Order Code RS20490
Updated January 8, 2007
Singapore: Background and U.S. Relations
Emma Chanlett-Avery
Analyst in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Summary
A former colonial island trading and military outpost of the far-flung British
Empire, the tiny Republic of Singapore has transformed itself into a modern Asian
nation and a major player in the global economy. Singapore’s heavy dependence on
international trade makes regional stability and the free flow of goods and services
essential to its existence. As a result, the island nation is a firm supporter of both U.S.
international trade policy and the U.S. security role in Asia. The U.S.-Singapore Free
Trade Agreement (FTA) went into effect in January 2004.
Historical Setting
SINGAPORE STATISTICS
An island city-state located astride key
Population: 4.5 million
shipping lanes at the southern tip of the
Area: 647.5 sq. km. (about 3.5 times the size of
Malay Peninsula, Singapore’s economic
the District of Columbia); one main island
and 58 islets; extensive land reclamation
and strategic importance exceeds its small
Ethnic Groups: 77% Chinese; 14% Malay; 8%
size. Founded in 1819 by British East
Indian; 1% other
India Company official Sir Thomas
Language: Chinese (official); Malay (official
Stamford Raffles, Singapore’s free trade
and national); Tamil (official); English
status has been a major factor in its
(official) widely used in business,
professions, and schools
success. Singapore achieved home rule in
Life Expectancy at Birth: female, 84 years;
1959 and joined with Malaya, Sabah, and
male, 79 years
Sarawak to form the Federation of
Literacy: 92.5%
Malaysia in 1963. Within two years,
Inflation Rate: 0.4% (2005 est.)
GDP (PPP): $126.5 billion (2005 est.); Per
friction between the Malay-dominated
Capita $28,600 (2005 est.)
federation government and the Chinese-
Trade: exports $204.8 billion (U.S. 11.5% -
dominated Singapore administration led to
2005); imports $188.3 billion (U.S. 12.4% -
the separation of Singapore from Malaysia.
2005)
Amid serious doubts about its viability,
Source: CIA World Factbook
Singapore became a separate independent
nation on August 9, 1965.

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Government and Politics
Singapore’s parliamentary-style government is headed by the prime minister and
cabinet, who represent the majority party in Parliament. The president serves as a
ceremonial head of state, a position currently held by former Singapore ambassador to the
United States S.R. Nathan. In August 2004, Lee Hsien Loong succeeded Goh Chok Tong
as prime minister. Lee is the son of former Prime Minister Lee Kuan Yew, who stepped
down in 1990 after 31 years at the helm. The senior Lee, widely acknowledged as the
architect of Singapore’s success as a nation, reportedly continues to wield considerable
influence with the title of Minister Mentor.
In the last parliamentary elections in May 2006, the governing People’s Action Party
(PAP) secured a decisive victory, capturing over 66% of the vote and 82 of 84 seats.
Singapore has universal suffrage, and parliamentary elections are held at least every five
years. The PAP has won every general election since 1959, aided by a fragmented
opposition, Singapore’s economic success, and electoral procedures that strongly favor
the PAP. In 2006, the opposition parties picked up a marginal degree of support in terms
of the percentage of overall votes cast, but only managed to maintain their two existing
seats. The seats are held by veteran lawmakers from the Workers’ Party and the
Democratic Alliance party. The Workers’ Party was given an additional seat in
Parliament under a constitutional provision that grants a seat to the highest-scoring
minority party if fewer than three opposition candidates are elected.
Economy
Aside from having the world’s busiest port in terms of shipping tonnage, Singapore
has the world’s second largest container-port, one of the world’s top-ranked airports,

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modern expressways, and an up-to-date mass rapid transit system. For more than two
decades until the 1997 Asian financial crisis, the country achieved annual growth rates of
8-9%. In recent years, it has emerged as the fourth largest foreign exchange center in the
world (behind London, New York, and nearly even with Tokyo), as well as Asia’s third
largest financial services center (behind Tokyo and Hong Kong). Singapore’s major
industries include electronics, particularly computer peripherals; petroleum refining and
petrochemicals; construction; food and rubber processing; and shipbuilding and repair.
