The Business Environment of Singapore - Literature review Example

The Business Environment of Singapore Student’s Name Institution The Business Environment of Singapore Introduction Famed as the Garden City or the Lion City, the Republic of Singapore is one of the world’s most standout nations. Tsang and Hendricks (2015) described it as the only city-state in the entire world, a beauty to behold, and the place to set up and run a business. Ideally, these projections were based on the nation’s geography as well as the political, economic, and social environs that collectively build an aura that would favor productivity. Singapore is a nation of 63 islands with some connected by man-made facilities. This beauty is further bolstered by its resources like the Botanic Garden that has been shortlisted by UNESCO a heritage site, the only tropical garden in the world to be given this status. Besides, as Koninck, Drolet and Girard (2014) noted, in economic measures, the nation boasts economic resources that have facilitated its growth and position as one of the world’s most important business harbors. This paper is idealized to examine Singapore’s environment and to determine its economic significance. Singapore’s Profile Economic Environment Singapore boasts of a magnificent and highly developed market economy. Its position as one of the most innovative, freest, dynamic, and business-friendly nations was bolstered by the fact that it was one of the original four tigers of Asia that were positioned to be podiums from which inroads into the rest of the continent would be made. Considering that it has continually advanced an achieved a strong GDP that compares to some of the world’s most economically dominant nations, the nation has, for the past four consecutive years, received credit ratings of AAA. Its prime location close to the Suez Canal, its low tax rates, skilled workforce, advanced infrastructural development, and a zero-tolerance against corruption are the factors that have significantly role played in positioning the country as the most preferred destination for foreign investors. Koninck, Drolet, and Girard (2014) stated that the rates at which investors flock the country contradicts the fact that it is not one of the most populated nations in the world. This ideally highlights the significance of the creation of positive and encouraging business environments. In Tsang and Hendricks’s statement, Singapore sits with the world’s most significant industrialization pacesetters (2015). Ideally, the nation has some of the most significant industrial resources in the whole world. For instance, it boasts one of the largest ports in the world in its Port of Singapore. Besides, its foreign exchange center is the third largest after US’ and Japan’s foreign exchange centers. Other than that, its oil-refining and trading center is also the third largest in the whole world. Other activities like gambling and trade in general are always positioned to thrive in the city as the gambling businesses in its cities position it as the second largest casino market in the world. Ideally, the nation’s economic environment is defined by activities that relate to financial services, oil refining, and manufacturing. Notably, it also has global brands that contribute to the earning of foreign exchange and in bolstering its financial centers (Leasor, 2015). Legal Environment Singapore’s legal framework is similar to the British Westminster’s Model in which administrative and governing powers are divided between the Legislative, Executive, and Judiciary branches of the government. The judiciary, as is required in the model, operates autonomously without influence from either branch. The nation’s major sources of law are the case laws, which are the deliberations, and propositions that have been projected in previous judgments and the legislations, which are the acts that are deliberated and passed in parliament (Leasor, 2015). Mitigation, mediation, and arbitration are the nation’s preferred mechanisms for handling and negating civil disputes. Tsang and Hendricks (2015) stated that these measures were outlined as measure of ensuring that the nation avoids plunging into a civil dispute. Regarding employment, the nation has implemented an Industrial Relations Act that regulates collective negotiation and bargaining which are mechanics that have been significant in averting labor unrests. This, as Palmer (2014) stated, has been significant in positioning the nation as the investors’ most preferred destination. The nation also governs its markets using the Competition Act through which it limits biased business practices and ensures that the markets are favorable both for local companies as well as for the foreign investors. Political Environment Singapore is a democracy in which the people elect political representatives to push for their course. This has created stability, which has consequently translated to peace and a standardized set for living in the nation. Other than that, the stability has been vital for its transformation into a business hub. According to Koninck, Drolet, and Girard (2014), the Political and Economic Risk Consultancy, PERC, rates the country as the nation with the lowest political risk in the entire world. However, despite these political positives, the nation has many negatives that limit its political development. For instance, the government limits freedom of speech for the opposition citing that they can cause unrest and affect the nation’s economic development and social cohesion (Leasor, 2015). Besides, the government controls the media and determines the kind of information that is shared with the public. Other than that, there is no independent electoral body and though there are significant disputes that have ever been filed, this is a factor that Koninck, Drolet, and Girard (2014) stated to create a podium that hands the incumbents the political advantage over their rivals. These propositions have led to the nation’s label as flawed democracy. However, Tsang and Hendricks (2015) stated that the fact that there are no disputes and that the opposition can win over the sitting incumbents like it happened in 2011 is a projection that this system best works for the nation. The other notable political factor in Singapore is its approach to foreign policies that