SINGAPORE – Driven by the electronics sector, Singapore attracted a record $22.5 billion in fixed asset investments last year despite global headwinds, the Economic Development Board (EDB) said on Thursday.
But it cautioned that the “exceptional inflow” of large manufacturing projects in the first half of 2022 for the key electronics sector will cool this year due to global macroeconomic uncertainties, increased global competition for investment and a sharp slowdown in demand for semiconductors.
The electronics sector accounted for about two-thirds of all fixed asset investment commitments last year.
In all, the projects secured in 2022 are expected to create 17,113 new jobs when they are fully implemented in the next few years.
Of the jobs created, about 70 per cent are for professionals, managers, executives and technicians, with a majority of these expected to be taken up by local workers.
Some 61 per cent of the jobs will come from hub and business services, 27 per cent from advanced manufacturing, with 12 per cent from innovation (research and development projects).
EDB chairman Beh Swan Gin said the 2022 numbers reflect Singapore’s standing as a trusted hub for business and a critical global supply chain node, but these levels are expected to cool this year as competition for investments becomes more intense.
“Rising interest rates will lead to dampening demand and higher costs of capital, making companies tentative about moving ahead with sizeable investments,” he said at a briefing held at EDB’s office in Raffles City Tower.
Developed economies have introduced aggressive policies to attract investments in areas like semiconductors and climate change technologies, he said, adding that Singapore’s commitment to decarbonising also means it will be more selective about energy-intensive companies expanding here.
Asked about the semiconductor industry, Dr Beh said companies in the sector have built capacity to ensure they are not exposed to risks from being concentrated in a specific country, resulting in a surge of investments into Singapore. This was also helped by increased adoption of digital solutions during the Covid-19 pandemic.
“But when Covid-19 settled, consumer behaviour became more normal and demand came down because of that… in 2023, the industry will be in a somewhat depressed mode,” said Dr Beh.
However, he added that the global chip industry, which is expected to grow to a trillion dollars by 2030, will still benefit from growing demand in the long term.
His agency also expects more opportunities in other high-growth and high-value-added sectors.
These sectors include advanced manufacturing – in the electronics, healthcare and aerospace sectors – as well as the green and digital economies.
“Singapore is also strengthening capabilities as a supply chain control tower and nexus of entrepreneurship, innovation and private capital,” said EDB.
Dr Beh said: “We will harness our comparative advantages to remain attractive to global companies and founders, so as to continue creating good business and job opportunities that meet the aspirations of Singaporeans.”
Last year’s total business expenditure came to $6.2 billion in 2022, in line with EDB’s medium-term goals, with the headquarters and professional services sector accounting for half of such commitments as more global businesses used Singapore as a hub for their operations and to access other markets.
Total business expenditure refers to a company’s incremental annual operating expenditure in Singapore, excluding depreciation. Major components include wages and rental.
Singapore captured quality investments from diverse sources across the United States, Europe and Asia, said EDB. It also saw rising interest from businesses from China and other North-east Asian economies wanting to capture the growing markets of South Asia and South-east Asia.