The government plays a major role in directing the export-oriented economy and
providing infrastructural support for the strong manufacturing and services sectors.
Foreign Investment. With little room to grow, an acute labor shortage, and
capital surpluses that it needs to invest, Singapore increasingly has looked abroad to
sustain its economic growth. Highly successful growth triangle projects with neighboring
Malaysia and Indonesia in the 1980s were followed by a major regionalization drive
begun in the 1990s. China, India, Vietnam, and Burma all have become targets for
Singaporean entrepreneurs, who enjoy strong support and encouragement from such
government agencies as the International Enterprise Singapore and the Economic
Development Board. By 2002, Singapore had invested an estimated $70.78 billion
abroad, largely through a government-owned holding company. Singapore is a major
investor in China, Malaysia, Burma (Myanmar), Thailand, and India.
Asian Financial Crisis. As a result of growing economic ties to its neighbors,
Singapore has become increasingly sensitive to fluctuations in regional prosperity.
Despite the strong management of the Singapore economy and financial sector, the
growth rate for 1998 fell to 1.3% after the Asian financial crisis, down from 8% in 1997.
The Singapore government responded to the crisis with a series of measures designed to
cut business costs, stimulate the economy, and make Singapore more competitive and
attractive to investors. The Singapore GDP growth rate recovered to 5.9% in 1999, and
soared to 9.4% in 2000.1 Financial analysts attributed Singapore’s quick turnaround, in
part, to the strong U.S. economy and the improving regional economies. They noted,
however, that Singapore’s well-managed economy and aggressive reforms had enabled
it to weather the crisis and remain competitive.2
Economic Setbacks and Recovery. By July 2001, the global economic
downturn had pushed Singapore into a technical recession (two consecutive quarters of
contracting GDP). The continuing slump in the major world economies was further
exacerbated by the September 11 terrorist attacks on the United States. Singapore’s
export-driven economy was particularly hurt by the decline in demand for electronics,
which account for two-thirds of its exports. The SARS epidemic and the war in Iraq
caused the economy to contract further in 2003. Indications of an economic rebound
began appearing in May 2004, however: exports, particularly in electronics and
pharmaceuticals, expanded by double digit growth rates and unemployment eased slightly.
The economy continued its strong performance in 2005, posting GDP growth of 6.4% for
1 Asian Development Bank, [http://adb.org/Documents/Books/ADO/2003/sin.asp].
2 Amit Prakah, “Singapore’s Economy Grew by 9.9% in 2000,” Asian Wall Street Journal,
February 23, 2001.

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the year.3 Despite a slow-down in electronic exports in 2006, the economy grew by an
estimated 7.7%, fueled by a government decision to allow gambling in Singapore. As two
mega-casinos are constructed, strong tourism numbers are expected to further increase.4
Regional Linkages. A trade-dependent economy, Singapore has adapted its
strategy as the Asian economic landscape has shifted. U.S. economic strength and
China’s growth are crucial to Singapore’s economic health. China (including Hong
Kong) overtook the United States as Singapore’s second largest trading partner in 2003.
Singapore has also taken steps to shore up its economic relations with other neighbors:
friendly overtures to top trading partner Malaysia have improved prospects for further
cooperation, deals with India to link its consumer market and technology industry with
multinationals are flourishing, and free trade agreements (FTAs) have been concluded
with Australia, the United States, Japan, India, Jordan, South Korea, and New Zealand.
Singapore is actively seeking further FTAs, as well as pushing aggressively for
implementation of the ASEAN Free-Trade Area (AFTA). Such agreements are relatively
easy for Singapore to negotiate because, in addition to having a mature, globalized
economy, it has virtually no agricultural sector and its manufacturing is limited to
specialized sectors.
