Singapore WT/TPR/S/267 
 Page 1 
 
 
  I. ECONOMIC ENVIRONMENT 
(1) MAJOR FEATURES OF THE ECONOMY  
1. Singapore's economy remains one of the most open and competitive in the world, and its 
institutions continue to be assessed as the best in terms of lack of corruption and government 
efficiency.1  Singapore is also considered the easiest economy in which to do business.2  GDP per 
capita is estimated at around US$50,000 in 2011.  Singapore ranks 26th (out of 187 countries) on the 
UNDP's Human Development Index.3 
2. Services constitute the most important sector in  terms of contribution to nominal value-added 
(VA) (over two thirds) and total employment (a bout 70%).  Manufacturing accounts for 21% of VA, 
around 16% of employment, and almost 70% of the to tal value of merchandise  exports (section (3)(i) 
below).  Construction and utilities contribute 4% and 1.5%, respectively, to Singapore's VA while the 
share of agriculture, fishing and quarrying is negligible (Table I.1). 
3. Singapore continues to have a managed float ex change rate regime with the value of the 
Singapore dollar (S$) set by the market.4  The Monetary Authority of Singapore (MAS) monitors its 
value against an undisclosed trade- weighted basket of currencies.  The composition of this basket is 
reviewed periodically to take into account changes in  Singapore's trade patterns.  The exchange rate is 
maintained within an undisclosed target band.5  The U.S. dollar is the intervention currency.  
According to the IMF, Singapore's exchange rate re gime continues to serve the economy well and the 
MAS' policy framework has been an important s ource of stability in times of economic turbulence.6  
The exchange rate system is free of restrictions on payments and transfers for current international 
transactions. 
(2) RECENT ECONOMIC PERFORMANCE  
4. At the time of its fifth TPR, Singapore's economic  performance had been strong, with average 
GDP growth of 8.5% per year during 2004-07, low inflation (1.3% annual average), declining unemployment, and strong external indicators.  Nonetheless, income inequa lity had widened and its 
competitiveness had been tested by the ri se of low-cost economies in the region.
7 
5. Since then, Singapore's economy has suffered the effects of the 2008 global downturn, and 
activity started to shrink in the second quarter of that year.  At its low mark in the second quarter of 2009, GDP was 9% lower than pre-crisis, the biggest output decline in 20 years.
8  H o w e v e r ,  t h e  
economy's flexibility enabled it to adjust rapidly through, inter alia , a countercyclical large fiscal 
                                                      
1 In the Global Competitiveness Index, Singapore ranks 2nd out of 142 countries and economies (World 
Economic Forum, 2011a).  According to the Institute for Management Development (IMD), Singapore is third 
in the overall competitiveness ranking, 7th in the world and 1st in Asia in terms of less corruption (IMD, 2011). 
2 The World Bank's Ease of Doing Business Index is based on ten topics (Singapore's ranking in 
parentheses):  starting a business (4);  dealing with constr uction permits (3);  getting electricity (5);  registering 
property (14);  getting credit (8);  protecting investors (2);   paying taxes (4);  trading across borders (1);  
enforcing contracts (12);  and resolving insolvency (2).  World Bank Group online information.  Viewed at:  
http://www.doingbusiness.org/data/explore economies/singapore/. 
3 UNDP (2010). 
4 Singapore's exchange rate is classifi ed as "other managed" (IMF, 2010).  
5 The policy band itself is adjustable and allowed to  "crawl" to prevent misalignment in the currency.  
6 IMF (2010). 
7 WTO (2008). 
8 IMF (2010). WT/TPR/S/267 Trade Policy Review 
Page 2 
  
