Studies Notes for Singapore Industralization

Once agian with Thanks to Hwa Yi Secondary for the notes

LABOUR-INTENSIVE INDUSTRIES (60s-late 70s)
• S’pore’s solution to unemployment
• Labour-intensive manufacturing industries
• Assembly plants that employed large workforce
• Largest portion of product cost is wages
• Eg Electronics and electrical industry, textile industry

2.1 Door Open to MNCs• MNCs keen to set up factories in developing countries
• Labour was cheap
• S’pore willling to learn from them

MNCs : Very large foreign companies doing business in many different countries
• Other NICs reluctant to do so; developing own industries
• Fear control and over-dependence on MNCs
• Turned MNCs attention to S’pore as a more favourable location

2.2 Incentives to Attract Foreign Investors• EDB set up in 1961 : Successful in attracting foreign investments because
– Savings in labour costs
– Incentives
• Pioneer Certificates
• Exemption from tax for 5 years or more
– Policies were not changed unnecessarily or frequently

2.3 A Peaceful & Skilled Workforce• Industrial Peace
– 1961 : 400,000 mandays lost because of work stoppages
– 1968 : New labour law to maintain industrial peace

• Labour Cost & Working Conditions
– Industrial Arbitration Court (IAC) in 1960
– National Trade Union Congress (NTUC) in 1961
– National Wages Council (NWC) in 1972
• Technical Education & Skills Training
– Technical Education in 1969
– Training Institutes
– Industrial Training Schemes

2.4 Location of Industries• Jurong Town Council in 1968
• Reduced time needed to set up factories
• Location shows careful planning by govt
– Light industries
– Heavy industries

2.5 Support Facilities• Transport & Communications
– Port of Singapore Authority (PSA) in 1964
– Paya Lebar Airport expanded
– Major communications centre
• Banking & Financial Services
– Development Bank of Singapore (DBS) in 1964

3.1 Benefits
• Unemployment reduced from 8.7% in 1965 to 4.5% in 1975
• Total income : $3m in 1965 to $13.5m in 1975
• Average income : $1,618 in 1965 to $5,903 in 1975

INDUSTRIAL RESTRUCTURING
(Late 1970s to 1980s)
4.1 Reasons for Industrial Restructuring
• Serious Labour Shortage
• Competition from other countries


4.2 What is Industrial Restructuring?
• Labour-intensive to capital-intensive industries
• Low-tech to high-tech industries
• Low value-added to high value-added industries)

4.3 Strategies of Industrial Restructuring
• Higher wages
• Productivity Campaigns
• New Focus in Education & Training
• Increased Emphasis on Research & Development
• New & Better Industrial Facilities
• Better Support Services

CONCLUSION

Important to be practical, efficient & far-sighted

Economic development has strengthened Singapore’s security

Cherish our achievements & build upon it

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To what extent did the incentives offered by the government play in attracting foreign investment to Singapore in the 1960s – 1970s? Explain your answer.



The government set up the Economic Development Board (EDB) in 1961 to promote the industrialisation of Singapore. Its main role was to attract foreign investment into Singapore. EDB encouraged foreign investors from Japan, Western Europe and the US to set up factories in Singapore. One incentive for foreign firms to set up in Singapore was the cheap labour. Besides this, the government also issued Pioneer Certificates to companies that manufactured new products in sufficient quantity. These certificates exempted the company from paying the standard 40% tax on company profits for a maximum of 5 years. Moreover, the government also ensured that they did not change their policies unnecessarily. This showed that the government had clearly thought through their policies before implementing them. This efficiency shown by the government was an added incentive for foreign companies as it raised their confidence level in Singapore. Thus, foreign investors were willing to invest large sums of money / capital in Singapore which was needed to boost Singapore’s economy.



To attract foreign companies to Singapore, the government saw the importance of having a workforce that had relevant work skills and a positive work attitude. To ensure that there was adequate supply of adequately trained workers, technical education was introduced in 1969. Many training schools institutes were jointly set up by the government and foreign companies. Thus, technical education and skills training were important because it meant that the workers had the skills that were needed to meet the demands of the economy. As a result, investors were attracted to Singapore.

Besides this, the government realised that to ensure industrial peace, there needed to be a good working relationship between workers and employees. With industrial peace, production would not be disrupted. In 1960, the Industrial Arbitration Court was set up to settle misunderstandings between employers and workers. The following year, NTUC, a federation of trade unions, was set up to improve the working condition of the workers and promote good working relationship between the employers and employees. As a result of the various government measures, the number of man-hours lost due to strikes was drastically reduced. Therefore a peaceful and skilled workforce was important in attracting investments as it ensured that production would not be disrupted. Thus, this gave companies greater confidence in investing their money in Singapore. Moreover, it ensured that productivity was much higher than the neighbouring countries.

