QUT International College

BSD119 Global Business

Student Name
Student ID

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Contents
1. Introduction .............................................................................................................................. 4

2. Socio-economic environment ................................................................................................... 4

3. Political-legal environment ...................................................................................................... 7

4. Business environment .............................................................................................................. 8

4.1. Doing business .............................................................................................................. 8

4.2. Market potential ............................................................................................................ 8

5. Analysis .................................................................................................................................... 9

6. Recommendations .................................................................................................................. 10

7. References .............................................................................................................................. 12

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List of Figures

Figure 1: GDP from 2014 to 2022 .................................................................................................. 5

Figure 2: GDP per capital from 2014 to 2022 ................................................................................ 5

Figure 3: Inflation rate from 2014 to 2022 ..................................................................................... 6

Figure 4: Unemployment rate from 2014 to 2018 ........................................................................... 6

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1. Introduction

An Australian coca expert, Daintree Estates, manufacturers single origin Australia chocolate
using cocoa from planation in Far North Queensland. The management could foresee the bright
future for chocolate and has expectation to export into other emerging markets in Asia. Malaysia
and Singapore markets are the two optimal options for chocolate export in preliminary research.
The report will further examine market potential of Malaysia and Singapore in terms of socio-
economic, political and business environment to identify the most suitable market for Daintree
Estates’ export of chocolate.

2. Socio-economic environment

As a developed nation, Singapore is considered a country with advanced and strong economic
reputation. The country maintains a healthy public financial system including high living
standards and solid global trading background. Apart from that, Malaysia’s economy is in upper
level of middle class which export play a main role in the economic growth. This country could
export electrical parts, appliances and components, natural gas and palm oil, to name but a few
(Changing Role of State in a Globalised Economy: Case Study on Malaysia-India Companies,
2015). Notwithstanding, the recent low demand of global export has been put pressure in
Malaysian economy whereas the domestic demand gradually increases, which remains the
economy to be stable.

Gross domestic product (GDP) measuring total production within the country boundary is used to
evaluate the size of an economy. Meanwhile, GDP par capita measures a country’s economic
output that accounts for its number of people, evaluating living standards of a country. In other
words, GDP per capita is calculated by dividing GDP by the country’s total population. The two
below tables would show GDP and GDP per capital between the two countries as follows:

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Figure 1: GDP from 2014 to 2022

GDP in current price from 2014 to 2022

(in billion US Dollars)
GDP in current price in billion

500

400
U.S dollars

300

200

100

0
2014 2015 2016 2017 2018 2019 2020 2021 2022

Years
Malaysia Singapore

Source: World Bank, 2019

Figure 2: GDP per capita from 2014 to 2022

GDP per capita in current price from

2014 to 2022 (in U.S dollars)
80,000
70,000
60,000
50,000
GDP per capital
40,000
in current price
30,000 Singapore
20,000
Malaysia
10,000
-
2015

2022
2014

2016
2017
2018
2019
2020
2021

Years

Source: World Bank, 2019

In general, the line graph of GDP shows the stable growth of both countries Singapore and
Malaysia. Even though it could be seen that GDP of Malaysia is slightly higher than Singapore,

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the rate of GDP per capita of Singapore is six times larger than the rate of Malaysia due to the
fewer population of Singapore. This may mean that the living standards of Singapore would be
high and consumers are likely to afford expensive or luxury products rather than focusing on
necessities (Mehrara & Musai, 2015). The inflation rate and unemployment rate would be further
examined when comparing the two economies as follows:

Figure 3: Inflation rate from 2014 to 2022

Inflation rate from 2014 to 2022

4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
Inflation rate Singapore
1.50%
1.00% Malaysia
0.50%
0.00%
-0.50%
-1.00%
Years

Source: World Bank, 2019

Figure 4: Unemployment rate from 2014 to 2018

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 Unemployment rate from 2014 to 2018
4.0
Unemployment rate 3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2014 2015 2016 2017 2018 2019 2020 2021 2022

Years
Malaysia Singapore

From the two tables, it could be said that the inflation rate and unemployment rate of Malaysia is
much higher than Singapore, which could impact on socio-economic environment of the two
countries.

3. Political-legal environment

In terms of political-legal environment, both Asian countries contain some risks that Daintree
Estates need to pay attention. In Singapore, currently the government has put an emphasis on
restrictions of political freedom. Since Singapore is a multi-racial country with different kinds of
racism including Chinese, Malays, Indian, and other races, racial tensions could be seen a huge
problem in the country. Notwithstanding, in general, political status in Singapore is relatively
stable with one party system in the government and every aspect of the economy is under strict
control of the government (Goh, Tan & Lee, 2005). Besides, with the purpose of opening and
developing the economy, the government also issue loose regulations in relation to export and
import in order to give golden opportunities to generate partnership relationship with other
economies and promote consumption in the economy.