  stimulus and monetary easing, while strong economic  fundamentals, openness to international trade/ 
foreign investment, and labour market flexibility provided important buffers.9  As a result, the 
recovery was as swift as the contraction.10   
6. Real GDP grew at an annual average rate of 5.9% in 2007-11, with a record 14.8% in 2010 
after contracting by 1% in 2009 (Table I.1).  Growth was broad-based across private and public 
consumption and investment, while stronger than  anticipated external demand propelled exports 
particularly of manufactured goods (section (3)(i) be low)).  Singapore also experienced a surge in 
transport and wholesale trade activities, reflecting its role as a regional trading and logistics hub.  Labour markets too proved more resilient this  time around than in previous recessions:  the 
unemployment rate increased from 2.1% in 2007 to 3%  in 2009 but has since declined to 2% in 2011. 
Table I.1 
Selected macroeconom ic indicators, 2007-11  
  2007 2008 2009 2010 2011a 
Miscellaneous  
Real GDP (% change) 8.9 1.7 -1.0 14.8 4.9 
Inflation (CPI average;  % change) 2.1 6.6 0.6 2.8 5.2 
Unemployment rate (average;  %) 2.1 2.2 3.0 2.2 2.0 
National accountsb (% change)      
Private consumption 6.8 3.3 0.1 6.5 4.1 
Public consumption 2.6 6.4 3.6 11.0 0.9 
Gross fixed capital formation 17.4 13.0 -2.9 7.0 3.3 
Exports of goods and services 9.0 4.7 -7.8 19.1 2.6 
Less: Imports of goods and services 8.1 9.5 -11.1 16.2 2.4 
Share of nominal value-addedb      
Manufacturing 24.2 20.6 21.1 22.1 20.9 
Construction 3.1 4.4 5.3 4.3 4.2 
Utilities 1.5 1.5 1.5 1.5 1.5 
Services 67.8 69.2 67.8 68.1 69.0 
Money and credit  
Money supply (M1;  % change) 22.4 18.4 23.5 20.3 14.8 
Lending to non-banking sector (%change) 19.9 16.6 3.4 14.7 30.3 
3-month interbank rate (%)  2.4 1.0 0.7 0.4 0.4 
Public financesc (% of GDP)      
Operating revenue 14.8 15.6 14.2 14.8 15.1 
Total expenditure 12.1 14.5 15.1 14.5 14.2 
Special transfers 0.8 2.7 2.0 2.3 2.6 
Overall balance 2.8 0.1 -0.3 -0.3 0.7 
External sector      
Real exchange rate (end of period, 2005 = 100) 104.5 109.0 107.3 114.4 117.0 
Singapore dollar per US dollar (avera ge) 1.51 1.41 1.45 1.36 1.26 
Current account (% of GDP) 25.8 13.9 16.2 24.4 21.9 
Table I.1 (cont'd) 
                                                      
9 In particular, employment subs idies and training programmes were  highly successful in supporting 
household income and businesse s access to cred it (IMF, 2010). 
10 From a historical perspective, this upswing has been more vigorous than those following the 2001 
dotcom crash and the 1997-98 Asia crisis (IMF, 2010). Singapore WT/TPR/S/267 
 Page 3 
 
 
    2007 2008 2009 2010 2011a 
Gross official reserves (USD  billion) 163.0 174. 2 187.8 225.8 237.7 
Import coverd 4.9 6.5 5.5 5.7 5.8 
a Preliminary. 
b Value-added at current prices. 
c Central government. Based on fiscal year, e.g.  2007 is FY2007, starting 1 April to 31 March.  
d In months of next year's imports of goods and services.  
Source:  Information provided by the authorities of Singapore. 
7. Price dynamics have mirrored those of output.  Consumer price index inflation declined 
quickly and turned negative in the second half of 2009 as the economic downturn suppressed price 
rises across most items;  inflation pressures resurfa ced from early 2010 along with economic recovery 
and rising fuel and transport costs.  The average annual rate of inflation was 3.5% over 2007-11.  The 
main goal of the monetary policy conducted by th e MAS is price stability as a basis for sustainable 
growth.11  According to the IMF, monetary policy re sponded well to the global economic crisis and 
helped foster the recovery.12  For 2012, the IMF expects inflation of 3.5% (5.2% in 2011).13 
8. Fiscal policy contributed to the swift recovery  of the economy.  The Central Government's 
expenditure (including special transfers), as a pe rcentage of GDP, increased from 12.9% in 2007 to 
16.8% in 2011 due, inter alia , to a fiscal stimulus of around S$20.5 billion in 2009 in response to the 
global economic crisis.  As a result, the overall balance went from a surplus of 2.8% of GDP in 2007 to deficits of 0.3% in 2009 and 2010.  A surplus of 0.7% of GDP is estimated for 2011 (Table I.1).  
With the economic recovery, some of the key compone nts of the fiscal stimulus were withdrawn, such 
as the job credit scheme and the credit to sustain th e operation of certain businesses (e.g. special risk-
sharing initiatives).  Since then, the focus has shifted from crisis  relief measures to supply-side 
measures in order to promote productivity growth ; expand transport, housing and healthcare 
infrastructure capacity; and increase support fo r low-income households and workers.  
9. Singapore, as much of the rest of the world, h as seen a marked increase in inequality over the 
last two decades.
14 To tackle inequality and population ageing social safety nets (i.e. benefits based on 
the Central Provident Fund (CPF)15;  housing16;  healthcare;  and the workfare scheme17) are being 
strengthened.  Singapore is also to reduce its demand for foreign workers, inter alia , in manufacturing 
(from 65% to 60%), and in services (from 50% to 45% ).  These ratios will apply as from 1 July 2012 
for new workers, and as from 1 July 2014 for existing workers. 
                                                      
