January 26, 2022
SINGAPORE – Singapore attracted $11.8 billion in fixed asset investments in 2021, bolstered by large manufacturing projects from semiconductor and biotech firms despite challenges amid the Covid-19 pandemic.
The projects secured in 2021 are expected to create 17,376 new jobs in the next five years, with about 70 per cent of these for PMETs (professionals, managers, executives and technicians). A majority of these jobs are expected to be taken up by locals.
Investments from semiconductor and biotech companies accounted for more than half the commitments secured, which exceeded the Singapore Economic Development Board’s (EDB) medium- to long-term yearly target of between $8 billion and $10 billion.
New investments were also seen across sectors such as agri-food, chemicals and materials, as well as electronics, EDB shared at its annual year-in-review briefing, which was held virtually on Wednesday (Jan 26).
EDB chairman Beh Swan Gin noted that Singapore drew strong investment commitment numbers in 2021, which are in line with its targets despite pandemic disruptions.
“I think this really reaffirms Singapore’s standing as the preferred location in Asia for companies to site their regional headquarters and global headquarter activities. It also speaks to our role as a critical node of… global supply chains of major industries.”
The amount of investments drawn in 2021 was lower than in 2020, when Singapore attracted a 12-year high of $17.2 billion in fixed asset investments, underpinned by large capital investments in the electronics, chemicals, and research and development sectors.
The numbers in 2020 were, as highlighted in last year’s review, “quite exceptional and we did not expect to repeat that in 2021”, Dr Beh noted.
EDB managing director Jacqueline Poh, who took on the post last October, noted that Singapore saw a number of large investments by semiconductor firms in 2021 to meet the heightened demand from the global chip shortage.
Among them was German manufacturer Siltronic, which announced its new $3 billion silicon wafer fabrication facility last October, which makes Singapore the world’s largest supplier of high-end silicon substrates, she highlighted.
“Investments like these will strengthen the local semiconductor ecosystem and our supply chain resilience,” Ms Poh said, adding that these would also support Singapore’s research and development (R&D) capabilities in semiconductor manufacturing.
Singapore continues to see good interest from semiconductor companies for new investments or expanded operations here, Dr Beh said, adding that EDB remains optimistic about the prospects for the sector.
EDB said that the growth of the digital economy contributed significantly to total business expenditure (TBE) commitments in 2021, as digitalisation picked up pace across all sectors.
The Republic drew $5.2 billion in TBE per annum in 2021, lower than the $6.8 billion TBE per year garnered in 2020 and the lowest since 2005 when it was around $5.2 billion per year, but within EDB’s medium- to long-term target of $5 billion to $7 billion.
TBE refers to a company’s incremental annual operating expenditure in Singapore, excluding depreciation. Major components of TBE include wages and rental.
Responding to a question on the lower TBE in 2021, Dr Beh outlined the challenging and uncertain operating environment in 2021. TBE tends to fluctuate with economic sentiment, he said, adding that when sentiment is less positive, companies would be less aggressive with their TBE estimates.
“But of course, if the economy picks up then (companies) will expand accordingly,” he noted.
Fixed asset investment commitments (2012-2021)
When fully implemented, the commitments secured in 2021 are expected to create 17,376 jobs in the coming years, with a projected contribution of $16.8 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. EDB’s medium- to long-term target is between $12 billion and $14 billion of expected value-added per annum.
The largest contributors to the value-added per year in 2021 were the R&D ( 27.8 per cent), info-communications and media (26.3 per cent) and headquarters and professional services (17 per cent) sectors.
The job creation figure of 17,376 in 2021 is within EDB’s aim of 16,000 to 18,000, despite a slight dip from the expected 19,352 jobs created from projects secured in 2020.
New job opportunities generated include roles as cyber-security specialists, software engineers, automation engineers, process technicians, logistics officers and innovation managers.
About 35 per cent of the jobs created are production roles, 32 per cent in business and commercial services, 22 per cent in digital roles and the remaining 11 per cent in innovation.
The United States continued to be the largest investor region for Singapore in 2021, accounting for 67.1 per cent of fixed asset investments, compared to 53.4 per cent in 2020. US firms also represented 40.9 per cent – the largest share – of TBE investment commitments in 2021.
Fixed asset investment commitments
EDB noted how companies capitalised on Singapore’s thriving research and innovation ecosystem to undertake more R&D and innovation activities, such as by establishing new R&D centres and partnerships with institutes of higher learning and public research institutions.
These activities not only helped firms enhance their existing products, but also helped spawn new products and businesses, strengthening the country’s innovation capabilities and creating new job opportunities for Singaporeans, it added.
EDB has been promoting innovation through corporate venture-building, with the Corporate Venture Launchpad rolled out last year. The $10 million programme enables companies to create new, global competitive products, services and business ventures.
To date, more than 40 successful corporate ventures have been launched in Singapore.
Jobs created in 2021
Ms Poh noted that the global economic climate remains uncertain in 2022, and global competition for investments will remain intense.
But Asia will continue to be the fastest growing source of final demand for the next 10 years.
“As our connectivity improves, a reputation for reliability, stability and neutrality, together with our vibrant innovation and tech ecosystem, as well as our growing talent base, will enable us to continue securing economic growth for Singapore,” she said.
Addressing a question on sectors which EDB expects to draw investments moving forward, Ms Poh pointed to continued strength from the semiconductors as well as biotech and medtech sectors, as well as growth in the digital economy and the green economy.
Dr Beh noted that inflation is a risk factor for drawing investments in 2022, alongside geopolitical tensions.
But Singapore should take comfort from the underlying tailwinds that support Singapore’s continued growth, such as continued digitalisation, the growth of the digital economy and efforts towards greening the economy such as decarbonisation, he said.
“These will all be very powerful drivers of opportunities for businesses in Singapore and for Singapore to attract investments,” Dr Beh added.