RELATIONSHIP COMPARISON BETWEEN TWO COUNTRY AND HYPOTHESIS ANALYSIS

PRESENTED BY

DENZIL

KEVIN

KUNAL

SINGAPORE & MALAYSIA

The English name of Singapore is derived from the Malay word, Singapura

Derived from (literally Lion City), hence the customary reference to the nation as the Lion City.

Singapore’s annual GDP growth rate from the 1960s to the 1990s has averaged about 8%, more than

three times of the US growth rate

Currently, Singapore ranks as the top Asian country with the highest standard of living.

About 90% of Singaporeans live in proper houses with modern facilities, while the city itself is

virtually slum-free

It is also a base of more than 3000 multinational companies from the developed world

All of these achievements have been realized in a country that is no more than 685 sq. km and with

no fortunate endowment of any natural resource.

How is it possible then for Singapore to attain and maintain such amazing economic growth as it has

experienced over the past forty years?

STRATEGIC ANALYSIS OF SINGAPORE. Singapore’s economic strategies can be summarized into three basic categories

1. The government’s strategic role.

2. Mobilization of its human capital.

3. Continuous development of infrastructure.

Together, these three factors contributed to the high level of economic achievements that

Singapore has enjoyed for the past four decades. Yet, a variation of these three factors was

specifically used in the different periods from the 1960s onward.

In the early period, Singapore used its sufficient physical infrastructure as well as the semi-

skilled workforce to attract foreign investors to the island.

In both periods, the role of the government institutions has been crucial. The government has

adopted different policies to suit the different needs of the Singaporean economy, which would

attract continuous foreign investment and thus, maintaining Singapore’s economic excellence.

WHAT WAS THE MAIN ECONOMIC CHALLENGE?

The main challenge for Singapore in its early years was to overcome its high

unemployment problem.

The Singapore government understood that the only way to increase employment

was through extensive growth in its manufacturing industries. But in its early years,

the economy was still too dependent on the ENTREPOT trade for the East India

company and as a result, the manufacturing sector was undeveloped.

The Economic Development Board (EDB) was established in 1961 with the main

purpose of attracting foreign capital to enter the Singapore market.

Singapore’s GDP grew at a relatively high average of 6% per year. In the same

period, the manufacturing share of the GDP grew from about 10% in 1960 to about

15% in the late 1960s.

• Similar to the 1980’s, the main challenge of Singapore’s economy in the 1990s was

to ensure that the nation would adopt high-technology..

WHAT DID THE GOVERNMENT DO TO IMPROVE THE

ECONOMY?

The 1990s continued high spending by the Singapore government in efforts to develop the high

technology of the country.

Another important strategy adopted by Singapore realization of a need to expand its economic

activities in the region.

The Singapore-Johor-Riau (SIJORI) growth triangle was initiated in the early 1990s to relocate

Singapore’s investments in manufacturing to the nearby areas of Johor in Malaysia and the

Bintan and Batam islands of the Riau province in Indonesia.

Malaysia and Indonesia would benefit from the initiative because of the infrastructure

development, economic growth, and lessons from Singapore’s financial expertise as spillover

effects in both places.

Under the agreement, Singapore would provide the network and financial services for foreign

investors to set up their manufacturing bases in both Johor and Riau. The state of Johor and the

province of Riau would provide tax and financial incentives for foreign firms to relocate their

manufacturing bases from Singapore

WHAT ARE THE KEY INDUSTRY NETWORKS IN SINGAPORE?

Manufacturing

Electronics

Chemicals.

Engineering

Biomedical Manufacturing

Construction

Wholesale and Retail Trade.

Financial Services

Business and Other Services

• business services include that of legal, accounting, architectural & engineering

activities, business management consultancy, business representative, advertising,

labor recruitment, event management and building cleaning.

Transport and Communications

Hotel & Restaurants

WHAT ARE SINGAPORE’S CURRENT CHALLENGES AND PLANS?

With the emergence of India and China as main economic players in the global economy,

Singapore’s strategy to maintain its economic competitiveness is to continue its transformation into

a high-technology economy.

Among the latest in Singapore initiatives is the formation of the One-North technological park for

R&D and biomedical science, a vision of Singapore to lead the world in the future of biomedical

scientific research in the 21st century.

The Singapore government is committed to spend billions of dollars in the next 15 to 20 years in

order to expand the new technological complex.

From 2000 onwards, the Singapore government has continued its negotiations into forming bilateral

trade relationships,

The two main problems from Singapore’s demography are its graying population and low fertility

rate.

CONCLUSION

• The government and the people of Singapore have realized that Singapore depends primarily

on its human resources and secondarily on the resources of foreign investors.

• As such, both the government and the people have worked together throughout the years to

ensure that Singapore’s economy remains competitive. With relatively stable governments

from 1960 onward, Singapore has been able to attract foreign investors, from which it gains the

crucial financial capital for its economic progress.

• Many skeptics have often cited that the small size of Singapore makes it easy for the

government to implement state-planned economic strategies, something that is often tough to

do in other bigger developing nations.

Malaysia is a federation of 13 states.

The Federation of Malaysia, formed in

1963, originally consisted of Malaya,

Singapore, Sarawak and Sabah.

MALAYSIA

CONTINUED..

Due to internal political tensions Singapore was obliged to leave in 1965.

Malaya gained independence in 1957, Sarawak and Sabah (the latter known previously

as British North Borneo) in 1963, and Singapore full independence in 1965.

The Government system is a constitutional monarchy.

