Some $17.2 billion in fixed asset investments (FAI) were made in Singapore last year, far exceeding the $8 to $10 billion that had been forecast, the republic’s Economic Development Board (EDB) revealed in a virtual year-in-review briefing on 20 Jan.
Interestingly, 2020 generated the highest FAI investment commitment in the decade spanning from 2011 to 2020.
"We had a very good momentum coming into 2020 from 2019," said EDB chairman Beh Swan Gin.
Major contributions came from the electronics and chemicals sectors which raked in investments of $6.5 million and $4.1 million respectively.
According to Beh this follows an upcycle in investment once every eight to 10 years that is typically driven by semiconductors, energy and chemicals. He added that the 2020 FAI numbers may have been higher had it not been for the delay in projects which came from the movement control restrictions.
In terms of geography, the US (53.4%), Singapore (17.3%) and Europe (17.1%) made the highest investment commitments in Singapore. Contributions also came from other countries such as Japan (6.3%) and China (1.4%).
SEE: Singapore manufacturing firms predict less favourable business outlook, lower output: EDB survey
The year also saw total business expenditure (TBE) per annum hitting $6.8 billion – between the $5.0 to $7.0 billion long-term target that had been set.
Of this, expenditure commitments from transport engineering (23.7%), headquarters & professional services (17.6%) and info-communications &media (11.3%), were the highest.
The projects tied to these investments and business expenditure will – upon completion – create 19,352 jobs in 2021. This translates to an expected value-added per annum of $31.2 billion notes EDB, a government agency under the Ministry of Trade and Industry (MTI) in charge of attracting investments.
In contrast, FAIs made in 2019 hit $15.2 billion and TBE was $9.0 billion. Collectively, these were slated to create 32,814 jobs and generate a value-added per annum of $29.4 billion.
The difference in investment commitments follows the challenging business environment posed by the coronavirus. Data from the United Nations Conference on Trade and Developments (UNCTAD) indicates that global foreign direct investment (FDI) flows tumbled by 49% in the first half of 2020.
It expects a 30% to 40% in FDI flows for their full year.
However, companies continued with their investment plans in Singapore as they took “a long-term view of their investments still see Singapore as a trusted and attractive business location for transformation, innovation and growth,” reckons Beh.
He adds that several of these companies also made significant contributions to fight against the pandemic and support the wider local community. For instance, healthcare companies scaled up their manufacturing capacity for diagnostic test kits and vaccines, while tech operators provided jobs and training opportunities for Singaporeans.
Meanwhile, investments were made in accelerating digital capabilities across sectors to facilitate the development of new digital technologies and the adoption of advanced manufacturing.
Additionally, the nation made headway in developing new areas of opportunity such as in agrifood and mobility, EDB notes.
For 2021, the agency is looking to maintain Singapore’s investment commitment at – between $8 - $10 billion for FAI and between $5 - $7 billion in TBE. These are collectively expected to create around 16,000 to 18,000 jobs in the medium to long-term.
“We are approaching the first half of 2021 with some caution. But if the Covid-19 situation stabilises in the coming months, there could be grounds for guarded optimism in the second half of 2021,” says Beh.
His sentiments resonate with trade and industry minister Chan Chun Sing who professed "cautious optimism" for 2021 as countries around the world compete for investments to revive their economies from the damage that pandemic has created.
Aside from this, EDB points out that there may be delays in businesses’ project implementation as the decision-making process may take longer due to changes in companies’ operating context.
Singapore's is looking to cope with these challenges in 2021 with four key economic strategies, Chan explains. This involves strengthening Singapore's position as a critical node in the global value chain and forging new trade rules in forward looking areas such as data, finance and technology.
Aside from this, he says the city state should purse an innovation-led and sustainable economy and also help firms and workers transform for a "Covid world".
"For companies, our support will progressively move from stabilisation to helping them pivot to new areas of opportunities," Chan elaborated.
Agreeing, EDB's Beh says the agency “must continue to work closely with companies, industry stakeholders and government agencies to strengthen our economy and enhance our competitiveness, so that we can continue to create good business and job opportunities that meet the aspirations of Singaporeans”.
