Posted: March 28th, 2021

Benefits of Tourism in Singapore

1.0 Introduction

1.1Definition of Tourism industry

Tourism refers to the movement of people from different social and cultural background travelling out of their usual environment staying in a different place for business, personal, or professional reasons. These people are commonly referred to as tourist. Their actions in the country they visit affects the local economic market as they carry out their activities, as most of which may require them to spend money thus increasing the expenditure in the local markets which in turns boosts the GDP of the respective country (, 2014b). Therefore the tourism industry is formed to cater to the needs and demands of locals and tourists in terms of products and services and is defined as such in this report.

1.2 What does the tourism industry mean to Singapore?

As Singapore lacks natural resources, the tourism industry serves as an integral factor that acts as a crucial pillar for the economy of Singapore. It contributes an estimated 4% to the gross domestic product of Singapore and also provides jobs to about 160,000 people. The tourism industry serves to reaffirm Singapore’s position as a global cosmopolitan city that is dynamic, able to cater to the locals’ and tourists’ demands for leisure, entertainment, giving consumers enhanced quality and diversity in terms of leisure creating a wider range of options creating a vibrant living environment that Singaporeans can proudly call home (, 2014).

2.0 Economic Impact Analysis

Four types of Economic Impacts that Tourism have on the economy

1-Direct contributions

Tourism’s direct contributions are results of revenue earned from tourists’ expenditure by businesses like hotels, restaurants, retail outlets, transportation services, cultural / sports and recreational services.

2-Indirect contributions

Some of the indirect contributions derive from investment spending from the businesses of the travel and tourism, Government expenditure in the form of investment to improve or enhance the industries.

3-Induced contributions

The direct and indirect employees involved in this sector then in turn contributes to the consumption by spending their wages on food and beverages, recreational activities, clothes, housing and household goods.

4-Total contributions

Therefore the total contributions from the direct, indirect and induced contributions will in turn affect the GDP and the employment rate as they affect various factors of the GDP equation which also affects the production rate thus increasing the GDP and employment rate in a situation when there is an increase in revenue and demand from tourist and with certis paribus assumed.

2.1 Contributions to Singapore’s GDP

The latest press release by UNWTO World Tourism Barometer, shows that expenditure receipts international visitors spent on food and beverages, services, entertainment, accommodations and much more totaled up to an estimated SGD$ 1,455 billion during 2013. And that the growth rate of receipts experienced a 5% increase from 1035 million during 2012 to 1087 million during 2013(, 2014a).

According to an economic report by Singapore’s Travel and Tourism Economic Impact report 2014, in 2013 travel and tourism’s direct contribution to Singapore’s GDP was SGD$ 19.1 billion (5.3% of total GDP) Singapore’s GDP. Its GDP contributions in 2014 is expected to experience a 5.8% increase, and also to experience a 3.4% increase per annum, as of 2014-2024, to SGDS$ 28.3 billion as of totaling a 5.3% of the total GDP in 2024 (World Travel and Tourism Council, 2014).

The abovementioned news and report serves as macroeconomic examples that shows how tourism is able to increase consumption of goods through expenditure internationally and in a country. It also shows that tourism’s contributions to a nation’s GDP shows positive signs of growth thereby explaining why Singapore’s government is showing increased interest in the economic impacts that tourism presents on national and local levels.

2.2 Supports Job and Induces Investments

The tourism industry serves to support employment indirectly by providing 295,620 job positions which makes up 8.7% of the total employment in Singapore. Currently, there is a SGD$ 16.2 billion worth of investment in the tourism industry which contributes to 19.7% of total investment which also expects to experience a 5.5% increase this 2014 (Singapore Business Review, 2014b).

Therefore if the tourism industry booms and experiences an increase in demand for goods and services, relevant services and manufacturing companies that indirectly contributes to the tourism industry may experience shortage of manpower as a result also creating increased job opportunities for the people in Singapore. Purchases from suppliers may also experience an increase as more products are needed to cater to the demands of the people. Also due to increased numbers and demands from tourists, the government of Singapore would therefore have increased reasons to further invest in the travel and tourism industry which will eventually contribute to the GDP equation.

2.3 Increase in Tax revenues

The Singapore government imposes a ‘sin’ tax on alcohol and tobacco goods on all business. These taxes are paid by firms when importing such goods. Tourists that consume such products while in Singapore increases the demand for such goods which makes businesses increase their imports to meet the demand, allowing the government to collect more ‘sin’ taxes increasing tax revenues of the government. Given the recent news of a 25% increase in liquor taxes, the potential revenue that can be earned when tourist or locals consume such products provides substantial reasons for the Singapore government to be interested in investing in tourism sectors in an attempt to attract more tourists, increasing the demand and consumption for liquor to generate more tax revenues (, 2014d).

