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Building from Strength to Strength
Despite its own lack of natural resources, Singapore has managed to develop itself into one of the top oil and gas hubs in the Asia Pacific region. Today, the Republic is one of the world’s top three export refining centres, and the world’s third largest oil and oil products trading hub. In addition, the Southeast Asian nation also has set its sights on becoming the region’s premier LNG (liquified natural gas) hub.Singapore’s success in this sector has largely been the result of exceptional foresight by its government, with early investments in key infrastructure paving the way for the country to develop expertise in oil refinery, trading and handling. Building from strength to strength, Singapore was able to transform itself into a global centre for oil refining and training.
Integrated Oil and Gas Value Chain
Much of Singapore’s success in growing its oil and gas sector has been due to its ability to attract the world’s top oil and gas multinationals to invest and set up here. Some of its key advantages include its ideal location in the heart of the fast growing Asia Pacific region, its business-friendly climate, skilled labour, strong government support and an excellent physical infrastructure for oil and gas firms.The highlight of the local oil and gas supply chain is Jurong Island. Located towards the southwest of Singapore, Jurong Island is home to more than 95 leading oil and gas, petrochemicals and specialty chemicals companies from around the world. The island – which opened in 2000 – is built on reclaimed land and connected to the Singapore mainland by a causeway to facilitate the movement of raw materials and finished products.
Critical Investment Delivers Major Returns
Jurong Island is also the heart of Singapore’s rise to become an integrated chemicals hub, and hosts many international chemical companies with some S$42 billion in investments.While Jurong Island was a significant investment for Singapore, the strategic and economic benefits it has delivered far outweigh the costs. For one, its unique plug and play structure has allowed the Republic to attract companies involved in different stages the oil and gas value chain.
Singapore has also capitalised on its early success in oil refinery to develop its petrochemical sector, which today is a major contributor of economic value add. Besides oil refinement and petrochemical production, Singapore is also the ideal location for energy and chemicals firms to site their regional headquarters and R&D activities. The Republic’s combination of a business-friendly environment, availability of talent and presence of leading research institutions make it an attractive destination for the oil and gas majors.
Conquering the Next Frontier with Gas
Far from resting on its laurels, Singapore is making further investments to develop itself into a regional gas trading hub too. With the Asia Pacific expected to contribute close to 40 per cent of global LPG (liquified petroleum gas), there is tremendous potential for the Republic to become the focal point for gas storage, processing and trading activities in the region.One major investment Singapore has made to strengthen its role as a gas trading hub is its development of the S$1.7 billion LNG terminal on Jurong Island, which officially opened in February 2014. Such is Singapore’s confidence in the future of LNG in the region, that it has already started looking into setting up a second LNG terminal to tap on future demand in the region.
Beyond infrastructure, Singapore is also laying the foundations for gas trading through other measures, such as the creation of Pavilion Energy, an investment unit focused on LNG, while providing it with a S$6.9 billion war chest. These moves have prompted the International Energy Agency (IEA) into highlighting Singapore as the best candidate for an LNG trading hub regionally.
Record Low Oil Prices Both Boon and Bane for Sector
Much has been reported on the current record low levels of oil – with prices touching the region of USD30 per barrel in recent months – and how it has impacted great swathes of the oil and gas sector. However, in truth, the low prices can be both boon and bane depending on which phase of the oil and gas supply chain a company is involved in.The negative fallout of low oil prices are primarily being felt in the exploration and production (E&P) section of the value chain, of which firms in the marine and offshore, and oil tools and services sectors are particularly affected. Meanwhile, some refineries and petrochemical companies here in Singapore are benefiting from plunging oil prices – which translates to lower feed stock costs and higher profit margins – though there are similar firms also catching the brunt of oil price declines.
A Marathon and Not a Sprint
All things considered, it can be said that Singapore’s status as an oil and gas hub looks set for a number of years to come. However, the Republic will need to pay
A passion for good food.
Singapore is widely recognised as being a gourmet paradise with the country’s food culture a melting pot of many cuisines, such as Chinese, Malay, Indian and Eurasian. Eating out is also a national pastime with cosmopolitan Singaporeans being equally at home with local dishes, as well as flavours from countries all around the world.
