Economic Policy: Singapore's Role in ASEAN, Opportunities and Threats

This report examines Singapore's role in the Association of Southeast Asian Nations (ASEAN) economic integration, focusing on the opportunities and challenges it presents. It begins by outlining the benefits Singapore gains from ASEAN's economic growth, including increased merchandise exports and imports, joint government projects, and the growth of manufacturing industries. The report then addresses the challenges Singapore faces, such as a lack of market information, insufficient government support in certain areas, and a lack of sufficient financial assets. Furthermore, it explores economic strategies to strengthen the relationship between Singapore and ASEAN, including bilateral free trade agreements, strengthened financial cooperation, and support for local companies accessing ASEAN markets. The report concludes by emphasizing the importance of these strategies for overcoming challenges and fostering a stronger economic partnership between Singapore and ASEAN, ultimately promoting regional economic development. This analysis provides a comprehensive overview of Singapore's position within ASEAN and its efforts to contribute to regional economic advancement.

Running head: ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
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1ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
Table of Contents
Introduction:...............................................................................................................................2
The benefits Singapore gained from the ASEAN economic growth:........................................3
Merchandise exports and imports within ASEAN countries:................................................3
Joint government projects within ASEAN:............................................................................3
Growth of manufacturing industries within ASEAN countries:............................................4
The challenges Singapore faces in this economic relationship:.................................................5
Lack of market information:..................................................................................................5
Lack of government support:.................................................................................................5
Lack of sufficient financial assets:.........................................................................................6
The economics strategies to strengthen the relationship:...........................................................7
Bilateral tie in signing agreement in free trade within ASEAN:...........................................7
Strengthening financial cooperation:.....................................................................................8
Helping local companies (SMEs) access to ASEAN markets:..............................................8
Conclusion:................................................................................................................................8
References:...............................................................................................................................10

2ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
Introduction:
The full form of “ASEAN” is The Association of Southeast Asian Nations, which is a
regional group that helps member countries to promote their political, economical and
security cooperation. These member countries are Cambodia, Singapore, Indonesia, Brunei,
Thailand, Laos, Malaysia, the Philippines, Vietnam and Myanmar. Total number of
population in this association is 640 million and these countries generate total $ 2.57 trillion
of total gross domestic product (Visvanathan and Anbumozhi 2018). ASEAN stimulates
economic integration through signing six different free-trade agreements with other regional
blocks (Nimtrakoon 2015). The association was formed in 1967 in order to reduce the
regional hostilities. Another chief vision of ASEAN was to face various potential threats
related to communist-led insurgencies during the war between the US and Vietnam. The chief
founding members of this association were Malaysia, Indonesia, Singapore, the Philippines
and Thailand. These countries intended to promote social and political stability accompanied
by increasing instabilities among the post-colonial states of the Asia-Pacific.
Singapore is one of the founding members of ASEAN. According to economists, the
country needs to maintain a positive relationship with the association to achieve various
advantages. These benefits come in the form of huge market potential, which further can help
Singapore to experience significant economic growth (Davenport 2017). The report will
analyse these benefits briefly in the following sections along with some challenges. In
addition to this, the project will analyse various economic strategies for strengthening the
relationship between Singapore and ASEAN.

3ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
The benefits Singapore gained from the ASEAN economic growth:
Merchandise exports and imports within ASEAN countries:
In 2018, Singapore becomes the chairman of ASEAN. The government of this
country is one of the strongest supporters of this association. In this context, it could be
beneficial to discuss economic and political benefits that Singapore has gained from the
ASEAN. The market under this association is considered as the fastest growing one and
consequently earns the position of seventh largest economy. According to market researchers,
this market will possess the fourth largest position by 2030 (Kim 2018). In addition to this,
ASEAN contains a large section of growing and developing middle class people among
which a large section of people belong to young population. As a result, Singapore receives a
large domestic market containing with 628 million consumers (Das 2017). The ASEAN
represents its commitment to regional integration, free trade and open economies. According
to economists, the New ASEAN Economic Community (AEC) could increase the gross
domestic product of Singapore to 9.5 percent by 2030. In 2015, the leaders of ASEAN
formed the AEC whose one of the main aims was to promote free movement of trade as well
as capital within regions. Economists expected that the community could influence Singapore
firms to shift their production of goods of lower value to other countries; where labour is
comparatively cheap (Narine and Lyon 2018). Therefore, creation of the AEC gives the
Singapore economy an opportunity to increase internationally. In addition to this, the
economy brings a standard procedure of customs, which in turn helps the country to make an
easy shipment of goods. This further helps the Singapore economy to outsource production
processes to other countries.
Joint government projects within ASEAN:
It is also essential to understand that whether ASEAN has brought any political
benefits in Singapore in terms of peace or not. Without peace, it becomes impossible for any

4ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
economy to develop significantly. Instable economic condition negatively influences
policymakers to utilise the resources in an efficient way. It could be difficult for Singapore to
shift from the Third World country to the First one without maintaining peace (Booth and
Smith 2018). Through considering the history of ASEAN it could be said that the association
has maintained peace in South-east countries successfully. The association has also provided
another political benefit to Singapore. The country has successfully established partnerships
with 10 major economies, such as Australia, New Zealand, Japan and Canada and so on. As
ASEAN is known as a successful regional organisation, it possesses an inclusive as well as
open attitude for its stakeholders, who have external link. The association has helped
Singapore from other aspects as well (Visenescu 2018). ASEAN can be considered as a
regional organisation that operates in a diverse way in this world. Instead of cultural
differences, the association helps Singapore to develop its solidarity and regional identity.
Growth of manufacturing industries within ASEAN countries:
In addition to this, the environment of low trade-growth influences many companies
to increase their margins for protecting their bottom lines. As a result, firms could receive
advantage from the AEC for shifting production to cheaper sections. Therefore, some
clothing companies intend to move their production to Thailand and Vietnam, where labour
costs are comparatively low. Similarly, many companies intend to shift their production to
Malaysia. Moreover, creation of this community helps various services and investments of
Singapore to move in a cross-border direction. This further can help financial products as
well as services of Singapore to expand and consequently the position of this country could
become a financial hub (Findlay and Garnaut 2017). However, some companies related to
high value sectors such as computing and pharmaceuticals have influenced by the creation of
this association. These companies remain in the country because of a higher quality of labour
force as well as better protection of intellectual property. According to economic experts, the

5ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
pace of movement of Singapore companies in abroad can increase slightly during 2016 and
2017. This speed can increase more during 2018 and 2020 (Vu 2017). Therefore, as the
government intends to implement more policies on free trade, Singapore companies intend to
move abroad for better opportunities.
The challenges Singapore faces in this economic relationship:
Lack of market information:
ASEAN helps Singapore companies to expand their business in international market.
This process of integration gives producers opportunities to produce their products at
comparatively lower prices. However, the country also experiences some challenges, such as
higher costs, in order to implement economic integration for expanding businesses in other
ASEAN countries (Yeung 2017). These are economically and culturally diverse from that of
Singapore. Most of the countries in this association belong to low middle income countries
while some other possess comparatively better economic positions. According to economic
forecasts of economists, each country possesses a large gap of income inequality. However,
some countries may experience negative impacts after the AEC integration. In addition to
this, some other ASEAN countries also experience higher inflation. Due to this economic
phenomenon, companies of country experiences dissimilar levels of price as well as unequal
purchasing power on other ASEAN countries. As a result one country enjoys more
purchasing power compare to others.
Lack of government support:
In addition to this, various levels of inflation lead different countries to invest
different amount of money. This further helps some sectors to develop while some sectors
cannot develop due to lack of investment. However the governments of respective countries
do not provide sufficient support to recover these economies (Lieng, Yagi and Ishihara 2018).

6ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
Therefore, some ASEAN countries experience economic instability while some other
countries enjoy economic progress. Singapore also experiences such difficulties due to
integrated economies. In this context, it can be said that different member countries of
ASEAN possess different stages of development. Some countries, such as Malaysia, Brunei
and Singapore enjoy high-saving economies while some other countries like Laos, Cambodia
and the Philippines enjoy low-saving economies.
Member countries of ASEAN also experience higher level of diversity in political and
socio-cultural contexts. As a result, each member country experiences this economic
integration as a challenge. Each country experiences different levels of development in
capital market. In addition this, each country also experiences different financial regulations
though some countries do not possess proper regulation and infrastructure in financial sector
(Lee and Itakura 2018). Therefore, economists observe that Singapore and other member
countries of ASEAN may experience challenges in the context of capital market
development, liberalisation of financial services as well as liberalisation of capital account.
Singapore incurs costs for institutional strengthening, evaluating and monitoring regional
systems within its economic framework. Moreover, countries bear costs in order to develop
and manage the regional systems that are essential for an effective economic integration
(Culpeper 2018). Economists also predict that Singapore experiences other costs associated
with urbanisation. In Singapore, economic activities grow and expand significantly and
consequently migration happens. This further increases the cost of urbanisation by large
extend.
Lack of sufficient financial assets:
Moreover, it becomes difficult for Singapore companies to operate their businesses in
low-saving economies, as this provides comparatively lower capital formation. In addition to
this, Singapore experiences unequal economic development, exchange rates and interest rates

7ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
with its partner countries. As a result the government may experience difficulties to
implement proper macroeconomic strategies while firms experience difficulties to implement
proper business strategies. Therefore, financial conditions in this integrated system of the
association create some difficulties for Singapore and other member countries of ASEAN.
Therefore, it can be said that Singapore experiences both advantages as well as
challenges for AEAN. Hence, it would be beneficial to discuss various economic strategies
that can help the country to overcome such challenges. This further helps the economy to
strengthen the relationship with other member countries of ASEAN.
The economics strategies to strengthen the relationship:
To strengthen the relationship among member countries of ASEAN, the government
of different countries implement various economic strategies, which can be described briefly.
These strategies are related to bilateral tie between two countries regarding free trade
agreement.
Bilateral tie in signing agreement in free trade within ASEAN:
The free trade agreement (FTA) within ASEAN was formed in 1967 with six member
countries while more countries were included in this association later. Singapore also does
free trade agreements with other countries of ASEAN through bilateral collaboration. For
instance, such collaboration can be observed between Singapore and Indonesia. The
Indonesia-Singapore Working Group on Investment is considered as one of the six
government-to-government Economic Working Groups (Liu, Li and Parkpian 2018). This
group helps both countries to experience flow of investments between Indonesia and
Singapore using investment promotion with the help of various marketing platforms. This
free trade strategy leads the Singapore market to expand further, as companies of this country

8ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
can conduct their business in Indonesia without experiencing any trade related restrictions
policies or regulations.
Strengthening financial cooperation:
The finance minister of Singapore along with the Monetary Authority of this country
takes various initiatives related to the ASEAN Finance Track. The association strengthen
financial integration for facilitating intra-ASEAN trade as well as investment to develop the
role of indigenous banks of ASEAN. This financial integration helps insurance sectors to
integrate and connect with capital markets. Moreover, ASEAN countries promote financial
inclusion in order to deliver financial products as well as services to those communities,
which have not developed yet, for instance, small enterprises. The ASEAN countries provide
financial stability for improving regional infrastructure, financial surveillance and
microeconomic along with prudential international for best practices.
Helping local companies (SMEs) access to ASEAN markets:
The local companies of Singapore and other developing countries experience various
advantages for the strategies that ASEAN has made. Free trade agreement helps these
companies to expand their business in international market; this in turn helps these companies
to obtain more consumers for other countries (Dindin Abdurohim, Si and Si 2017). As a
result, companies earn significant amount of revenues from other countries, which further
help them to develop significantly.
Conclusion:
Thus, after the entire discussion it can be said that Singapore has experienced both
advantages and disadvantages from ASEAN. This association has been formed to help Asian
countries to conduct trade freely with other trade blocks across the world. In addition to this,
member countries also experience bilateral trade relationship, such as Singapore and

9ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
Indonesia and others. Due to free trade opportunity, various companies of Singapore conduct
their business in other countries for lower labour costs. However, this country also
experiences various challenges. Different economic conditions of member countries create
huge trouble. Some countries enjoy economic benefits due to inflation while other countries
experiences difficulties.

10ECONOMIC POLICY AND THE GLOBAL ENVIRONMENT
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