11 The MAS targets a nominal effective exchange rate (NEER) band to safeguard price stability.  The 
money market tools used by the MAS include foreign exchange swaps, inter-bank lending/borrowing, and sales 
and purchases or repurchases agreements in government securities. 
12 When necessary, the MAS has intervened in th e foreign exchange market to dampen upward 
pressure on the Singapore dollar (and thus deliver price stability), sterilizing the liquidity injections to limit the 
volatility of domestic interest rates (IMF, 2010). 
13 IMF (2012a). 
14 Singapore has the second-highest income gap between the rich and the poor among the 42 countries 
with very high human development (UNDP, 2010).  
15 The CPF is a mandatory savings scheme financed by contributions from employers and employees.  
It covers around 90% of the resident  population and is the cen trepiece of Sing apore's "persona l responsibility" 
system for the provision of social services. 
16 Home ownership is close to 90% even for those in the lowest quintile of incomes. 
17 The workfare scheme, introduced in 2007, comprises, inter alia , an income supplement and a 
training subsidy for workers who earn less than S$1,700 per month, and provides assistance to older low-wage 
workers who demonstrate their willingness to help them selves through work.  There is no minimum wage. WT/TPR/S/267 Trade Policy Review 
Page 4 
  
  (3) TRADE PERFORMANCE AND INVESTMENT  
(i) Trade in goods and services 
10. Historically, Singapore has had significant net cap ital outflows, the counterpart of persistent 
current account surpluses (20.5% of GDP on average during 2007-11).  Official flows have 
constituted the bulk of net outflows, reflecting mo stly foreign asset accumulation by Singapore's 
sovereign wealth funds.  Net FDI in flows have also been consistently  positive (section (ii) below), the 
result of Singapore's favourable investment and busin ess climate.  Gross official reserves, which were 
drawn down during the world economic downturn, stood at US$238 billion in 2011 (equivalent to 
5.8 months of imports, compared with US$163 billion in  2007 or 4.9 months of imports) (Table I.1). 
11. Singapore felt the impact of the global recession primarily through the trade channel.  It has 
the highest trade to GDP ratio in the world:  around 400% on average during 2008-11.  From peak to trough, non-oil domestic exports fell by close to 30%.  Their revival has been boosted particularly by 
consumer demand in China and corporate IT inve stment in the United States.  In 2011, Singapore 
ranked 9
th among world merchandise exporters and importe rs.  In services trade, Singapore ranked 6th 
both among exporters and importers.18   
12. Singapore's merchandise exports include a large volu me of entrepôt trade, encouraged by its 
location and developed port facilities.  Overall, re-exports accounted for 45% of Singapore's total 
merchandise exports in 2011.19 Singapore continues to rely heavily on manufactured exports 
(Table AI.1 and Chart I.1), which accounted for 68%  of total merchandise exports in 2011 (76% in 
2007).  They are mainly machinery and transport e quipment, office machines and telecommunication 
equipment, and chemicals.  Fuels represented 20% of total merchandise exports in 2011 and 
agricultural exports only 2.5%.  Similarly, manuf actured products account for most merchandise 
imports, with 60% share in 2011 (72% in 2007).  Fu els represented 33% of total merchandise imports 
in 2011 and agricultural imports 3.8% (Table AI.2 and Chart I.2). 
13. Taken together, exports to Asian economies ac count for about three quarters of total 
merchandise exports in 2011, led by Malaysia (12% ), Hong Kong, China (11%), and China (10%).  
The EU and the United States accounted for 10% and 6%, respectively (Table AI.3 and Chart I.2).  
The share of exports to ASEAN markets in 2011 was 31% (32% in 2007).  The EU was Singapore's largest source of merchandise imports in 2011, w ith 13%, followed by the United States (11%), and 
Malaysia (10.7%).  The share of ASEAN count ries in total imports decreased from 25% to 21% 
during 2007-11 (Table AI.4 and Chart I.2). 
14. Balance of payments data indicate that Singa pore became a net exporter of services in 2010, 
with surpluses of over S$2 billion pe r year in 2010-11 (Table I.2).
20  In 2011, transportation services 
accounted for 38% of total services exported, follo wed by "other business services" (e.g. professional 
and technical services, and other miscellaneous business)  with 20%, and travel with 16%.  The main 
services imports in 2011 were transportation (3 1%) and "other business services" (25%). 
                                                      
