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2. Summary and main problems

In 1965, Singapore was driven out of Malaysia to become an independent city-state owing to deep political and economic dissension between the ruling parties in Singapore and Malaysia, which created community tensions leading to riots. Since then, Singapore has become a major economic hub in Southeast Asia.

When it was a British colony, Singapore developed as a key trading area, thanks to the opening of the Chinese market and raw materials from Malaysia. At that time, the colony attracted many immigrants, which reflects the composition of Singapore today (74% Chinese, 13% Malay, 9% Indian, and 3% Chinese). The government has fostered economic development by maintaining peace and harmony among the multi-ethnic population, and by focusing on the needs for competitiveness in the global marketplace.

It has evolved from a production-based economy to a knowledge-based one, creating its own technology. Government policies have encouraged foreign direct investment and government-led corporations (GLCs) in the development of key infrastructure. Singapore's economy has grown through research and development, with a focus on information technology, microelectronics, electronic systems, manufacturing technology, materials technology, energy, water, environment and resources, food and agribusiness technology, biotechnology, and medical science.

However, Singapore is facing difficulties and disadvantages such as the risk of becoming a state dependent on foreign investment, an overly strict government that could lead to potential revolts ("nanny state"), becoming a state with an overly aged population, and a reduction of the labor force (low fertility rate [1.16%] and aging population) but also its lack of natural resources and therefore its dependence on imported energy, and finally the relationship with its neighboring countries.

2. Contributing factors

Advantages:

1.Geographical location

Due to its natural harbor and strategic location between the southernmost tip of continental Asia and the top of the Malay Peninsula, one of the two gateways between the Indian Ocean and China Sea, Singapore was a logical location for a port city.

2.Policy support

1. Economic Growth Policy

• Investment in government-owned corporations, promoting foreign direct investment (FDI), free trade, a pro-business environment , a tight monetary policy, and high individual savings.

2. Monetary Policy:

• Exchange rate-centered policy,using a basket-band-crawl approach.control inflation

3. Savings:

• The Central Provident Fund (CPF) acted as the primary vehicle for Singapore's social security system. Self reliance was a key principle of the CPF system, and the program operated on a fully funded basis. Through the CPF, the government collected and invested workers ' savings to be paid back with interest upon retirement.

4. Transitioning to a Knowledge-Based Economy

• The government strengthened regional partnerships to overcome market constraints and thus created the Singapore Johor-Riau Growth Triangle to capitalize on the economic links between Singapore, Indonesia, and Malaysia.
• Encourage innovation and entrepreneurship through the economy.

5. Labor

• Singapore's openness to foreign labor has enabled it to attract, retain and absorb the best of foreign talent, providing it with a clear competitive advantage over its neighbors.
• Training (CET) program in order to supply Singaporeans with the skills needed for

employment in new growth industries.

3. A stable international environment

1. Trade:

• Remove of tariffs
• Free trade agreements(FTAs) with main trade partners.

4.Social factors

1. Social environment and welfare

• Since the 1959 elections, the PAP has developed an efficient system of government control over the economy and welfare of its citizens.

Disadvantages:

1. small national territory area and limited natural resources

1. Land: As Singapores population continued to grow, the government had to carefully consider how to use the islands limited resources. The ESC recommended accelerating the shift toward more land-efficient activities through continued master planning of industrial parks. The government also explored the possibility of using subterranean spaces to expand the nations footprint.
2. Energy: As a small city-state, Singapore was disadvantaged by its lack of its own natural resources, and remained dependent on energy imports. Moreover, Singapore was expected to experience growth in competition over energy within Asia during the coming years. ASEAN as a whole was a net importer of energy, and Southeast Asias energy demand was forecast to grow 80% over the next 25 years. 99 As a result, energy security was a growing concern. More than 80% of Singapores electricity was generated from natural gas, piped in from Indonesia and Malaysia via four separate pipelines. In 2006, the government introduced its plan to build the countrys first liquefied natural gas (LNG) terminal on Jurong Island to reduce reliance on piped imports. In May 2013, the LNG terminal was completed, initially capable of processing 3.5 million tons per year. This capacity was expected to increase eventually to 6 million tons per year. 100 The new terminal also opened up opportunities for LNG-related businesses, including increased trade and bunkering, that is, the provision of fuel to ships. Singapore was already the largest bunkering port in the world, though the transition to green energy under the looming threat of climate change was a larger challenge.

2. scarcity of labor

1. Dependent on large inflows of foreign workers to meet labor demands, the government had to rethink the use of labor force growth as a driver of the economy. Singapore attracted highly skilled international workers to complement its small domestic population in developing high-value manufacturing and services industries.
2. Foreign workers had come to represent nearly a third of the workforce, one of the highest ratios in the world. The influx of foreigners was causing friction among Singaporeans, who blamed these non-residents for taxing the public transportation system and exacerbating the countrys space limitations. The growth in foreign workers was also expanding wage distribution.

3. the negative impact of COVID-19 pandemic

1. consumption contracted sharply in 2020, and unemployment rose

RECOMMENDATIONS

Optimize the pro-natalist policies

As mentioned before, one of the problems that Singapore faces right now is the shortage of the labor force, especially local labor, due to the low percentage of fertility rate. To encourage local people to give birth, the country needs to boost the promotion of its existing pro-fertility policies and revise some components of it. According to the United Nation, Singapore has three main policies to foster the birth rate which are financial incentives, support for parents to combine work and family, and pro-marriage policies. The government needs to continuously socialize those programs to every group. Also, it is critical to create an atmosphere that the country is a right and safe place to have children and ensure that having children is not a significant life problem. Some ways to support those things are to increase financial incentives and provide childcare programs. Moreover, the government needs to ensure that every workplace supports the work-life balance in having kids.

Long-term plan for local enterprises

Encouraging foreign direct investment by creating a pro-business environment for MNCs is a good thing to support Singapore's economy which has challenges such as limited national territory and natural resources. However, the government also needs to start to focus on its local enterprises. They have to encourage them to develop and expand their businesses. Thus, in the future, they have an opportunity to reach the global market. Align with this objective, the government should create a long-term project to provide local companies with a supportive business environment. The plan includes financial assistance, a networking program, and an easy and safe process to run the business. In addition, they have to participate in enhancing the human capital as well through education and training programs. Therefore, the firms can be ready to compete globally.