Unlike the advanced economy of Singapore, Malaysia is a federal constitution monarchy, and
thus the government’s interfere in private sectors as well as political donations could be
considered a loose control. As a result, bribery and corruption would be easier to occur in this
kind of country. The risk of transparency in government lobby would be a huge concern in terms
of politics in the country. When it comes to Corruption Perception Index (CPI), according to the
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Transparency International, Singapore ranks the third position of the cleanest corruption at the
score of 85 whereas Malaysia places the 61st at the score of 47. Therefore, generally speaking,
Malaysia would, without doubt, lack transparency of information and political status could not be
as stable as Singapore’s.

4. Business environment
4.1. Doing business

The fact remains that conducting a business seems to be relatively straightforward and smooth for
foreign businesses. According to World Bank 2019, Singapore is the second position in 190
countries which foreign investors could be easier to implement business operations. The country
remains the lowest number of days in dealing and working with business obligations including
tax authorities, asset management, to name but a few among other countries in Organization for
Economic Co-operation and Development (OECD). This would be resulted from clear and
transparency regulations and framework of Singapore with the government’s effort in attracting
investment flows in the country to enhance the business-friendly economy (Chauvin & Chenavaz,
2017). Apart from that, with a solid economic infrastructure, foreign enterprises would be able to
be supported in doing their business (Chen & Shao, 2017).

Malaysia places a ranking at 23rd position in terms of ease of doing business, which is much
lower than Singapore’s ranking ("Ease of doing business index", 2019). However, a free trade
agreement between Malaysia and Australia was made in 2013 to facilitate the export from
Australia into the country ("Malaysia-Australia FTA", 2019). The agreement has almost reduced
tariff of exported goods and open a huge opportunity for Australian goods (Bischoff, Nique and
Machado, 2018).

4.2. Market potential

The trend of consumption of healthy products is gradually increasing over the past few years.
Scientist has given a conclusion that chocolate, especially dark chocolate has a positive impact on
people’s health. As a result, more and more people steadily choose chocolate for their daily
meals. Remarkably, consumption of chocolate in the two countries has been going up
accordingly. Singapore would be considered a well-developed market for confectionery products
whereas Malaysia has a high proportion of urbanised population (Leong & Li, 2017). In
Singapore with high level of living standards, people are easy to afford expensive to luxury
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chocolate in gourmet chocolate market. Besides, the trend of those markets is going towards
small size of chocolate rather than higher unit price. Chocolate is a product which could meet
demands of a wide range of audience from children to old people. However, in line with healthy
or green lifestyle, dark chocolate seems to be preferable in those markets rather than white or
sweet chocolate which could be considered unhealthy products.

5. Analysis

Both Singapore and Malaysia have their own unique advantages and disadvantages of choosing
which country would be the optimal choice for Daintree Estates for chocolate exporting. The
table below would provide weighted index to determine suitable country.

Variables Weighting Singapore Malaysia

Score (out of Weighted Score (out of Weighted
10) score 10) score
Socio- 25% 7 1.75 6 1.50
economic
environment
Political 20% 7 1.75 5 1.00
environment
Trade 25% 6 1.50 7 1.75
relations
Market 30% 8 2.40 7 2.1
potential
Total 100% 7.4 6.35

Market potential could be considered the most significant factor in determining the most suitable
country since it would impact on future profitability of Daintree Estates. Apart from that, other
factors also contribute to considerations.

In terms of socio-economic environment, it is likely that when people have a higher level of
living standards, they are easier to afford other supplemented products such as chocolate with a

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variety of price (Pylypenko & Horbanov, 2018). Singapore is an advanced economy where
people are willing to spend money on expensive products. As a result, the road to access market
of Daintree Estates to this market is smoothier than Malaysia’s market.

When it comes to political environment, the fact remains that working with a country with a clear
and transparent frameworks and regulations would give rise to access and evaluate market
information to be more accurate. The lack of transparency would result in unfairness in doing
business and competition in the market. A completely new entrant of a foreign enterprise, who is
not familiar with the local market, would prefer Singapore rather than Malaysia (Kim-Soon et al.,
2015).

