Singapore's Clever Economic Planning leading to a Perfect Economy.

Singapore, a city-state located near Malaysia, is highly praised and respected for its economy by the global business community. Until recently, it held the title of the easiest country to do business in, according to the World Bank, but has now been overtaken by New Zealand. Despite its limited land resources and relatively small population, Singapore has established itself as a key hub for finance, commerce, and trade in Southeast Asia.

Singapore's economic history is fascinating due to its remarkable diversity. The origins of its economy date back over 200 years to 1819 when British colonialism established a trade post on the southern tip of the Malay Peninsula. This post served as a crucial link for the trade conducted by the British East India Company in Southeast Asia, eventually transforming into a bustling seaport with trade routes passing through Singapore. However, it wasn't until 50 years later, following the completion of the Suez Canal, that the port city truly flourished. The canal's opening connected the Mediterranean to the Red Sea and Southeast Asia, effectively doubling the region's trade volume and propelling the port of Singapore into prominence for the next century.

Singapore was a relatively prosperous little British outpost similar in many ways to Hong Kong it wasn't until 1957 that the Malaysian government claimed independence from England and then in 1965 Singapore claimed independence from Malaysia. For Singapore been out on their own was great but it also lost a huge part of what it needed to prosper. Up until that point Singapore acted like a little bit of England in Southeast Asia for better or for worse international companies and shipping organisations liked the stability and confidence of Malay rather than doing major business with a newly formed and untested micronation, so unemployment and poor living conditions were ripe in the region. Hence, a newly formed Singapore government sought to turn that around through a scheme of very hands-on economic development of its own citizens, through education and productive investment while at the same time looking to attract foreign investment through a system of very hands-off commercial regulation.

Singapore, a prosperous British outpost similar to Hong Kong, only gained independence from Malaysia in 1965. While becoming independent was beneficial, Singapore also faced challenges as it lost crucial support for its prosperity. Before independence, Singapore was seen as a piece of England in Southeast Asia, attracting international companies and shipping organizations due international companies preferring the stability and confidence of Malay rather than doing major business with a newly formed and untested micronation. Hence, after independence, the region experienced high unemployment and poor living conditions. To address these issues, the Singaporean government implemented a comprehensive economic development plan focusing on education, investment in its citizens, and attracting foreign investments through minimal commercial regulations.

Singapore owes its success largely to foreign investment, with over 70 percent of the country's total output coming from foreign companies operating within its borders, particularly in the banking, shipping, and oil sectors. The nation's appeal to these industries stems from its transformed reputation as a secure and stable environment, instilling confidence in investors to establish their operations there. Moreover, Singapore's allure to multinational corporations is bolstered by its favorable taxation and banking privacy laws. Positioned strategically in the rapidly growing Asian region, Singapore serves as the equivalent of Switzerland in Southeast Asia, attracting significant foreign investments. Its central location along major shipping routes linking Asia's emerging economic powerhouses with the West further enhances its attractiveness. The influx of diverse foreign companies has led to the proliferation of glass skyscrapers across the city, aligning perfectly with Singapore's strategic development goals.

As mentioned, the government's plan to invested heavily in educating its citizens and building efficient infrastructure was that specific purpose in mind. Recognizing its limitations in raw economic production due to its small size, Singapore strategically positioned itself as a key intermediary in the region. While it may not have abundant natural resources like major oil-producing countries, Singapore capitalized established itself as a leading oil refining hub, playing the middle-man. Today, Singapore boasts one of the world's largest oil refineries, strategically located to facilitate the distribution of refined oil products to various destinations.

Singapore understood that its domestic service sector would not be sufficient to drive significant wealth due to its small population. Instead, it serves as a neutral hub for financial service companies in the region. The country also acknowledged the limitations of its tourism opportunities. Despite its beauty, cuisine, and culture, its size makes it unlikely for many to visit solely for that reason. However, Singapore is a strategic stopover for travelers, given its central location between major international countries such as China, Japan, India, Australia, and the Middle East, playing the middle-man.

Singapore has taken advantage of this opportunity by running one of the world's largest international airline companies, leveraging its strategic central location. It is often mentioned that excelling in business involves being a proficient intermediary, a skill that Singapore has mastered. By strategically positioning itself as a facilitator rather than a producer of economic growth, Singapore has become a shining example for various politicians and interest groups championing their economic ideologies.

On the surface Singapore's economy looks pretty simple a small micro nation filled with bank buildings trade ports low taxation and hopeful Goldman Sachs interns the typical capitalist paradise right? Well yes or no. Singapore is really a Tale of Two Cities the gleaming metropolis of multinationals built on the backbone of some surprisingly socialist style policies. For starters income tax in Singapore is super low topping out at around 22% for extremely high-income earners and even then very few people pay that, if anything at all. But this doesn't mean that taxes aren't levied on the citizens of Singapore they are just done where the government sees fit.

The Singaporean government has a strong dislike for cars due to the country's small size, high population density, and numerous urban areas, which lead to significant congestion and pollution. However, instead of imposing an outright ban on cars to avoid being perceived as an authoritarian state, Singapore has implemented a unique approach that combines social and capitalistic elements. The country has made car ownership extremely expensive not through import tariffs or foreign exchange issues, but primarily through a complex registration system. For instance, acquiring a basic model Honda Civic in Singapore would cost around US$104,000 due to limited issue licenses and government checks. This approach does not prohibit car ownership but rather emphasizes that individuals must be highly productive members of society to afford a car. Additionally, a significant portion of the revenue generated from car registration fees is reinvested in developing public transportation infrastructure, reducing the necessity for private car ownership. This strategy effectively shifts the balance of supply and demand towards public transportation, prompting many to opt for trains over cars. The blending of free-market and socialist policies in Singapore's economy has made the country an attractive place for conducting business. While some may advocate for a purely capitalist economy without government intervention, Singapore's model demonstrates that a balance of regulations is essential to maintain public goods, protect property, uphold contracts, and ensure a sustainable population for business operations.

Singapore clearly benefited from advantageous circumstances; it was strategically positioned to take advantage of Asia's economic growth as a major trade hub. However, prosperity did not simply fall into the lap of this small island with limited arable land and natural resources. Singapore took deliberate actions to establish itself as a key player in the region by implementing a diverse range of effective economic policies, rather than adhering to a single ideology to steer the nation's course.