Why is Singapore so rich? | CNBC Explains


Singapore is a tiny country, so tiny you can
drive across the island in just an hour. Despite its size and lack of natural resources,
Singapore’s 5.6 million people enjoy one of the highest average incomes in the world,
ahead of countries like Germany, France and Japan. So, how did this little
island get so rich? Singapore doesn’t have resources like coal or oil but it
does have something countries can’t buy, location. The island sits in the middle of an important
trade route connecting Asia to Europe. That’s a key reason why the British decided,
back in 1819, to set up a colony in Singapore. Location isn’t everything though. There are several countries nearby that
could have made use of their whereabouts, but they weren’t quite
as successful. That’s because there are other ingredients
that go into this crazy rich Singapore recipe. I’m at the Raffles Hotel, which is one of the most
prominent icons of Singapore’s colonial history. Unlike some of its neighbors, which wanted to
separate themselves from their colonial histories, Singapore kept close ties with Britain,
even after independence in 1965. That decision announced to the rest of the
world that Singapore was open for business. That’s important because we know now that
exports help to grow and expand an economy. But back then, it wasn’t
conventional wisdom. Singapore, Hong Kong, Taiwan and South Korea,
became known as the four Asian tigers, which have grown rapidly
since the 1960s. Their rise was fueled by exports, industrialization and
more crucially, big doses of government intervention. This was especially
true for Singapore. Labor strikes were common on the island in
the 1960s, even with high unemployment. On top of that, there
was a housing crisis, with Singapore being home to one of the
largest slum settlements in the world. So how do you build a more disciplined
labor force to attract investment? Well, you give them something to
work for, like a house of their own, which is why one of the first Singapore
government agencies set up was focused on building
affordable public housing. While just nine percent of the population
lived in public housing in the 1960s, that figure stands at more
than 80 percent today, add in greater employer rights and
strikes became extremely rare. At the same time, the government attracted
foreign investment through tax incentives, growing the economy
and easing unemployment, which fell from an estimated 14 percent
in 1959 to 4.5 percent in the 1970s. By the 1980s, Singapore was
a regional manufacturing hub, and it was the world’s biggest
producer of hard disk drives. But today, manufacturing makes up only
about 20 percent of Singapore’s GDP. Take a look at Singapore’s growth in GDP. You can see two big surges, one beginning in the late
80s and another at the start of the new millennium. Ironically, Singapore has a
downturn to thank for that. You see, in 1985, Singapore went into
its first post-independence recession, prompting the government
to introduce new measures. State-owned companies like telecommunications
were privatized to make them more competitive. Then at the turn of the century, service industries
like finance and insurance were further liberalized. That openness helped to grow the share of
services from just 24 percent of GDP in 1985 to more than 70 percent in 2017. Multinational companies began to set
up regional headquarters in Singapore. That attracted even bigger players, boosting Singapore’s
attractiveness to corporates and in turn its GDP. Now, Singapore is ranked as one of the
world’s easiest places to do business. Singapore has been praised for transforming
itself from a developing to a developed economy. But do most Singaporeans feel rich? Well, not exactly. Two of the most
important reasons? The high cost of living and inequality. For five years in a row, Singapore has been
named the world’s most expensive city, ahead of New York
and London. That’s largely because of taxes on cars, making
Singapore the most expensive place in the world to buy and run
an automobile. It’s also the third most expensive
place on Earth to buy clothes. But personal care, household goods
and domestic help in Singapore tend to be less expensive
than in other major cities. While Singapore is rich in terms of GDP per
capita, the median monthly salary is $3,270. That doesn’t sound too bad, but about 20 percent
of that goes into a mandatory savings account. You can use that account to pay for
medical bills, housing and education, but it does restrict the purchasing
power of the population. You’ve probably heard of the movie Crazy
Rich Asians, which was set here in Singapore. And it’s no wonder. Because Singapore has about 184,000 millionaires,
making it truly the land of the crazy rich. That’s great news. But Singapore also has a fairly high rate of inequality,
compared with other developed countries. Let’s look at the Gini coefficient, which
is a scale used to calculate inequality, with zero being the most
equal and one being the least. Singapore’s Gini coefficient, after accounting
for taxes and transfers, was 0.356 in 2017. That was worse than countries like the
United Kingdom, Japan, Korea and Germany, although it fared better than
some, like the United States. Is that number really that bad? That question had books
like this flying off the shelves. A think tank ignited public debate on the divide
in social classes, after it found that on average, Singaporeans who live in public housing have fewer
than one friend who lives in private housing. The government has called the issue
of inequality a national priority, but it remains to be seen if it is a
problem that can be tackled effectively. Hi everyone, it’s Xin En.
Thanks for watching! If you want to watch more of
our videos, click here and here. As always feel free to leave any suggestions
for future videos in our comments section. That’s all for now, don’t forget to
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100 thoughts on “Why is Singapore so rich? | CNBC Explains

  1. BTW: If you Realy think singapore is so Rich, you Obviously don't KNOW that We here in the Good ol USA, have around 300 Major Cities ! Singapore ? New York Alone has R.E. valused at a WHOPPING $25Trillion ! Now Add Chicago, Houston, Dallas, Miami, Boston, Palm Beach,…………….need i say More ?

  2. Really an incredible growth by any country after the end of the colonial rule. We are proud— Singapore is one of the asian countries.

