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Do you know that millions of people go on vacation tour each year. People often want to go on a trip tour to enjoy beautiful sights of other countries and as a way of getting a break from their jobs and responsibilities. The increasing number of people who book a tour is therefore a good reason why it is a splendid idea to start a travel tour company. So, our company Â«Paradise tour" decides to open up a travel business in Singapore known as a city-state which has a highly developed and successful free-market economy.
The main purpose of this paper is to discover the key aspects of doing travel business in Singapore. This report provides the reader with detailed information about cultural, physical, economic, legal and political variables typical for this country. It also describes the impact of trade, investments and foreign policy on the business environment of Singapore. To open up a successful and profitable tour company in Singapore, it is necessary to be familiar with its business environment.
II: Company description
The travel company"Paradise tour" is a sole proprietorship and operated by Yulia Markova in Singapore. The owner decides to operate in Singapore because this country has a great location, a tropical climate, wealth of flora and fauna, an excellent infrastructure, and a prosperous global environment.
The initial start-up capital requirement for"Paradise tour" will be used to: purchase the assets and liabilities (a building, a yacht, a hotel, and the tour buses) and finance start-up costs and payroll expenses for the first period (legal fee established by the Government of Singapore; expenses related to office supplies, insurance; salaries and other miscellaneous costs.
Company's primary clients are couples, families, individuals, and affinity groups of high-net-worth who travel for leisure at least once per year. Travel company"Paradise tour" will have a competitive advantage over others in this market by providing a superior level of services for its clients who demand the finest quality activities and accommodations. "Paradise tour" seeks to be recognized for offering exceptional service and anticipating the needs and desires of its clients.
The company should establish good relationship with other companies related to the same industry. Moreover, it is a good idea to build relationship with a tickets company and tour bus companies, so "Paradise tour" can be given discounted rates and nice accommodation. This company also can increase contacts with different franchising hotels to give an affordable travel deal along overnight stay at famous hotels to its customers. Also, the travel company should find competent staff who can handle its corporate tours. Look for reliable and friendly tour agents, tour operator and tour guides who will be responsible for the tour services. Tour agency should also create and keep customers and attract more people by giving group and student discounts. To become one of the premiere luxury travel companies,"Paradise tour" will adopt the following strategy: to establish the outstanding reputation and provide unparalleled service to clients.
III: Identification and Analysis of Country Variables
1. Physical and demographic profile (geography, resources, population, religion, languages, workforce characteristics)
Singapore is a small, heavily urbanized, island city-state in Southeast Asia, located at the southern tip of the Malayan Peninsula between Malaysia and Indonesia. Singapore has a total land area of 699 kmÂ² and 193 km of coastline. Its position is unique - it is separated from Indonesia by the Singapore Strait and from Malaysia by the Straits of Johor.
Singapore is known as a green city. There is a wealth of flora and fauna that is beyond our own imagination. The native animals found here are macaque, slow Loris, giant squirrel, colugo etc. among the birds Indian Maina, Brahminy Kite and House Swallow.
The climate in Singapore is classified as equatorial, with no true distinct seasons. Its climate is warm and humid, with temperatures ranging from 23 degree Celsius to 31 degree Celsius. This makes it ideal for those who enjoy sunbathing, swimming, sailing, and other water sports. Rain falls throughout the year with more consistent rain during the monsoon season from November to January. Showers are usually sudden and heavy, but brief and refreshing.
Singapore has limited natural resources (especially fresh water resources) and limited land availability. Soils are relatively infertile, and clays and sand are the only mineral resources. Without natural freshwater rivers and lakes, rainfall is the primary domestic source of water supply in Singapore. About half of Singapore's water comes from rain collected in reservoirs and catchment areas while the rest comes from Malaysia. Singapore's only significant natural resource is its natural harbor, which is the busiest in the world. Singapore also is capable of promoting one more natural resource - a relatively clean and pleasant environment.
According to the Singapore Department of Statistics, the population of Singapore as of 2009 was 4,99 million (115th), of whom 3.73 million were Singaporean citizens and permanent residents (termed "Singapore Residents"). There were 3.2 million citizens in 2009.Various Chinese linguistic groups formed 74.2% of Singapore's residents, Malays 13.4%, Indians 9.2%, while Eurasians, Arabs and other groups formed 3.2%. Singapore is the second-most densely populated independent country in the world after Monaco.
Singapore is a multi-religious country, the roots of which can be traced to its strategic location.