U.S.-Singapore Relations
Trade and Investment. Singapore was the 16th largest trading partner of the
United States with $35.8 billion in total goods trade during 2005. Trade in services with
Singapore totaled $8.3 billion in 2004. U.S. foreign direct investment in Singapore
expanded to $56.9 billion in 2004, a 13% increase from 2003.5 The U.S.-Singapore Free
Trade Agreement (P.L. 108-78) was enacted on January 1, 2004; bilateral trade between
the United States and Singapore totaled nearly $37 billion in 2005, an increase of 12.6%
since the FTA went into effect.6 For information on the FTA and other trade issues, see
CRS Report RL31789, U.S.-Singapore Free Trade Agreement, by Dick K. Nanto. Some
1,300 U.S. corporations operate in Singapore, with total investments of $61.4 billion in
2002.7 This investment is concentrated mainly in electronics, petroleum, chemicals, and
the financial sector.
Defense Cooperation. In addition to trade, mutual security interests strengthen
ties between Singapore and the United States. Bilateral military access agreements allow
the United States to operate resupply vessels from Singapore and to use a naval base, a
ship repair facility, and an airfield on the island-state. The U.S. Navy also maintains a
logistical command unit — Commander, Logistics Group Western Pacific — in
Singapore that serves to coordinate warship deployment and logistics in the region. As
part of the agreements, squadrons of U.S. fighter planes are rotated to Singapore for a
3 “Singapore: Curiously Dynamic,” Economist Intelligence Unit. February 20, 2006.
4 “Singapore Economy,” LEX Column, Financial Times. January 4, 2007.
5 Press release from the United States Trade Representative. March 30, 2006.
6 Press release from the United States Trade Representative. March 30, 2006.
7 “Singapore Country Commercial Guide, Fiscal Year 2004,” U.S. Commercial Service. August
2003.

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month at a time, and naval vessels make regular port calls. Singapore supported the U.S.-
led coalition in the Iraq war and Operation Enduring Freedom in Afghanistan, allowing
American aircraft and ships access to Singapore bases. It also sent a contingent of
transport aircraft and ships to Iraq and contributed policemen to help train Iraqi police.
In July 2005, President Bush and Prime Minister Lee signed the “Strategic
Framework Agreement” to formalize the growing bilateral security and defense
relationship in counterterrorism, counter-proliferation of weapons of mass destruction,
joint military exercises, policy dialogues, and shared defense technology. The agreement
builds on the U.S. strategy of “places-not-bases” in the region, a concept that allows the
U.S. military access to facilities on a rotational basis without bringing up sensitive
sovereignty issues. A 1990 Memorandum of Understanding was updated in 2005 to
continue to provide the United States with access to Singapore’s military facilities.
Counterterrorism Strategy8
Singapore has been at the forefront of anti-terrorist activity in Southeast Asia. A
terrorist attack on the city-state could jeopardize its standing as the region’s financial and
logistical hub. Shortly after the September 11 attacks in the United States, Singaporean
authorities launched aggressive operations to counter terrorist activities. Under its
Internal Security Act, Singapore has arrested dozens of suspected Islamic militants, 34 of
whom remain in detention. Many of the militants are alleged to be members or
sympathizers of Jemaah Islamiyah (JI), a designated foreign terrorist organization with
reported links to Al Qaeda. In 2002, Singaporean authorities reportedly uncovered a JI
plot to bomb the U.S. Embassy and other western targets in Singapore.
The Joint Counter Terrorism Center (JCTC) coordinates the multiple agencies and
departments of the Singaporean government that deal with terrorism, including the
intelligence agencies. Since 9/11, Singapore has increased intelligence cooperation with
regional countries and the United States. Singapore officials point to the arrests of the
alleged Jemaah Islamiah Singapore cell leader in Indonesia and of a senior member of the
same cell in Thailand as evidence of successful intelligence sharing with counterparts in
neighboring countries. Singaporean authorities have also shared information gathered
from the detainees with U.S. officials, providing detailed insights into JI and Al Qaeda’s
structure, methods, and recruiting strategies.
