SINGAPORE – Singapore attracted about $17.2 billion in fixed asset investments in 2020, despite weathering its worst recession since independence as a result of the Covid-19 pandemic.
This beat the Economic Development Board’s (EDB) medium- to long-term target of $8 billion to $10 billion and exceeded 2019’s haul of $15.2 billion in fixed asset investments. The investments secured in 2020 are the most sizeable since 2008, when the EDB pulled in more than $18 billion.
Last year’s commitments were bolstered by large capital investments in the electronics, chemicals, and research and development sectors, the EDB shared at its year-in-review on Wednesday (Jan 20).
Speaking to the media on Wednesday morning, Trade and Industry Minister Chan Chun Sing said: “Our efforts to keep our borders open, maintain external connectivity and ensure business continuity have given global companies the confidence to continue to site their projects in Singapore.”
In addition, Singapore has been able to attract key projects, especially those dealing with high-value and knowledge-intensive products, on the back of its strong regulatory system and intellectual property (IP) regime, he said.
The Republic garnered $6.8 billion in total business expenditure per annum in 2020, which was lower than the $9 billion seen the year before.
When the projects from the investments secured in 2020 are fully implemented, they will create 19,352 new jobs over the next five years, with a projected contribution of $31.2 billion in value-added per annum. Value added refers to the direct contribution made by a company to Singapore’s gross domestic product, and includes components such as employees’ wages and corporate earnings.
In comparison, 2019’s investments were predicted to create close to 33,000 openings and to contribute $29.4 billion in expected value-added per annum.
Notably, the R&D industry is expected to add more than 4,200 employment opportunities while the headquarters and professional services segment will contribute more than 3,000 openings over the next few years.
“Our focus will continue to be on placing our workers in jobs that are created. The companies remain committed to working closely with us to prepare the local workforce for the available positions,” said Mr Chan.
Of the more than 19,000 jobs that will be created over the next few years, 45 per cent are in production and include roles such as process engineers, administrative assistants and supply chain executives.
Close to a quarter of the new openings will be in digital roles, such as cloud developers, software engineers and cyber-security specialists.
Addressing questions on the number and types of jobs created, Mr Chan said that while some sectors may have high investment figures yet fewer jobs, these are high-quality positions. At the same time, there are some investments of lower value that create more jobs.
However, he emphasised that the focus should not solely be on the investment amount or the number of jobs created.
“We want to secure investments that make us a critical part of the global value chain in different industries, so that we cannot be easily bypassed, so that we have the knowledge, we have the IP… to make sure that we can entrench ourselves in the global value chain.”
Singapore’s robust investment picture came despite the challenging business environment globally. The United Nations Conference on Trade and Development had noted that global foreign direct investment flows fell 49 per cent in the first half of 2020 and a 30 per cent to 40 per cent decline was predicted for the full year.
However, Singapore has defied market expectations, with companies continuing to place their roots here.
“Companies that invest in Singapore continue to take the long-term perspective and they have trust and confidence in Singapore’s fundamentals, the prospects for Asia, and clearly also… a very deep affinity for Singapore and the operations they have here,” said Dr Beh Swan Gin, chairman of EDB, who noted that many of the companies which made investment commitments have existing operations here.
Singapore saw a surge in investment commitments coming from local companies, which accounted for 17.3 per cent of capital investments in 2020, higher than the 8.2 per cent in the previous year. The United States overtook Europe as the Republic’s largest investor region, with 53.4 per cent of Singapore’s fixed asset commitments in 2020. In contrast, Europe accounted for 17.1 per cent of investments secured in 2020, compared with 47.4 per cent in 2019.
Mr Chan noted that Singapore’s portfolio of investments has become more diversified both in sectors and region over the past few years and this adds to the resilience of its economy.
Furthermore, the Covid-19 pandemic has also given rise to a greater appreciation of supply chain resilience in making investment decisions and this has reinforced Singapore’s competitiveness over the past year given its assurance of a robust supply chain system.
For example, many logistics companies have strengthened their investments here for this reason and more high-value products and time-sensitive products are coming through Singapore.
EDB managing director Chng Kai Fong said that given Singapore’s trade exposure and investment-driven nature, it always has to keep up with the latest trends to retain investor interest.
One new area that it has pivoted towards in the past few years is innovation, to create products and services out of Singapore, he said, and the EDB is doing so in ways such as nurturing a large local enterprise ecosystem.
“We think that when you start new ventures out of Singapore, that’s when the IP is created here, that’s where jobs are created around product lines, and we’re very happy that today… we have many product lines and services that are headquartered out of Singapore,” Mr Chng said.
The EDB highlighted that digital capabilities were built across sectors to facilitate the development of new technologies and adoption of advanced manufacturing in 2020.
It also made progress in promoting innovation and the creation of new businesses and products and in the development of growth sectors such as agri-food and mobility.
Dr Beh said that the EDB does not anticipate to have the same level of fixed asset investments in 2021 as it did in 2020 but it will “hopefully be in line” with its medium-term goals.
He noted that every eight to 10 years, there tends to be a surge in fixed asset investments in Singapore, as a result of a wave in investments from the semiconductor and energy and chemicals industries to increase their capacity to meet the growing demand.
The numbers for 2020 could have been stronger, Dr Beh said, but some projects were delayed due to impact on the energy and chemical sectors last year, adding that these projects could proceed when the demand picture is more stable.
For the medium- to long-term, the EDB’s yearly targets are fixed asset investments of between $8 billion and $10 billion, $5 billion to $7 billion of total business expenditure per annum, and 16,000 to 18,000 new jobs.
Mr Chan acknowledged that while the EDB has done well in the past year, the road ahead will be challenging, given that the global situation remains mired in uncertainty.
Nevertheless, the country heads into 2021 with cautious optimism for its economic prospects, he said, adding that if things go well, there could be some recovery in the global economy towards the second half of the year.
“However, we should not think that the road ahead will be a walk in the park because we have managed to do well up till now,” Mr Chan cautioned.
“While Singapore continues to be an attractive investment destination, we also need to be mindful that things can change very quickly. In order to stay resilient, we must continue to be flexible and adaptable – Government, companies and workers.”
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