The location of industries also helped in attracting foreign companies. The development of industrial estates greatly reduced the time needed for foreign companies to set up their factories as the infrastructure was already provided for in these estates. Moreover, EDB also ensured that labour-intensive industries were located close to housing estates so that the residents in these estates would be attracted to work in these factories as they could save on time and transport cost. On the other hand, heavy industries were located away from the residential areas. They were located near the sea to facilitate the import of raw materials and the export of manufactured products. Thus all these measures enhanced Singapore’s reputation as an efficient place to do business. Thus, locations of industries greatly appealed to foreign investors as it made it convenient and hassle-free to set up production in Singapore. It also meant that they would be able to receive returns on their investments / profits / generate revenue at a faster rate.


Singapore, situated at the crossroads of international shipping and air routes, is the transport and communications centre of Southeast Asia. PSA, set up in 1964, built new shipyards and expanded its port facilities to cater to large ships. Also to cope with the growth of air traffic, Paya Lebar Airport was expanded. Thus, Singapore became a major telecommunications centre. Besides this, new roads were built and improved. Thus, these support facilities made it convenient for business transactions to take place which greatly appealed to foreign investors. It led to an increase in the volume of trade and cargo.

Singapore further developed its banking and financial services. In 1968, the government set up the Development Bank of Singapore primarily to provide loans for manufacturing and other industries. Our robust infrastructure ensured accessibility and convenience. Singapore geared itself to become a major telecommunication centre. Thus, by offering a range of international banking services, Singapore became a global business hub. In short, these support facilities facilitated trade and industry.

The incentives offered by the government no doubt helped to attract investments to Singapore. However, investors were attracted to Singapore because Singapore had their necessary requirements met - a peaceful and skilled workforce, sound infrastructure and industrial estates. The incentives offered by the government were the icing on the cake. Therefore, had the government not ensured that her labour force was educated and skilled, or had not built a good infrastructure, the incentives offered by the government would have been useless. Thus, incentives did play a part in attracting investments to Singapore but not as much as the other factors.

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“Foreign Investment was the most important cause behind the success of Singapore’s industrialization in the late 1960s.” Do you agree? Explain your answer


1. I agree that foreign investment was the most important cause as our government strongly encouraged foreign investors to come to Singapore. But we need to look at the other causes for success to show why it was the most important cause.

2. Foreign investment helped Singapore in a number of ways.
• Large foreign companies set up factories with foreign capital and technology transfer and also provided training for workers.
• Foreign investment also enabled our goods to be sold to a wider market to countries like United States, Japan and Europe. Therefore with foreign investment, new jobs were created and this helped to solved unemployment.

3. Another cause was the financial incentives to attract foreign investors.
• The government issued pioneer certificate to industries that manufactured new products, or not produced in sufficient quantities and they were exempted from paying standard 40% tax for a period of 5 years. Pioneer status was till offered in 1970s and 1980s
• Training of workers received subsidies and there were duty free imports of equipment and raw materials for manufacturing. Foreign companies were also attracted by the cheap labour here. Singapore’s policies were thought through before implementing. As a result, foreign investors confidence was raised and they were more willing to invest large sums of money in Singapore

4. One more cause for success a peaceful and skilled workforce. The government took steps to achieve this.
• In 1961, many factories and shops were unable to operate because the workers went on strikes and there were frequent work stoppages, then the government saw the need to maintain industrial peace.
• In the 1960, the Industrial Arbitration court (IAC) was set up to settle misunderstanding between employers and workers.
• The National Trade Union Congress (NTUC) was formed in 1961 to improve working conditions of workers, promote good relationship between workers and employers and provide training opportunities for workers to upgrade their skills.
• The National Wages Council (NWC) comprises the government, employers and union representatives were formed in 1972 and it makes recommendations on wages increase to meet the economic needs of Singapore.
• New laws were passed to define the rights of unions and management in matters of recruitment, promotion and dismissal of workers. Laws were also passed to cut labour costs. Working hours were increased while public holidays and retirement benefits were reduced. Thus, in looking after the needs of workers, industrial peace became possible
• To ensure an adequate supply of trained workers, technical education was introduced in 1969. By 1975, 12 training institutes offering training in different types of industry. The EDB also started a number of industrial training schemes to upgrade the skills of workers

5. An additional cause was the steps taken by the government to locate its industries and to provide support facilities.
• The light industries such as food and textiles, require little land and are less pollutive and are labour-intensive. They are located in flatted factories or close to housing estates.
• As for heavy industries such as ship building and ship repairing need large area of land, need large quantities of raw materials and often noisy so they are located far away from the housing estates. and are located near the sea to facilitate the import of raw materials and the export of manufactured products.
• In 1964, the government appointed the Port Of Singapore Authority (PSA) to control all port operations such as cargo-handling services.
• To cope with the tremendous growth of air traffic and rapid innovations in the aircraft industry, Paya Lebar international airport was expanded.
• Efficient banking and financial services are necessary for companies to operate. In 1968, the government set up the Development Bank Of Singapore, primarily to provide loans for manufacturing and other industries. At the end of 1973, there are 62 banks and many foreign banks. And these measures made it easy for industries to operate.

