This paper discusses Singapore’s progress in implementing the ASEAN Economic Community (AEC) and tries to explore whether the city-state has encountered any domestic conflict whilst doing so. It concludes that being a highly trade- and FDI-dependent economy, it is in Singapore’s national interest to be a part of the AEC. It is one of the leading ASEAN countries to implement the AEC initiatives. When examining domestic conflicts, Singapore presents a unique case as the city-state has long been exposed to the competitive forces of globalization, well before the development of the AEC. The country adopts non-protectionist measures to manage competitive pressures from the global economy. Almost full employment and a low incidence of poverty also minimize the negative impacts of liberalization. Case studies of the electronics and aviation sectors highlight how these two sectors are adjusting to liberalization and competition from the global economy, including the AEC. With respect to the electronics sector, which is an integral part of regional production networks, Singapore is continually progressing up the value chain. In the case of the aviation sector, the city-state continues to meet global and regional challenges through cooperative arrangements with the aviation industries of other countries and by upgrading and expanding its air services.