Formulating Economic Policies for Singapore - Essay Example

? Policy and Planning Tourism ABC XYZ In today’s world of cut throat competition and economic downturn, nations are constantly striving to attain robust economic growth by recognizing and identifying certain sectors which may help in garnering revenue. One such sector is tourism. This sector is extensively labour intensive which means that it helps in garnering increased employment opportunities and on the other hand it helps nations to earn revenue. Singapore is one of the nations which has set targets for economic growth and has accordingly aligned tourism policies so as to comply with the strategic objectives formulated to achieve robust growth in the economy. Here, we will examine the manner in which the Ministry of Trade and Information Singapore formulates certain economic strategy and the manner in which they are in compliance with the basic economic management philosophy of free market economy and outward oriented economic policies. Accordingly, this paper will also delve into the manner the tourism policies have been formulated so that they comply with the economic strategies to attain robust economic growth in the nation. Contents Abstract 2 Introduction 4 Formulating Economic Policies for Singapore 4 Current Economic Management Philosophy 6 Tourism policy instruments 7 Conclusion 11 Reference 12 Introduction The Ministry of Trade and Industry Singapore helps in directing policy formulation with reference to developing industry and trade in Singapore. Its mission is to enhance economic growth and help in creating more job opportunities so as to attain enhanced living standards (MTI, 2013). Formulating Economic Policies for Singapore The Ministry of Trade and Industry Singapore formulates certain strategies which drives economic growth. The Economic Strategies Committee of MTI Singapore, came up with several strategies to boost economic growth in the year 2010. The strategies were conducted taking into consideration certain economic, political and social aspects of the economy in Singapore. The committee set up a challenging target of attaining a growth rate of at least 2 – 3 percent per annum for a decade. Accordingly, they needed to devise strategies to boost every sector in the economy. The urgency is to augment the income levels of the people of Singapore. This may be possible only if productivity increases. For this, the economic policy focussed on productivity – based growth. They realised the need to deepen expertise and skills so as to strengthen each sector and drive economic growth. The strategies formulated needed to focus Singaporeans to spend more time on business activities and tasks. High rate of competency and knowhow is required for conducting high skilled tasks and provide excellent service to customers and enable organizations to innovate, change and align strategy and structures with changing market situations (Economic Strategies Committee Report, 2010). A significant goal of strategizing and implementing government policy is by promoting industrialization. Industrialization is a tool which developing nations like Singapore use to attain augmented economic growth and thereby attain the privilege enjoyed by developed countries (Goh, 2005). Accordingly, the economic strategy has been formulated which supports and promotes innovation and drives growth. The policy formulation were made keeping in mind to aid the international community by striving to decrease carbon emissions. A corporate social responsibility perspective was also considered while formulating the economic strategies in Singapore. Corporate social responsibility is a global topic and may be used in diverse manners in diverse nations. Also the nation has less of corruption and nepotism which further helps in driving growth. The incorporation of corporate social responsibility in various business enterprises has been a critical factor while considering strategy formulation for economic policies in Singapore. The trade practices including imports and exports and foreign direct investment in Singapore are comparatively high. The economic policy supports global investors and allows 100 percent investment by global parties (Robertson, 2009). All these issues, help in driving economic growth and promoting strategy formulation in Singapore. The corporate social responsibility is one of the factors other than social, cultural and political factors which have been incorporated while formulating the economic strategy formulation in Singapore. A thorough market survey was conducted taking into consideration each sector and measures were formulated to drive growth in every sector of the economy. The Singapore economy contains around thirty five major industrial sectors, eight groups of occupation, a household sector, a representative investor and a government body. The economic policy has been formulated taking all the above mentioned bodies and industrial sectors in mind and the government is aiming to add in highly talented and competitive workforce to augment productivity and drive economic growth. Current Economic Management Philosophy The philosophy behind the economic management committee believes in following two main principles. These are as follows: a) Obedience to a free market economic system b) Constantly trying for inclusive and high quality growth by developing