapore has an effectiveness of government so far. As a result of high quality governments, good policy, law and regulation have been initiated making its economic escalation. Based on the book by Lall (2004), Singapore government is the only one nation in the region offering all supporting MNCs in the boom in offshore manufacture by multinational companies in the electronics industry during 1970 and 1980. The rapidity and flexibility of government to supply infrastructure such as transport and communication built a big opportunity and also gave Singapore the competitiveness rather than other host countries. Moreover, nowadays the government, considered as the one of the least corruption and transparency in the world (Transparency International, 2008), has always regulated regulation and policy to appropriate with global economic situations. For example, concerning to economic crisis currently, corporate tax rates are reduced from 18% to 17% since the beginning of this year to challenge in particular Hong Kong (David, 2009) and employers’ Central Provident Fund contribution rates are lower (Singapore Government, 2009). Decline of tariff and non-tariff barriers together with a number of Free Trade Agreements (FTAs) signed with powerful economic countries, for instance US, New Zealand, Japan and members of the European Free Trade Association, are also considered as the major factors to attract FDI. In addition, with the aim of welcome FDI, Singapore’s investment laws are effortless for foreign investors to start business. It takes approximately eight days in average for starting a business and the process of getting permits and licenses is transparent. Thus, Singapore is one of the fastest and easiest places to run business (Unger, 2004). Another considerable regulation is intellectual property protection. The nation has a robust regulation to defend proprietary innovation and knowledge (Singapore Government, 2009). Thus, the vigorous as well as transparency of its rule and regulation, the clarity of government policies, the lack of corruption, competitive tax rates and lower of tariff and non-tariff barriers are the key strengths in government sector.
Lastly, Singapore’s infrastructures, comprising transportation, telecommunication as well as financial infrastructure, are competence and sufficiency for FDI. According to advantage of geographical location, Singapore has provided the greatest transportation especially seaport and air cargo. The achievement of strategic Singapore port as a transshipment hub makes that country more competitive in which performs entrepôt activities. Entrepôt trade, by import products in particular oil then refining for re-exports, is noteworthy strategy to increase economic growth. Though its import volumes increase, Singapore still gained trade balance surplus so far because most of goods are imported for re-exporting purpose. Singapore’s container ports can link to more than 600 ports in 123 states (Singapore Government, 2009). Furthermore, the continuous upgrading in Changi international airport since 1996 (Country Profile, 2003) leads Singapore air cargo to connect over 180 cities in the world at this time. Singapore airport also gives several best choices such as 24-hour opened of Changi Airfright Center, one-stop hub for the storehouse and no need for custom duties and documentation in case of repackaging of products. Regarding to other transportations, the country offers convenient transportations including a complex bus network, a number of taxi and the high-efficient Mass Rapid Transport (MRT) railway system (Singapore Government, 2009). Singapore has ready world-class networks as a good telecommunication hub to make business operation smooth by providing disaster recovery, international data storage service and data/server centre consolidation. In relation with infrastructure in service segment such as financial infrastructure, Singapore is the location of numerous local and foreign financial institutions and international asset management companies to supply market in the Asia Pacific region. Additionally, Singapore has a huge foreign exchange trading center (Unger, 2004).
As discuss above, Singapore has several core competencies that make Singapore enable to compete in globalized. On the other hand, there are some weak points that Singapore need to more concern according to high potential rivals. China, the largest economy in developing countries, is a powerful enemy in term of workforce for every country in the world because of its low rate of labor cost. Although millions of human resources in China are menial laborers now, China has attempted to train and educate its labor force into high skill labor in the closed future. In the book by Oded (2008), China plans to use low labor-intensive and mid-technology industries as a fund to develop knowledge-intensive realms which will drive world economy in the future. At the moment, China has a large and rising number of specialists, such as engineers, scientists and skilled technicians (Brandt and Rawskialso, 2008). For that reason, Singapore with a high labor rate needs to prepare the best strategic plan to compete with China which is the enormous pool of cheap labor cost in the next few years. Besides, in a study by Lee et al (2006), Singapore would have a major impact from neighboring ports when they upgrade their services and costs. Singapore has several port competitors such as Malaysia port, Busan port of Korea, and in particular Hong Kong (China) port which is the key Singapore’s contender. As a result, the development of many countries in competitiveness is a big challenge for Singapore to find out further how to sustain its competitiveness.
In conclusion, as I said above, Singapore is very interesting country because they know how to obtain maximum benefits from limited physical resources they have. The small country has only a few labors but value has been add to its populations by education and training as high-skilled workforces and high quality human resources. The limited physical resources cannot limit their economic growing because they can import products from other realms, transform and re-export as entrepôt trade. Entrepôt activity has played a significant role to generate trade balance surplus to that country. Singapore also knows how to exploit from the geographical competitive advantage by using differentiate strategic port of transshipment. Moreover, Singapore realized that FDI is the key factor to increase economic growth so Singapore government offers several effective policies and regulations to more attract foreign companies such as low tax rate and minimum tariff and non-tariff barriers. The high quality government also provides a lot of infrastructures for example road, airport and sea cargo, telecommunication as well as financial infrastructures. Nevertheless, Singapore should keep improving to compete in globalized and sustain its economic growth.
References
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