Economic Policy And The Global Environment In Singapore's Manufacturing Sector

Contribution of Electronic and Precision Engineering Companies

Discuss about the Economic policy and the global environment.

Manufacturing sector deals with production of merchandise with the help of labour along with various machines and tools. Moreover, biological and chemical processing or formulation also play important role for manufacturing any product (Li and Lin 2016). This specified sector is closely related with engineering concept. This sector has possessed economic importance for various countries both developed and developing countries across the world. This phenomenon is true for Singapore as well. At present, the economic condition of this country is the most stable compare to other countries across the world. Moreover, during financial crisis of 1997 and 2008, the country has remained strong due to its strong economic activities. In this context, the role of electronic manufacturing and precision engineering products are very important, as the country chiefly exports products of those companies. Hence, manufacturing sector is very important in the economy of Singapore, as it contributes almost 20% to 25% to the national income of this country (Thomasz, Da, Yi and Chew 2018).

The manufacturing sector of Singapore has increased drastically within few years, due to strong demand for electronics in internal market. This rapid expansion in turn, has helped the economy of this country to develop its various macroeconomic factors, for instance, employment, economic growth and real income (Yahya, Chang and Ng 2016). As the demand for electronic and engineering products have increased in international market, various companies related to those segments of manufacturing sector have started to hire large number of workers. As a result, the sector has generated huge amount of job opportunities and this in turn has helped many people to get jobs. Those hired employees of manufacturing sector have contributed significant share to the gross national income (GDP) of Singapore and the amount of share is increasing each year. Thus, one of the economic importances of Electronics and Precision Engineering companies of Singapore is that, they have helped to reduce unemployment level within this country (Hiratsuka 2016). In this context, it is important to mention that unemployment is a great obstacle for a country to grow and develop further.

Higher amount of employment along with higher amount of exports of electronic and engineering products of Singapore have helped the country to promote its economic condition. Through exporting those products in international market, Singapore has successfully earned foreign capitals. This further has helped companies to invest more amount of money within the production process for their company by purchasing more raw materials along with advanced technologies from other developed countries like Japan and the U.S.A. As a result, those electronic and precision engineering companies of this country have successfully competed in world market by manufacturing products with higher quality and advanced techniques. This is one of the chief reasons for those companies to export more products in each year with increasing amount of demand.

Constraints Faced by Those Companies in Singapore's Economy

Hence, based on above discussion with the help of macroeconomic concept, it can be said that electronics and precision engineering companies of Singapore have helped this economy to create large amount of wealth, which further can help this nation to grow and develop its economic condition further.  

The above discussion has described about economic importance and contribution of those electronic and precision engineering companies to country’s national income for improving economic condition of Singapore. However, those companies have experienced various obstacles as well for which they have faced various difficulties. One of the chief obstacles is lack of financing. In Singapore, most of the precision engineering companies are of small and medium size (Goh et al. 2017). Hence, due to lack of financial support, those small and medium size companies of Singapore related to electronic and precision engineering have experienced problems to make products with higher quality with the help of modern technologies. Moreover, managerial capability is another important issue that can negatively influence productivity of those companies. To meet changing demand of other industries, those electronic and precision engineering companies are required to be dynamic by nature. For this, effective managerial skill is essential. An efficient manager can forecast the changing trend of electronic or engineering product and consequently can manage to produce products with allocating resources efficiently. However, to hire efficient and skilled managers, those companies are required to provide higher amount of remunerations, which are become impossible for those companies.

This lack of managerial skills has negatively influenced production capacity of those companies. Moreover, due to lack of skilled workers, those companies have failed to produce higher amount of products. Low productivity has brought negative influence on the country’s economic condition. Lower productivity due to inefficient skills have forced those electronic ad precision engineering companies to export less amount of products in international market. On the other side, tighten governmental regulations have negatively influenced those companies. The Energy Conservation Act (ECA) controls energy of companies in industrial sector.  Due to higher amount of tax of the Singapore government along with strong restrictions and policies, most of the electronic companies cannot produce more of product. The chief constraint for those companies is environmental regulations (Wang 2018). Most of the raw materials used by those companies generate greenhouse gases. However, due to governmental regulations, those companies have had trouble to use most of the raw materials. Sometimes, those companies purchased raw materials from other countries to get rid of those governmental regulations. However, to purchase raw materials from outside the country, those companies under manufacturing sector pay higher amount and this in turn has forced those electronics and engineering companies to increase the price of their products. On the other side, higher wages of skilled labours also lead those countries to increase the price of those electronics products. This higher price further has influenced the demand for those products negatively in international market.

