Surpassing its expectations for 2006, with outstanding results in manufacturing and services buoyed by 450 quality investments across the board, Singapore Economic Development Board achieved its best performance to date.
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An exceptional year - that was the verdict passed down by the Singapore Economic Development Board (EDB) at its 2006 Year-In-Review press conference, held on 29 January 2007. The scorecard revealed exemplary results that exceeded forecasts in value added (VA) to country's GDP, fixed asset investment (FAI), total business spending (TBS) and job creation. In particular, VA per annum and TBS were the best in more than 10 years, while jobs created were the highest recorded in the last five years.
This stellar performance was no mean feat, as Lim Siong Guan, Chairman, EDB, pointed out. "The competitors are different, but competition in every sector is just as intense," says Lim, who was helming his first annual assessment since assuming his current position in October 2006. He highlighted that despite mounting competition from both developing and developed countries, Singapore still remained an attractive location for capital-, knowledge- and innovation-intensive investments.
This makes the results posted in 2006 all the more appreciable as 450 projects were committed in the island-state during that period. When fully implemented, they are expected to generate some S$13.4 billion (US$8.7 billion) in total VA per annum, a 24 per cent jump over 2005's S$10.8 billion (US$7 billion). Approximately 26,800 new jobs will also be created as a result of these projects, furthering bolstering the country's economy.
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As investments poured in, manufacturing remains a cornerstone of Singapore's economy as it contributed at least two-thirds to GDP.
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MANUFACTURING & SERVICES: MOVING UP THE LADDER
As investments poured in, manufacturing remains a cornerstone of Singapore's economy as it contributed at least two-thirds to GDP. Last year, manufacturing FAI raked in S$8.8 billion (US$5.7 billion), a four per cent increase over 2005. Meanwhile, TBS from services was S$2.8 billion (US$1.8 billion), a 12 per cent surge over the previous year.
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EDB's blueprint for bringing the economy forward is obviously working, as indicated by its strong showing. For manufacturing, the agency stayed with its policy of attracting complex, high-end activities and this bore fruit as they garnered several large, world-scale manufacturing investments, each exceeding S$1 billion (US$700 million) in FAI. The chemicals sector received a shot in the arm with Shell Eastern Petroleum's cracker and MEG plant, its biggest investment in Singapore to date. It came as no surprise that the electronics sector - which drew in the lion's share of manufacturing FAI with S$4.3 billion (US$2.8 billion) - also enjoyed the arrival of several high-value projects. These included two firsts: a S$1.7 billion (US$1.1 billion) 300mm silicon wafer substrate facility established by Samsung Electronics-Siltronic, and Intel and Micron's S$4.7 billion (US$3.1 billion) NAND flash memory fabrication plant. Long-time investor Seagate Technology also announced its commitment to build its third media facility here at a cost of S$1.3 billion (US$846 million).
To ramp up the appeal quotient and relevance of Singapore's manufacturing sector globally, EDB pushed the envelope in developing new growth areas. Its efforts paid off, with two groundbreaking projects that represent ambitious firsts for the Republic: Australian company Natural Fuel setting up its biodiesel plant and Singapore Copper Technologies's plans to build an integrated copper refinery locally.
Over in services, TBS was at an all-time high, gaining ground mainly in the HQ & Professional Services segments, which contributed over S$1.2 billion (US$780 million), or 43 per cent to the services TBS pie. Not only are more companies basing their HQ activities here, they are also embarking on sophisticated, knowledge-intensive areas such as intellectual property management, design and innovation. The outstanding TBS showing is linked with manufacturing's solid performance, says Lim, as the latter not only creates downstream economic activities but also helps promote manufacturing support services.
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Maintaining Singapore's attractiveness as a premier business destination, EDB also focussed on boosting R&D activities in the country.
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EMPHASIS IN R&D LEADS TO RISE IN PROJECTS
Maintaining Singapore's attractiveness as a premier business destination, EDB also focussed on boosting R&D activities in the country. This sector is a crucial catalyst in developing the full potential of stalwart sectors, while nurturing new growth areas. Newer technologies and processes, in particular, help to enhance the country's manufacturing capabilities. To this end, EDB looked to generate more opportunities for the R&D sector to flourish.