Malaysia shares world’s lowest death rate of respiratory diseases.

Life expectancy:

In 1957 – 55.8 years for men

58.2 years for women.

Today – 71 years for men.

74 years for women.

INTRODUCTION OF MALAYSIAN ECONOMY

Since Malaysia’s independence, it’s economic performance has been one of Asia’s best.

Performance peaked in the early 1980s through the mid 1990s.

Malaysia today is a middle-income country with a multi-sector economy based on service and manufacturing.

Malaysia is one of the world’s largest exporters of:

Semiconductor components and devices

Electrical goods

Solar panels

Information and Communication Technology (ICT) products.

Tin & rubber.

CULTURE, HISTORY & SOCIETY

The current population in Malaysia is around 28 million (23 million live in Peninsular Malaysia.)

The local population is 67 percent.

Bahasa Melayu is the official national language of Malaysia.

Religion plays a vital role in Malaysian life

61% are Islam

19% are Buddhists

9% are Christians

6% are Hindus

After several centuries dominated by Buddhism & Hinduism, Islamic conversion began in Malaysia in the early 14th century.

Tin

Besides ample land, the Malay Peninsula also contained substantial deposits of tin. International demand for tin rose progressively in the 19th century due to the discovery of a more efficient method for producing tinplate.

Rubber

While tin mining brought considerable prosperity, it was a non-renewable resource. In the early 20 th century it was the agricultural sector which came to the forefront.

By 1921 the rubber acreage in Malaysia (mostly in the Peninsula) had reached 935 000 hectares (about 1.34 million acres) or some 55 percent of the total in South and Southeast Asia while output stood at 50 percent of world production.

THE TRANSITION TO CAPITALIST PRODUCTION

BENEFITS AND DRAWBACKS OF AN EXPORT ECONOMY

Prior to World War II the international economy Malaysia’s place was as a leading exporter of raw

materials (tin, rubber, timber, oil, etc.) and an importer of manufactures.

Malaysia depended heavily on earnings from exports of primary commodities to maintain the standard

of living

Rice had to be imported (mainly from Burma and Thailand) because domestic production supplied on

average only 40 percent of total needs

Immediately following World War I there was a depression from 1919-22. Strong growth in the mid and

late-1920s was followed by the Great Depression (1929-32). As industrial output slumped, primary

product prices fell even more heavily.

WHY NO INDUSTRIALIZATION? Malaysia had very few secondary industries before World War II.

The little that did appear was connected mainly with the processing of the primary exports, rubber

and tin, together with limited production of manufactured goods for the domestic market (e.g.

bread, biscuits, beverages, cigarettes and various building materials).

Much of this activity was Chinese-owned and located in Singapore (Huff, 1994).

Among the reasons advanced are; the small size of the domestic market, the relatively high wage

levels in Singapore which made products uncompetitive as exports, and a culture dominated by

British trading firms which favored commerce over industry.

Overshadowing all these was the dominance of primary production. When commodity prices were

high, there was little incentive for investors, European or Asian, to move into other sectors.

AIMS OF INDUSTRIALIZATION AND THE NEW

ECONOMIC POLICY 1970-90 To redistribute corporate equity so that the bumiputera share would rise from around 2 percent to

30 percent. The share of other Malaysians would increase marginally from 35 to 40 percent, while

that of foreigners would fall from 63 percent to 30 percent.

To eliminate the close link between race and economic function (a legacy of the colonial era) and

restructure employment so that that the bumiputera share in each sector would reflect more

accurately their proportion of the total population (roughly 55 percent).

In 1970 this group had about two-thirds of jobs in the primary sector where incomes were

generally lowest, but only 30 percent in the secondary sector. In high-income middle class

occupations (e.g. professions, management) the share was only 13 percent.

To eradicate poverty irrespective of race. In 1970 just under half of all households in Peninsular

Malaysia had incomes below the official poverty line. Malays accounted for about 75 percent of

these.

THE NEW DEVELOPMENT POLICY Followed in 1991 by the New Development Policy (NDP),which emphasized assistance only to

“Bumiputera with potential, commitment and good track records” (Malaysian Government, 1991, 17) rather than the previous blanket measures to redistribute wealth and employment.

In turn the NDP was part of a longer-term program known as Vision 2020. The aim here is to turn Malaysia into a fully industrialized country and to quadruple per capita income by the year 2020.

This will require the country to continue ascending the technological “ladder” from low - to high-tech types of industrial production, with a corresponding increase in the intensity of capital investment and greater retention of value-added (i.e. the value added to raw materials in the production process) by Malaysian producers.

The Malaysian economy continued to boom at historically unprecedented rates of 8-9 percent a year for much of the 1990s (see next section).

There was heavy expenditure on infrastructure, for example extensive building in Kuala Lumpur such as the Twin Towers (currently the highest buildings in the world).

The volume of manufactured exports, notably electronic goods and electronic components increased rapidly

OPINION ON MALAYSIA ‘S ECONOMY

Malaysia owes its successful historical economic record to a number of factors.

Geographically it lies close to major world trade routes bringing early exposure to the international

economy.

The sparse indigenous population and labor force has been supplemented by immigrants, mainly

from neighboring Asian countries with many becoming permanently domiciled.

The economy has always been exceptionally open to external influences such as globalization.

Foreign capital has played a major role throughout. Governments, colonial and national, have aimed

at managing the structure of the economy while maintaining inter-ethnic stability.

Since about 1960 the economy has benefited from extensive restructuring with sustained growth of

exports from both the primary and secondary sectors, thus gaining a double impetus.