International Business in Singapore: PEST Analysis

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Table of Contents

Singapore: PEST Analysis
Industry and Firm Analysis
Role of the Government
Discussion: How Singapore’s Economy has grown Within the Past 10 Years
Works Cited

Many countries in the developing world have benefited the most from international trade activities. The World Trade Organization (WTO) has designed powerful laws and policies in order to support different nations. According to Rajan and Thangevelu (12), “international business has the potential to support many countries and entrepreneurs”. This practice also supports the economic activities and Gross Domestic Product (GDP) of many nations. Singapore’s economy has benefited significantly from international trade. Singapore is currently one of the largest 20 exporters in the globe. The PEST Analysis presented below can be used to determine the nature of Singapore’s international business activities within the past one decade. The major international activities include trade and foreign direct investment (FDI).

Singapore: PEST Analysis

Singapore has become a major player in different international trade activities. This country is also among the leading Asian Tigers. The “government has created one of the freest economies in the continent” (Yulek 25). This development has made the country more competitive, innovative, functional, and profitable. The level of corruption in Singapore is also small thus making it a leading business destination (Yulek 26). The country’s strategic location supports its entrepôt trade activities. The PEST Analysis presented below will be used to establish whether Singapore has benefited significantly from international trade.

Political Environment

The country uses centralized policies to monitor different business functions.
The government of Singapore is very stable.
Singapore is one of the less corrupt nations in the world.
The government has instituted severe laws to monitor different trade activities.
The country uses free housing policies.
Singapore has established a proper taxation system.
The country has several political parties that dictate different polices and laws (Wong and Goh 12).

Economic Environment

The country’s economic freedom is on the rise.
The country depends on internal debt. This situation affects its economic development pattern.
The rate of unemployment in Singapore is at 2.2 percent.
The inflation rate is around 2.8 percent.
The government uses appropriate monetary and fiscal policies in order to attract more foreign investors.
The country’s taxation rate stands at 17 percent.
The country boasts of many factors of production.

Socio-Cultural Environment

The country has an even distribution of wealth.
Singapore’s literacy level stands at 96 percent. This situation explains why many citizens are able to engage in different international trade practices.
Singapore has a population of around 5.5 million people.
The “country’s population is diverse with many Chinese, Malays, and Indians” (Yulek 17).
Christianity is common thus attracting many investors from the west.
The country’s population comprises of individuals between 16 and 60 years of age. This age bracket supports different economic activities.
The country has specific norms and cultural practices.
Singapore’s strategic location makes it one of the favorite tourist destinations.

Technological Environment

The nation overcomes most of its technological problems by hiring many individuals from the developed world.
Singapore has invested heavily in modern technologies.
The internet is available in Singapore. This situation has attracted many investors.
Singapore supports its industries using different technologies.

Industry and Firm Analysis

Main Economic Activities

In the 1950s, the economy of Singapore was supported by its strategic location. The country “served as an entrepôt for different nations such as Malacca and Straits” (Wong and Goh 6). However, the nation has engaged in other economic activities such as tin melting and shipbuilding. The country has also been producing different minerals such as rubber. In the recent past, Singapore has promoted new economic activities. New industrial estates and financial services have also emerged in the recent past. The country also “manufactures different electronics and chemicals” (Wong and Goh 7). Such products “account for over 60 percent of Singapore’s manufacturing output” (Yulek 38). For instance, Singapore is a leading producer of pharmaceuticals and medical equipment. Some of the major industries include “Biomedical Sciences, Engineering, Electronics, and Chemicals” (Yulek 38). The country’s banking, information technology (IT), and service industries also support the economy.

Main Export Industries

The above industries continue to support Singapore’s international trade. To begin with, Singapore’s value of exports is over 380 billion dollars. This fact shows clearly that the country has been highly-involved in international trade (Wong and Goh 6). The major industries produce pharmaceuticals products and machines. The country has a wide range of manufacturers that export numerous consumer goods. Singapore also produces different products that are exported to countries such as India, Russia, Germany, the United States, Hong Kong, Indonesia, Japan, and Malaysia (King 74). The electronics industry produces different exports such as home appliances. The nation also exports different organic chemicals and plastics.

