The socio-economic impacts of globalization on Singapore
1a. Why is Singapore attractive as a location for new factories owned by foreign companies
This is because firstly Singapore have exceptional infrastructure in communication and transportation. Singapore has the world’s busiest port with efficient cargo and container handling and the airport Changi International Airport has the most air-links in the Asia-Pacific region.
Singapore has a strategic location together with its state-of-the-art communication facilities. This thus enables MNCs to conduct their business transaction from Singapore to any county in the world with great efficiency.
Singapore is also close to the expanding Asia-Pacific markets, for example Malaysia, thus this would attract MNCs to Singapore to set up their headquarters here before venturing into this new markets.
Also Singapore has many industrial facilities and specialised parks. They have also served to attract MNCs to Singapore. For instance, the international Business Park and Changi Business Park have pre-constructed facilities for companies to conduct administrative and manufacturing activities at the same location.
Also Singapore has a highly skilled and disciplined labour force. This is an added bonus and attraction to MNCs as with the increasing number of MNCs dealing in technology-based manufacturing, Singapore has increased its pool of Information Technology professionals.
Furthermore, Singapore has political stability. The Singapore government have established a high level of stability within the county. The government have also ensured and maintained a strike-free labour movement. It has also established and maintained good relationships in other governments in the region,
The Singapore government have also allowed investors to have 100% ownership of their companies. They are permitted to remit their profits to their headquarter freely. There is also no restriction on the nationality of qualified employees. In fact, the government is trying to foreign talent to work, live and even settle in Singapore to supply the personnel required by the high technology, value-added companies.
The Singapore government also actively encourage MNCs to locate their regional headquarters in Singapore by providing tax concessions. This provides MNCs with assistance in setting up their business. Singapore also is working towards becoming not only a regional business hub but also an International Business Hub. This vision would thus also attract more MNCs which foresight Singapore to have such a potential.
1b. What advantages do these MNCs and industrial developments bring to Singapore?
Firstly they bring in capital for further developing the industries in Singapore, thus our industries would be able to develop at a faster rate.
They also create jobs ranging from production line work to managerial posts.
They also introduce new technology, which local companies can benefit from. The new and advanced technology is vital to our country’s economic survival in this highly competitive market.
MNCs are also important in promoting export competitiveness in the country. This positive competitiveness will result in ecomony development because each company will strive to out beat their counterparts and thus profits comes in and the Singapore’s economy improves in the process.
Also they help local supporting industries to expand when they buy parts and components from them. They also create opportunities for local companies to go into joint ventures with them the production of good and provision of services.
Their presence can also increase confidence in our country as being an investment centre and pave the way on to becoming regional business hub or even an International Business Hub.
The country will also earn revenue though cooperate tax and personal income tax this will thus increase our country’s capital.
The sale of the manufactured goods overseas is a source of foreign exchange
2a. What factors have encourage the rapid industrialization of Singapore in recent times?
The government aims towards an innovation and knowledge economy by developing a world-class workforce with capabilities in business, technology, innovation, production and services, and international market development have encouraged rapid industrialization in the sense that there is a larger labour pool for company to choose from. Continuous improvement in improving existing products and developing new ones through Research and Development in areas such as electronics, computer hardware and software, and chemical. The Singapore government have promote R&D and high-technology industries, a good example would be JTC developing the Singapore Science park situated next to the National University of Singapore.
The government have also given tax incentives to manufacturing firms involved in R&D. They also provide funds to local companies to encourage to carrying out R&D. This thus has encouraged the rapid industrialization of Singapore because new and improved products have been researched on and introduced. Also, given our limited resources, the government R&D efforts have been focused on those areas that Singapore has already built up reasonable world standing and which are of eventual relevance to industry. The government have enhances links to other global technological centres.
And thus generate rapid industrialization. Also the government have recognized the importance of building up capabilities of local enterprises to be more resilient in the face keener competition. Economic links to global markets remain crucial for Singapore’s long-term growth and development, especially as a source of growth complementary to the domestic economy. Thus, the Singapore government have boost efforts to develop a strong and resilient external wing to overcome our resource constraints, and to take advantage of the opportunities in the region and further afield. This has thus resulted in industrial development. Furthermore, embarking on ecomnomic co-operation with neighbouring countries in East and South-east Asia would thus complement our strengths with those of the other countries to promote industrial development in the region.
Singapore would provide the infrasturture and expertise while the other countries provide land and labour. Examples of these projects are like the Wuxi-Singapore Industrial Park and Batamindo Industrial Park. These projects not only develops the regions but Singapore benefits as well as it overcomes the constraints of limited land and labour as well as capitalise on the rapid economic development and industrialisation experienced in the Asia-Pacicific region.
This thus results in the rapid industrialization because Singapore is able to develop and at the same time overcome its constraints and increase economic growth. The focus on high-technology manufacturing for example wafer fabrication, biomedical field and the petrochemical industry have caused rapid industrialization as these industries are developing at a very stably rate and have a even brighter future ahead Singapore is one of the top wafer-fabrication manufacturers in the world and it also contribute to about half of the nations GDP
2b. Describe the possible problems for Singapore of encouraging a great deal of foreign investment as show in the figure?
Firstly there will be large unemployment when the MNCs relocate their factories and headquarters to other countries. This is a very high possibility as since Singapore is now an industrialize country, the standard of living of the people have improved and people now demand high pays. This might cause MNCs to relocated to neighbouring developing countries where labour cost is lower. Singapore is also highly depend on MNCs to produce high-value products for example the wafer fabrication industries, if these MNCs relocate to other countries where they find more cost effective, the Singapore economy might suffer a huge blow as we might not be able to support our industries and have the technology provided by the MNCs to produce these high-value products which amounts to a reasonable percentage in the country’s revenue.
Also local firms may wind up their business when they cannot compete with the MNCs for the local market. This is because these MNCs would have a much bigger capital and thus would be able to invest more into R&D their production cost would also be allow and thus sales cost would be lower than the local firms. Furthermore if there is an economic recession in a particular county, which invest heavy in Singapore, the Singapore industry and economy will suffer a great loss as well since they are inter-related. A good example would be the current pending war on Iraq, which have caused much uncertainty in the US market.
Thus the US economy have declined steady, this thus have caused Singapore to follow suit as US as seen in the figure invest about 24% in Singapore Industries. The more Singapore industries is dependant on foreign investments, the higher a risk is has to be adversely effected when any particular economy suffer from a economic blow. The Singapore economy would thus not be very stable is reliant on the global economic situation. It would therefore not be economically independent and a global economic blow turn would throw it into a great economic ression.