Wednesday, 30 January 2013

S'pore draws record $16b in investments

They could create 18,600 skilled jobs, add $20.3b a year in economic value
By Aaron Low, The Straits Times, 29 Jan 2013

SINGAPORE attracted a record amount of investments last year, a sign that it is holding its own in an increasingly competitive world, said the Economic Development Board (EDB) yesterday.

About $16 billion of fixed asset investments flowed in, 17 per cent up on 2011. These investments should eventually add $20.3 billion in economic value a year to the economy and create 18,600 skilled jobs.

The $16 billion figure is the highest in Singapore's history, apart from the one-off petrochemical-related investment spikes in 2007 and 2008. The EDB discounts those as one-off lump sums.

EDB chairman Leo Yip said: "It was a good year for Singapore."

He added that companies wanting to invest in the fast-growing region and Asia in general were behind the good result.

But he warned that inward investment is likely to decline given Singapore's physical limitations of finite land and manpower.

The EDB expects investments to come in at a lower $11 billion to $13 billion this year.

"There continues to be land for industry to grow," said Mr Yip.

"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."

The largest contributor to fixed asset investment last year was the chemicals sector, which drew in $6.7 billion.

Electronics was a close second, bringing in $6.2 billion in investments despite it being a difficult year for the sector. Electronics output fell 11.3 per cent last year compared with 2011. Some analysts have attributed this to Singapore having little exposure to the fast-growing mobile devices sector but EDB managing director Yeoh Keat Chuan dismissed this.

He noted that about 30 per cent of the semiconductor sector here builds parts for smartphones and mobile devices, adding that industry leaders such as Qualcomm, Apple and Samsung have significant operations in Singapore.

"While we are plugged into the communications sector, Singapore's electronics industry is diversified," he said.

"But it also means that we are very much plugged into the global electronics sector. Unfortunately in 2012, the global electronics industry was depressed."

CIMB regional economist Song Seng Wun said the figures did show that Singapore remains attractive and competitive.

"It takes a lot for an electronics firm to plonk down hundreds of millions to set up a factory in these difficult times. This probably means Singapore is doing something right."

Singapore remains competitive: EDB
Republic still a compelling choice for firms looking to tap region's growth
By Aaron Low, The Straits Times, 29 Jan 2013

SINGAPORE faces many challenges, including rising costs, strong competition from other centres and a revival of United States manufacturing.

But Economic Development Board (EDB) chairman Leo Yip believes that Singapore still represents a compelling choice for firms looking to tap Asian and South-east Asian growth.

Singapore is one of the world's most competitive economies, often ranked near the top of international competitiveness surveys.

But a combination of rising inflation and tighter manpower policies has started to put pressure on companies here.

A survey by the business consultancy arm of The Economist magazine recently said that Singapore is losing some of its shine among multinational firms.

Speaking at a press briefing to announce last year's investment figures, Mr Yip acknowledged yesterday that many firms are concerned over rising costs and have complained about the difficulty in getting staff for their operations.

But despite the rising costs and manpower issues, Singapore continues to attract firms here because of the total package it offers.

"But in overall terms, the picture we are getting shows that firms continue to find Singapore an attractive location to consider to expand in this part of the world."

He also said that while EDB is aware of the trend for US manufacturing firms to move back to their home base, so far, there has been no indication that Singapore has been affected.

And as for whether firms are concerned over the Republic's new political environment, Mr Yip said that they are keen to learn about the situation.

"They ask, but whether it means they are losing trust in Singapore? No, they continue to trust the country," he said.

OCBC economist Selena Ling said that Singapore remains competitive but it also faces immense challenges from its competitors.

"Global competition remains very keen for foreign investments, so while Singapore currently ranks highly in terms of global competitiveness, any complacency should be avoided," she said.

One company convinced that Singapore is an ideal place to expand its Asia-Pacific operations is data storage firm Nimble Storage.

The US firm wants to move its regional headquarters from Sydney to Singapore in about 18 months.

Asked if Singapore's rising costs were a deterrent, Nimble's vice-president for Asia-Pacific, Mr Peter O'Connor, said: "Sydney isn't a low-cost location either. So in relative terms, it's not that much different."

Singapore too has a much larger pool of IT talent than Sydney, which the firm intends to tap.

"Nimble is a very unique company and we believe that we will be able to attract talent. So we are not too worried about the manpower crunch," he said.

"We see Singapore as an important hub from which we can quickly expand into the rest of Asia."

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