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EDB revises key indicators to reflect industry changes

THE blurring of the traditional lines between the manufacturing and services sectors has led the Economic Development Board (EDB) to revise the performance indicators it uses to reflect investment into Singapore.

EDB’s assistant managing director for planning and policy, Dr Beh Swan Gin, said yesterday that evolving industry conditions had necessitated a revamp of the key indicators typically used to show the level of investments made into the Republic each year.

Up until this year, fixed asset investment was the indicator used for the manufacturing sector. This reflects capital investments made by firms on facilities, plant equipment and machinery.

For the services sector, total business spending – which captures a firm’s business expenditure and, hence, direct spin-offs to the economy – was used.

The major components of this indicator include wages, work subcontracted out locally, depreciation and rental.

Dr Beh explained that, when a company takes significant action to get a project going, such as starting construction or buying a factory or machinery, the investment is counted as committed and EDB adds it to the annual tally.

However, from next year onwards, EDB will begin to look at the combined fixed asset investment and business spending figures for the manufacturing and services sectors, instead of splitting them up.

Dr Beh said at a press conference: ‘This is because the traditional boundary between manufacturing and services is blurring.

‘Some companies are going asset-light and outsourcing more and more work. Others create value through manufacturing, such as aircraft engine assembly, but capture more value through services such as aircraft engine repair and overhaul.’

He also said that EDB’s sharpened focus on capital-, knowledge- and innovation-intensive projects had made it necessary to tweak the indicators.

‘Fixed asset investment has been a good proxy for capital-intensive projects, but it is not adequate as a measure of knowledge- or innovation-intensive projects.

‘This is where total business spending and the number of skilled jobs come in. We believe we should look at all the indicators as well as value-added for a project, regardless of whether it is manufacturing or services.

‘We feel the updated indicators offer a more holistic and multi-dimensional view of the projects we work on.’

 

Source: The Straits Times 22 Jan 08

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