PESTEL analysis of Singapore

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PESTEL analysis of Singapore

This detailed PESTEL analysis of Singapore aims to explore some of the political, economic, social, technological, environmental, and legal factors that affect Singapore today. Singapore is a sovereign city state with a highly developed economy. It is officially known as the Republic of Singapore.

Political factors affecting Singapore

Singapore is a parliamentary democracy whereby the President is the head of state and the Prime Minister is the head of government. It is one of the most stable countries in south-east Asia. It is a member of the IMF, the World Bank, ASEAN, APEC, the UN, the Commonwealth, and some other prestigious institutions. The focus of the government of Singapore on attracting foreign direct investment (FDI) has been an important key to the economic success of the country.

Singapore maintains very good relations with China, the USA, and some other highly developed and powerful countries in the world. Interestingly, it also maintains good relations with North Korea. However, its relations with neighbouring countries such as Malaysia and Indonesia have been cumbersome at times particularly due to disputes over border issues.

Singapore has done well in its fight against corruption. It was ranked the third least corrupt country in the world in the Transparency International Corruption Perceptions Index 2018. However, the Singaporeans face severe restrictions on their basic rights to freedom of expression, association, and peaceful assembly (Human Rights Watch, 2019). In this connection, it is worth noting that the government of Singapore has rejected the criticisms of Human Rights Watch.

Economic factors affecting Singapore

The next element to address in the PESTEL analysis of Singapore is the economy of Singapore and the factors affecting it. Singapore is the 38th largest economy in the world. It is also one of the four Asian Tigers or Asian Dragons that are so named as they are highly developed economies with highly educated and productive work forces. The four Asian Tigers are Hong Kong, Singapore, South Korea and Taiwan.

Singapore has seen remarkable growth in recent years. Its GDP in 2018 was $323.9 billion with $94,105 GDP Per Capita, while GDP for 2019 is expected to be around $359.6 billion (US News, 2018). The unemployment rate in 2017 was 3.91%, while 3.77% in 2018 (Plecher, 2019). However, this unemployment rate may be regarded as overemployment in some countries meaning that employers may have been forced to recruit anyone as there were not enough workers in the market. Corporate tax is charged at a flat rate of 17%. Many analysts see Singapore as a tax heaven as it offers low taxes and other incentives to foreign investors. No wonder why it is one of the largest recipients of foreign direct investment (FDI) in the world.

Singapore is the 14th largest export economy in the world. Its top exports are integrated circuits, computers, semiconductor devices, gas turbines, refined petroleum, gold, diamonds, refined copper, broadcasting equipment, and raw tin which mostly go to countries such as China, Hong Kong, Malaysia, Indonesia, and the USA. Its top imports are integrated circuits, refined petroleum, crude petroleum, gold, and computers (Pines, 2019).

Social factors affecting Singapore

Singapore is one of the wealthiest nations in the world. It is a multi-ethnic country with a total population of 5.64 million as of 2018. The life expectancy for men is 79 years, while 84 years for women (BBC, 2018). While the Singaporeans are somewhat conservative due to the influences of dominant faiths such as Taoism, Buddhism, Islam, Christianity, and Hinduism, they are well aware of the world around them.

Though Singapore has made remarkable progress over the years, it faces some social challenges. For instance, it is a densely populated country and has severe space constraints. The ageing population, rising costs of living, high divorce rates, occasional tensions between ethnic groups, and income inequality are some other social challenges to pay special attention to.

Technological factors affecting Singapore

Singapore is one of the world’s most technologically advanced countries. It is also considered the most innovative country in Asia. Its IT infrastructure is one of the best and it has the fastest internet in the world. It is also often regarded as the Asian technology capital. No wonder why global tech giants such as Amazon, IBM, and many others use Singapore to pilot ground-breaking new projects before their commercialisation around the world. Likewise, 80 of the top 100 tech firms in the world have a presence in Singapore (EDB Singapore, 2018).

Hiring in IT sector has recently outpaced many other dominant sectors in the economy of Singapore. However, there is a severe lack of STEM (science, technology, engineering and mathematics) talents in the country. According to Manpower Group’s 2018 talent shortage survey as cited in Quek (2019), approximately 56% of employers find difficulties in recruiting IT and engineering staff.

Environmental factors affecting Singapore

Singapore is one of the most beautiful places in the world. According to Canada-based online travel agency Flight Network as cited in Bock (2019), it is the most beautiful city in Asia, and the 11th most beautiful in the world. It is renowned for its world’s cleanest streets, year-round summer, Changi Airport (awesome!), street food, sandy beaches, resort hotels, adventure parks, and many other great visitor attractions.

However, it is worth mentioning that as Singapore is a low-lying island state, it is very vulnerable to sea level rise and coastal erosion. Likewise, industrial pollution, and limited resources for freshwater are two big environmental challenges facing the country.

Legal factors affecting Singapore

The legal environment is the last element to discuss in this PESTEL analysis of Singapore. However, it is worth noting that due to the limited scope of the article, the discussion here is somewhat limited. Singapore has some strict laws in areas such as leaving a ‘unflushed’ toilet, connecting to someone else’s Wi-Fi network, urinating in elevators, littering, and vandalising. As long as employment rights are concerned, employees have the right to a minimum of 7 to 14 days paid annual leave, sick leave, timely salary, and paid public holidays. They are also protected by law against wrongful dismissal.

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Last update: 15 November 2019

References:

BBC (2018) Singapore country profile, available at: https://www.bbc.co.uk/news/world-asia-15961759 (accessed 12 November 2019)

Bock, H. (2019) Singapore is most beautiful city in Asia, 11th most beautiful in the world, available at: https://www.straitstimes.com/lifestyle/singapore-is-most-beautiful-city-in-asia-11th-most-beautiful-in-the-world (accessed 15 November 2019)

EDB Singapore (2018) Singapore flexes its standing as Asia’s technology capital, available at: https://www.edb.gov.sg/en/news-and-events/insights/innovation/singapore-flexes-its-standing-as-asias-technology-capital.html (accessed 14 November 2019)

Human Rights Watch (2019) Singapore, available at: https://www.hrw.org/asia/singapore (accessed 10 November 2019)

Pines, L. (2019) Singapore’s Top 5 Exports & Imports: Why It’s The World’s 14th Largest Export Economy, available at: https://commodity.com/singapore/ (accessed 10 November 2019)

Plecher, H. (2019) Singapore: Unemployment rate from 1998 to 2018, available at: https://www.statista.com/statistics/378643/unemployment-rate-in-singapore/ (accessed 12 November 2019)

Quek, C. (2019) Commentary: The future is tech but where is Singapore’s engineering and IT talent? Available at: https://www.channelnewsasia.com/news/commentary/singapore-deep-technology-talent-scheme-foreign-it-enginneering-11870930 (accessed 14 November 2019)

US News (2018) Overview of Singapore, available at: https://www.usnews.com/news/best-countries/singapore (accessed 12 November 2019)

Photo credit: Pixabay

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.