it believes is a significant determinant of peace and development. To this effect, the nation ensures that it has formidable relations with as many nations as possible. Palmer (2014) opined that Singapore has diplomatic relations with over 180 nations. In the overall sense, the nation has a very positive political environment that is not only inviting to foreign investors, but that also favors the nation’s trading in other global platforms. Singapore’s Cultural Environment Singapore has a novel culture based on the principles that support the nation before the community. In the nation, the family is the basic unit of every society while the society is constructed such that it respects individuals. Moreover, consensus and harmony are favored over conflict (Bercuson and Carling, 2015). The environment in Singapore also favors intense competition that limited by the cooperation and harmony. This manner of competition ensures that the competition over political and economic aspects do not override the nation’s well founded aspects (Leasor, 2015). Cultural Layers: According to Tsang and Hendricks (2015), 77% of Singaporean citizens are Chinese while 8% are Indians and the remaining 14% are Malay. The official languages that are spoken in the country are the Malay, Chinese, Tamil, and the English. The nation also has freedom of worship that has propagated the Buddhist, Taoist, Christian, Hindu, and Islam forms of religion. Besides, a generation of free thinkers that makes up a significant 15% of the total population. These cultural layers have been significant role players in the creation of a podium that favors harmony and moral drivers for social development. For instance, the nation has the lowest drug use percentage in the whole world as, culturally; drugs are considered immoral and undesirable (Bercuson and Carling, 2015). However, this is a factor that is further that is also credited to the laws that have been adopted to fight drug use and trafficking in the country. For example, drug trafficking is punishable by death. A notable fact is that the nation’s culture is also influenced by foreigners who prefer Singapore for its peace, beauty, and position as a business hub. Palmer (2014) stated that Singapore’s entire population in 42% foreigners. Singapore’s Globalization According to the KOF index of globalization, Singapore ranks as fifth nation in the entire world with a strong index of 87.49 (Bercuson and Carling, 2015). Ahead of it are Ireland, Netherlands, Belgium, and Austria. Factors that were taken into consideration and that have favored this high rank are inclusive of the business environments that the nation has created and that favor both foreign and local investments. As had already been stated, the Singapore is a nation that is favored by investors as it strives to ensure that it climbs the ranks and becomes the world’s most preferred destination of investors (Leasor, 2015). Economic Globalization The KOF Index of Globalization ranks Singapore as the first country in economic globalization with a significant index of 95.69. This high rank is credited to the fact that the nation has created several measures that favor foreign investments. For instance, it has regulations that limit corruption (Bercuson and Carling, 2015). Other than that, it has low taxes and a high education level and infrastructural development. These are factors that not only position the country as a cheap production site, but also enhance the growth and development of industries and companies that have been set up by investors. According to Koninck, Drolet and Girard (2014), foreign investors are always critical of such measures as they value profitability and development. That implies that Singapore has created an aura that is considered by investors as profitable and growth inclined. Other than that, the nation’s foreign policy also favors its trade with other nations as it has diplomatic relations with over 180 nations across the world. This factor has contributed to the strengthening of the nation’s financial bases and markets through earned foreign exchange (Leasor, 2015). Ideally, the nation’s financial market also attracts investors who are assured of financial freedom and development. As Koninck, Drolet and Girard (2014) stated, nations with weak financial markets do not provide the podium for development as there are no factors that contribute to the creation and development of capital bases. That implies that young investors are never favored by the weak financial markets and, therefore, do not prefer nations with such weak markets. However, this is a factor that is largely absent in Singapore as it its strong financial market has attracted both established and young investors (Leasor, 2015). Social Globalization In Social Globalization, Singapore is ranked second by the KOF index of globalization with an index of 90.83. This ranking is only beaten by Austria’s index of 91.54. Such a high ranking, as Koninck, Drolet, and Girard (2014) stated, is often enhanced by factors like social cohesion, harmony, and the overall value of culture in developing and molding practices that favor morality, competition, and social development. Ideally, these factors largely define Singapore’s social environment hence its high ranking. Palmer (2014) opined that though there are nations that are more culturally and socially diverse, Singapore, Austria, and Switzerland have definitive features that favor three-fold development which are social, political, and economic development. Ideally, Singapore’s diverse cultural setup is harmonized through values that promote morality and the disdain for practices that would annihilate peace and cohesion. This is a nation that identifies factors that may affect its social setup and creates measures to avert them (Bercuson and Carling, 2015). The most significant indicators of this proposition are the laws that have been implemented to avert drug use as well as corruption. Notably, the country’s cultures promote respect both for the locals as well as for the visitors. Though KOF’s ranking is largely based on the peace and cohesion that characterizes the nation’s social aura, the influences of the social setup on business and commerce are also significant in determining how the nation’s social globalization compares to that of the rest of the