Singapore to step up investments to extend lead in advanced manufacturing, such as in semiconductors

Singapore wants to secure and extend its leadership in advanced manufacturing sectors such as semiconductors, medical products, speciality chemicals, and aerospace, said Deputy Prime Minister Gan Kim Yong.

While these sectors already contribute significantly to economic growth and provide good jobs, he said more needs to be done as the economy matures.

“Growth and good jobs can no longer come from scale alone,” he said. “Growth must increasingly come from depth – by establishing and deepening global leadership in sectors where Singapore already has strong foundations.”

DPM Gan, who is also Minister for Trade and Industry, said during the debate on his ministry’s budget on 2 March that Singapore will step up investments in artificial intelligence, automation, and digital technologies in these key sectors.

The moves aim to help manufacturers raise their productivity, improve quality and reliability, and become more flexible and resilient.

“As factories become more automated and data-driven, demand will grow for skilled jobs such as automation and robotics engineers, process engineers, data specialists, and advanced equipment technicians that command higher wages,” he said.
 

Singapore will also focus on research and development (R&D) to sharpen the country’s technological edge, shorten innovation cycles, and help firms move ideas faster – from the lab to the factory floor, and into the market.

Semiconductors, in particular, remain a key pillar of Singapore’s economy, contributing close to 7 per cent of the country’s gross domestic product.

Some S$800 million will be channelled to the Research, Innovation and Enterprise (RIE) plan to establish the RIE Flagship in Semiconductors, said Dr Tan See Leng, Minister-in-charge of Energy and Science & Technology.

The RIE plan, managed by the National Research Foundation, charts and supports the country’s five-year strategy to strengthen its research capabilities.

Dr Tan, who spoke on R&D resources for the semiconductor sector in Parliament on 2 March, said the flagship will focus on areas such as advanced packaging and advanced photonics, which boost chip performance while cutting power use.

“The flagship will translate research into products and encourage more advanced R&D and manufacturing activities, creating good jobs in Singapore.”
 

The initiative will also bring together efforts under the National Semiconductor Translation and Innovation Centre, which will be given S$60 million to strengthen Singapore’s competitiveness in next-generation power electronics, added Dr Tan.

More than S$3 billion will also be injected into a scheme that aims to help businesses expand their R&D teams and bring new or significantly improved products and processes to market.

The Research and Innovation Scheme for Companies had previously helped companies like Singapore’s Grab set up an AI Centre of Excellence, and German chemicals giant Evonik hire over 100 researchers for its Asia Research Hub in Singapore.

Beyond manufacturing, Singapore will also seek to extend its lead in modern services, which are high-value, technology-enabled, and often knowledge-based economic activities that can be delivered remotely.

Examples are information and communication technology, finance, and professional services.

DPM Gan noted that Singapore has established itself as a global hub for finance, capital, and intellectual property. The next step is to become a global hub for trust-based services, such as risk advisory, cybersecurity, and AI assurance.

“This will create new opportunities in modern services,” he said.

Singapore must also push into new areas of growth, such as quantum, decarbonisation technologies, and space-related industries, as they will open up new career opportunities for Singaporeans in related areas.

“Taken together, this will deepen what we already do well in advanced manufacturing and modern services, while creating new engines that expand Singapore’s growth frontier and secure high-quality jobs for Singaporeans,” he added.
 

This would mean that Singapore should sustain a dynamic and vibrant enterprise ecosystem, spanning multinational corporations (MNCs), high-growth companies, and a vibrant startup community.

“Leading MNCs – both foreign and local – will continue to be a core pillar of our economy. They bring scale, advanced technologies, global networks, and high-quality jobs.”

At the same time, the next phase of growth will increasingly come from a new generation of emerging enterprises.

These will be growth-stage companies that have yet to establish themselves as leading MNCs, but have demonstrated both the potential and ambition to become future industry leaders, DPM Gan said.

To do that, Singapore must be prepared to take some risks to support such promising enterprises by providing them with a trusted base to operate from and to scale internationally.

DPM Gan cited the example of Workato, an enterprise software firm that helps businesses automate workflows and integrate systems across their operations. The firm’s Asia-Pacific revenue has increased 10-fold over the past five years, with a customer base of more than 12,000 companies across sectors such as manufacturing, financial services, and healthcare.

“Anchoring and partnering companies like Workato in Singapore at an early stage of their growth is important as it would allow us to shape where strategic HQ decisions are made, where core capabilities are built, and where long-term value is created,” he said.

The Singapore Economic Development Board will step up efforts to identify and anchor such companies, working closely with leading venture capital and private equity partners.

Support will also be given to existing firms, which will increasingly face the need to relook how they operate in a changing world where business models that once worked well may no longer be viable.

DPM Gan said the Government will work closely with trade associations and chambers, enterprises, and the labour movement to support firms as they go through these transitions.

Support will also be set up for leading companies pursuing significant overseas ventures that may involve higher risks and capital outlay, especially in developing and emerging markets.

In parallel, the adoption of low-carbon and resource-efficient technologies will be accelerated, so that industries here remain competitive as the world transitions to a low-carbon future.

Singapore has raised its solar energy target to 3 gigawatt-peak by 2030 and is currently studying how to tap other resources, including geothermal energy, biomethane, low-carbon hydrogen, and nuclear energy.

The efforts outlined by both ministers come amid a turbulent geopolitical landscape that could pose challenges to Singapore’s open economy.

DPM Gan, responding to a question by Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) about the increase in the Ministry of Trade and Industry’s development expenditure, said it partly arises from the need to continue to attract investment. With the introduction of the global minimum tax, offering tax incentives to potential investors is now “less effective”, he noted.

“Therefore, we will need to look at other ways of anchoring key investments into Singapore. And this development expenditure, part of it is designated to allow us to be able to attract investment to Singapore to continue to provide good jobs.”
 

Source: The Straits Times ©️ SPH Media Limited. Permission required for reproduction.