Singapore draws record $22.5b in fixed asset investments in 2022 but level will drop this year: EDB

Driven by the electronics sector, Singapore attracted a record $22.5 billion in fixed asset investments in 2022 despite global headwinds, the Economic Development Board (EDB) said on Thursday.

But it cautioned that the “exceptional inflow” of large manufacturing projects in the first half of 2022 for the key electronics sector will cool in 2023 due to global macroeconomic uncertainties, increased global competition for investment and a sharp slowdown in demand for semiconductors.

The electronics sector accounted for about two-thirds of all fixed asset investment commitments in 2022.

In all, the projects secured in 2022 are expected to create 17,113 new jobs when they are fully implemented in the next few years.

Of the jobs created, about 70 per cent are for professionals, managers, executives and technicians, with a majority of these expected to be taken up by local workers.

Some 61 per cent of the jobs will come from hub and business services, 27 per cent from advanced manufacturing, with 12 per cent from innovation (research and development projects).
 

EDB Chairman Beh Swan Gin said the 2022 numbers reflect Singapore’s standing as a trusted hub for business and a critical global supply chain node, but these levels are expected to cool this year as competition for investments becomes more intense.

“Rising interest rates will lead to dampening demand and higher costs of capital, making companies tentative about moving ahead with sizeable investments,” he said at a briefing held at EDB’s office in Raffles City Tower.

Developed economies have introduced aggressive policies to attract investments in areas like semiconductors and climate change technologies, he said, adding that Singapore’s commitment to decarbonising also means it will be more selective about energy-intensive companies expanding here.

Asked about the semiconductor industry, Dr Beh said companies in the sector have built capacity to ensure they are not exposed to risks from being concentrated in a specific country, resulting in a surge of investments into Singapore. This was also helped by increased adoption of digital solutions during the Covid-19 pandemic.

“But when Covid-19 settled, consumer behaviour became more normal and demand came down because of that... in 2023, the industry will be in a somewhat depressed mode,” said Dr Beh.

However, he added that the global chip industry, which is expected to grow to a trillion dollars by 2030, will still benefit from growing demand in the long term.

His agency also expects more opportunities in other high-growth and high-value-added sectors.

These sectors include advanced manufacturing – in the electronics, healthcare and aerospace sectors – as well as the green and digital economies.

“Singapore is also strengthening capabilities as a supply chain control tower and nexus of entrepreneurship, innovation and private capital,” said EDB.

Dr Beh said: “We will harness our comparative advantages to remain attractive to global companies and founders, so as to continue creating good business and job opportunities that meet the aspirations of Singaporeans.”

Total business expenditure came to $6.2 billion in 2022, in line with EDB’s medium-term goals, with the headquarters and professional services sector accounting for half of such commitments as more global businesses used Singapore as a hub for their operations and to access other markets.

Total business expenditure refers to a company’s incremental annual operating expenditure in Singapore, excluding depreciation. Major components include wages and rental.

Singapore captured quality investments from diverse sources across the United States, Europe and Asia, said EDB. It also saw rising interest from businesses from China and other North-east Asian economies wanting to capture the growing markets of South Asia and Southeast Asia.

In particular, the digital industry’s long-term prospects remain positive, said EDB.

“Companies across a variety of industries continue to build capabilities in data, digitalisation and automation. There are also opportunities from the growing digital economy in Southeast Asia, including in fintech, cloud, cyber security, B2B SaaS (software provided as a service to businesses) and gaming,” it said, adding that it expects resilient demand for tech skills across all industries in Singapore.

EDB also noted that Singapore’s vibrant R&D and innovation ecosystem attracted companies here to establish product innovation activities, creating new areas of growth and jobs for Singaporeans.

EDB has been promoting innovation through corporate venture-building, with a $10 million Corporate Venture Launchpad rolled out in 2021. The programme enables companies to create new, globally competitive products, services and business ventures.

The agency expanded the programme in July 2022 by setting aside an additional $20 million to support a larger pool of companies. It aims to work with companies on 20 to 30 projects over the next two years.
 

EDB added that it is working with carbon-intensive companies to implement pathways for them to decarbonise, and help the manufacturing sector achieve Singapore’s net-zero emissions goal by 2050.

“This is complemented by efforts to attract companies with promising technologies in emissions-reduction and renewable energy, as well as agri-food, the circular economy and carbon services.

“In addition, together with Enterprise Singapore, EDB has been developing the carbon services sector, resulting in a growing ecosystem of over 70 companies in that space today,” it said.
 