With Singaporeans being such passionate and discerning food lovers, it’s no wonder local companies have looked to distill these local flavours into food products for domestic consumption and international exports. In fact, the food manufacturing sector here is made up of about 840 companies, the majority of which are small and medium enterprises (SMEs). Furthermore, the range of food and beverage (F&B) products made in Singapore also spans a wide range of categories, from flavourings and sauces, to frozen foods and ready-to-eat meals, to confectionaries and beverages, and more.
To date, the food manufacturing industry has seen strong growth in production output and export sales. Based on official figures, the sector industry contributed S$9.1 billion of manufacturing output in 2013. Meanwhile, Singapore’s international food exports increased from S$6.7 billion in 2011 to S$8.2 billion in 2014, setting a consistently strong pace of growth.
Setting the Stage for Growth
The success of Singapore’s food manufacturing sector can be said to be a result of several factors. For one, the vibrant food culture here has provided local companies with a solid platform from which to innovate, develop and refine their products. Singapore’s position as a regional manufacturing and trading hub also helps to strengthen the food manufacturing sector, putting them in an ideal position to grow from.
Another reason for the strength of Singapore’s food manufacturing sector is the strong support by the Government and its economic agencies. In mapping out its growth plan for the industry, it commissioned an international benchmarking study, which revealed that while local food manufacturers have strong established products and brands, stringent quality control and food safety standards that were comparable internationally, industry productivity levels still lagged behind countries such as the USA, Japan and Korea.
To bring the sector to a higher level, a wide variety of support programmes have been rolled out to help food manufacturers in areas such as product development, research and development (R&D), productivity, branding and marketing, and overseas market expansion. Such support has helped the sector stay competitive amidst the challenges of international markets.
Cultivating the mark for Quality Food
For many years, Singapore has been building a strong reputation for its F&B exports under the Tasty Singapore name. Launched in 2004 by IE Singapore - the lead Government agency driving Singapore’s external economy - in collaboration with the industry partners Singapore Food Manufacturers’ Association (SFMA) and Singapore Manufacturing Federation (SMF), this collective brand identity aims to provide recognition to the best of the best amongst Singapore’s food manufacturing players.
Companies looking to become part of the Tasty Singapore brand programme need to meet stringent food safety and quality management certifications. This ensures that Tasty Singapore Ambassadors are committed to offering reliable food manufacturing solutions to support Singapore’s reputation as a global food player. In turn, they can leverage the recognition of the Tasty Singapore brand mark - thus gaining better mileage for their marketing efforts overseas - while enjoying exposure through business missions, trade shows, food festivals and other retail promotions.
In particular, the strong brand equity enjoyed by Singapore food companies is a significant advantage in their expansion to Asian markets. Singapore’s total F&B exports to the region grew by about 37 per cent between 2008 and 2012 to reach nearly $3 billion. Despite recent economic turbulence, Asia is still expected to be a key growth market, with its rising middle class. And with the ASEAN Economic Community looming on the horizon in 2016, Singapore food brands should expect to see greater opportunities arising from the creation of a single market with greater flow of goods.
Raising the Game on Productivity
In recent years, Singapore has been tightening the influx of foreign workers into the country as part of a national push for companies to restructure and increase innovation and productivity levels. To help the food manufacturing sector remain competitive globally during this transition, the Singapore government has been implementing a series of measures to transform them.
One of the key initiatives which has already been in place since 2011 is the S$45 million Food Manufacturing Productivity Plan launched by SPRING Singapore, which seeks to raise the sector-wide nominal value-added (VA) per worker by 20 per cent by 2016, through automation and adoption of productivity improvement tools, product innovation and workforce investment. In an update at the Food Productivity Conference 2014, Minister for Health Gan Kim Yong shared that some 1,300 food service and manufacturing companies have already embarked on productivity upgrading projects.
The food manufacturing sector is also set to benefit from SkillsFuture - a major national effort to help Singaporeans develop skills for the future. The SkillsFuture Earn and Learn Programme for Food Manufacturing was rolled out in April 2015 to support the industry to meet the need for skilled local talent from the polytechnics. In her launch speech, Senior Minister of State for Manpower and Health Dr Amy Khor pointed out that the programme will help strengthen the local talent pipeline for food technologists, food processing engineers and quality assurance officers.