18 Considering the countries of the EU together and excluding intra-EU trade. WTO Statistics database, 
"Trade Profiles:  Singapore".  Viewed at:  http://stat.wto.org/CountryProfile/SG_e.htm. 
19 WTO Press Release No. 658, 12 April 2012.  Due to  lack of data at a more disaggregated level, 
domestic exports and re-exports could not be calculated in the corresponding Tables and Charts. 
20 There have been major changes to the compilation of services statistics by Singapore's Department of 
Statistics due to the implementation of the latest international standards set out in the IMF's BOP and 
International Investment Position Manual (Sixth Edition) .  For example, maintenance and repair services are 
now included in the services a ccount when previously they were part of the goods account.  Singapore WT/TPR/S/267 
 Page 5 
 
 
  Chart I.1
Product composition of merchandise trade, 2007 and 2011
2007 2011
(a)    Exports (f.o.b.)
Other 
consumer goods
6.8
Manufactures
75.9
Total:   US$299.3 billion Total:  US$409.5 billion  
(b)    Imports (c.i.f.)
Other office
machines & 
telecom. 
equip.
16.2Chemicals
6.0Transport equipment 
5.9
Manufactures
71.5Other electrical 
machines  
4.7
Non-electrical 
machinery
8.7Other
3.5
Other electrical 
machines
4.0Other offfice machines
& telecommunication 
equipment
13.0
Other 
semi-manuf.   
4.9Transport equipment  
4.3
Chemicals
6.9Manufactures
60.1
Non-electrical
machinery
8.6
Total:   US$263.2 billion Total:   US$365.8 billion Per cent
Manufactures
68.3Fuels
19.8
Other consumer goods  
7.3Other
5.4Other electrical 
machines
4.9Transport equip.
3.2Other
9.5
Other semi-
manufactures
2.8
Source :  UNSD, Comtrade database (SITC Rev.3).Other consumer goods 
7.8Other 
consumer goods 
7.2
Other semi-
manufactures
3.0
Other semi-
manufactures
5.2Agriculture
3.8
Electronic integrated circuits
& microassemblies
17.0Electronic integrated circuits
& microassemblies
12.9Chemicals 
11.2
Chemicals
12.6Other
8.3
Fuels
32.6Agriculture
2.0
Non-electrical 
machinery
6.5
Non-electrical
machinery
6.9
Agriculture
3.2Electronic integrated circuits 
& microassemblies
18.8
Other  office machines
& telecommunication
equipment
11.1Fuels
20.0Agriculture
2.5
Transport equipment
4.5
Other electrical
machines
4.2
Other office machines
& telecommunication 
equipment
21.4Fuels
13.8
Electronic integrated circuits 
& microassemblies
17.2
 WT/TPR/S/267 Trade Policy Review 
Page 6 
  