Identifying the Main Companies involved in generating Export Turnover

Several companies contribute a lot to the country’s exports. Hi-Beau International and I Nouvi Professional export various cosmetic products. Some of the leading companies in the engineering industry include Ezra Holdings, SIA Engineering Company, EMAS, Beca Group, ST Engineering, and Horizon Fuel Cell Technologies. Different firms in the Electronics Industry also support the country’s export turnover. Some of these companies include Creative Technology, Jurong Technologies Industrial (JTI), and AXIOO International. These companies “produce consumer products, electronics, cosmetics, and medical equipment” (King 102). Singapore also exports different aerospace equipment. The major companies in this industry include STI Aerospace and Rolls-Royce Holdings. The above companies have made it easier for the country to attract more business partners.

Role of the Government

The economy of Singapore has encountered numerous challenges. After independence, the nation encountered numerous obstacles such as poverty, poor infrastructure, and unemployment. The government uses different initiatives in order to support Singapore’s economy. For example, the government established the Economic Development Board (EDB) in order to support the country’s economy. The board also attracted many investors. This approach made the country an attractive destination (Yulek 83). The government has also identified a powerful economic strategy.

The government uses the Monetary Authority of Singapore (MAS) to monitor the nation’s economy. The government uses different statues in order to monitor the country’s financial sector. The MAS controls “functions such as insurance, banking, securities, and investment” (Wong and Goh 12). This approach has made it easier for the country to attract more investors. Towards the end of the 20^th century, the government instituted new policies such as the Central Provident Fund.

The government of Singapore has formed the International Marketing Activities Programme (IMAP) in order to promote international trade. This programme encourages many companies to access different markets around the globe. The IMAP has encouraged many investors to engage in different trade fairs and international business activities. The Singaporean government uses effective taxation policies in order to promote different markets. The country has worked hard in order to construct new roads and ports. These infrastructures are also supported by different technologies. The government gives grants to different companies and entrepreneurs in order to achieve the best goals. Singapore has also “signed numerous trade pacts with many nations and global companies” (Rajan and Thangevelu 85).

Discussion: How Singapore’s Economy has grown Within the Past 10 Years

Singapore encountered a major crisis in 1999. This economic crisis affected the wider Asian region. However, the economy expanded within the next few years due to increased international trade activities. During the same period, the country’s trade stood at 373 billion USD. The nation has been attracting new trade partners. The country has also been importing different products from Japan and Malaysia (King 48). Singapore has also established new bilateral trade relations with countries such as Japan and Malaysia. More manufacturing companies are also on the rise.

Singapore has established effective trade agreements with different nations. The country’s GDP has been increasing steadily within the last one year. Many economists believe that Singapore’s GDP growth will increase in the coming years. Singapore also boasts of one of the freest economies. This fact explains why “the nation has friendly taxation systems and absence of trade barriers” (King 64). The country attracts many workers from different countries in order to become a leading exporter. Singapore has “a very high GDP to trade ratio” (Yulek 69). The “ratio stands at 407.9 percent” (Yulek 72). This situation shows clearly that Singapore has benefited a lot from international trade. Singapore is one of the leading recipients of FDI in the globe. The county’s FDI is over 60 billion USD. The country uses proactive policies and trade openness to attract more foreign investors. In conclusion, Singapore’s economy has been growing steadily due to its involvement in international trade activities.

Works Cited

King, Rodney. The Singapore Miracle, Myth and Reality. Singapore: Insight Press, 2008. Print.

Rajan, Ramkishen, and Shandre Thangevelu. Singapore: Trade, Investment and Economic Performance: Trade, Investment, and Economic Performance. New York: Word Scientific Press, 2008. Print.

Wong, Koi and Soo Goh. “Outward FDI, Merchandise and Services Trade: Evidence from Singapore.” MPRA 1.1 (2011): 1-16. Print.

Yulek, Murat. Economic Planning and Industrial Policy in the Globalizing Economy. New York: Springer, 2014. Print.

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