Singapore aims to consolidate its position as the "control tower" for global companies expanding in Asia by attracting commodity and energy firms to the financial centre, a top government official told Reuters. The resources industry is the new focus to supplement banking, pharmaceuticals, electronics and aerospace firms that now run regional bases out of Singapore, said Swan Gin Beh, managing director of the main agency for economic strategy.
"We have many global leaders already based here so it's a question of how we can walk alongside them as they change their priorities for their investments in Asia," Beh said in an interview at Economic Development Board (EDB) headquarters. "Many of the world's commodities companies, the natural resources companies, are starting to put quite substantial operations here in Singapore."
The city state, a barometer for its neighbours with trade flows that are three times the size of its economy, is pitching itself as a gateway to fast-growing Asia with its low taxes, financial infrastructure, clear-cut regulations and location. It also plans to expand international agreements on double-taxation, free trade and investment guarantees to help ensure "the best possible operating environment," Beh said.
Nearly 70 percent of the economy is dominated by services, including wholesale/retail, business services, finance/insurance and transportation. But manufacturing will keep playing a key role at 20 to 25 percent of the economy, said Beh, a medical doctor who joined the EDB in 1992. Staying nimble and moving up the value chain are among the greatest strengths and challenges for the wealthy but small island of just 5.2 million people, a third of them foreigners, as it competes with the vast and ever more sophisticated output of Chinese factories and with Hong Kong in financial services.
Despite the allure of China, Beh said the presence of plants run by Abbott Laboratories, Micron Technology and Rolls-Royce showed that Singapore remains an attractive base for global manufacturers. Biomedical output has been a star, surging 33.8 percent in the first two months of this year. But semiconductors shrank an overall 29.7 percent in January and February.
Analysts differed on whether the data suggested a gradual decline for Singapore's semiconductor sector or merely a bottoming out as demand for chips begins to recover. Beh, managing director since 2008, said the EDB was confident semiconductors will be "quite resilient" and did not envision any big shifts in the manufacturing mix.
Growth is coming from biologics facilities that make antibodies and protein drugs, he said, and Singapore is also seeing some results from companies doing cell therapy. "It's really about pre-positioning," Beh said.
Singapore has long been open to talent and investment from abroad to develop and compete. While many foreigners are bankers and business people who help drive the economic engines, hundreds of thousands of low-skilled workers from Southeast and South Asia do the menial jobs that Singaporeans typically shun. Unemployment is a paltry 2 percent but costs are rising relentlessly, causing concern among the locals about not having enough opportunities for a decent life. That is especially true for those with fewer skills who must survive in a place with the world's highest concentration of millionaires.
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