Republic of Singapore Singapore

Singapore is the largest port in Southeast Asia and one of the busiest in the world. It owes its growth and prosperity to its focal position at the southern extremity of the Malay Peninsula, where it dominates the Strait of Malacca, which connects the Indian Ocean to the South China Sea. Once a British colony and now a member of the Commonwealth, Singapore first joined the Federation of Malaysia on its formation in 1963 but seceded to become an independent state on August 9, 1965. Singapore has been able to emphasize its comparative advantage in knowledge-intensive activities—especially communications and information and financial services—which are less dependent on foreign investment. Higher productivity and research and development are encouraged through schemes that provide investment credits and allowances. An effective economic strategy has been to invest local funds abroad and simultaneously to export management skills. Singapore has sought to recruit skilled people, particularly Chinese from the United States and China (notably Hong Kong). Tourism has become increasingly important to Singapore’s economy. Singapore’s central location in Southeast Asia and its excellent air-transport facilities have been augmented by massive investments in ho- tels and shopping centres. Duty-free shopping and a variety of recreational attractions, along with a refurbished beachfront, are among the primary attractions. Singapore’s financial services are highly sophisticated and are available through a wide variety of institutions. There is a growing venture-capital market that offers seed funding to firms that develop or introduce new technology. The government’s Monetary Authority of Singapore performs all the functions of a central bank except issuing currency. A focal point of Singapore’s growth as an international financial centre has been the Asian Dollar Market, which is essentially an international money and capital market where currencies other than the Singapore dollar are traded. The Development Bank of Singapore is the largest local bank in terms of assets. The Stock Exchange of Singapore is an important component of the financial activity in the region. Singapore has few natural resources. There are no natural forests remaining on the island. Only a tiny fraction of the land area is classified as agricultural, and production contributes a negligible amount to the overall economy.