Improving Economies of Scale
In recent years, there has also been a greater emphasis on collaboration and consolidation to generate economies of scale amongst companies in the local food industry. For example, the SFMA, the SMF and the Restaurant Association of Singapore (RAS) have utilised SPRING Singapore’s Collaborative Industry Project (CIP) grant to assist restaurants with the outsourcing of non-core food item preparation to food manufacturers. This has helped food manufacturers tap on greater economies of scale and encouraged them to improve efficiency through investing in automation.
Besides collaboration, the Government is also developing new infrastructure for the sector that will allow for greater sharing of resources. The upcoming Food Hub in Senoko - which is being developed by the JTC Corporation - will feature shared integrated cold room warehouse facilities to help reduce initial start-up cost of tenants and enable them to enjoy better economies of scale and lower operating costs. The facility will also be operated by a third-party logistics service provider, offering a full suite of logistics services to tenants.
Raising the Value of Food Products
Besides helping Singapore food manufacturers with cost and operation efficiencies, the Singapore government has also been encouraging companies to leverage on innovation and technology to add value to their food products. One of the major enablers of value creation through the years has been the Food Innovation and Resource Centre (FIRC) at Singapore Polytechnic (SP), which provides local companies with access to food technology consultancy and platforms to develop new products, grow productivity and increase product shelf life.
Speaking at the NTUC FairPrice Made In Singapore fair in July 2015, Senior Minister of State for Trade and Industry Mr Lee Yi Shyan shared that many local food manufacturers have been investing in R&D and innovation, as well as collaborating with the FIRC on new ways of improving the nutrition, texture, taste and shelf life of processed food, as well as discovering new ways to manufacture traditional food items and new packaging so that production can be scaled up for export markets.
Pushing on to New Heights
Despite the current global economic uncertainty and moderating consumer demand in several major global economies, there still remains much room for Singapore food exports to grow strongly, especially in Asia. In a way, Singapore’s relatively small domestic market means that export growth is an imperative if the food manufacturing sector is to continue flourishing. With a wide plethora of programmes in place to help companies build internal capabilities, facilitate new market entry and enhance their market presence, there is strong impetus for the sector to push on to greater heights.
While Singapore is relatively land scarce, it has been strategically optimising the available space to ensure that industries – especially high value add sectors such as finance, technology and biomedicine – are able to find the right locations for their businesses to grow and expand. With Singapore’s economy rapidly developing in recent years, let us review how commercial and industrial spaces have evolved in tandem.
Where Space is at a Premium
Singapore’s Grade A office space is predominantly found in the Central Business District (CBD), consisting of the major areas such as Tanjong Pagar, Raffles Place, Shenton Way, Marina Bay, as well as parts of City Hall, Orchard Road and Beach Road. In recent years, the CBD has seen a strong supply of Grade A office space hitting the market. These include Asia Square and Marina Bay Financial city and in the waterfront business district of Marina Bay, CapitaGreen in bustling Raffles Place, as well as South Beach Tower in Beach Road.While banks and financial institutions were traditionally the main tenants at Grade A office spaces, this has been changing in recent years with technology firms also taking up such spaces. Internet giant Google has been occupying four levels at Asia Square Tower 1 totalling around 120,000 square feet, while social media giant Facebook is similarly occupying four floors at South Beach Tower in Beach Road.
Business as Usual in the Suburban
With commercial space in the CBD coming at a premium, many businesses have relocated to suburban business spaces in recent years. While many of these locations such as Pasir Panjang, Paya Lebar, Tampines and Jurong may not boast the prestige of a CBD address, the rental cost savings – sometimes at about half that of a Grade A CBD office – more than make up for it.A number of public agencies have followed suit in shifting to these suburban centres. These include the Ministry of National Development, which has taken up a 30-year lease for 11 levels of office space at the office tower component of Jem, a mixed-use development in Jurong East Central. Meanwhile, the Central Provident Board (CPF) has shifted its corporate operations to Novena Square Towers A and B since November 2015, and putting up its previous office address the CPF Building at 79 Robinson Road up for sale.
