Credit Management issue April 2021

COUNTRY FOCUS
Singapore may
be small, but it’s
perfectly placed
(Part 1 ).
Small Island
AUTHOR – Adam Bernstein
SINGAPORE is an island city
state associated with Sir
Stamford Raffles who founded
it as a trading post in 1819,
the Japanese occupation in
1942, and the virtual banning
of chewing gum. The reality, of course, is
much more than that.
With a history that stretches back
across the millennia, Singapore gained
self-governing status in 1959 and joined
the Federation of Malaysia in 1963.
However, following differences with
fellow members it was expelled in 1965
and became fully independent.
One degree of latitude off the equator,
Singapore consists of one main island,
63 smaller islands and islets and one
outlying islet. With an area of just 700
sq km, it packs a mighty punch – well
above what might be thought of it. Data
from the International Monetary Fund
estimates that as of 2020 its people enjoyed
the world’s second largest GDP (PPP) of
$95,603. In comparison Luxembourg sat
in first place with $112,875, the US in
seventh place with $63,051 and the UK
was shockingly found in 25th place with
just $44,288.
THE PEOPLE
Singaporeans are quite diverse. Of its 5.7m
population, 4.03m are residents (citizens
and permanent residents) and around
1.68m are non-residents. The state is very
densely populated, coming in second
after Monaco. Ethnically, Chinese make
up around 76 percent of the population,
Malays 15 percent and ethnic Indians
around seven percent.
But the people are aging. November
2020 data from the CIA World Factbook,
illustrates to what degree. Those aged
under 15 years make up 13 percent of the
population; 15-24 years 15 percent; 25-54
years represent 50 percent; 55-64 years is
11 percent while persons aged 65 years
and over number 11 percent of Singapore’s
inhabitants. Compare those statistics over
the years since 1970 and the age bulge is
moving from young to old.
There are four official languages –
Malay, English, Mandarin and Tamil.
Malay is the official language; English is
used for business. Education is a key part
of Government spending, comprising
around 20 percent of the national budget.
According to data from the Programme
for International Student Assessment,
as run by the OECD, Singapore does
exceedingly well; students score at the
top of all countries examined for reading,
maths and science – well above the
OECD average. As for further education,
Singapore has six ‘local’ universities of
its own but is also home to a number of
overseas and private institutions.
Indeed, success in academia is seen
as a high priority for families who have
effectively made private education a very
lucrative industry; as far back as 2008, the
Straits Times found that some 97 percent
of students went without any form of extra
tuition.
A SMALL NATION…
Singapore may be small, but it’s perfectly
placed. It’s thought that around half of
the world’s population can be reached
within six hours by air, and by definition
of its location, it’s a superb location from
which to gain a foothold into the currently
expanding ASEAN economies which
themselves are home to around 630m
people.
On top of that, Singapore is sited at
a point where shipping lanes from the
East and West meet; it’s essentially a wellconnected,
very friendly trading hub
– one of the world’s biggest. The Straits
Times, reckoned in a May 2017 report, that
Singapore ‘has the potential to become the
world's largest commodity trading hub
in the decade ahead as trade flows shift
towards Asia.’ Rising demand for metals
and agricultural products in the region
will enhance its status in the region.
The report also noted that ‘some 80
percent of the world's leading commodity
trading companies have a presence here.’
Names include commodity trading and
mining giant Glencore; energy firms BP,
Shell and PetroChina; the world's top-four
food commodity traders – Bunge, Cargill,
Louis Dreyfus and Archer Daniels Midland;
as well as home-grown companies Olam,
Wilmar, Kairos and Fortrec.
Singapore may be Southeast Asia’s
smallest country, but it’s home to more
than 7,000 multinational corporations and
150 international organisations.
The point is further made in a
September 2020 report on Worldfinance.
com which detailed its predictions
for the five countries most likely to be
the world’s next manufacturing hubs.
Singapore takes up one of the slots on the
list, along with Malaysia, Vietnam, India,
Mexico and not unsurprisingly, China.
Interestingly, the report says that in recent
times, manufacturing in Singapore has
declined to just 19 prcent of GDP, but
that ‘the trade war and the coronavirus
pandemic could change this. As a trade
hub with liberal trade and investment
policies and a history of stable economic
growth, Singapore is well-positioned to
boost its manufacturing capabilities and
Advancing the credit profession / www.cicm.com / April 2021 / PAGE 24