Political Stability for Singapore’s Economy Growth (2017 Update)

political stability

Political Stability for Singapore’s Economy Growth

Political Stability is a primary driver of economic growth. Achieving true political stability is the first major step to development in any country. Without stability, the government and its bodies cannot do anything functional. Rather than pave ways for economic growth, they would be preoccupied with maintaining shaky coalitions, preventing dictators from seizing power or maintaining the unity of the country at large. Political Instability adversely affects government-subsidized sectors which become harder to run in such situations. Political instability brings a whole country to a standstill. No economy thrives in such situation. It is no wonder that political instability is the hallmark of the developing world.

Factors Influencing Political Stability

There are several political parties active in Singapore with five of these parties having high profile and influence. The military has not been an influential force in the political spectrum of the country. Hence, the country does not experience constant change in government like countries close to it. Singapore has remained amazingly stable and nearly untouched by political violence since independence. This stability in government accounts for the low spate of violence and crime in the country. It has subsequently contributed to the economic growth of the nation. 

political stability
political stability

Political Stability on Singapore’s Economy 

The Political stability in the country accounts for why the country is a major attraction for Foreign Direct Investment (FDI). Singapore has benefited from the inflow of FDI from global investors and institutions due to its highly attractive investment climate and stability in government.
It is as a result of this stable political situation in Singapore that business owners consider it as a haven for investment.


Experts are of the opinion that the factors below make Singapore a suitable location for investment:
• Singapore is rated as the first in the world by World Bank because of the relative ease of carrying out business
• Additionally, Singapore is currently the third wealthiest nation in the world according to  a report by Forbes magazine
• Singapore has also been ranked as the third most globalized country among sixty of the world’s greatest economies according to Ernst and Young 2000 and the eleven Globalization Index
• The country’s labor force is also one the best labor force in the world, thus, its productivity
• Corporate tax rates are around eight percent up to $300K profits and about
• Singapore is ranked as number one regarding stability. It is the most politically stable country in all of Asia.

Impact of Political Stability on Singapore’s Economy 

1.Flexible Immigration Policies

Singapore has an open immigration policy that aids the relocation of foreign nationals who intend to set up businesses in the country. As a prospective investor, the government has an immigration policy on ground tailored to suit your investment needs. It is why a provision was made for the Singapore Work Visa arrangements. 

To further aid individuals who intend on settling permanently and continually support the country in sustaining its economic strength, Singapore has a commendable immigration policy, making it less cumbersome for foreign professionals to gain Singapore Permanent Residence status.

2. High Standard of Living:

Due to the high and quality standard of living in Singapore, most entrepreneurs who set up businesses relocate to Singapore with their families. The country provides its residents with great public and private transportation, world class health services, safe and healthy living environment, easy access to other nations, excellent educational services, a reliable support system for businesses and corporations and a rich selection of cultural opportunities. All these accounts for the quality of life enjoyed by residents in the country. The political stability makes it possible.

3. Topnotch Labor Force

Singapore boasts of an attractive and a world-class productive labor force; which is vital to the success of any business. Due to the high regards given to education, Singapore has a highly skilled labor force with extreme professionalism.  Thus, Singapore’s workforce is lauded for its high standard of education, productivity, technical proficiency, work hard and smart culture.

4. Outstanding Taxation system

For any prospective business person, a vital consideration in setting up a business is the tax system of their ideal location. One factor that stands out in Singapore’s tax system is its low effective personal and corporate tax rates. Personal Income tax has a tier system that begins at 0% and goes up to 20% for income above $320,000. In the same fashion, the effective corporate tax rate for Singapore Private Limited Companies for profits up to $300,000 is below 9% and capped at a flat rate of 17% for profits above $300,000. Thus, there is no capital gains tax as the country operates a single-tier tax policy. As you cannot be taxed for income already taxed at the corporate level.  Finally, this means shareholders receive tax-free dividends. 

Thus, in a bid to avoid dependency on income taxes and make the economy more competitive, the government adopted a more broad-based consumption tax named Goods and Services Tax (GST). Singapore maintains one of the world’s lowest GST which currently stands at 7%, which is below the global VAT/GST rate of 16.4% and the Asian-Pacific average of 10.5%. 


In Conclusion, no business exists in a vacuum. Addtionally, they need a supportive and political structure to grow and thrive. Finally, Singapore’s political set-up is one that enacts laws and regulations that are not inimical to business operations in the region. Thus, Singapore has a stable and orderly government whose primary goal is to make the nation the front runner of industrialized countries.

The last point sums up other facts about the country’s economy. The stability of Singapore’s government accounts for the country’s favorable laws that place them at a pedestrian for continuous economic growth. The stability in the political sphere has remained a major fulcrum for attracting investors into the country.  


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