Providing Industries with Room to Grow
To further meet the unique needs of specific industries, Singapore has developed many business parks across the island in recent years. The two earliest successes are the 37 hectare International Business Park in Jurong (launched in 1992) and the 71 hectare Changi Business Park (launched in 1997). These two developments provide high value add companies the necessary space to build facilities customised to their specific needs.Recognising the need to create optimum conditions for important growth sectors, Singapore has also developed specialised business parks to house these industry clusters. Perhaps, the most successful example of this is one-north at Buona Vista, a 200 hectare business park developed to house Research & Development (R&D) and high technology industries, such as biomedical sciences, infocomm technology (ICT) and media industries. Developed by the JTC Corporation, the sprawling one-north is further broken up into Biopolis (for biomedical R&D) and Fusionopolis (for IT, infocomm, engineer R&D), as well as Block 71, an incubation space for tech start-ups.
JTC Corporation – which is the lead government agency in Singapore to spearhead the planning and development of a dynamic industrial landscape – has also developed other specialised business parks, such as the Seletar Aerospace Park, Tuas Biomedical Park and Jurong Island to support the growth and development of key manufacturing sectors for Singapore. Such hubs offer industries the benefits of supporting infrastructure, as well as opportunities for collaboration.
Retail and Lifestyle Developments
Moving away from the office and industrial space sector, we can see that Singapore’s retail space sector has been evolving with the influx of new retail and lifestyle concepts locally and abroad. When it comes it prime retail space, the Orchard and Somerset Road shopping belt is still the place to be. This is especially so for international tourists.In recent years, the prestigious retail district has seen new developments such as Orchard ION, Knightsbridge, 313@Somerset, Orchard Central and more. Existing retail destinations such as Wisma Atria, Paragon and Mandarin Gallery have also undergone refurbishments to keep pace with the increasing competition on the scene.
When it comes to luxury retail and dining, one major development has been the Shoppes at Marina Bay Sands. Part of the Marina Bay Sands integrated resorts, the Shoppes offers close to 800,000 square feet of retail space and 270 boutiques and restaurants. Luxury brands will feel at home here with an unprecedented assembly of 15 duplex and triplex stores, offering the right touch of class to match their status.
Shopping in Suburbia
For the retail sector, the shift towards spaces in suburban townships has been evident too. Whereas most suburban shopping centres used to be simple affairs allowing residents to shop for daily goods and essentials, today’s suburban malls are altogether different affairs. Nowadays, the sight of high street fashion brands such as H&M and Topshop would not be amiss at many of these developments.In particular, Tampines and Jurong East – in the east and west of suburban Singapore respectively – have emerged as credible retail destinations in their own right. Tampines is home to three shopping malls – Tampines Mall, Century Square and Tampines 1 – offering different retail tenant mixes. Jurong East is home to four shopping malls – Jem, Westgate, JCube and outlet mall IMM – to cater to the growing resident population in the western part of Singapore.
Ideal Spaces for the Right Businesses
The breadth and diversity of commercial, industrial and retail spaces in Singapore is testament to the foresight of its urban planners. The development of land and business spaces is tightly integrated with the economic development strategy of the nation, ensuring that the right businesses are supported with spaces ideal for them.
Singapore’s Marine and Offshore Sector the Beneficiary of Past Years of High Oil & Gas Prices
Over the years, Singapore has leveraged on its strengths in shipbuilding and engineering, steadily growing to become a major player in the offshore sector. Today, the Republic is the largest manufacturer of jack-up rigs, and commands 70 per cent of the global market share. Singapore also has 70 per cent of the global market for the conversion of Floating Production Storage Offloading (FPSO) units.It must be said that Singapore has been a beneficiary of high oil and gas prices over the past years, which have driven the growth of the marine and offshore engineering sector. In 2013, the industry achieved a record milestone in rig construction and delivery, with the delivery of 31 newly built rigs. Overall, the industry also performed well, hitting a total turnover above the S$15 billion mark.
Within the sector, two companies stand out: Keppel Offshore & Marine and Sembcorp Marine, which are the world's number 1 and number 2 maker of oil rigs. Singapore is also home to a large number of firms in offshore solutions and services such as offshore & marine engineering and construction, vessel owner-operators, shipyards, offshore machine, systems integrator, turnkey engineering and oilfield equipment and tools.
