Before independence in 1965, Singapore was the capital of the British Straits Settlements, a Crown Colony. It was also the main British naval base in East Asia. Because of its status as the main British naval base in the region, as well as hosting the largest dry dock in the world at that time in the form of the Singapore Naval Base, it was described in the press as the ‘Gibraltar of the East’. The opening of the Suez Canal in 1869 caused global trade to boom, and Singapore became a major world trade node, and the Port of Singapore became one of the largest and busiest ports in the world. Before independence in 1965, Singapore had a GDP per capita of $511, then the third-highest in East Asia. After independence, foreign direct investment and a state-led drive for industrialisation based on plans by Goh Keng Swee and Albert Winsemius created a modern economy.
Today, Singapore has a highly developed market-based economy, based historically on extended entrepôt trade. Along with Hong Kong, South Korea and Taiwan, Singapore is one of the original Four Asian Tigers. The Singaporean economy is known as one of the freest, most innovative, most competitive, and most business-friendly. The 2011 Index of Economic Freedom ranks Singapore as the second freest economy in the world, behind Hong Kong. According to the Corruption Perceptions Index, Singapore is consistently ranked as one of the least corrupt countries in the world, along with New Zealand and the Scandinavian countries. Singapore is the 14th largest exporter and the 15th largest importer in the world. The country has the highest trade-to-GDP ratio in the world at 407.9 percent, signifying the importance of trade to its economy. The country is currently the only Asian country to have AAA credit ratings from all three major credit rating agencies – Standard & Poor’s, Moody’s, and Fitch. Singapore attracts a lot of foreign direct investment because of its location, corruption-free environment, skilled workforce, low tax rates and advanced infrastructure. There are more than 7,000 multinational corporations from the United States, Japan, and Europe in Singapore. There are also 1,500 companies from China and 1,500 from India. Foreign firms are found in almost all sectors of the economy. Singapore is also the second largest foreign investor in India. Roughly 44 percent of the Singaporean workforce is made up of non- Singaporeans. Over ten free trade agreements have been signed with other countries and regions.
Singapore also possesses the world’s tenth largest foreign reserves. The currency of Singapore is the Singapore dollar, issued by the Monetary Authority of Singapore. It is interchangeable with the Brunei dollar.
The Singaporean economy depends heavily on exports and refining imported goods, especially in manufacturing, which constituted 27.2% of GDP in 2010 and includes significant electronics, petroleum refining, chemicals, mechanical engineering and biomedical sciences sectors. In 2006 Singapore produced about 10% of the world’s foundry wafer output. Despite its small size, Singapore has a diversified economy, a strategy that the government considers vital for growth and stability.
Tourism also forms a large part of the economy, and 10.2 million tourists visited the country in 2007. To attract more tourists, in 2005 the government legalised gambling and allowed two casino resorts (called Integrated Resorts) to be developed. Singapore is promoting itself as a medical tourism hub: about 200,000 foreigners seek medical care there each year, and Singapore medical services aim to serve one million foreign patients annually by 2012 and generate USD 3 billion in revenue. Singapore is an education hub, and many foreign students study in Singapore. Singapore hosted over 80,000 international students in 2006. There are also more than 5000 Malaysians students who cross the Johor–Singapore Causeway every morning with hopes of receiving a better education in Singapore. In 2009, 20% of all students in Singaporean universities were international students. The students were mainly from ASEAN, China and India.
Singapore is a world leader in several economic areas: The country is the world’s fourth leading financial centre, the world’s second-biggest casino gambling market, one of the world’s top three oil refining centres, the world’s largest oil-rig producer, and a major shiprepairer. The port is one of the five busiest ports in the world. The World Bank has named Singapore as the easiest place in the world to do business and ranks Singapore the world’s top logistics hub. It is also the world’s fourth largest foreign-exchange trading centre after London, New York and Tokyo.