Posted: 28 January 2013 1543 hrs
SINGAPORE: The Economic Development Board (EDB) says Singapore booked record investment commitments in 2012 as investor interest and confidence in Asia remained strong.
EDB's Fixed Asset Investments (FAI), which refers to capital investment in facilities, equipment and machinery, came in at better-than-expected S$16 billion last year.
That's up from S$13.7 billion in 2011.
The growth was largely driven by significant investments in the electronics and energy & chemicals industries which totalled S$12.9 billion last year.
EDB says when the investments committed in 2012 are fully implemented, they will contribute to a record S$20.3 billion in value-add and create 18,600 new skilled jobs.
However, EDB says companies spent less on operating expenditure including wages and rental last year, at S$6.2 billion. This was down from S$7.3 billion in 2011.
It adds that the drop in business expenditure reflects the short-term cautious business sentiments in 2012.
Over the next 5 to 10 years, EDB says, planned capital investments could moderate as a result of land and labour constraints in Singapore.
It projects Fixed Asset Investments to come in lower, at between S$11 billion and S$13 billion in 2013.
EDB chairman, Leo Yip, said: "Companies are undergoing a transition now where they have to manage the impact of these foreign manpower policy changes. Different companies will have to chart their own path and we are working with many of these companies to see how we can continue to support that effort."
For example, EDB has helped Infineon, SSMC and Global Foundries in the electronics sector to redesign their manufacturing processes to improve their competitiveness. EDB says it has led to a 10 per cent growth in productivity as well as up-skilled some 4000 workers.
Meanwhile, it expects total business spending and job creation to expand further in 2013.
Total business spending is forecast to increase to S$6.5 billion to S$8 billion, and the number of skilled jobs generated could rise to between 19,000 and 22,000, compared to 2012.
In spite of the tight labour market and high cost environment, EDB says Singapore continues to be an attractive location for companies to stage their growth in Asia because of its strong fundamentals and a broad range of capabilities.
Semiconductor manufacturer STATS ChipPac is one of the companies that has continued to make capital investments in Singapore.
Over the past three years, it has invested some S$350 million here.
It aims to double its manufacturing space in Singapore and is planning invest another S$500 million over the next 5 years.
STATS ChipPAC is close to completing the construction of a new extension to its current facilities in Yishun at a cost of some S$35 million.
Its CEO, Mr Tan Lay Koon, said the company is also plugged in to technology trends, particularly the mobile devices segment.
"In Singapore, we are completely aligned and exposed to the mobility theme, because that really is what's driving our business today. 70 percent of my business is communications and overwhelmingly that is driven by the growth of handsets and tablets," he said.
Despite the weaker performance in the electronics sector last year, the EDB said the sector has a bright future.
EDB's managing director, Yeoh Keat Chuan, said: "We will continue to promote activities that are tied to growth of the electronics sector. So, examples of this, aside from communications, would be the automotive sector, power management sector.
"These three areas are projected to grow at double-digit rates over the next 5 years."
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