Current State of Record Low Oil Prices Leaves Oil & Gas Majors Struggling
While the oil and gas sector has always been susceptible to boom and bust cycles, the plummet in oil prices in 2015 has nonetheless caught many off-guard with its swiftness and severity. While there has been much debate on the specific factors behind the decline – from more than US$100 per barrel in late 2014 to its current lows of US$30 per barrel – we can trace it primarily to overcapacity from oil-producing nations, as well as a decrease in energy demand from many major economies around the world.The resultant fallout has severely impacted upstream exploration and production. With oil prices at record lows – and looking set to remain there for some time – most of the oil majors are pulling back on the heavy investment required for such exploration and production activity, preferring to wait it out. In all, the scaling back of exploration and production has resulted in many jobs losses for the sector globally. At the same time, makers of offshore and onshore equipment and platforms, are beginning to see orders dry up – along with cancellations and postponement – putting their bottom lines at risk too.
Having benefited from the upswing in oil prices, Singapore has not been spared from the decline.
Singapore Offshore Firms Coming to Terms with New Normal of Low Oil Prices
Across the board, Singapore’s marine and offshore sector has been badly affected, with record low oil prices depressing the demand for exploration and production activities. For 2015, new orders at Keppel Offshore & Marine and Sembcorp Marine fell to their weakest level in six years. In addition, both companies are facing the possibility of major project cancellations from one its major South American clients, Sete Brasil. The Brazilian firm has been facing a corruption investigation involving its client, state-run oil producer Petrobras. Having failed to secure long-term financing, Sete Brasil is now facing the possibility of bankruptcy.As Sete Brasil is one of the largest clients for jack-up rigs at both Keppel Offshore & Marine and Sembcorp Marine – about 40 per cent of both companies’ backlog, according to analysts – the potential fallout is expected to be significant. Across the rest of the industry, investment analysts are also concerned with heightened default or cancellation risks from smaller clients, should oil prices continue to stay depressed.
Singapore’s Lesser Exposure to Onshore Sector Means Lower Fallout
There are significant differences between drilling for oil and gas offshore and onshore. Fundamentally, offshore oil drillers require more long term investments in floating platforms and rigs. This has translated to opportunities for Singapore’s marine and offshore engineering sector, with multi-year contracts to build these deepwater exploration and production platforms. Meanwhile, onshore oil drillers can turn on or off their drilling depending on the price of oil and gas.Building on its base as a leading oil refinery centre, Singapore has grown to become the regional headquarter of choice for many oil and gas firms. With many decisions affecting regional explorations and production made here, this has attracted oilfield services firms such as Schlumberger, Halliburton, Baker Hughes and Weatherford. Considering everything, Singapore’s exposure to the onshore sector is relatively small.
Global Oil & Gas Sector Seeing Glimpses of Light at the End of a Long Tunnel
Currently, there is no real consensus as to whether oil prices have truly bottomed out. While some analysts are predicting doomsday scenarios of US$10 to US$20 per barrel, there are also those who have opined that the market has bottomed out with prices set to recover in 2017. Those holding a more optimistic outlook point to the possibility of leaders in oil producing countries coming together to broker a deal to cut oil production output. Meanwhile, US shale oil producers are starting to slash their 2016 capital spending plans, and this could result in a curtailing of the current oil glut that is flooding the market and bringing down prices. With these possibilities in mind, 2016 could yet see a recovery of the market.
Bringing Success with Strategic Planning and Great Support
The success of these two high-value sectors, is the result of strategic foresight, careful planning and generous support by the Singapore government. In June 2000, the Republic launched the Biomedical Sciences Initiative (BMI), with the aim of establishing biomedical sciences as a pillar of its economy.Spearheaded by the Agency of Science and Technology (A*STAR), the first phase of the BMS initiative – funded to the tune of S$6 billion - looked to rapidly build up research capabilities and infrastructure, attract international research and development (R&D) laboratories and increase the scientific talent available.
The second phase of the BMS initiative (2006 to 2010) received S$13.55 billion in government funding, and focused on the better understanding of human diseases and translating this science for the clinic. The most recent phase (2011 to 2015) enjoyed S$16.1 billion in funding, and looked to support research programmes with greater healthcare and economic impact.
