IT in SINGAPORE

Some feel that Singapore is over-protected and over-regulated.(35) This statement is how many percieve the government and therefore potential investors may initially be scared away. If possible investors feel that the goverment may try to exert too much control over their operations or how they conduct business, they may be reluctant to invest large amounts of money into an operation which does not take their interests into consideration.

Even though government intervention in the IT industry in Singapore can be a benefit to the country, it can also be a detriment. Constant government intervention in business can hamper investment by imposing strict regulations and procedures for doing business in the country. Currently, this is not the case but if the government continues to play a controlling part in the development of Singapore into an IT country, too much involvement could once again drive investors away.

The island location of Singapore may be a weakness due to the fact that exports and imports have to be shipped by boat or plane in order to get to other areas in Asia as well as other parts of the world. Even though Singapore is close to other Asian countries, its island location may serve as a barrier to other parts of the world.

The small size of the Singapore population is also a weakness. Due to the small domestic market for products produced in the country, the domestic market will not substantially contribute to the successful sale of these products. Therefore, in order for businesses located in Singapore to be successful, they must establish demand for their products and services outside of the island nation. If they do not, a downturn of the economy in Singapore could end up driving them out of business. Even if companies to export to markets in other parts of the world, a sluggish economy in one area has the ability to severly affect the amount of business done worldwide.

As mentioned earlier, Singapore's economy is heavily dependent on exports. In fact, Singapore is Asia's most export-dependent economy with exports totalling 203% of its GDP in 1991.Increasing Labor Costs

Due to the high rate of literacy of the Singapore population, labor costs are continuing to increase. This could become a problem for the small island of Singapore when companies have the opportunity to move their operations to nearby lower cost areas such as China, Malaysia, and Indonesia. Singapore has to continue to combat this problem by trying to attract high-tech investors from abroad. If they can continue with this strategy, the labor costs will be reasonable considering the fact that the companies are receiving skilled labor. Even though labor costs are increasing, they are still fairly reasonable compared to the costs in other developed nations.

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