Its efforts resulted in not just 158 R&D projects worth S$1.6 billion (US$1 billion), representing a 30 per cent increase from 2005, but there were several ground-breaking firsts as well. One example was Vestas Wind Systems, which invested in its first R&D centre dedicated to wind technology here. "Singapore was not on the shortlist," says Ko Kheng Hwa, Managing Director, EDB. "Yet our officers succeeded in convincing the company to set up an R&D centre with 150 staff to develop next-generation wind energy."
Indeed, EDB's strategy of aggressively promoting complex manufacturing and high-end R&D activities places the Republic in good stead in an increasingly competitive arena for investment dollars. Singapore will remain "an attractive place to plant new technologies," notes Lim.
This is not to say it isn't one currently. Several investments, involving highly skilled manpower and emerging technologies, were sealed in 2006 and they represent the first of its kind here. These include the establishment of a high volume flat panel TV production plant, a global water R&D laboratory, a commercial scale biologics manufacturing plant, a remotely-operated vehicle engineering and manufacturing plant, as well as an engine manufacturing plant. Further, EDB will capitalise on the impetus these new entrants bring to spur the expansion and promote horizontal integration within different clusters. For example, in the aerospace industry, maintenance, repair and overhaul (MRO) activities will gradually encompass engine manufacturing. EDB will continue to harness these pioneering projects to spearhead development in new industries such as alternative energy.
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EDB's strategy of aggressively promoting complex manufacturing and high-end R&D activities places the Republic in good stead in an increasingly competitive arena for investment dollars.
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INCOMING INVESTMENTS FROM NEW GEOGRAPHIES
For the past five years, EDB has steadfastly and successfully engaged new geographies to invest in Singapore. And it is a trend that continues unabated. The number of Asia-Pacific (ASEAN, Australia, Greater China, India and Korea) and Middle East companies in Singapore has doubled to 13,000 and in 2006, 12 per cent of manufacturing FAI projects hailed from the Asia Pacific. Singapore also welcomed its inaugural investment from the Middle East - Kuwait's Proclad - which set up an oil equipment manufacturing facility. Other notable entries included Indonesia-based Pan Sino's coca processing plant, India's Bahar Industries' manufacturing and R&D centre, as well as Huijia's Chinese International School from China.
However, diversification does not mean Singapore's ties with long-term international business allies were neglected. In fact the US, Europe and Japan retained their commanding share of overall investments, strengthening relations along the way. And, while Singapore is on the constant lookout for business investments, EDB highlighted that around half of investments hail from existing investors each year. As such, maintaining good relations with Singapore-based MNCs, finding out their needs and identifying new opportunities are paramount considerations to ensure their competitiveness.
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FAVOURABLE PROSPECTS FOR 2007 & BEYOND
Ko also took time out during the press conference to commend the agency's team of officers. Attracting investors, he said, is a tough process, especially as Singapore does not have a big domestic market. "As a result, EDB has to sell the intangibles," he explains. "However, despite mounting world competition, the tenacity, imagination, agility and commitment of our officers reflect their quality and approach." He cited Shell Eastern Petroleum's cracker project, which took more than five years to materialise, having been placed on the backburner several times. He also praised the "quick, solid response" of his team, who are willing to work round the clock to divert lucrative projects into Singapore.
Having a solid frontline team, and with Singapore a leader in many aspects of the global economy, EDB is optimistic for more good times. It describes 2007’s worldwide and local economic outlook as "buoyant", and forecasted that investments will contribute between S$11 - S$11.5 billion (US$7.2 - US$7.5 billion) to the economy.
The agency is also targeting to hit S$9 billion (US$5.9 billion) in manufacturing FAI and up to S$2.9 billion (US$1.9 billion) in services TBS.
To achieve these figures, EDB intends to sharpen Singapore's value proposition abroad via the "4-Ts" - Think, Try, Test and Trust. Companies will be encouraged to "think" of the city-state as a potential investment location for a broad spectrum of activities, from manufacturing to services. Based on Singapore's world-class pro-business environment, they will feel compelled to give the country a "try" for their investments to bear fruit. Next, they will look to Singapore to "test" innovative products and solutions for the world market. And finally, they will place their "trust" in the Republic to consistently deliver quality, productivity and respect for intellectual property.
"[This will be] EDB's formula as it looks ahead to ensure continued flow of investment into Singapore," says Lim. He added that Singapore's open employment market will continue to welcome both local and foreign talent, with more new jobs and long-term career options available as investors bring new opportunities into the country.
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