1.1 Economic background of Singapore Singapore had established a much stronger and diversified economy in the early 1980’s, and which gave it an economic importance in South-east Asia. Government plan the realigning industrial activities from the traditional labour-intensive, low-wage activities to capital-intensive, high-wage and high-technology activities during the first half of the 1980s. However, Singapore’s economy declined in year 1895 and this is the first time in 20 years. One of the reasons for decline was high-wage, which cause the product of Singapore less competitive on the world market. By the late 1980s, Singapore had to focus on diversify its economic, making it able to provide the manufacturing, financial, and communications facilities for multinational firms. Government take the action to emphasis on the manpower development through the education and training to improve competitive. It also can be shift toward the higher value-add and skill of intensive investment promotion policy. Economic growth averaged 7.7% per annum during this period. In the 1990s productivity increased as did labour cost. Singapore had success in shifting to the higher value-added production signalled by the export growth in high-technology manufactured goods.In year 1997, Singapore economy was affect by the regional crisis by the devaluation of the Thai Baht. Although Singapore’s financial and economic fundamental were sound, the rapidly deteriorating external environment adversely affected Singapore. Overall, the Singapore economy contracted 2.1% in 1998. In year 2001, Singapore hit again by another recession and downturn in the major development economic in the same time. Unemployment rose to 4.7% in 2001 and remained above 4% throughout 2002. Per capita income estimate by the CIA in purchasing power parity terms was $24,700,