6. I think in the 1960s, foreign investment was the most important factor
• With their help that many labour intensive factories were set up and this helped in our economic prosperity. Without their help, less factories would be set up and many people will be jobless and the efforts put into setting up industrial buildings and support facilities would be useless. Thus many incentives were given to attract foreign investors.

• But the other factors were also important as they all served to help foreign investors.
• A peaceful and a skilful workforce, good location of industries and support facilities are further incentives to attract foreign companies. Thus all factors are interlinked as without any of them it would be difficult for industrialization to succeed.

7. I conclude that foreign investment was the most important factor as without foreign companies to take the lead in our industrialization programme, all the other factors would be less useful in ensuring our success.

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1. I agree that a skilled workforce was the most important factor as skilled workers are needed to handle advanced machinery to produce high valued added goods and carry out high technology activities.
• But we need to look at the other factors to show why this was the most important factor.

2. Multinational companies (MNCs) made use of the local skilled workforce. As more MNCs came, more factories were set up but there was a greater demand for skilled workers due to changing conditions.

• In the 1970s, many developing countries such as Indonesia and Malaysia were also setting up factories. With their large populations, these countries had a big supply of labour and their labour cost was lower. We were unable to compete with these countries in labour-intensive industries.
• Also our productivity was lower due to less skilled workers compared to our competitors such as Taiwan which were able to produce better quality goods and services more efficiently.

3. Our government saw the need to upgrade the worker’s skills and knowledge.

• In 1979, NUS increased intake of engineering students. In 1982, Nanyang Technological Institute was set up to train more engineers for industry and Singapore Polytechnic and Ngee Ann Polytechnic also greatly expanded their enrolments.
• New industrial training institutes were set-up because of joint ventures between the government and large foreign companies and funds were set aside to upgrade workers’ skills and retrain those who had lost their jobs. Thus with a skilled workforce, we would be able to manufacture high valued added goods and compete with other countries to sell our goods.

4. Another factor for success was the high wages and productivity campaigns.
 The National Wages Council (NWC) recommended higher wages between 1979 and 1981 to encourage employers to substitute machinery for labour, with workers acquiring new skills to handle the machinery. In respond to the increase in wages, employers found it more worthwhile to mechanise, automate and computerise.
 The government encouraged workers to take pride in their work and to be productive through newsletters and advertisements.
 Therefore, high wages and more productive workers helped in restructuring our economy

5. One more factor was research and development (R&D)
• To encourage research and development, the government established the Singapore Science Park to house R&D firms and various government research institutes.
• It also provided tax incentives and funds to local companies to carry out R&D.. Through R &D existing products are improved and new ones developed in order for our industries to remain competitive.

6. Yet another factor was the setting up of new industrial facilities and better support facilities.
• JTC upgraded older industrial estates such as Jurong and built new industrial buildings and facilities. Loyang Industrial Estate was set up to house Singapore’s first aviation centre manufacturing aircraft parts. Wafer fabrication parks were built in Woodlands, Pasir Ris and Tampines and Jurong Island was developed into a world-class petrochemical hub.
• For better support facilities, the government developed transport, telecommunications and banking services to help manufacturing industries.
• For air services, a big air cargo complex was built at Changi Airport to handle the increased volume of high value-added exports.
• For land transport, the buses, taxis and MRT are continuously being improved to provide support for the growth of business
• Telecommunications is constantly upgraded to link with the rest of the world.
• Other support services such as banking, accounting and advertising also continue to be expanded.
• Such measures taken encourage investments in high-technology industries.

7. I think that in the 1980s, a skilled workforce was the most important factor .
• With skilled workers many companies could produce better quality goods and this would boost our exports and improve our economic growth.
• Without skilled workers, our factories would only be producing low-value goods and our exports would be less competitive and this would slow down our economic growth.
• The other factors would seem to be less important but they all helped companies change from producing labour-intensive to capital-intensive goods.
• Higher wages and better productivity meant that companies had to use more and better machinery.
• Research and Development led to better goods and new goods produced
• and improvement in support facilities was a further incentive to attract foreign companies to set up value-added companies.
• Thus all factors were interlinked as without any of them it would be difficult for restructuring to succeed.

4. I conclude that a skilled workforce was the most important factor as without capable workers to start with , all the other factors would be less useful in ensuring our industrial success.