Singapore Mncs Essay

Pages: 12 (3294 words)  ·  Bibliography Sources: 1  ·  File: .docx  ·  Level: College Senior  ·  Topic: History - Asian

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Instead, its importance is founded on its geographical location, the importance of its ports and the relationships which it has established making it a functional bridge between the economic powers of the East and West. According to LowTax (2009), "Singapore's main industries include electronics; financial services; chemicals; oil-drilling equipment and petroleum refining; ship repair; rubber processing and products; offshore platform construction; life sciences; and entrepot trade." (LowTax, p. 1)

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First and foremost among these industries and the sector which attracts the greatest saturation of foreign interest is Singapore's financial industry. Here, Singapore has established itself as one of the preeminent destinations for participation in global stock exchange, trading and investment banking activities. According to Ogg (2011), even today in the midst of a global recession that has deprived nations such as Japan, the United States and Spain of their previously solid AAA credit rating, Singapore remains one of the few nations in the world and the only nation in Asia to boast a continually robust rating. Indeed, Ogg evaluates this rating as being a function of Singapore's extremely disciplined fiscal policy, which has not financed any government deficits through borrowing in more than 20 years. (Ogg, p. 1). As a result of this degree of governmental responsibility, Ogg indicates, "Singapore is the sole Southeast Asian nation with a solid triple -- A rating. Despite a reliance on foreign trade exports, investors consider Singapore the safest place today for Asia. Its population is tiny at 4.74 million and its revised GDP is $291.9 billion." (Ogg, p. 1)

Essay on Singapore Mncs Singapore as a Assignment

Certainly, the appeal of the financial industry in Singapore has for roughly a generation now been fueled by its centrality in a thriving Asian market. As one of the four so-called Asian Tigers, along with Taiwan, Hong Kong and South Korea, its coordination with the capitalist ambitions, legal parameters and political environments of the west would make it a prolific place to conduct financial sector services. Today, in a significantly downgraded global market, Singapore's global importance to the financial sector is perhaps even greater because it represents a mode of comparable stability that cannot be found in many of its historically imposing partners such as Great Britain, France or the United States.

Growth in this industry has fueled massive leaps forward in a host other areas. Particularly, as growth in Asian markets demonstrated an increasingly inextricable link between technological innovation and financial excellence, Singapore began its aggressive courtship of technology sector MNCs. According to Yin, Singapore's markets and emphases in the education of their skilled labor-force would make the nation a highly appealing point of destination for international technology firms. According to Yin, this initiated a period which would lead to present day in which the production and engineering industries would lead to a technology boom for Singapore. Yin indicates that "saw the movement to high value added industries in the electronics (like wafer fabrication industry), computing-related industries and chemical industry and the 1990s to life sciences industry. This essentially saw strong investments from world-class MNCs like Apple Computer, Seagate Technology, IBM, Hitachi, Glaxo, Petrochemical Corporation of Singapore (jointly with Japan), Du Pont and Hoechst Celanese." (Yin, p. 1)

The convergence of its geographical location, its highly developed infrastructure and its always rising importance in the global technology sector would help to make the importing and exporting businesses defining businesses for Singapore's economy. According to LowTax, even with the emergence of so many other areas of importance, exports remain the single most important part of its economic identity. It is a purveyor of manufactured goods, technology products and machinery that are shipped to industrialized economies throughout the world. LowTax identifies its top trade partners as Australia, China, Hong Kong Indonesia, Japan, Malaysia, Saudi Arabia, South Korea and the U.S. And because Singapore exports more than it imports, its economy and the firms operating there within enjoy a substantial profitability there from. According to LowTax, "in 2009, it was estimated that exports amounted to USD245bn," whereas its imports "amounted to an estimated USD210bn." (LowTax, p. 1)