Singapore has demonstrated its commitment to fighting terrorism through a number
of multilateral and bilateral agreements. It was a founding member of Proliferation
Security Initiative (PSI), a program that aims to interdict shipments of weapons of mass
destruction-related materials and was the first Asian country to join the Container Security
Initiative (CSI), a series of bilateral, reciprocal agreements that allow U.S. Customs and
Border Patrol officials at selected foreign ports to pre-screen U.S.-bound containers.
Singapore has focused particular attention on maritime security measures, urging other
littoral states in Southeast Asia to work together to protect critical shipping lanes. In
addition to ongoing coordinated patrols of the Straits of Malacca and Singapore,
Singapore, Malaysia, and Indonesia launched a joint security initiative to provide
8 For a more detailed discussion on Singapore’s counter-terrorism strategy, see CRS Report
RL31672, Terrorism in Southeast Asia.

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maritime air surveillance of the Straits in 2005. Singapore was also instrumental in
establishing the Regional Cooperation Agreement on Combating Piracy and Armed
Robbery Against Ships in Asia (ReCAAP). The ReCAAP Agreement promotes
cooperation against piracy and armed robbery at sea in Asia. An information sharing
center in Singapore will serve as a platform for cooperation. Eleven other Asian
countries, but not Malaysia and Indonesia, have ratified the agreement.
Human and Civil Rights Issues
Although usually elected by a comfortable majority in free and fair elections, the
PAP “uses the government’s extensive powers to place formidable obstacles in the path
of political opponents,” according to the U.S. State Department’s 2005 Country Reports
on Human Rights Practices. The PAP has maintained its political dominance in part by
developing voter support through effective administration and its record in fostering
economic prosperity, and in part by manipulating the electoral framework, intimidating
organized political opposition, and circumscribing the bounds of legitimate political
discourse and action.”9 According to Amnesty International, “The misuse of defamation
suits by PAP leaders has contributed to a climate of self-censorship in Singapore.”
Especially during the boom years of the 1990s, the ruling PAP advocated what it
terms “Asian values” as an antidote to Western liberal traditions. The PAP ideology
stresses the government role in enforcing social discipline and harmony in society, even
at the expense of individual liberties. Under the Internal Security Act, the government can
prohibit or place conditions on publications that incite violence, advocate disobedience
to the law, arouse tensions among the various ethnic, religious, and linguistic groups, or
that might threaten national interests, national security, or public order. In October 2005,
a Singapore court sentenced two ethnic Chinese bloggers for posting racist remarks about
ethnic Malays, the first such prosecution under the Sedition Act.
Under Prime Minister Lee, Singapore has largely maintained its stringent social
restrictions but indicated some increased tolerance. Chewing gum is now allowed, as are
casinos and opposition party gatherings, provided they are indoors.10 Although Lee has
emphasized the need for society to adapt to deal with modern challenges, he also remains
adamant that a multi-party liberal democracy is not an appropriate model for Singapore.
In an indication that the United States might increasingly challenge Singapore’s resistance
to embracing participatory democracy, in 2005 outgoing U.S. Ambassador Frank Lavin
warned that the Singaporean government “will pay an increasing price for not allowing
full participation of its citizens.”11 When Singaporean authorities banned activists from
demonstrating at the September 2006 IMF meetings, World Bank President Paul
Wolfowitz criticized the move as “authoritarian” and that Singapore should adopt, “a
more visionary approach to the process.”12
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9 U.S. Dept. of State, Country Reports on Human Rights Practices for 2005, February 2006.
10 “Singapore Lightens Up at 40,” Los Angeles Times. September 25, 2005.
11 “US Ambassador Takes a Parting Shot at Singapore,” Financial Times. October 13, 2005.
12 “Singapore Activist Ban ‘Authoritarian’: Wolfowitz,” Reuters. September 15, 2006.

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