2.4 Attractions and events

Major events like the Singapore F1 Grand Prix serves to turbo charge economies by attracting tourists from all over the world to Singapore. A 12.6% increase in advance bookings of flights show how such events contribute directly to the tourism industry, not to mention the increase consumption of other services and products like restaurants, hotel accommodations and other necessities (AsiaOne, 2014). Tourist attractions like gardens by the bay, marine life park, river safari and national art gallery also serve to provide a wider range of activities for tourists to engage in thus increasing the population of tourists affecting the demand of goods and services and further generating revenues for local businesses(Singapore Business Review, 2014a). Coupled with the Casinos in Marina Bay Sands and resort world makes Singapore attractive to tourists.

3.0 Demand Analysis

3.1 Changi Airport plans for Terminal 4

Changi Airport is planning to build a fourth terminal that costs $985 million that is expected to be completed in 2017. The new terminal is expected to allow Changi Airport to cater to 16 million travelers annually (, 2014a). A new multi-story car park will also allow it to provide about 1500 parking lots. Coupled with the fact that Changi airport won Skytrax’s title for being the best airport, the planned terminal 4 would be able to increase the overall service quality making it a preferred airport resulting in increased demand as preferences is one of the main factors that result in a change of demand (, 2014b). The increased population of tourists also causes the demand for goods and services to experience an increase as it corresponds to the population factor regarding change in demand.

3.2 Gastronomic Tourism

Gastronomic tourism is an emerging type of tourism that is being developed and packaged into a new tourism trend. This is due to the fact that 1/3 of a tourists’ expenditure is spent on food and beverages which is a necessity. Gastronomic tourists make experiential trips to countries to visit producers of food, food fairs and gastronomic festivals some of which may even try to learn how to cook the local dishes (World Tourism Organisation 2014, 2014).

When Singapore organizes food fairs or events like the Food & Hotel Asia 2014 and Wine & Spirits Asia at Singapore Expo which ended on 11th April 2014, the demand of such gastronomic tourists to travel to Singapore would experience a significant increase. The events was host to a record of 64,826 international trade attendees from more than a hundred countries and regions which was also a 5.8% increase from 2012 (, 2014). Thus showing how events like these are able to affect the numbers and type of tourists increasing the demand of goods and services.

3.3 Medical Tourism

Latest reports from RNCOS, predicts Singapore’s medical tourism to experience a compound annual growth of 30% within the forecasted period of 2013 to 2017. Singapore is emerging to become a leader in the medical tourism market as it prides itself on its highly skilled healthcare professionals and world class medical infrastructure. The expected growth of medical tourism is also attributed to the fact that Singapore has state of art medical facilities and costs that are affordable in relation to quality(, 2014). Being a preferred location for medical procedures increases the numbers of such tourists. Singapore is increasingly able to attract growing numbers of patients from lesser developed countries like Mongolia and Cambodia along with the current majority of medical tourists from developed or developing countries like Indonesia and Malaysia and the occasional patients from China and India (, 2014). Patients of such medical tourism also serves to increase the consumption of other services and goods as depending on the respective medical procedures, their stay may take days, weeks or even months.

4.0 Environmental Analysis

4.1 Safety and security

Singapore recently ranked 2nd out of 99 in a law study. It also ranks top ten in terms of its civil justice systems (WJP Rule of Law Index, 2014). The republic has praised by the World Justice Project for having low crime rates, political violence and high confidence in its law enforcers. This gives tourists a sense of safety and security when they are in Singapore which will further increase the popularity and preference of Singapore as a tourist location giving rise in the numbers of tourist who will contribute to increase consumption of goods and services in the country.

4.2 Clean and Green City

Singapore is globally renowned to be a clean and green metropolitan city that is known to be of low pollution levels. Also attractions like Gardens by the Bay strives to attract more people to choose Singapore as a tourist location by attempting to create a city surrounded by gardens capturing the essence of a tropical garden city Singapore in an attempts to attract and increase the numbers of eco-tourists(Gardens by the Bay, 2014).

5.0 Conclusion

The positive contributions and economic impacts of tourism supports and maintain many jobs and is also expected to create more jobs and further contribute to the country’s GDP in future, therefore Singapore’s government should implement policies and take a more proactive approach to boost the tourism industry. Actions should be taken to spruce up bridges like the Cavanagh Bridge which is part of Singapore River’s historical structures (Zaccheus, 2014). They should also continue their efforts to organize events like the F1 Grand Prix, constantly improving the facilities of the Changi airport while making plans to capture and become a first class cruise tourism market by ensuring swift completion of the Marina Bay Cruise Centre as that market is expected to see a growth of up to 3.8 million passenger by the year 2020 (Kaur, 2014). Lastly further efforts and investments to improve medical facilities in Health City Novena should also be taken in order to attract more medical tourists and also benefit the locals (, 2014c). Once these recommendations are implemented, Singapore should be able to attract more tourist and experience the positive economic impacts that the tourism industry can offer.


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