Thus, we can see that manufacturing and the exporting of this production output would play a general role in the economic development of Singapore and remains an important attraction to MNCs. But a changing set of demographic conditions for Singapore has also lead to a transformation in the type of companies that are attracted to its markets. Certainly, the role of foreign interest and consumption of its manufactured goods remains a defining point of the Singaporean economy. However, in addition to these well-instituted industries, the appeal of Singapore as a destination in the era of free-trade is helping to produce meaningful growth in emergent domestic consumer sectors as well. According to CFOIS (2010), "the Straits Times reports that banking and financial services, health care and life sciences, and manufacturing and industrial, are the sectors that are more keen to recruit." (CFOIS, p. 1) These reflect a pattern of growth in Singapore, which has continued to perform above many of the flagging economies in Europe and North America. Particularly, this demonstrates the swelling importance of a service economy in Singapore, a fact most notably instigated by the ever-rising standard of living, the progressive nature of its educational system and the permeation of wealth through its general population. These have created a circumstance in which the domestic service industry is itself now a highly lucrative area of commerce.

Quite in fact, the growing importance of the service sector suggests that Singapore's economy is now enjoying the kind of sustained growth that is transforming the lives of its citizens. According to MinMin (2011), the expansion of the service sector represents a concerted effort on the part of Singapore to improve economic stability through diversification. The implications of the global recession to its financial markets, while tempered relative to these implications for other industrialized nations, helped to reveal the need for this type of diversification as insulation against rippling global monetary crisis. This imperative would be exemplified in its rising commitment to healthcare industry services, tourism hospitality and casino gambling. Such priorities would help to forge a newly dominant growth industry in Singapore. So reports the article by MinMin, which indicates that the service sector "accounted for 68 per cent of the region's gross domestic product in 2007, up from 65 per cent in 1995. Services also accounted for 61 per cent of total employment in Asia-Pacific Economic Cooperation economies in 2007, according to the latest available figures." (MinMin, p. 1)

This is an area of particular interest for multinational firms viewing Singapore as an attractive operational definition. As will be addressed in the section entitled "Recommended Strategies," this may denote the most promising area for a business opportunity in a national climate that is itself highly promising.

Risks and Obstacles:

While Singapore is indeed a highly promising destination for the expanding Multinational Corporation, it is not entirely without its risks and obstacles. Though the government has worked hard to create a fair and stable business environment free from operational barriers, Singapore is highly entangled in the global economy. As a result, it has not been totally insulated from the conditions created by the global recession. Ogg reports that Singapore would indeed experience a retraction in its previously robust growth in 2008 and 2009. This demonstrates the interdependence of its economy with a tumbling global economy. That said, we consider the implications of the rising service sector as a demonstration that Singapore is finding ways to rebound from the global recession that distinguish it from many other nations. As reported by LowTax, "like most financial centres, Singapore was hit badly by the recent recession, and growth tumbled from around 7.8% of GDP in 2007 to 1.1% in 2008 and -2.6% in 2009. However, there was a strong rebound in 2010, when the economy grew at 14.5%, according to the Monetary Authority of Singapore (MAS)." (LowTax, p. 1)

This denotes that Singapore does carry some of the implicit risks of being a global standard-bearer, but that it has also in this role demonstrated an unparalleled resiliency. LowTax reports that even still, tempered growth again in 2011 demonstrates its connectivity to the world economy as a potential business barrier. Here, LowTax tells that spikes in global oil prices and natural disasters such as the devastating earthquake and nuclear disaster in chief trade partner, Japan, would have a determinedly negative effect on Singapore's economy.

National Innovations:

The barriers cited above, while warranting consideration, are not too foreboding relative to the opportunities afoot for the investing MNC. This is because Singapore offers what might be described as an inherently innovative context for the conducting of business. Such is to say that the most appealing innovation on display in the Singapore economy is its reputed freedom from corruption. The emphasis on transparent business practices, freedom from undue government intervention and compliance to ethical… [END OF PREVIEW] . . . READ MORE

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