Singapore’s manufacturing sector ended 2020 on a high, with output expanding by 14.3% year-on-year in the last month of the year, following broad based expansions across most segments save biomedical manufacturing.
Excluding this segment, the increase in output widened to 19.8%, according to data released by Singapore’s Economic Development Board (EDB), a government agency under the Ministry of Trade and Industry (MTI).
Still, December’s showing falls a little short of the 17.9% increase registered in the previous month.
Nonetheless, a substantial lift came from the 41.8% surge in output from the linchpin electronics sector. This follows a 51.0% rise in activity from the semiconductor segment which was supported by 5G marks as well as a low production base from the previous year.
A further lift to the segment came from a 9.3% increase in the performance of computer peripherals & data storage. This helped to mitigate the fall in output from infocomms & consumer electronics (6.7%) and other electronic components (8.7%).
Chemicals followed suit, with a 12.3% growth as all segments except petroleum expanded. Specifically, the petrochemicals and specialties segments grew by 17.9% and 16.9% respectively, from the previous year, when production levels had taken a hit from plant maintenance shutdowns.
A further boost came from a 14.1% increase in the other chemicals segment which saw a higher production of fragrances.
Output from the precision engineering cluster similarly expanded by 11.0% in December. This is thanks to a higher output of semiconductor equipment and measuring devices (12.6%) and optical instruments and metal precision components (6.3%).
In the same regard, the general manufacturing sector saw its output rise by 5.9%. This follows a 13.6% growth in the food, beverage & tobacco segment which benefitted from higher production of beverage products and milk powder.
The printing segment similarly grew by 1.2%, while the miscellaneous industries saw a 0.3% dip due to lower output of construction-related products.
Meanwhile, the output of the other clusters came in the red in December, with transport engineering registering the biggest year-on-year contraction of 31.5%.
This was led by declines to the marine and offshore engineering (-30.8%) and aerospace (-41.8%) segments as the order intake took a hit from the weak global oil and gas market as well as the travel restrictions imposed to curb the spread of coronavirus infections.
A further contraction in the cluster was mitigated by a 4.2% growth to its land segment.
The biomedical cluster – which had previously been a key driver of Singapore’s factory output in 2020 – similarly, posted a 13.2% year-on-year growth in output in September. This follows a 22.8% dip in its pharmaceuticals segment due to lower production of biological products.
However, the cluster had still benefitted from a 7.3% increase in its medical technology segment that was spurred by higher export demand for a broad-base of medical devices, EDB explains.
The growth in the manufacturing sector’s output in December falls well into Singapore’s blueprint to grow the sector by over 50% in the next 10 years.
This serves to maintain the republic’s competitiveness – which came under pressure in throes of the Covid-19 pandemic and the resultant disruptions to supply chains, says Trade and Industry Minister Chan Chun Sing.
To meet the aim, Singapore has to innovate and produce higher-value products rather than look to lower the cost of production or labour, he suggests.
See: Singapore has a 10-year plan to ramp up manufacturing by 50%
UOB Bank economist Barnabas Gan says that the latest factory output numbers sets an “optimistic tone for [2021]”.
“We note that further growth in the electronic cluster is likely in 2021, on the back of support for digital solutions (adoption of 5G technology, cloud computing etc), coupled with continued demand for work-from-home equipment,” he says.
Gan adds that the possibility of an economic recovery and higher oil prices this year may just see sectors such as transport engineering, chemicals and general manufacturing that have seen a full-year contraction, reversing into the green.
As such, he expects Singapore’s manufacturing momentum to expand by 3.0% this year.