Trade relations witnesses a higher score of Malaysia in comparison with Singapore. Singapore is
well-known as a business-friendly economy which promotes partnership with other foreign
economies. This may mean that Daintree Estates could have various opportunities to be granted
to have incentive trading terms with Singapore. However, Malaysia also has a free trade
agreement in relation to exported goods with Australia which would, without doubt, reduce tariff
to the lowest level, approximately zero percent (Yaw & Keong, 2019). It is likely that exported
goods from Australia is easier to access the Malaysian market with lower price to meet
consumers’ demand in different levels of income.

It seems that market potential of Singapore is slightly higher than Malaysia due to impact of
socio-economic environment. In Singapore, people can be easy to find any chocolate gourmet
and select the most favorite kind of chocolate for themselves. Cheaper chocolate is also found in
supermarkets or night markets (Monotti, 2008). In the future, when Daintree Estates
manufactures organic chocolate with higher prices, Singapore would be potential market to
initially consider. Malaysia, even though the country is in upper level of middle-class, rural
population seems not to potential market for chocolate, especially for Daintree Estates
(Gevorkyan, 2018).

From all above reason, it could be concluded that Singapore is the suitable country for Daintree
Estates for exporting chocolate when considering different factors and comparing with Malaysia.

6. Recommendations

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Upon above analysis in relation to socio-economic, political-legal and business environments,
Singapore presents more beneficial market for exporting chocolate of Daintree Estates, giving
golden opportunities to access Asian market, particularly in South East Asia. Taking in-depth
understanding of local market when it comes to laws and regulations, culture, custom,.. would
assist the business in opening market share.

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7. References

Chauvin, C., & Chenavaz, R. (2017). The appeal of doing business in Hong Kong, Singapore,
and Shanghai. Global Business And Organizational Excellence, 37(1), 59-66. doi:
10.1002/joe.21829

Bischoff, V., Nique, W., & Machado, M. (2018). Influences of international orientation and
export commitment on the export performance of emerging market SMEs. International Journal
Of Export Marketing, 2(1), 28. doi: 10.1504/ijexportm.2018.10014507

Chen, X., & Shao, Y. (2017). Trade policies for a small open economy: The case of
Singapore. The World Economy. doi: 10.1111/twec.12555

Changing Role of State in a Globalised Economy: Case Study on Malaysia-India Companies.

(2015). Akademika, 85(02). doi: 10.17576/akad-2015-8502-05

Mehrara, M., & Musai, M. (2015). The Causality between Education and GDP Growth in Asian
Countries. International Letters Of Social And Humanistic Sciences, 50, 28-35. doi:
10.18052/www.scipress.com/ilshs.50.28

Goh, C., Tan, P., & Lee, S. (2005). Key issues in manufacturing enterprise integration - the
Singapore perspective. INDIN '05. 2005 3Rd IEEE International Conference On Industrial
Informatics, 2005.. doi: 10.1109/indin.2005.1560408

Leong, C., & Li, L. (2017). Singapore and Sydney: Regulation and Market-Making. Water, 9(6),
434. doi: 10.3390/w9060434

Gevorkyan, A. (2018). Exchange market pressure and primary commodity – exporting emerging
markets. Applied Economics, 51(22), 2390-2412. doi: 10.1080/00036846.2018.1545077

Kim-Soon, N., Rahil Mostafa, M., Mohammed, A., & Ahmad, A. (2015). Export Market
Orientation and Organizational Knowledge Enhance Export Market Performance. International
Business Research, 8(12), 80. doi: 10.5539/ibr.v8n12p80

Yaw, W., & Keong, C. (2019). Theoretical Reviews of International Trade: Malaysia and China
Exporting Goods in Asia. Journal Of Management, Economics, And Industrial Organization, 35-
47. doi: 10.31039/jomeino.2019.3.2.3

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Pylypenko, Н., & Horbanov, V. (2018). Global goods in the structure of public purpose
goods. Socio-Economic Research Bulletin, 0(2(66), 19-28. doi: 10.33987/vsed.2(66).2018.19-28

Monotti, C. (2008). Future chocolate market growth in four EU countries. British Food
Journal, 110(7), 671-690. doi: 10.1108/00070700810887158

Malaysia-Australia FTA. (2019). Retrieved 28 August 2019, from

https://dfat.gov.au/trade/agreements/in-force/mafta/Pages/malaysia-australia-fta.aspx

Ease of doing business index. (2019). Retrieved 28 August 2019, from

https://data.worldbank.org/indicator/IC.BUS.EASE.XQ

Corruption Perceptions Index 2018. (2019). Retrieved 28 August 2019, from

https://www.transparency.org/cpi2018

World Bank Group - International Development, Poverty, & Sustainability. (2019). Retrieved 29
August 2019, from https://www.worldbank.org/

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