Religious divisions follow ethnic divisions: the Indians are Hindu (7%), the Malays and Pakistanis are Muslim (about 15% of the population), and the Chinese include Buddhists, Christians, Taoists, and Confucianists (more than 40%). There are also Sikh, Jewish, Zoroastrian, Jain communities, and Singaporeans, who do not belong to any religion and consider themselves as "free-thinkers" (about 14%).
The official languages are English, Malay, Chinese (Mandarin) and Tamil. The national language of Singapore is Malay for historical reasons, and it is used in the national anthem, "Majulah Singapura". English is the main language of Singapore and has been heavily promoted as such since the country's independence in 1965. However, most Singaporeans speak a localized hybrid form of English known as Singlish ("Singapore English"), which has many creole-like characteristics, incorporating vocabulary and grammar from Standard English, various Chinese dialects, Malay, and Indian languages.
The economy of Singapore demands a highly trained and flexible workforce. The government strongly promotes the acquisition of different skills, supporting several higher education centers, and vocational and technical institutes. Facing shortages in the workforce, the government encourages women to work by providing different initiatives and support for working mothers. Due to labor shortages, there is a growing number of foreign workers in Singapore, unskilled and concentrated in the service and construction sector.
2. Cultural/social, political (political system, political risks), legal, ethical and economic (level of development, inflation) profile
About a third of the workforce in Singapore consists of women. Women are well respected in business, as long as they remain sensitive to the various ethnic groups within the region. Before starting business in Singapore, everyone should study its culture and customs: It is customary there to shake hands before sitting down for a meeting and address those in the meeting by title plus the last name. Calling cards should be handed out to each person in the party. Business cards should be printed in English on one side and Chinese on the other side, preferably in gold ink. In applying for a job in Singapore, one should be very certain that the job is well matched to his or her skills. Advancement is rare in Singapore, and only those who work very long hours and very intensely may be promoted. Executives must continue to work intensely once promoted. One should always speak in low, quiet tones and maintain a modest demeanor. It is polite to break eye contact. When attending a meal with a Singaporean, do not discuss business, unless the host brings it up first. When making written correspondence, it is important to avoid using white or blue paper - these colors signify death.
Singapore is a republic with a parliamentary system of government. The executive branch is headed by the president, Sellapan Ramanathan NATHAN, with limited powers and a presidentially designated prime minister, LEE Hsien Loong (People's Action Party), who must command a parliamentary majority and who selects a cabinet that is collectively responsible to the Parliament. Since Singapore achieved self-rule in 1959, the People's Action Party (PAP) has never been out of power. Although roughly two dozen legal parties have been registered in recent years, most have had minuscule memberships.
Risk ratings according to The Economist Intelligence Unit 2009 are the following: "The ruling People's Action Party will dominate the political scene in 2009-10. It will, however, face challenges to its authority and popularity amid the economic downturn. The government will rely on an expansionary fiscal policy orientation to support the economy and try to prevent a deep and prolonged recession. Still, we forecast that the economy will contract by 6% in 2009". Moreover, the legal system will prove effective, and intellectual property rights remains well protected. Tax rates will remain low in 2009-2010 compared with other countries in the region. The labor force will remain compliant and the infrastructure excellent. Singapore risk summary estimated by The Economist Intelligence Unit 2009 is shown in Appendix1.
The unicameral legislature is elected by universal suffrage and compulsory voting for a maximum term of five years, with 84 elected members: nine members of parliament (MPs) are directly elected from single-member constituencies, and 75 are elected in teams of five or six to represent the 14 group-representation constituencies (GRCs), at least one member of which must be of non-Chinese ethnicity. Courts of first instance ultimately lead, on appeal, to the Supreme Court, members of which are appointed by the president. Singapore's Supreme Court encompasses a High Court and a Court of Appeal. Since 1994 the Court of Appeal has served as the highest appellate court, replacing in that capacity the Judicial Committee of the UK Privy Council. Subordinate courts include district and magistrate's courts.
Singapore's booming economic growth largely outperformed the world economy during the last three decades of the 20th century. The economy has traditionally been geared to the entrepot trade, with a heavy emphasis on the processing and transshipment of petroleum, rubber, timber, and other regional products, and on related banking, shipping, insurance, and storage services. Singapore is now a major producer of computer-related electronics as well as pharmaceuticals. Tourism is also a significant source of earnings. Because of its phenomenal economic growth, Singapore became known as one of Asia's "Four Tigers," along with Hong Kong, South Korea, and Taiwan.
As a small, open economy Singapore is vulnerable to movements in global commodity prices.