outward-oriented economic policies The Ministry of Trade and Industry Singapore formulates and manages economic policies at the macro level so as to set broad guidelines for certain strategies and directions and identify hurdles and opportunities for attaining favourable economic growth. A free market system is advocated because it helps the industries to rapidly respond to market signals and accordingly align strategies. Also the nation’s economic resources are efficiently allocated. The Singapore government does not interfere with the economic decisions taken by organizations unless there are political or social constraints. Also entrepreneurs enjoy the liberty to establish a business venture in almost any sector. By striving for outward-oriented economic regulations, the nation has opened doors for global investment and trade practices. This decision has been taken keeping in mind the necessity and economic policy, limited resources and size of the nation. By following the above mentioned two philosophies, the small nation has attained world’s highest Gross Domestic Product rate in the year 2010 (MTI Insights, 2011). The outward-oriented economic policies framed by the government have helped to alleviate poverty levels and augment living standards. This tactical plan has integrated a relatively high level of integration into the international economy and believes on relying and concentrating heavily on the growth of exports in the manufacturing sector, augment the rate of national savings by financing heavy tariff on investments made in the domestic sector, which includes investments made by the general public on social and physical infrastructure. This is further complemented by foreign direct investment to maintain stability on the macroeconomic level by depending on the functioning market to effectively allocate resources and lastly having a capable, credited and committed government which constant makes measures to drive economic growth. However, one adverse effect of outward-oriented economic strategy is heavy dependence on domestic exports and investment. This policy fails to garner enough revenue especially during economic downturn as both domestic exports and investment rates decline. This was witnessed by Singapore in the years 2008 – 2009 but the nation quickly recovered in the year 2010 with an increase in performance in industrial sectors especially the tourism sector which had registered an increase by 49.2 percent in the year 2010 (STB, 2010). Tourism policy instruments One of the major foreign exchange earners in Singapore is tourism. Tourism is a critical source of garnering income especially from global visitors. One of the essential policies is to further enhance infrastructure and transport for wooing, processing and accommodating domestic and foreign tourists (Lohmann et al. 2009). Singapore has long adapted a regional framework for economic growth with special emphasis on tourism development by promoting public-housing, economic zones, technological upgrades and town planning. In all, this was a manner in which the government facilitated developing transport and infrastructure. The favourable economic policy has also attracted migration and this has helped to enrich the already rich cultural and social heritage enjoyed by this country (Dutta, 2008). Tourism is a highly labour intensive industry and in Singapore this field resulted in providing employment opportunities to its workforce. Post independence witnessed the establishment of Singapore Tourism Promotion Board (STPB) as a policy effort the then government displayed in order to identify the importance of the tourism industry in promoting and accelerating economic growth and development. The 1970s era witnessed development and establishments of hotels and gardens in Singapore to attract global tourists. The scenario changed in the 80s with accelerated enthusiasm in tourism management as a means to boost economic growth. Tourism policies were modified to align with alterations in economic and social aspects both internationally and domestically. One of the main reasons for tourism policy change was the global recession in 1985 and the economic focus changed to upgrade high skills and innovation. The government also turned its attention to preserve heritage monuments and tourism attractions which were neglected in 1970s and mid 80s. The 21st century witnessed a soft approach to managing tourism in Singapore and subsequently a change in the image of Singapore as previously projected to global tourists was undertaken. Another economic goal which has been adhered to be Singapore tourism policy is the creation and development of man-made natural attractions like zoo, night safari, theme parks and jungle attractions. The Singapore Tourism Promotion Board has used multi faceted mannerisms in order to develop and strategise tourism policies to align with economic policies and strategies formulated by the Ministry of Trade and Industry Singapore (Hall & Cage, 2011). In a bid to promote economic growth in Singapore, the 2015 aims and objectives of the tourism policy has recognized three main areas in which the main emphasis will be placed. These are as follows: a) Promoting and encouraging ‘Leading Convention & Exhibition City’ with a dynamic and strong business environment. b) Developing the concept of ‘Unique Singapore’ by providing an