  Chart I.2
Direction of merchandise trade, 2007 and 2011
2007 2011
(a)    Exports (f.o.b.)
Other Asia  
7.3
Asia
72.8
Total:  US$299.3 billion Total:  US$409.5 billion
(b)    Imports (c.i.f.)
Other Asia  
8.3
EU27
12.4EU27
12.6
China
10.4Chinese Taipei
7.4Other
6.5United State
10.8
Total:  US$263.2 billion Total:  US$365.8 billionPer cent
Asia
75.2Other Asia  
8.4
Hong Kong,
China
11.0Other
7.5
Other 
Middle East  
6.9United States
8.9
Other Asia  
7.7United States
5.5
Source :  UNSD, Comtrade database.Japan
7.2EU27
9.6
Hong Kong,
China
10.5
Asia
58.4Asia
61.6
Japan
8.2Malaysia
13.1Indonesia
9.8
Korea, 
Rep. of
3.5Other
9.7
Indonesia
10.4
Indonesia
5.3Thailand
4.1
Korea,
Rep. of
3.8
Chinese Taipei 
6.3Chinese Taipei
3.1Thailand
3.4
Thailand
3.2India
3.9EU27
10.8
China  
10.4
Malaysia
12.2
China
12.1Indonesia
5.6China
9.7
Malaysia
10.7Chinese Taipei
3.7
Saudi Arabia
3.3 Korea, Rep. of
5.9
Other 
Middle East
6.2Saudi Arabia
4.8United States
12.4Other
4.0Japan
4.8Japan
4.5
Malaysia
12.9India
3.4India
3.3
Korea, Rep. of
4.9Australia
3.9Australia
3.7
 Singapore WT/TPR/S/267 
 Page 7 
 
 
  Table I.2 
Balance of payments, 2007-11 
(S$ million)  
      2007 2008 2009 2010 2011a 
Current account balance 69,082.4 37,275.5 43,836.0 75,686.7  71,679.5 
Goods balance 85,998.8 58,948.3 68,755.4 86,033.6  84,840.5 
 Exports  471,332.2 502,067.2 419,493.0 505,937.3 540,049.1 
 Imports  385,333.4 443,118.9 350,737.6 419,903.7 455,208.6 
Services balance -3,833.7 -3,781.3 -4,637.0 2,083.9 2,319.8 
 Exports of services 111,297.5 124,595.6 116,630.6 136,367.6 142,868.0 
  Maintenance and repair services 6,605.6 8,224.2 8,953.3 8,479.9 9,496.4 
  Transport 43,859.7 50,118.3 41,853.5 51,969.7 53,850.2 
  Travel 13,663.5 15,158.9 13,626.3 19,270.4 22,627.2 
  Insurance 2,342.2  2,633.2  3,744.6  4,408.9  3,730.6  
  Government goods and services 330.5 360.1 339.1 349.7 362.9 
  Construction 1,137.1 1,532.2 1,544.6 1,656.3 1,700.0 
  Financial 15,443.4 15,303.9 15,105.5 16,421.8 16,152.2 
  Telecommunications, computer and 
information 2,844.6 3,690.2 3,780.6 4,694.0 4,757.8 
  Charges for the use of intellectual property 1,051.7 1,001.9 1,145.8 1,434.5 1,543.6 
  Personal, cultural and recreational 357.7 726.8 762.5 686.5 732.4 
  Other business services 23,661.5 25,845.9 25,774.8 26,995.9 27,914.7 
 Imports of services 115,131.2 128,376.9 121,267.6 134,283.7 140,548.2 
  Maintenance and repair services 546.4 657.6 850.7 761.7 754.6 
  Transport 42,323.6 43,207.0 36,870.3 41,278.4 44,177.3 
  Travel  20,209.9 23,156.2 23,053.2 25,402.3 26,543.4 
  Insurance 3,520.5 3,699.2 4,120.4 5,459.5 4,243.9 
  Government goods and services 280.3 319.1 320.0 261.3 261.6 
  Construction 385.1 495.6 618.2 674.6 692.2 
  Financial 3,465.4 3,573.0 2,971.4 3,486.5 3,268.8 
  Telecommunications, computer and 
information 2,673.4 3,213.7 3,271.7 3,997.0 4,026.8 
  Charges for the use of intellectual property 13,444.8 17,586.2 17,055.1 19,135.6 20,591.3 
  Personal, cultural and recreational 430.2 609.3 713.4 604.6 644.9 
  Other business services 27,851.6 31,860.0 31,423.2 33,222.2 35,343.4 
Primary income balance -8,547.8 -12,617.7 -14,470.6 -5,390.4 -7,038.8 
 Primary income receipts 87,686.1 67,312.3 66,999.2 84,491.4 85,527.4 
 Primary income payments 96,233.9 79,930.0 81,469.8 89,881.8 92,566.2 
Secondary income balance -4,534.9 -5,273.8 -5,811.8 -7,040.4 -8,442.0 
 General government (net) -216.1 -273.6 -232.8 -287.2 -292.7 
 Other sectors (net) -4,318.8 -5,000.2 -5,579.0 -6,753.2 -8,149.3 
Capital and financia l account balanceb -39,417.0 -21,860.8 -32,985.8 -17,626.8 -50,360.5 
Overall balance 29,297.6 18,531.1 16,456.2 57,480.5 21,487.7  
a Preliminary. 
b The capital account is consolidated under the financial account. 
Source:  Ministry of Trade and Industry, Economic Survey of Singapore 2011 , Singapore. 
(ii) Foreign direct investment 
15. Singapore has traditionally been a major recipi ent of FDI, with annual inflows averaging 
almost US$25 billion since 2007 (Table I.3).  On the basis of UNCTAD's latest Inward FDI WT/TPR/S/267 Trade Policy Review 
Page 8 
  
