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Investments in fixed assets in S’pore jump to record $16b

Good mix of new projects boosts data, lifts outlook for this year: EDB

SINGAPORE has smashed the record for investments in new factories, machinery and other industrial facilities – having secured $16.1 billion worth of such investments last year.

This was thanks to a whopping 400 new projects, including multibillion-dollar petrochemical and wafer fabrication plants which make semiconductors. It was a huge rise over the previous record of $9.2 billion  set in 2001.

And the Economic Development Board (EDB) is confident that 2008 will be another bumper year.

The level of fixed asset investment is one of three key indicators used by the EDB. The other two are business spending, and the value-added or the rise in the value of goods and services resulting from a firm’s activities.

Fixed asset investment from the manufacturing sector was nearly double 2006’s $8.8 billion and easily beat the forecast of $8.5 billion to $9 billion, EDB said.

Business spending from the services sector also grew, to $3 billion from $2.8 billion in 2006, surpassing expectations of between $2.7 billion and $2.9 billion.

The new projects won last year are set to create a record 28,600 new jobs.

They are also expected to add $11.6 billion each year to Singapore’s gross domestic product, exceeding the upper limit of earlier forecasts by $100 million. Still, this was lower than the $13.4 billion recorded last year.

EDB managing director Ko Kheng Hwa said this was due to the mix of projects.

‘It depends on the industry. In the chemicals sector, for example, investment figures are usually high, but the value-added tends to be captured in downstream plants as opposed to the initial upstream ones,’ he said at a press conference yesterday.

EDB chairman Lim Siong Guan said the data reflected strong investor confidence.

‘It also affirms manufacturing as a critical component of Singapore’s economic growth, and underlines our ability to continue to attract high-end complex manufacturing projects which bring in quality jobs,’ he added.

EDB said many of the projects it had pursued were capital, knowledge or innovation-intensive, or a combination of all three – all key to economic development and creating good jobs.

The top projects announced last year included ExxonMobil’s second world-scale petrochemical plant in Singapore, set to cost US$4 billion (S$5.7 billion), and Neste Oil’s 550 million euro (S$1.16 billion) biodiesel plant, which will be the world’s largest.

Mr Lim said attracting such projects has made EDB confident that the momentum will continue this year despite global slowdown fears.

Fixed asset investment from manufacturing and services is set to hit up to $19 billion. Business spending could rise to $8 billion and value- added is tipped at $12 billion to $14 billion.

Economists were cautious about the forecasts. Citigroup economist Chua Hak Bin said: ‘It’s an ambitious target as there’s a risk of a manufacturing recession in Asia by the middle of the year,’ he said.

‘If the United States slows even more, chances are that exports from Asia could weaken more…and this could dampen manufacturing investments.’

CIMB-GK economist Song Seng Wun is more optimistic. ‘If things on the external front stay on an even keel, then the numbers are do-able. ‘But if sentiment deteriorates as a result of spillover to the real economy from the financial sector, we may see firms cutting back on investments. What is encouraging is that investments are coming from more diverse sources and some slack may be taken up by Asia-Pacific firms.’

Mr Lim said EDB will focus on exploring opportunities in three growth areas where Singapore itself requires good solutions and can serve as a working model and test bed.

They are: urban solutions involving pollution control, clean water and energy and traffic management; health and wellness solutions for ageing populations; and lifestyle products and services.


Source: The Straits Times 22 Jan 08


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