The Singapore Department of Statistics shows the latest data of the Singapore economy: GDP down 3.5% in 2Q2009; CPI down 0.3% in Aug 2009; Total Trade down 19.9% in Aug 2009; Index of Industrial Production up 12.3% in Aug 2009; Retail Sales down 9.8% in Jul 2009; Employment was 2.94 million in Jun 2009; Unemployment Rate (SA) was 3.3% in Jun 2009 (% changes are compared to same period of previous 2008 year). The main reason of slowdown in economy of the country is the world depression, but Singapore is trying hard to recover from this problem as quick as possible.
3. Trade, investment and foreign policy profile
Singapore is the world's second-busiest port (after Hong Kong) in terms of tonnage of ships handled. Singapore has virtually no natural resources, so it depends heavily on external trade. Indeed, it has the highest trade-to-GDP ratio in the world. Because of this dependence, Singapore engages in free trade with several countries, such as the United States, Australia, New Zealand and Japan. Singapore has emerged as a major manufacturing site and a regional center for oil supply, servicing and refining. Capital goods (particularly machinery, telecommunications, oil-drilling equipment and industrial materials) and services constitute a growing proportion of the country's overall trade since manufacturers increasingly focus on international rather than regional markets. Caterpillar, DuPont, General Motors and Kodak of the US and Komatsu of Japan have chosen Singapore as a regional supply base. Singapore, virtually a free port, pursues a free-trade policy. Other than the goods and services tax (GST) introduced in 1994 for imports, very few goods are dutiable or restricted. Most goods can be freely imported to and exported from Singapore.
All industries are open to foreign investment in Singapore's free-enterprise economy. A new International Headquarters Award program was unveiled by the Economic Development Board (EDB) in 2003 to attract more company operations to Singapore. The award offers customized incentive packages with lower concessionary taxes on qualified income to all organizations incorporated in Singapore through discussion with the EDB.
Many world-class pharmaceutical firms have set up operations in Singapore: AstraZeneca (UK), Aventis (France), GlaxoSmithKline (UK), Kaneka (Japan) etc. Singapore also aims to become a leading medical hub. To attract more patients and healthcare providers, it has developed specialist centers, including Singapore National Eye Center, Singapore Heart Center and National Skin Center. International investor confidence in Singapore remains strong as a location for investments in electronics and precision engineering. Logistics and supply-chain management is another cluster that Singapore is promoting. Its well-equipped and efficient airport and seaport have been instrumental in transforming the country into a logistics hub. Singapore also has ambitions to become a top science and technology center, and it is encouraging information-technology (IT) companies to use Singapore as a springboard to the region. Singapore has also targeted the green-energy industry. Singapore also aims to become a premier wealth-management center. Education is also the source of major investment.
Looking ahead, the government is exploring opportunities where Singapore itself requires solutions and where it may be a test bed for such solutions as urban solutions; health, wellness and aging; lifestyle products and services.
Typically, once the government identifies growth or thrust areas, it follows up with incentives and proactive courting of leading international companies in these segments.
Foreign policy profile
Singapore generally maintains a positive balance of trade. Much of the country's trade involves the transshipment of goods produced in the region. Singapore has numerous trading partners in Asia, Europe, and the Americas. Leading purchasers of Singapore's exports are Malaysia, the United States, the European Union (EU), Hong Kong, and Japan; imports come mainly from Japan, Malaysia, the United States, the EU, and China.
Singapore maintains strong trade with its regional neighbors as a charter member of the Association of Southeast Asian Nations (ASEAN). Singapore is a full participant in the ASEAN Free Trade Area (AFTA), established in 1992 with the goal of establishing nearly free trade among member nations. As of May 2009, Singapore had 13 free-trade agreements. In addition, it benefits from ASEAN free-trade agreements with Australia-New Zealand, China, Japan and South Korea. Singapore and the United States signed the US-Singapore Free-Trade Agreement (FTA) in May 2003 (after several years of negotiations), eliminating trade barriers and tariffs for US$33bn in annual trade. This was the US's first FTA with any Asian nation. Singapore became a member of the World Trade Organization (WTO) in 1995.
To sum up, it is important to emphasize the great variety of travel business opportunities present in Singapore. Warm climate, strategic location, amazing sights (especially tropical lush landscapes), excellent financial structure, conductive regulatory and business environment, political stability, skilled and educated workforce, and high living standards make this city-state an ideal place for doing travel business.
Singapore: Country risk summary
(AAA=least risky, D=most risky)
Banking sector risk
Economic structure risk