Growing talent

A record amount of fixed asset investments was poured into Singapore last year. The Straits Times speaks to two industry professionals in growing sectors.
 

Helping firms to be sustainable

Ms Tan Hui Xin, 27, thought her career prospects were limited to fieldwork and academia when she specialised in environmental biology as an undergraduate at the National University of Singapore.

But she soon found that opportunities were vast in the growing sustainability sector, and now helps companies achieve their goals in areas such as renewable energy, carbon emissions and their impact on biodiversity. For example, companies that pledged to switch fully to renewable energy to power their operations under the global RE100 initiative.

“I build my knowledge in these areas by researching and analysing trends and emerging regulations in the relevant markets,” said Ms Tan, who is a junior sustainability specialist at Dutch environmental solutions provider ACT Commodities.
 

She joined the company in August 2022 after leaving workplace technology company Ricoh Asia Pacific, where she was a Sustainability and Environmental Management Executive.

ACT Commodities is part of a growing ecosystem of more than 70 companies in the carbon services sector.

It works with clients of various sizes and industries, including those in chemicals, shipping and fashion.

Ms Tan noted that environmental issues are usually intertwined and global in nature, requiring multi-pronged solutions from a wide range of stakeholders.

“Corporates play a big role in encouraging this shift toward sustainability because of the immense influence they have over the environmental impact of their operations.

“For example, the decisions they make about the materials they use, vendors along the supply chain, and how they carry out their operations can really have an impact on areas such as carbon emissions, habitat loss and waste generation,” she said.

Companies can also create change by partnering other businesses to come up with new technologies that can tackle climate change, added Ms Tan.

Her time in school helped her gain knowledge in areas such as environmental law and ecology.

The corporate world also allowed her to acquire crucial skills such as stakeholder management and deeper insights into companies’ sustainability strategies like reporting their greenhouse gas emissions.

She said: “The sustainability industry is still emerging in Singapore and the region, and it might seem quite daunting. But I think that all the unknowns in the sector also make it very exciting and promising.”
 

Harnessing tech for efficiency

Mr Vergis Vijay Thomas, 29, has always been interested in how supply chains work.

After studying business management at Singapore Management University, he started his career in inventory and operations at home-grown grocery delivery start-up Honestbee.

He then became an E-commerce Operations Specialist at insurance tech start-up CXA Group.

“These roles allowed me to experience the downstream side of the supply chain,” he said, referring to the movement of manufactured goods from a business to its customers.

Mr Vergis is now a Regional Manager at Melbourne-based logistics company Toll Group’s operations excellence and continuous improvement business unit.

The company launched a $20 million global innovation centre in Singapore in October to bring together businesses, start-ups, and academics to foster collaboration and innovation in supply chains.

Mr Vergis’ team coaches and guides staff who are in charge of operations excellence and continuous improvement across the group’s markets in Asia.

“Together, we make incremental changes to raise our service quality benchmarks and productivity levels... This work can vary from simple process reviews to exploring new technologies to support reporting activities,” he said.

Mr Vergis, who has been at Toll for more than 2½ years, started out in the company’s graduate programme.

This allowed him to experience different parts of the business before deciding which area to build his career in. 

He was also seconded for two months to Thailand, where he helped to automate Toll’s performance reporting for customers.

“Living abroad while working made me more independent and taught me to be more collaborative as I had to manage day-to-day life in a foreign environment. I also had to work closely with the local team to understand their cultural nuances, which may impact our data and ways of working,” he said.
 

Mr Vergis was also given opportunities under the graduate programme to take up project management courses and development workshops, and participated in Toll’s first hackathon.

“Through our internal online learning platform, I learnt to use Microsoft’s Power BI, which helped me complete a digital automation project in Thailand,” he added.

The data visualisation software is not new to Toll, he said.

“However, like many other tools and technologies, it takes time to learn how to harness them for our use,” said Mr Vergis, who also used Power BI to build a tracking system for his Asia team in 2022.

The software helped to save up to 30 per cent of operational work hours that would have been spent on manual data entry, freeing up the operations team to focus on customers’ needs, he added.

Mr Vergis said that cost-saving initiatives – in terms of finances and time – allow the company to understand its customers’ peak periods and their end customers’ behaviours.

“Resolving or reducing our customers’ pain points makes their supply chains more resilient, helping us all weather the challenges in the market,” he said.

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