In 1975, the Monetary Authority of Singapore (MAS)
unveiled measures to boost the Singapore economy.
This involved the reduction of the minimum cash
reserve ratio, a cut in the MAS rediscount rate for
export and pre-export bills, and the freeing of
interest rates on loans and deposits of banks.
The measures would also create a more competitive
financial environment, while export-oriented
industries would particularly benefit from cheaper
funds resulting from the banks' lower prime rates and
the reduction in the MAS rediscount rate.
By 1976, Singapore's economy had begun to pick up
again. The recovery in manufacturing was led by the
electrical and electronics industry, and petroleum
refinery. Export-oriented industries (like textiles
and wood-based products) and domestic-oriented
activities (like printing and food manufacturing)
also contributed to the recovery.
The emphasis had also shifted from older
industries (like rubber, pepper, wood and metal
products) to more rapidly-developing industries (like
petroleum products, electronics, fabricated products
and industrial machinery).
In the late 1970s, the growing sophistication of
Singapore manufacturers led to the growth of original
equipment manufacturers. Skill-based but
manpower-intensive electronic industries were
relocated from the industrialised countries to
Another recession hit Singapore in 1985,
interrupting its economic growth in the 1980s.
An Economic Committee established to set new
directions for the Singapore economy reviewed the
reasons for the recession and recommended measures to
The major thrust of the Economic Committee's
recommendations was to build up Singapore's
international competitiveness, alongside longer-term
issues like wage flexibility.
The economic recovery came in 1986. Despite the
setback of the recession, growth averaged 7.1 per
cent during 1980-90 and the unemployment rate fell to
a record low of 1.7 per cent in 1990.
Foreign investment and Government participation
Singapore was able to attract foreign investors
because of its strategic location and good
infrastructure. In the 1960s and 1970s, foreign
investors were also given "goodies" like
tax concessions, simplified immigration procedures,
tariff protection and exemption from import duties.
The already liberal foreign exchange controls were
lifted totally in June 1978.
The Government also participated directly in
Singapore's economy by establishing wholly or partly
owned industrial and commercial ventures. New
companies were established in areas where the private
sector lacked capital or expertise, like Singapore
Airlines, Neptune Orient Line, Development Bank of
Singapore and Sembawang Shipyard.