2013 TJC H1 Econs Prelim Paper 1

TEMASEK JUNIOR COLLEGE Preliminary Examination 2013 General Certificate of Education Advanced Level Higher 1 ECONOMICS 8819/01 18 September 2013 3 hours Additional Materials: Answer Paper, Cover Sheet READ THESE INSTRUCTIONS FIRST Do not turn over until you are told to do so. Write your name and CG number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Section A Answer all questions. Section B Answer one question. Begin each question on a separate sheet of answer paper. Fasten your work for Section B and the Cover Sheet together. Hand in your answer to each question separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 8 printed pages Temasek Junior College Economics [Turn Over © TJC 2013

2 © TJC 2013 [Turn Over Section A Answer all questions in this section. Question 1 Tourism Barometer of Singapore Table 1: Visitor Arrivals into Singapore by Country of Residence Country 2008 2009 2010 2011 TOTAL 10,116.1 9,682.7 11,641.7 13,171.3 ASEAN 3,571.4 3,684.8 4,821.8 5,414.3 Japan 571.0 490.0 529.0 656.4 Hong Kong 278.1 294.4 387.6 464.4 China 1,078.7 936.7 1,171.5 1,577.5 United Kingdom 492.9 469.8 461.8 442.6 Source: Yearbook of Statistics Singapore, 2012 Extract 1: Singapore Tourism 2015 – Vision, Targets and Initiatives By 2015, Singapore aims to be a destination of choi ce, a powerful tourism hub attracting visitors, business, and talents from across the world by 2015. The Singapore Tourism Board (STB) has identified three key areas of focus: (a) strengthening Singapore position as a Leading Convention & Exhibition City in Asia with a strong and dynamic business environment. (b) developing Singapore as a leading Asian leisur e destination by providing an enriching experience that is Uniquely Singapore. (c) establishing Singapore as the Services centre of As ia – a place where visitors come to enjoy high end quality services such as healthcare services. Table 2: STB’s targets for 2015 Indicator 2004 2015 Target Tourism Receipts S$10 billion $30 billion Visitors Arrivals 8 million 17 million Tourism Employment 150 000 250 000 Source: Adapted from https://app.stb.gov.sg

3 © TJC 2013 [Turn Over Extract 2: Should there be a lower F1 levy on hotel room rates? Economists agree that Singapore must promote tourism and other services to counter a decline in some manufacturing industries, particularly the mainstay electronics sector. Tourism is seen as favourable in employing large numbers of low-skilled workers who have lost industrial jobs. The inaugural Singapore F1 Grand Prix in 2008 was the only night race in the world. It costs $150 million to organise, with the Singapore government footing 60 per cent of the bill. Hotel room rates typically rise sharply for the F1 period (especially at trackside hotels) due to significant demand for rooms as well as the imposition of a special F1 tax on hotels to defray some of the costs. The tourism and hospitality sector would also need to focus its efforts on developing a skilled tourism workforce to fill the additional jobs created in the tourism industry. Efforts must not be spared in raising service standards because Singapore faces stiff competition as other countries in the region are also attempting to develop their own tourism sectors. In situations such as a global recession, sports tourism and other lifestyle industries would probably be the first few to experience the impact. Unforeseen events like the SARS epidemic woul d affect global tourism as people reduce their probability of being infected by staying home. Source: Adapted from The Business Times, May 15, 2010 Extract 3: Singapore has reaped benefits from F1 race? Singapore’s Minister of State for Trade and Industry, Mr. S. Iswaran, who is spearheading the government’s involvement in the F1 project, says F1 is needed to boost Singapore’s tourism industry which accounts for 3 to 4 per cent of gross domestic product. The event would not only give a strong boost to the tourism sector, but also generate broader economic spin-offs. The Formula 1 race is expected to generate a total of S$100 million in tour ism receipts as well as bring Singapore closer to its goal of being a vibrant global city that is abuzz with high quality entertainment and events. The race has given Singapore good international exposure and it continues to enjoy strong support locally and internationally. The event also provided a networking platform for businesses with many taking up hospitality suites to host partners and clients at the race. For example, in 2010 the Singapore Exchange organised a conference at the sidelines of the race to bring together potential investors in the Asian motorsports industry. However F1 will not get an A1 for environmental fr iendliness, given its high petrol consumption and the amount of carbon emissions. Then there is the pre-F1 construction mess as well as the noise pollution during the race. At full throttle, each car’s noise level is louder than thunder. The F1 race is unpopular among some locals as road closures near the circuit cause jams. Even those outside the circuit vicinity can be frustrated by the traffic snarls because of the spillover effects. Those who are unhappy include some retailers in the Central Business District (CBD) who were affected by the detours enforced when F1 is in town, but even some of those in town say business doesn’t spike up noticeably during this period. Source: Adapted from various sources

4 © TJC 2013 [Turn Over Extract 4: Medical Tourism in Singapore Thailand, India, Malaysia and Singapore have dominated the Asian medical tourism industry in recent years. Singapore’s medical tourism is fast developing steadily to be on the major location for medical tourism in Asia because we are competing on skills and beneficial outcomes rather than merely on costs, said Health Minister, Mr. Khaw Boon W an. Today Singapore attracts more than 200 000 patients every year to receive medical services from Singapore hospitals and clinics. This figure is estimated to increase to about 1 million medical tourists to Singapore by end of 2012. Demand for health care in Singapore – which spends about 4 per cent of gross domestic product on health care – is being driven by an aging population, rising affluence as well as increasing awareness of healthcare standards. Singapore started implementing a medical tourism sc heme, the ‘elective hospitalisation overseas option’, on 1st March 2010 where patients who want to use Medisave to pay for private care abroad, will be able to do so at 12 hospitals and medical c entres in Malaysia. The facilities, owned by two Singapore health-care groups, offer care which could cost as little as half what it does here. This scheme gives Singaporeans more choices especially for those who want to seek cheaper but good quality treatment from private hospitals overseas. Source: Adapted from various sources Questions (a) (i) Compare the trends in visitor arrivals in Table 1 between 2008 and 2011. [3] (ii) Explain the possible reasons for the above trends. [4] (b) With a relevant diagram, explain the burden borne by the trackside hotels and their guests as a result of the special F1 tax on hotel accommodation. [4] (c ) Discuss the possible measures to manage the market failures generated by the Singapore F1 race. [8] (d) Explain the economic rationale behind the ‘elective hospitalization overseas option’ as mentioned in extract 4. [3] (e) Discuss the impact o