world. Ideally, the positives in Singapore’s social setups have been role players in the problem solving, motivation for employees, performance appraisal, negotiation, and client relations (Leasor, 2015). These are some of the factors that underlie investors’ preference for Singapore as they are considered to be factors that make it a nation free of labor unrests. Political Globalization Unlike the high and positive ranks in social and economic globalizations, Singapore’s Political Globalization is ranked by the KOF index of globalization on a lowly 85th position with an index of 71.37. That implies that unlike the highly ranked aspect of globalization, the political globalization is mired in negativities that make it hardly comparable to the performances of other nations’ political setups (Bercuson and Carling, 2015). One of the factors that significantly contribute to this low rank is the lack of freedom for the opposition sides. As Tsang and Hendricks (2015) explained, the lack of freedom, though targeted at promoting peace and cohesion, makes the nation’s system of democracy flawed; it not only affects the people’s freedom of expression, but also enhances the use of measures that are internationally unapproved in creating political measures. For instance, the government takes full charge of the electoral board and its officials. This factor creates a podium for the manipulation of the electoral systems to favor incumbents and persons who are favored by the government. Koninck, Drolet and Girard (2014) stated that exemplified like Italy and France that both score above 97 on the KOF indices operate on equitable grounds that accord both the opposing side and the government equal rights for expression. Other than that, the government controls the media and determines the kind of information that is shared with the public. This is a factor that affects the people’s access to information and also creates a podium for gagging and misleading the public. According to Palmer (2014), such operatives are not only archaic but are also dictatorial in nature. Ideally, this ‘dictator’ label has significantly affected the nation’s ranking amongst the world best politically globalized nations. Singapore’s Cultural Sensitivity (etiquette) Etiquette How it Works How people greet and address one another People engage in prolonged handshakes. However, women must always extend their hands first. Address to women starts with ma’am while the address to men starts with sir. The role of business cards Business cards are used to build and maintain business and professional relations with other persons. Dressing codes in firms Dressing codes in firms is strictly formal Acceptable Personal Inquiries Acceptable inquiries include health and family statuses as well as performance at business Gifting Gifts are accepted even in business setups. However, there are limitations and taboos. For instance, gifting utensils and plates is considered as a move that is intended to server the relationship. Notably, the Chinese may refuse to accept a gift three times before accepting as an indication of lack of greed Attitude toward body contact Bodily contacts are not favored generally unless they are of personal relationships Direct Eye Contact Direct eye contact is considered as aggressive and impolite. It is, therefore, not expected. Standing Proximity Singaporeans consider it respectful to maintain some distance when standing next to each other in direct address. Display of emotions Display of emotions in Singapore is considered as embarrassing Silence Silence is considered as deliberation and a high level of intelligence. For instance, instead of giving an immediate reply to a question, Singaporeans pose for a moment to prove that their answers are well thought of and calculated Addressing people The Chinese prefer being addressed by honorific titles and their surnames while Malay and Indians prefer to be called using their names Dinning manners Proper manners involve not finishing food in the bowl and not living the chopstick in the bowl. Besides, people should not place bowls on the plate Gestures and Body Language Gestures and body language make a significant part of communication. Gesturing may be considered rude especially if they are casual. Conclusion Singapore, as Koninck, Drolet, and Girard (2014) explained, is a nation with a favorable business environment. That is because it has an economic environment that is luring, attractive, and favorable to foreign investors and local entrepreneurs alike. The most definitive factors of the environment are inclusive financial markets that favor young investing enterprises just as it favors the established. Besides, the country has tough regulations that do not favor corruption. The combination of these factors has made the country favorable for foreign investors hence the high KOF globalization-ranking index. Other than that, Singapore’s social environment also contributes to its positive and favorable business environments (Leasor, 2015). The social setup, enhanced by religious practices that demand for morality, respect, and equity, has created an aura that limits labor unrests while at the same time favoring productivity through motivation and amicable approaches to the solution of disputes and enigmas. Further, some political factors also favor the business environment. These are especially the policies that the country has adopted as a measure of promoting relations with other countries and for creating favorable laws for commerce and trade. Despite that, the fact that the nation ranks lowly in political globalization, its stability, coupled with the social and economic factors, have been significant in the creation of one of the best business environments in the world (Palmer, 2014). References Bercuson, K., & Carling, R. G. (2015). Singapore: A case study in rapid development. Washington, DC: International Monetary Fund. Koninck, R. ., Drolet, J., & Girard, M. (2014). Singapore: An atlas of perpetual territorial transformation. Singapore: NUS Press. Leasor, J. (2015). Singapore: The battle that changed the world. London: House of Stratus. Palmer, J. (2014). Singapore. Fredericton, N.B: Broken Jaw Press. Tsang, S., & Hendricks, E. (2015). Discover Singapore: The city's history & culture redefined. Singapore: Marshall Cavendish Editions. Read More