Singapore attracted S$17.2 billion in investments last year, exceeding forecast despite pandemic

SINGAPORE: Singapore attracted S$17.2 billion in fixed asset investment commitments last year, up from S$15.2 billion in the previous year despite an economic crisis fuelled by the COVID-19 pandemic, according to data released by the Economic Development Board (EDB) on Wednesday (Jan 20).

This exceeds the EDB’s goal of having S$8 to S$10 billion investments committed annually over the medium to long term.

“This is a strong performance from the EDB team in an exceptionally challenging year,” Trade and Industry Minister Chan Chun Sing told reporters in an online interview.

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Electronics and chemicals remained the top two sources of investments last year, with S$6.5 billion and S$4.1 billion secured respectively.

By region, Singapore saw the most investment commitments from the United States (53.4 per cent) followed by the home-grown market (17.3 per cent) and Europe (17.1 per cent).

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Total business expenditure per annum, which refers to companies’ incremental operating expenditure including wages and rental, was S$6.8 billion last year, compared with S$9 billion in 2019.

When these projects are fully implemented, they are expected to create 19,352 jobs over the next five years and contribute S$31.2 billion in value-added per year.

Nearly half (45 per cent) of these jobs will be in production, which are roles in the manufacturing, engineering, supply chain and logistics industries. This is followed by digital-related roles that will account for another 24 per cent, EDB’s report said. 

STRONG PERFORMANCE BUT CHALLENGES REMAIN

Mr Chan noted that Singapore remains an attractive investment destination for global firms across sectors, despite the pandemic-induced uncertainties.

The minister cited reasons such as a skilled local workforce, the ability to attract foreign talent, a competent and trusted government as well as efforts to maintain external connectivity and ensure business continuity.

Singapore’s regulatory system and intellectual property regime also support a “trust premium” that is highly valued by global companies, he said. This allows the country to attract key investment projects, especially those dealing with high-value and knowledge-intensive products.

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But Mr Chan cautioned of a challenging road ahead given uncertainties that range from recurrent waves of COVID-19 cases to a “slow and uneven” rollout of vaccination programmes in countries around the world.

Coupled with geopolitical tensions, the pace of a global economic recovery remains uncertain.

Mr Chan noted that tensions between the United States and China will likely persist.

“This could result in them having limited bandwidth to shoulder greater international responsibilities which could further stress the international rules-based trading system which many, including Singapore, have benefited greatly from over the years,” he said.

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Closer to home, there has been “heightened sensitivity” over the balance of locals and foreigners in the job market.

While this is understandable given the economic downturn, Mr Chan said Singapore’s hard-won reputation as an open and connected country could be lost if the situation is not managed carefully, resulting in dire consequences.

The trend of remote working, as a result of the pandemic, will also change the nature of competition for jobs, said the minister.

“Others can compete away our jobs without being in Singapore. We can also compete with others without being overseas, if we are skilled,” he added. 

SINGAPORE MUST REMAIN FLEXIBLE, ADAPTABLE

Concluding, Mr Chan said while there is “cautious optimism” about economic prospects for the rest of the year, one “should not think that the road ahead will be a walk in the park”.

“Many uncertainties lie before us, including how the COVID-19 situation will continue to pan out.

“Companies will take a much longer time to decide upon their investments over the next one to two years because of the uncertainties at the local and global levels. Countries will compete even harder for their investment dollars and jobs,” he said.

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To drive economic recovery, Singapore must remain flexible and adaptable, said the minister as he outlined four key strategies.

They are: Strengthening Singapore’s position as a “critical node” in the global value chain; forging new trade rules in forward-looking areas such as data, finance and technology; pursuing an innovation-led and sustainable economy; and helping companies and workers to stay competitive in a post-COVID-19 world.

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EDB said its aim is to maintain investment commitment numbers for the medium to long term.

Apart from fixed asset investments of between S$8 billion and S$10 billion, it hopes to sustain total business expenditure per annum at S$5 billion to S$7 billion, and create 16,000 to 18,000 jobs.

It added that it will continue to strengthen fundamentals that have been driving business interest in Singapore.

These include opportunities from Asia, digitalisation and the digital economy, innovation and the “deep skills” of the local workforce.