Singapore Defence and Security Report Q1 2010

Singapore continues to procure high-technology weapons systems and to contribute to multinational peace support missions. We expect defence expenditure to remain between 4.8% and 5.9% of GDP over the next few years. Singapore will likely maintain military spending despite the global downturn. Singapore's export-oriented economy will be a key beneficiary of any pickup in external demand, leading us to believe that real GDP growth will come in at -3.6% in 2009 ( an upwards revision of our previous forecast of -4.8%). However, our 3.2% growth projection for 2010 could still face downside risks should the withdrawal of stimulus knock the global recovery off course.

Singapore has enjoyed a good track record of maintaining racial harmony over the last few decades with hardly any signs of tension or unrest. However, strong economic growth that the country has seen has been contributed in large part by the considerable number of foreigners that Singapore employs, and the high numbers of foreigners have led to tensions with the locals. The Singapore government took key steps in September to reassure residents about their concerns regarding the surge in influx of foreigners. We believe these measures will serve the longer-term goal set by the government of increasing the population from the current 4.8mn to 6.5mn, and help Singapore reduce its dependency on the external sector. Singapore’s military recruitment strategy is similar to that of Israel, owing to its small population and relatively high defence requirements. The military relies heavily on conscripts and reservists, advanced weaponry and a core of highly trained, professional active military personnel. In addition, the military maintains a strict zero-growth policy with regards to the military. This policy has led to increased reliance on unmanned defence technology for the army, navy and the military.

Furthermore, to maintain internal stability, it maintains a significant number of paramilitary forces, which also rely on conscripts, reservists and volunteers to sustain their numbers. The conscription strategy utilised by Singapore since 1971 has relied upon a lengthy military service for its citizens, which could extend to 30 months. However, demographic changes indicate that this period is to be cut to 24 months from 2004. Some 19,100 personnel are currently recruited as conscripts annually, but with an expanding youth population, this figure was set to expand to 24,300 by 2006, before decreasing again by 2016.