Singapore and Malaysia are leaders in Southeast Asia. They are forging economic relations between members of the Association of Southeast Asian Nations (ASEAN) to further the region's development. Transformation of these economies has been fostered by industry and government cooperation. These countries have good trade balances, sound economies, positive capital flows, are internationally competitive, have diversified their industries, and are expanding into world markets. Singapore is classified as a more advanced developing country; Malaysia trails Singapore by only 5-10 years in its economic development. A major portion of their trade expansion is occurring in the electronics manufacturing sector. As a combined force, Singapore and Malaysia are the largest assemblers of IC packaging in the world. Singapore and Malaysia started in the electronics business in the late 1970s by exploiting their cheap labor to assemble final products and subsystems. In the mid-1980s, Singapore and Malaysia's labor rates lost this competitive advantage to neighboring countries with lower wage rates. Changing economic realities caused the governments to put together economic programs to modernize their nations and move to the next level of industrialization. Being single-party states with centralized decision-making structures allowed them to direct their resources to achieve aggressive economic development goals. Programs were directed towards export-oriented industries. Government-industry partnerships supported continued GDP growth of 8% per year with an inflation rate of less than 4%. Companies and government agencies provided clear goals to improve living standards as measured by GDP growth rate. The goal of Singapore's EDP 2000 plan is to achieve an unrivaled standard of living by the year 2000; Malaysia's plan, Vision 2020,1 aims to achieve the same goal by 2020.Table 4.1
Local - locally owned company; MNC - multinational corporation These plans support short- and long-term economic development programs. The electronics industry is playing an increasing role in elevating GNP with advanced manufacturing and end-assembly operations. The leaders of Singapore and Malaysia recognize that they can no longer improve their citizens' life styles by promoting labor-intensive industries: they no longer have low-cost labor. Singapore is the most expensive of newly developed and developing countries. Engineers' salaries in Singapore compare with U.S. salary levels. Surrounding countries like Indonesia, Myanmar, Laos, Cambodia, Vietnam, and China have far lower labor rates. To keep the standard of living up, more advanced technology and capital-intensive industries are required. Both countries are competing for high-technology and capital-intensive industries.