Table of Contents
1. Introduction 2
2. Discussion 3
2.1 Political Environment of Singapore 3
2.2 Economic Environment of Singapore 4
2.3 Monetary Situation 6
2.4 Legal or Administrative Situation 6
2.5 Factor endowments 7
2.6 Social and Cultural 8
3. Conclusion 8
4. Recommendation 9
Appendices 10
Appendix A 10
Appendix B 11
Business Environment Analysis: New Zealand and Singapore
1. Introduction
Singapore is one of the most successful and economically efficient South East Asian countries. It is the only country in the South East Asian region that is as small only as a city, and as successful and as efficient as larger countries, such as Thailand, Brunei, and Malaysia. With its success and the name it has made in the economy of the whole South East Asian region, Singapore has become one of the most targeted and most sought out after country by many foreign investors from Europe, Asia, the Americas, and from the Australian region. As a proof of this, Singapore has been an active member of many existing world organizations and summits, such as the ASEAN, the APEC, the World Trade Organization, and many others. In this regard, this means that Singapore has already gained the trust of many countries in terms economic, political, societal, and technological advancements and capabilities.
Recently, both Australia and New Zealand have made various treaties and agreements with many Asian nations, including Singapore in order to further improve and enhance trade links and objectives. This is based on the belief that for a specific country or nation to perform efficiently and effectively in terms of its economy, export and import activities have to be supported. Likewise, the government of New Zealand believes so, leading to the current existing agreement between the nation and Singapore. The main objective of this essay is to evaluate and assess the economic, political, society, and culture of Singapore, in relation to New Zealand perspective. This will be done to be able to determine and understand the strengths and weaknesses of the Singaporean government, economy, politics and society in the basis of the existing trade agreements between the country and New Zealand. Trade, business, and transport barriers would be determined, thus, helping the researcher to make sound conclusions and recommendations on the last part of the essay. Data gathered would also be supported by charts and figures, serving as proofs of the collected data.
2. Discussion
To be able to understand and assess the problems that may arise due to the existing trade agreements and policies between Singapore and New Zealand, comparison between the two countries must be made. This can be done through comparison between New Zealand and Singapore’s political environments, economic systems, societies, and cultures.
2.1. Political Environment of Singapore
The political environment of Singapore exists based in a parliamentary republic, where the Prime Minister is the head of its government (2007), and supports the different political parties that exist, including the People’s Action Party or PAP, the Worker’s Party or WP, the Singapore’s Peoples Party or the SPP, the Singapore Democratic Party or the SDP, and the Singapore Democratic Alliance (2007). (2006) reports that the political environment of Singapore is unique, having only few opposition parties, leading to the lack of coups, resistance, and clashes. This serves to be the primary strength of its political environment, being safe and secured, thus, having no worries in terms of loss of investments and employment. Another strength of its political environment is its policy that attracts and supports employment for foreigners, talents, and skilled immigrants (2006). In contrast to its political environment, the politics and government of New Zealand is a constitutional monarchy with a parliamentary democracy. A prime minister and a Cabinet represents the government, but its Head is Queen Elizabeth II, by which activities are being administrated by the Governor-General (2007). In this regard, it can be observed that the political environments of both countries are completely different from one another.
2.2 Economic Environment of Singapore
Singapore’s economy is a highly developed free market economy that is open for businesses, and characterized by transparency, stable prices, and is free of corruption. It is one of the nations having high GDP or Gross Domestic Product, brought mainly about by its exported goods, that serve to be the primary source of its economy (2007). In addition, it is based on free enterprise, having no restrictions on foreign ownership in terms of business or employment, and it welcomes foreign investors, accompanied by lack of restrictions on the repatriation of profits and import of capital ( 2007). In addition, its economy grew by 7.9% in 2006, where its GDP growth is expected to slow to 4.6% in 2007, being a result of an expected slow down in demands for exports in the United States and Europe. The country’s government increased its GST rates to 7% in July 2007 and decreased its corporate tax rates. However, Singapore remains to be committed to its free trade, which would continue to expand the number of nations with which it has free trade agreements with (2007). These features have led the nation a number of advantages, such as the improvement of its tourism, due to the increase in the number of tourists destinations and activities, development of sea lanes, ports and airports, high levels of investments and savings, high purchasing power, improvement in terms of education and skills of workforce, and increase in trade agreements, including export and import products from and to other countries.
It has been mentioned earlier that exports, especially in terms of electronics and chemical services provide Singapore with its primary source of income. This allows the nation to purchase and obtain the necessary natural resources and raw materials that it lacks. Singapore then re-processes the purchased raw materials and natural resources in order to produce export products (2007). Among all the countries being traded with by Singapore, New Zealand serves to the primary nation with which Singapore has first signed a free trade agreement with. New Zealand has been one of the active countries from which Singapore obtains its natural resources, and serves to be the import products of Singapore from New Zealand. The different import products of Singapore from New Zealand are shown in Appendix A.