  Performance Index, Singapore ranked 9th in 2010 (61st in 2008 and 20th in 2009)21, while in 
UNCTAD's Inward FDI Potential Index it ranked 3rd in 2009 (2nd in 2008).22   
16. The EU is Singapore's major investor accounting for 36% of total inflows in 2010, followed 
by ASEAN (10%), and the United States (9%).  Infl ows of FDI have been mainly in the services 
sector (86% of the total in 2010), led by financial services (Table I.3).   
17. Singapore is also an increasing investor in th e rest of the world, with annual FDI outflows 
averaging around US$20 billion since 2005.  Investment  abroad has been mainly in financial services 
and manufacturing, particularly in Asian countries.23 
Table I.3 
Inflows of FDI by source and sector, 2007-10 
(US$ million)  
  2007 2008 2009 2010 
Total 37,032.5 8,588.9 15,279.0 35,520.2 
ASEAN 1,168.3 659.5 2,108.3 3,377.0 
Indonesia 261.0 744.5 985.8 1442.4 
Malaysia 549.4 272.0 881.9 1606.5 
Australia 960.4 87.5 95.0 752.3 
China 695.2 755.3 3,154.9 1,978.1 
Chinese Taipei 244.7 105.1 -118.9 295.2 
European Union 11,483.3 2,017.3 4,981.8 12,683.8 
Hong Kong, China 302.7 -857.7 -1,269.2 -604.8 
India 1,743.2 572.8 606.8 2,520.3 
Japan 1,865.0 -1,284.6 -1,342.7 1,399.5 
Korea, Rep. of 809.5 186.1 203.1 438.6 
New Zealand 85.0 -63.6 268.9 82.6 
United States 4,258.8 663.5 2,852.8 3,242.5 
Other 13,416.4 5,747.7 3,738.2 9,355.1 
Sector     
Agriculture -2.8 3.2 2.3 2.9 
Mining and quarrying 15.7 54.6 245.6 125.1 
Manufacturing 8,388.8 -1,010.1 7,255.0 4,945.0 
Construction 87.4 38.3 262.4 28.7 
Wholesale and retail trade 7,135.7 4,329.5 -839.9 3,093.6 
Financial & insurance services 8,996.2 527.9 5,130.7 12,404.6 
Real estate 4,537.9 2,945.0 4,019.9 9,852.7 
Other services 7,873.6 1,700.5 -797.0 5,067.6 
Source:  Information provided by the authorities of Singapore.  
                                                      
21 UNCTAD's Inward FDI Performance Index measures  the extent to which host countries receive 
inward FDI, and ranks countries by the amount of FDI they receive relative to th eir economic size.  It is 
calculated as the ratio of a country's share in global FD I inflows to its share in global GDP (UNCTAD, 2011b). 
22 UNCTAD's Inward FDI Potential Index measures the extent to which host countries receive inward 
FDI, and ranks countries by the amount of FDI they receive relative to their potential.  It is calculated on the 
basis of structural variables, su ch as country risk, and trade-re lated measures (UNCTAD, 2011b). 
23 UNCTAD (2011b). Singapore WT/TPR/S/267 
 Page 9 
 