enhanced experience to global and domestic tourists and thereby aim to become the leading tourism destination in Asia. c) Establishing the nation to become the ‘Service Centre of Asia’ by promoting high quality healthcare and medical services. In order to attain above aims the Government has already approved funding of $2 billion to the Tourism Development Fund (TDF) which will concentrate in enhancing capability and infrastructure and product development and anchoring and attracting major events in the nation (Singapore Tourism Board, 2013). This is an essential construct as the tourism funding was allocated taking into consideration economic impact and the volume of tourist traffic in Singapore. Also infrastructure in a nation includes airports, roads, trains, and bus networks, supply of water, sewerage, telecommunications, sanitation, healthcare solutions, financial systems, computers and electricity. Developing these infrastructures is important in developing nations to potential tourism destinations. One of the most striking characteristics which have recently emerged in the global tourism industry is the wooing of governments of developed nations to attract global customers to provide excellent and high quality medical and healthcare solutions. Singapore is among the forerunners in providing excellent healthcare options and has rapidly shortened the gap between private healthcare sector and the government. The nation is paying augmented emphasis to woo international patients to seek excellent medical treatment options as a manner to boost tourism, trade and thereby drive the economic growth and development of the nation (Leng, 2010). This is in alignment to the economic strategies formulated by MTI Singapore. Also the main traffic originates from neighbouring nations like Malaysia and Thailand other than other South East Asian nations like Philippines and Taiwan. For this purpose, it is essential for Singapore to concentrate on the neighbouring nations as European nations have enhanced medical and healthcare solutions (Lin, 2010). The Singapore government is striving to woo international traffic by hosting and organizing major international events. One of the main global events hosted by this nation is the World Gourmet Summit. The concept has been made by the Singapore Tourism Promotion Board and restaurants, hotels and chefs and is now one of the most celebrated events in Singapore. This is a new way to not only promote gastronomic tourism but also woo customers from all parts of the globe (Chaney & Ryan, 2012). The island nation of Singapore has adapted a Computable General Equilibrium Model (CGE) model in order to calculate the effect of modifications in tourism tax policies and tourism demand on welfare and macroeconomic policies. The Singapore Tourism Promotion Board introduced the Double Tax Deduction scheme in the year 2007 in a bid to attract more global traffic into the nation. The sectors which benefitted from the tourism policy are clothing and accommodation (Meng, Siriwardana & Pham, 2013). This further encouraged Singapore tourism and travel organizations to promote and encourage the flow of inbound tourist traffic. Such policies have helped to augment the tax revenue earned from tourism to the Singapore government. Such revenues are earned from non shopping and shopping services. Selected policies implemented in the tourism sector have helped in positively contributing to the government’s motto of High Skilled People, Innovative Economy and Distinctive Global City. The destination brand name of ‘Unique Singapore’ reflects to fulfil the strategy of a Distinctive Global City. Also the concept of Innovative Economy as introduced in the economic strategies committee is reflected in the tourism policy by means of striving to attain Singapore to be the ‘Service Centre of Asia’. Also the motto of ‘High Skilled People’ is being reflected in the tourism policy framework which seeks to include trained and high quality labour to provide the best services to international and domestic tourists. This may be further witnessed by the introduction of several training and tourism programmes which are made to further equip personnel with high quality talent, skills and knowhow to compete with global levels of providing excellent service to tourist traffic. Conclusion The strategies developed by MTI with special reference to tourism and economic developed have been widely effective. These strategies have helped Singapore to continue having a more or less favourable Gross Domestic Product rate despite periods of recession. The aim of the government is to attain a high rate of economic growth for the nation by the year 2015 and all other industries including the tourism industry have formulated policies which reflect the aspirations, objectives and strategies developed by the MTI. Reference Chaney, S. & Ryan, C. (2012). Analyzing the evolution of Singapore’s World Gourmet Summit: an example of gastronomic tourism. International Journal of Hospitality Management, 31(2), pp. 309 – 318. Dutta, P. (2008). The impact of cultural factors on the growth of Singapore tourism. TMC Academic Journal, 3(2), pp. 76 – 79. Economic Strategies Committee, (2010). Report of the Economic Strategies Committee. [online] Available at: [Accessed 18 April, 2013]. Goh, A.L.S. (2005). 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