It has been reported that Singapore has been forcefully pursuing free trade agreements with a number of countries, including New Zealand, as the country became disappointed with the slow pace of trade liberalization talks under the World Trade Organization ( 2000). From this, it can be perceived that New Zealand has a great advantage in terms of its export products to Singapore, as the country needs its products for the daily subsistence and support of its citizens.
2.3 Monetary Situation
The currency of Singapore is the Singapore dollar or S$, and now is equivalent to one US dollar for 1.5225. On the other hand, the currency of New Zealand is the New Zealand dollar, and is equivalent to one US dollar for 0.7145. From this, it can be seen that the monetary situation of New Zealand is more stable than Singapore, having a lesser value of money than the US dollar. This is brought about by the higher inflation rates of New Zealand by 2.6% in December 2006 ( 2007). This is higher than the inflation rate of Singapore of 1% in 2006 (2007). However, both countries have relatively low inflation rates, which are favorable for foreign and local investors.
2.4 Legal or Administrative Situation
As mentioned earlier, Singapore is a corruption-free economy, thus, providing confidence and safety for both local and foreign investors in terms of investing and doing business in the country. Likewise, New Zealand is also a corruption-free country, being the second in the world. This is because New Zealand has a strong rule of law that protects property rights, resulting to the fact that foreign and locally owned businesses enjoy flexibility in licensing, regulation, and employment practices ( 2007). Such results are attributed to the laws or policies being implemented by both countries in terms of economy and investments. It has been reported that the government of Singapore has developed an outward-looking, export-oriented (2005), pro-business, pro-foreign investment economic policy framework, with its combination with state-directed investments in strategic government-owned corporations (2007). This policy encouraged two-way flows of trade and investment, thus, targeting the four “pillars” of manufacturing, namely, electronics, chemicals, engineering, and biomedical sciences, which encouraged foreign and local investments (2005). Likewise, New Zealand also adopted laws and restrictions in doing business. It has been emphasized that New Zealand is a common law jurisdiction, where the law is developed from case law and from statutes enacted by the New Zealand Parliament. The Overseas Investment Act of 2005 and the Overseas Investment Regulations of 2005, which applies to all types of investments, bound the law governing overseas investment and immigration. In addition, several other measures also govern and regulate businesses in New Zealand, such as the Commerce Act of 1986, the Fair Trading Act of 1986, the Consumers Guarantees Act of 1993, the Securities Markets Act of 1988, and the Resource Management Act of 1991 ( 2006).
2.5 Factor Endowments
New Zealand is one of the primary exporters of dairy products in Singapore, including milk, cheese, honey, and many others. As written in the table indicating the export products of New Zealand, other products, such as eggs, meat, fish, crustaceans, animal fur or skins, animal feeds, and edible fruits and nuts are the products being exported by New Zealand to different countries, including Singapore. Likewise, Singapore is also exporting goods and services to New Zealand, including electronic products, chemicals, and services. Singapore exports textile, clothing, footwear products, health, education, broadcasting services, and foreign investments.
2.6 Social and Cultural
Both Singapore and New Zealand have multi-cultural societies, having a lot of foreigners and immigrants from different parts of the world. This is because both countries have shortages in terms of workforce, thus, requiring the talents and skills of outside workforce. Currently, both countries have been importing skilled workers and immigrants from different parts of the world, such as the Middle East and Asian countries, including Malaysia, Indonesia and the Philippines. Due to this, cultural diversity can be observed in all aspects of both countries, such as in the medical field, construction, and manufacturing. It has been reported in the year 2000, 600,000 foreign workers are present in Singapore, comprising 27% of its total work force (2007). This contributed to its dense population, with an annual growth rate of 1.3%. As such, the presence of many varied cultures and languages in the country led to the existence of many religions in Singapore (2007). Likewise, New Zealand is also open for immigration from foreign workers and immigrants, as the country’s government is committed in increasing population to about 1% annually ( 2007). However, majority of the peoples of New Zealand are British in origin, along with others who are indigenous (2007), thus, further increasing the cultural diversity in the country.
3. Conclusion
From the discussion, it can be deduced that advantages and benefits can be attained from the trade agreement between Singapore and New Zealand. Such advantages would both benefit the countries, thus, strengthening their bond and cooperation, and their desired economic, political, societal, and technological stability and efficiency. However, despite the assumed success of the trade agreement between Singapore and New Zealand, certain problems and conflicts can still be determined. Problems include increase in cultural diversity in many different aspects of society, problems affecting the small businesses of the Maori people, the problem with tariffs, and miscommunication. Such problems must be addressed in order to continue the effective and successful interrelationship and cooperation between two countries.
4. Recommendations
Primarily, the key recommendation for all problems or conflicts is communication. It would be helpful for both governments to communicate with one another often in order to talk about the many problems or conflicts that arise based on the situation. Another recommendation is the consistent and thorough evaluation of the existing agreement in order to know if certain businesses are being affected by the move of both governments. Through evaluation and assessment of the problems and existing agreements, small and local businesses and manufacturers would not be affected by the entry of foreign products in both countries. The last recommendation is to come up and implement policies regarding the existing agreement to ensure that all rules and policies that exist are being met.
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