  3. Their country is rich, but their people are poor, more than 80% of Singaporean only afford to own very narrow HDB flat without balcony, to buy a landed house it could be your wet dream only, 11% of their total 5.8 million population owned a car, around 600,000 cars were registered under Land Transport Authority means 600,000 cars compared to their total population 5.8 million, so now we can see how poor they people are

  4. SINGAPORE CITIZENS CAN'T AFFORD TO SLEEP IN THEIR MAJESTIC SKY THROBBING HOTELS, WHERE IS THE RICHNESS WHEN 80% OF YOUR POPULATIONS CAN'T AFFORD TO EAT IN THE CBD? SINGAPORE REMINDS ME OF A PROSTITUTE, SHE WANTS ALL THE MONEY, SHE SELLS HERSELF TO ANYONE BUT DEEP DOWN YOU'RE EMPTY. GDP MEANS NOTHING IF YOU CANT BUT A HOUSE OR CAR.

  5. It's the capital of tax evasion… If you don't want to pay your taxes just transfer it to Singapore and the banks there will give false information to any government requesting it…
    Look it up !!

  6. Did anyone not notice the dirty money coming in from #China ??? And the CORRUPT officials that overlook the dirty money coming in???

  7. I'm a Singaporean who moved to Canada then Dubai around 5 years ago and never felt happier. Singapore and its people have no personality, everyone look miserable and most lack empathy & compassion. Probably because they have no choice but to work their ass off till they die. The country treat their locals especially minorites as second class & glorify Western expats. All that you see in the media is far from what's real. At least Dubai prioritise its locals first, rightfully so. Even as an expat I feel much happier here in Dubai than my own 'home' country. The Singapore government is smart in hiding its corruption from the world's eyes and its locals. I lived there for 28 years as a local so I know what I'm talking about.

  8. Expensive clothes…? Where you be shopping?
    I remember clothes being really cheap in Singapore, especially on/near the border with Malaysia.
    Maybe she just shops at Mall Clothing stores?

  9. Ohhhh how short lived this video was ๐Ÿ˜‚, a cursed video…
    Singapore currently going through a recession ๐Ÿ˜‚๐Ÿ˜‚๐Ÿ˜‚๐Ÿ˜‚๐Ÿ˜‚

  10. Land of the crazy rich ? Being a millionaire does not make you rich if you live in Singapore, the most expensive city. You really need to be a multi-millionaire. CNBC gotta check your facts.

  11. Are you sure highest income in the World ? Most expensive city in the World for the past 6 years. Confirmed ! The average median income is $4800 but about 50% of the work force earned less than $2500 and also Singapore is at the bottom of Oxfam income inequality list 149 position out of 157 countries. The government sell (rental) public housings.

  12. Why is Singapore So rich???

    because many Indonesian corruptors keep their money and assets in Singapore ๐Ÿ˜‚๐Ÿ˜‚๐Ÿ˜‚๐Ÿ˜‚

  13. Proud to be Asian… Whether it's india or Korea or China, Asia is here to stay… the next century is the Asian century… I'm excited

  14. Asia puts Africa to shame and remember Asia never got the charity and trillions in debt forgiveness that Africa got… it's the culture and values of Asians which has made us better than others

  15. I worked in Singapore for 3 years, stress level is too high people around are always worry the cost of living & the only true happiness that people get is when they travel outside Singapore. My experience in Singapore open my eyes to go back in my country get a farmland and start a farming business, I don't want my life to be in a rat race again & flat inside this rich countries. Now, I'm very satisfied & happy living a simple life in my poor country.

  16. They have a high gdp/capita, meanwhile they have no democracy, corrupt leaders, no labour rights, limited freedom of expression. They are only 34 in the happiness index, behind democratic western countries. They even allow caning for some crimes. Give me Europe or Taiwan any time over this backwards place.

  17. One of the most developed countries in the world.
    The urban development perfection can blow your mind.
    Nice food and nightlife as well as great shopping experience even at the airport.
    A perfect 10/10 and a great place to settle a secondary house as a millionaire.

  18. Oh well come from the host that singapore doesnt have resources, its money come from companies and if u dont know yet singapore is a tax heaven. Like luxemburg, neatherlands, british virgin islands, panama etc. Its not a magic!

  19. Country and govt rich doesnโ€™t mean the overall population is rich or well off. But do remember, the origin of handling the population is not to make them rich but to tackle from the angle of handling the majority of the population from foreign labors point of view.. which may have its effect till today..

  20. If u are sick or on unpaid leave for 2 or 3 days a month, you are done for… unless you are the rich minority…Singaporeans may look rich.. but in truth u cannot survive without work… nothing belongs to u..literally nothing

  21. Singapore is a beautiful city. I have been here this summer. I made a video about Singapore if you want to come to have a look! ๐Ÿ™‚

  22. Singapore is so rich but its people are so poor. I don't envy Singapore's economic status because a lot of its people are not happy and are under pressure for its cost of living.

  23. Singaporeans think they have the best education in the world and are more educated than the rest in Asia. But how come there's a lot of foreigners working in that tiny State as the majority of companies in that City State say Singaporeans are unemployable. Singaporeans are saying that foreigners are taking the jobs for lower wages Singaporeans are refusing to take.

  24. Bullshhit in terms salary …$1000 canโ€™t buy a house and no minimum income living and etc..Fake news ..๐Ÿ‘Ž

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