Singapore manufacturing investments expected to slow

SINGAPORE: Singapore attracted S$16bil in fixed asset investments last year, a 17% increase from 2011, but the city-state will likely attract fewer capital-intensive projects in coming years due to land and manpower constraints, the Economic Development Board (EDB) said.

EDB, Singapore’s main economic planning agency, said it expected to attract S$11bil–S$13bil worth of investments in new facilities, equipment and machinery this year as companies remained keen to expand in South-East Asia at a time when growth prospects in developed economies stayed weak.

“We believe that this (forecast) is consistent with the level of capitalintensive investments that we expect to see over the medium term in keeping with Singapore’s land and labour constraints,” EDB managing director Yeoh Keat Chuan told reporters at a briefing.

“There continues to be land for industry to grow,” added EDB chairman Leo Yip. “(But) it is quite clear that we have reached a stage of our economic development where the rate of growth of land going forward cannot be the same as what we had experienced in the past.”

Singapore’s economy has been in the doldrums in the past three quarters, hurt by slowing global demand for electronics made worse by the strong local dollar and government steps to make it harder for firms to hire low-cost workers from abroad.

The city-state’s output of electronics fell 11.3% lastyear, with December’s year-on-year decline of 16.9% the largest since January 2012.

However, the EDB said the citystate’s electronics industry remained competitive, citing recent investments by the likes of Qualcomm, Samsung Electronics and Apple Inc. Around 30% of Singapore’s semiconductor production goes into components for smartphones and tablets – the sector’s star performer.

The electronics sector attracted fixed asset investments of S$6.2bil last year, which when fully operational would create 2,900 skilled jobs and generate S$1.7bil in valueadded each year, the agency added.

“We should not forget this is a very cyclical industry. In 2010, for example, we benefited very much when the electronics sector in terms of VA (value added) grew by 50% and played a key role in Singapore’s economic recovery,” Yip said.

“If global leaders continue to invest in Singapore, it suggests to us that the sector by and large remains competitive,” he added. —