Steps to Strengthen Those Companies

Marketing and promotion are other important factors that have influenced those companies adversely. Those small-scale companies of electronics and precision engineering have not earned sufficient balance to promote their products in international market through applying proper marketing technology (Goh et al. 2017). The government of Singapore has supported to those companies to develop further by providing sufficient balance. However, to sustain in international market by capturing large portion of consumers, those companies require to apply advanced marketing strategy and for this huge amount of capital accumulation is required.                           

After discussing some economical constraints that those electronics and engineering companies are experiencing in Singapore regarding production and promotion, it is essential to discuss about the factors, which those companies and the government of Singapore can apply for strengthening this manufacturing sector. Firstly, the bank and other financial institutions of this country can lend money to those small and medium size companies on the priority sector basis (Pillai 2017). As, this companies have contributed significant amount to the national income of this country, it is essential for the government of this country to assist those companies financially at any situation. For instance, during inflation or economic crisis, those companies of electronics and engineering can get financial benefits on the priority basis.

Secondly, each electronic and manufacturing company can charge prices of their products according to their requirements. The government of this country cannot restrict the price or cannot bind the upper or lower limit of prices of these products in international market. Thirdly, through reforming labour law, Singapore government can hire more amounts of domestic workers with comparatively lower wages than that of foreign workers (Charoensiriwath 2017). For doing so, the government can provide basic training so that those workers can earn minimum skills to work within those companies. On the other side, the government of Singapore can provide other assistances like life insurance or medical facilities so that those workers can work within domestic market without moving to other companies of other countries. In addition to this, the government can reduce tax on products of electronic and precision engineering to increase the demand for those in both domestic and international market (Wang 2018). Moreover, the country can adopt some trade policies to protect infant industries within the economy from other strong and international companies. For this, the government of Singapore can impose tariff on importing electronic products and this in turn increase the price of those products in domestic market of this concerned country. Hence, people may demand products of domestic companies (Ishida 2015). Moreover, according to infant industry argument, those domestic companies can get opportunities to develop its production scale more and this further can help those them to earn economies of scale in future (Jensen 2017). Consequently, production cost for those concerned companies can reduce in future. Moreover, through using modern networking systems, those manufacturing companies can compete in international market in future. Thus, by following those steps, both the government and managers of electronics companies can earn huge opportunities expand their market in international market more successfully.

Conclusion:

After describing contribution, constrains and recommendations for protecting the electronics companies in world market, the essay can summarise the entire discussion within this sector. To develop and compete further, each company needs to follow globalised strategies. Moreover, young entrepreneurs can start their business based on those products to earn more revenue, as it is comparatively easy for them to understand dynamic global trends of those products.

References:

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Goh, B.K.B., Yee, A.S.V., Kendall, G. and Chong, A.L., 2017. Industrial R&D expenditure: its determinants and propensity of technology transfer of top ten companies in Malaysia, Singapore and Taiwan. Asian Journal of Innovation and Policy, 6(3), pp.354-378.

Hiratsuka, D., 2016. Production networks in Asia: A case study from the hard disk drive industry. In Production Networks and Enterprises in East Asia (pp. 139-157). Springer, Tokyo.

Ishida, M., 2015. Feasibility for Vientiane to Develop as a Precision and Electronics Industrial Cluster. Policy Recommendation, p.11.

Jensen, C., 2017. International trade in infant industries: A dynamic analysis of different trade policy instruments and their implications for sustainable consumption. management revue, 28(1), pp.121-148.

Li, K. and Lin, B., 2016. Impact of energy conservation policies on the green productivity in China’s manufacturing sector: Evidence from a three-stage DEA model. Applied Energy, 168, pp.351-363.

Pillai, D.P., 2017. REVISED PRIORITY SECTOR LENDING NORMS-BOOST TO SOCIAL INFRASTRUCTURE AND RENEWABLE ENERGY. International Education and Research Journal, 3(3).

Thomasz, R.J., Da, J.C.K., Yi, M.L.J. and Chew, S.B., 2018. How globalisation affects Singapore's unit labour costs in the manufacturing sector. International Journal of Business and Globalisation, 20(1), pp.1-17.

Wang, J., 2018. Innovation and government intervention: A comparison of Singapore and Hong Kong. Research Policy, 47(2), pp.399-412.

Yahya, F., Chang, Z.Y. and Ng, Y.H., 2016. Developing high-tech companies in Singapore. Journal of General Management, 42(1), pp.5-22.