|
Singapore INDUSTRY
Unavailable
Figure 8. Gross Domestic Product (GDP), by sector, Fiscal Year (FY) 1988
Industrialization Policy
The manufacturing sector was a mainstay of Singapore's
economic
growth despite the absence of natural resources or an
agricultural
base (see
table 7, Appendix). By the mid-1970s, the
country had
undergone a quarter-century of rapid industrial advance
based on
low-cost labor, low- to middle-level technology, and a
rapid
increase in exports. At that time, Singapore's planners
settled on
a policy emphasizing high technology, particularly
information
technology. In 1988 Singapore's 3,694 manufacturing
establishments,
employing 352,600 workers, were responsible for 29 percent
of the
GDP
(see
fig. 8). Industrial production, valued at
S$14,509.7
million, was fractionally higher than earnings from
financial and
business services, double those from commerce, and nearly
equal to
the total of commerce and transport and communications.
This
represented a 20-percent increase over 1987. The
manufacturing
sector's continuing success was largely a function of
Singapore's
ability to attract foreign investment through a favorable
business
climate and then provide investors with an educated,
trained, and
disciplined labor force.
Singapore entered nationhood with a mixed legacy. The
industrial sector was small, its productivity low.
Manufacturing in
1960 was a mere 11.4 percent of the GDP; commerce, far and
away the
largest sector, accounted for 32 percent. The industrial
policy in
1959 sought to promote industrialization as a way of
diversifying
from Singapore's traditional role as an entrepôt. Reliance
was
placed on private enterprises whose basic decisions were
determined
on the expectation of a common market with the neighboring
Federation of Malaya. A system of import quotas was
introduced for
a limited number of goods, along with controls on how many
enterprises could enter a particular field. Circumstances
altered
strategies. After separation from Malaysia in 1965, quotas
were
mainly replaced by a low level (for developing countries)
of
protective import tariffs. A traditional import
substitution
strategy was implemented.
In 1968, when the British announced their intention to
withdraw
from their Singapore bases, import substitution was
succeeded by a
strategy promoting export-oriented, labor-intensive
industrialization. At that time, the government began its
central
role in formulating and implementing the industrialization
program
through the Economic Development Board.
The new approach became official policy in 1967 with
the
government's proclamation of the Export Expansion
Incentives
(Relief from Income Tax) Act and was further enhanced by
the 1968
Employment Act. Direct foreign investment was welcomed
both to help
Singapore penetrate export markets and to bring in
advanced
technology. As early as 1970, when full employment was
attained,
there was some thought given to upgrading the industrial
structure
in order to provide more higher paying jobs. By 1979
efforts to
upgrade the overall industrial structure and to accelerate
the
trend toward skill- and technology-intensive, higher
value-added
economic activity were intensified. The government
implemented the
large, three-year wage increases recommended by the
National Wages
Council, which began the easing out of labor-intensive,
low valueadded activities in Singapore.
The machinery industry was increasingly in the
forefront of
technological innovation as a result of the Economic
Development
Board's promotion of computer-controlled production,
industrial
robots, and flexible manufacturing systems. The industry's
output
increased by 17 percent in 1987 and 20 percent in 1988.
Domestic enterprises played a lesser role in
industrialization.
The government argued that the emphasis on large industry
was a
more effective stimulus to increased productivity and
long-range
economic development. Major promotional efforts sponsored
by the
government were focused on high-productivity projects,
creating
industries that officials claimed would not otherwise have
been
established in Singapore. Although institutional
assistance for
small-scale local industry, the majority of enterprises,
was
provided through a subsidiary of the Economic Development
Board,
the effectiveness of this aid was limited until after the
mid-1980s
recession, when greater emphasis was placed on encouraging
and
upgrading small-scale local industry.
Following a decline in the textile industry in the
mid-1980s
resulting from increased international competition,
automation and
the upgrading of product lines were encouraged. What had
originally
been a textile industry and then a mass-market clothing
industry
was encouraged to target high-fashion markets. A 10
percent growth
in the fashion industry in 1987 reflected both the new
trend and a
strong market among Western trading partners.
Data as of December 1989
|
