Singapore Economy: F1 a Success but more Tourism Needed

Singapore, 29 Sep 2008. The Singapore Grand Prix contributed to revive tourism in the country, but more has to be done if Singapore is to sustain healthy tourism figures in the future. [br]

Just over 40 years ago, Singapore was an undeveloped third-world island, newly independent from Malaysia and largely isolated from the rest of the world. Today, it is a cosmopolitan center of shopping and food, well-known for its finance and commerce, and now famous for having held the first Formula 1 night race.

Singapore, 29 Sep 2008. The Singapore Grand Prix contributed to revive tourism in the country, but more has to be done if Singapore is to sustain healthy tourism figures in the future. [br]

Just over 40 years ago, Singapore was an undeveloped third-world island, newly independent from Malaysia and largely isolated from the rest of the world. Today, it is a cosmopolitan center of shopping and food, well-known for its finance and commerce, and now famous for having held the first Formula 1 night race.

Grand Prixs were held in Singapore in the late 60s and mid-70s, albeit without the commercialization and hype of today. Now the sport is back, and is welcome given the uncertain financial and economic future.

Government estimates envisage the races to add an additional US $70 million in tourism spending per year from the 100,000 people that are expected to watch the race annually. But the races cost even more to host: $105 million per year. The government is paying 60% of this sum, in a commitment that will last five years. [br]

The country is headed for a technical recession with growth shrinking for two successive quarters. With setbacks in the sizable electronics manufacturing industry, the government is doing all it can to promote the tiny nation and its economy.

Attendance to the first F1 race in Singapore drew about 50,000 from overseas, bringing the economy a much-needed boost. However, the boost may not have been as big as estimated. Expectations were that the 11 four and five star hotels surrounding the track would be fully booked, but only three sold out. This could be in part to the government-imposed 30% surcharge on room rates in an attempt to recover a portion of the US $60+ million the event cost.

Instead, the grandstands sold out, as did the luxury air-conditioned suites above them. Tickets for the suites sold for US $5,250. While this may sound expensive, it is a far cry from filling the remaining eight hotels which were under-booked.

Perhaps future years will be more lucrative for the country – or at least expectations will be more realistic. Bernie Ecclestone, who owns the F1 rights, was optimistic. He said that Singapore could be the jewel in the F1 crown some day.

He told Singapore’s English newspaper, The Straits Times, “… this will open people’s eyes and they’ll say, my God, Singapore really is alive and well.”

In a country with almost no natural resources, Singapore is betting on tourism for long-term economic success. Tourism makes up only about 3% of the GDP (US $8.37 billion), and it is declining, but there are projects in the pipeline to boost this figure. The Youth Olympics are planned for 2010 and casinos are under construction.

Facilities are being built for The Youth Olympics which are expected to cost US $75 million, and will last up to 12 days. The casinos, or more politically correct ‘integrated resorts’, as they are known in Singapore, will bring in continuous and long-term tourist dollars.

Hector Sim, Independent contributor