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Investment bar set high, but EDB expects to cross it

It forecasts another bumper year despite prospects of global economic slowdown

(SINGAPORE) The world’s economy may be slowing down, but Singapore expects to continue attracting huge investments this year that will spur growth and create jobs.

If anything, it expects to surpass last year’s record $16.1 billion worth of manufacturing investments. The Economic Development Board (EDB) has forecast fixed asset investments (FAI) of between $16 billion and $18 billion in 2008.

For the record, 2006 was described as a bumper year as manufacturing investments touched $8.8 billion. Last year, this figure almost doubled and EDB expects 2008 to proceed along similar lines, the global economic slowdown notwithstanding.

In fact, the sterling performance of 2007 – the first time that FAI here crossed the $10 billion mark by a wide margin – appears to have made it the new benchmark. The year also witnessed a record $3 billion in total business spending (TBS) and 28,600 new jobs were created – many in engineering, research, management, and creative and industrial design. Close to 400 new projects got off the ground.

Despite setting the bar so high, EDB expects to cross it this year. It reckons that 24,000-28,000 jobs could be created in 2008 and TBS may hit $3-$3.3 billion. It also expects more ‘big bang’ projects in sectors like chemicals, electronics and semiconductors, biomedical, and aerospace.

It is also banking on new growth areas like clean energy, environment and water, and natural resources. EDB will also explore business opportunities in urban solutions; health, wellness and ageing; and lifestyle products and services.

The last three are areas ‘where Singapore itself requires good solutions, where Singapore can serve as a working model and a test bed for new ideas’, it said.

But wouldn’t the looming global recession deter investors? Said EDB chairman Lim Siong Guan: ‘Investors aren’t looking at just how markets are going to be like this year, but in 2010, 2011, 2012 and beyond. Many of them do assessments based on what the longer-term trends are.’

This year, EDB expects to capitalise on the strong investment momentum and also attract peripheral or supporting industries following ‘queen bee’ investors like Norway’s Renewable Energy Corporation (REC) which is investing in a mega $6.3 billion solar manufacturing plant here, Mr Lim added.

But, certainly, competition for investments remains ‘very, very fierce’, both from developed and developing economies, EDB managing director Ko Kheng Hwa said.

He recounted how, for instance, Norway’s REC started out by looking at 200 possible locations for its integrated solar manufacturing complex, then narrowed this down to 20 before doing its due diligence and finally choosing to set up here. That is very typical of the competition Singapore faces.

His point was that in order to attract more new investments, Singapore also ‘has to deliver’ in terms of helping investors already here to carry out their projects.

Rising business and housing costs here for investors were, for example, questions raised at yesterday’s press conference, about challenges which EDB faces.

Mr Ko said that Singapore is helping investors manage capacity constraints and their manpower needs, and also in other areas like helping them secure places in bursting- to-the-seams schools for expatriate children – like getting United World College, for example, to temporarily expand its intake even as it builds a new, larger campus.

To meet investors’ increasingly skilled manpower needs, EDB also rolled out three training initiatives last year, including for wafer fabrication specialist engineers, precision engineers and for clean energy manpower.

2007 was a ‘chemicals year’, with the sector accounting for $8.6 billion or 53 per cent of total FAI, followed by electronics with $5.1 billion (32 per cent). This was the reverse of 2006, when electronics accounted for the lion’s share or 49 per cent of FAI, with chemicals accounting for 28 per cent.

Europeans, with $8.4 billion or 52 per cent of FAI, were the main investors last year, followed by the US with $3 billion or 19 per cent.

EDB has also been reaching out to new investment sources like China, India and the Middle East, and this has reaped significant projects – like Tsinghua Tongfang’s Asia-Pacific R&D centre for IT and environment, which will employ 100 researchers; and a US$110 million petrochemical plant on Jurong Island by Tamil Nadu Petroproducts (India) in a joint venture with Kuwait Finance House.

 

Source: Business Times 22 Jan 08

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