Singapore guns for $12-14b in investment commitments

Published 25 January 2011
The Business Times
By Teh Shi Ning

Last year, fixed asset investments hit $12.9b, says EDB

Singapore expects to attract $12-14 billion in investment commitments in 2011, after record levels of investment secured last year.

Fixed asset investments hit $12.9b in 2010The Economic Development Board yesterday said that fixed asset investments hit $12.9 billion in 2010, the highest on record save for spikes in 2007 and 2008 due to two multi-billion dollar petrochemical cracker projects.

Rising investor interest in Asia has also helped EDB’s ‘Home’ pitch to global and Asian enterprises gain some traction, and more now see Singapore as an attractive ‘control tower’ base for them in Asia, EDB chairman Leo Yip said at a briefing yesterday.

All of Singapore’s key industry clusters are expected to see some investment inflow this year, managing director Beh Swan Gin said.

But the strong forecast for 2011 capital investment in facilities, equipment and machinery is in part due to specific interest already identified in downstream specialty chemicals projects enabled by the upstream petrochemical crackers, he added. Shell’s US$3 billion plant opened last year, while ExxonMobil’s plant is supposed to begin operations later this year.

With more companies using Singapore as their ‘home base’ in Asia, a corresponding surge in sophisticated professional services or high-level technical expertise to cater to these set-ups is also likely, said EDB deputy managing director Tan Choon Shian.

This will impact the total business spending indicator, which EDB is fine-tuning to exclude depreciation from this year onwards to make it a more accurate reflection of economic activities not linked to fixed assets.

Total business spending – a company’s projected annual expenditure on wages, depreciation and rental when its investment is complete – hit a record high of $8.6 billion this year, almost a quarter of which came from headquarters and professional services. EDB forecasts that this will range between $7.5 and $9 billion next year, or $6-7.5 billion less depreciation.

The drive to get companies to choose Singapore as their ‘Asian home base’, is not merely about getting them to set up global or regional headquarters here, though quite a number did in 2010, Dr Beh stressed.

He highlights companies such as Applied Materials (AMAT) and Kulicke & Soffa as ones which set up a ‘home base’ in Singapore last year. AMAT opened its first Asian semiconductor equipment manufacturing facility here last April, and its centre here performs global corporate functions and attends to Asia, which now accounts for more than 80 per cent of its business.

Similarly, Kulicke & Soffa relocated its global headquarters from Pennsylvania to Singapore but this means expanded R&D and manufacturing activities to serve its customers, 90 per cent of whom are in Asia.

Last year’s investment mix by geography also reflected rising interest in Asian enterprises seeking to go global via Singapore. Investment commitments flowing in from the Asia-Pacific region (excluding Singapore and Japan) more than doubled to close to $1.5 billion, or 12 per cent of the total investment pie.

EDB is now bringing Singapore’s value-propositions to mid-sized companies in second-tier China cities. It recently sent new staff to Wuhan and Chengdu, Mr Tan said.

Beyond the obvious global multinationals and Asian enterprises, EDB is now also out to woo global mid-sized firms, Mr Yip said. Examples which touched down in 2010 include US firms Inphi and Skyworks and Sichuan clean energy firm Hanlong.

Headquarters and professional services made up 44 per cent of the $14.4 billion that investments last year will add to GDP each year when completed. This year’s investments are forecast to eventually yield a comparable level of $14-16 billion of value-added per year.

But EDB does not expect 2011’s investments to match the exceptional number of skilled jobs created last year. The 21,300 skilled jobs created overshot the forecast range by more than 4,000 jobs and reflects in part a release of pent-up hiring demand in 2009’s uncertainty, said Dr Beh.

Still, it is expecting 16,000-19,000 skilled jobs this year, a higher forecast than was set for 2010.

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