 
  (4) OUTLOOK  
18. Since real GDP growth slowed significantly in  the last decade compared with the 1980s and 
1990s, the Economic Strategies Committee (ESC) has emphasized the need to achieve future GDP 
growth by expanding productivity rath er than the labour-force-growth of the past decade, including by 
moderating the influx of foreign workers while c ontinuing to hire top talent from around the world 
(section (2) above).24  The Government has set the goal of sustaining productivity growth throughout 
the economy of 2-3% per year during 2010-20 (against 1% achieved in 2000-09).25  This implies 
sustaining investment in R&D at 1% of GDP between 2012 and 2015, so as to increase Singapore's 
gross expenditure on R&D towards 3.5% of GDP by 2015.26  As part of the national productivity 
effort, the Government will invest S$16.1 billion ov er 2011-15 for R&D, 60% of which is expected to 
be public R&D, 15% private R&D, and the rest is to be open to public/private proposals 
(Chapter III(3)(i)). 
19. The National Productivity and Contin uing Education Council (NPCEC)27, established in 
April 2010 to oversee and drive Singapore's effo rts to boost productivity, has identified 16 key 
sectors:  construction;  electronics;  precision engineering;  transport engineering;  general 
manufacturing;  retail;  food services;  hotels;  h ealthcare;  information, communication, media and 
design;  logistics and storage;  and administra tion and support services;  accountancy;  financial 
services;  process construction and maintenance;  and social services.28  
20. On the basis of the projected higher rate of productivity growth, the authorities consider that 
Singapore can achieve real GDP growth rates of around 3-5% per year over the current decade.29  
Singapore is an open economy driven largely by exte rnal demand and its perspectives hinge, to a great 
extent, on the world economic conditions.30  Anticipating a slowdown in the world economy, the 
authorities estimate that GDP growth will be about 1- 3% in 2012, while the IMF predicts a real GDP 
growth rate of 2.7%.31  
                                                      
24 The ESC notes that an increased  dependence on foreign labour was not sustainable as Singapore 
would run up against physical and social limits.  The productivity drive will require deepening skills and 
expertise in all areas of the economy;  economic restructuring to provide room for more rapidly growing and more efficient enterprises;  and supporting busine sses to capture growth opportunities abroad.  Its 
recommendations include providing tax deductions and t echnical assistance to foster  business efficiency and 
innovation, developing improved financing capabilities to allow companies to expand abroad, programmes to 
nurture start-ups and improve SMEs' access to finance (B ox III.1), and providing educ ational training support 
for Singaporeans (ESC, 2010). 
25 Following the launch of the first National Technol ogy Plan, total R&D expenditure increased from 
S$760 million (1% of GDP) in 1991 to about S$6.5 billion (2% of GDP) in 2010;  private sector R&D 
investment grew from S$440 million to S$3.9 billion.  Singapore's development strategy has been shifting from 
emphasizing the use of technology to creating it, by focusing on investments in R&D and innovation 
(Ministry of Trade and Industry, 2010). 
26 Ministry of Finance (2010). 
27 The NPCEC comprises members from the priv ate and public sectors as well as unions. 
28 The key sectors will be supported by "horizontal" themes, such as continuing education and training, 
and public communications. 
29 Ministry of Finance (2010). 
30 According to the IMF, one percentage fall in global growth would lead to a decline in Singapore's 
growth by about 1.7-1.9 percentage points. Singapore is a major financial centre and spill overs from financial instability might entail some deleveraging by foreign banks , reduced capital inflows, slowdown in credit, and a 
decline in financial market activity (IMF, 2012b). 
31 IMF (2012a). WT/TPR/S/267 Trade Policy Review 
Page 10 
  
  21. Other key factors influencing Singapore's econom ic outlook include further efforts to move 
into higher-value-added manuf acturing (Chapter IV(1)) and services (Chapter IV(2)).32  Moreover, 
Singapore's growth as a regional financial centre and the fact that it has tight trade and investment 
links with Asian countries may have increased its e xposure to other risks, including interruptions in 
production chains within ASEAN, financial weak nesses in the region, and economic or political 
instability in countries where it h as made significant investments.33 
                                                      
32 The longer-run challenge of moving Singapore into higher-value-added manufacturing and services 
is being addressed principally through investment in in frastructure, incentives to attract investment in the 
targeted areas, and through further regulatory reform.  Singapore has developed infrastructure to support its 
biotechnology industry, and the industrial parks cater to special needs of targeted industries.  Many of 
Singapore's incentives relate to R&D-related industries or services. 
33 The share of imported components in Singapore's total merchandise exports has increased over the 
last decades and is estimated at over 50%.