Thriving Hub for Biomedical Science Research
Today, Singapore is recognised as a leading R&D hub for the pharmaceutical and biotechnology sector. In fact, more than 30 of the leading biomedical sciences companies in the world have chosen Singapore as a base for the R&D efforts and innovation.The Republic’s transformation into a leading biomedical R&D hub has been helped by the establishment of several new biomedical research institutes under the umbrella of A*STAR in the last 15 years. Besides helping to attract the right talent, these institutes have allowed Singapore to build up strengths in research areas, such as biomedical engineering; infectious disease and immunology; molecular cell and development biology; and stem cells and regenerative medicine.
Important Base for Pharmaceutical Production
Besides research, Singapore has also established itself as a key base of pharmaceutical manufacturing. This success is a result of several factors, including the Republic’s strong physical and regulatory infrastructure, global connectivity and skilled manpower. Amongst the pharmaceutical majors which have chosen Singapore as their global production base are GlaxoSmithKline, Lonza, MSD, Novartis, Pfizer and Sanofi-Aventis. These firms operate multi-purpose plants, which are able to manufacture a wide range of active pharmaceutical ingredients (APIs), biologics and nutritionals.The Republic has also made significant inroads in the manufacture of biologics – a field where medicines are made from living cell. Baxter, Lonza, GlaxoSmithKline and Roche are amongst the companies which have announced investments to set up major biologics facilities, totalling US$2 billion in capital expenditure.
Growing the Medical Technology Sector
Besides biomedical science, Singapore is also home to a thriving medical technology hub. In fact, more than 30 medical technology companies have set up commercial-scale plants to produce medical devices for the regional and international markets. At the same time, there are about 25 R&D centres and close to 50 regional headquarters of leading Medical Technology (MedTech) firms in Singapore.Medtech players with the full set of manufacturing, R&D and headquarter functions in Singapore include AB SCIEX, Baxter International, Becton Dickinson, BIOTRONIK, Hoya Surgical Optics, Life Technologies, Medtronic and Siemens Medical Instruments.
The medtech sector has seen rapid growth in recent years, almost tripling its manufacturing output from S$1.5 billion in 2000 to about S$5.5 billion in 2015. At the same time, the sector’s manpower base more than doubled from about 4,000 to 10,000 across the same period too.
Singapore as an Innovation Hub for Medical Technology
With its solid base of R&D talent, close proximity to the Asia Pacific market and strong public research support, Singapore has emerged as a leading innovation hub for the medtech sector. Speaking at the Asia Pacific Medtech Forum in December 2015, Minister for Trade and Industry (Industry) S Iswaran noted that medtech companies based in Singapore has made major moves to innovate and develop devices for the Asian market.Promising companies are also emerging from Singapore’s start-up ecosystem. This has been helped by a commitment of S$70 million under the Sector Specific Accelerator (SSA) Programme to encourage the formation and growth of medtech start-ups here. So far, four accelerators have been appointed to identify and invest in high-potential companies.
Innovation in Business Models and Collaborations
Innovation for the medtech industry is not just confined to new products. Medtech firms here are also adopting new business models to address healthcare delivery challenges in Asia Pacific’s rapidly growing markets. For Medtronic, its Global Centre of Excellence (CoE) for Business Model Innovation in Singapore is helping to design, test and scale new business models that address market-specific needs and barriers in the region. This includes an innovative programme called the Health Heart for All (HHFA) initiative, which provides screening camps, patient education and financing schemes.Medtech firms also benefit from the strong sense of partnership between private and public sector players. In 2014, Singapore’s Eastern Health Alliance and Changi General Hospital partnered Philips Healthcare to pilot the first telehealth programme for heart failure patients in Singapore. The project seeks to help patients improve management of their condition and reduce the risk of hospitalisation through the integration of tele-monitoring, tele-education and tele-care. Such collaborations allow companies to create solution blueprints that can be scaled up for other markets.
Sprinting Ahead From a Standing Start
Singapore’s biomedical and medical technology sectors have truly grown in leaps and bounds since their beginnings less than two decades ago. That they have a thriving ecosystem today – with leading global players, research and development institutions, manufacturing capabilities, public sector collaboration, and a talented and capable workforce – is testament to the immense foresight, determination and support to enable its development.
How Singapore’s manufacturing sector is positioning itself for the growth in advance electronics.
A Key Growth Engine
Without a doubt, the electronics sector is a highly important contributor to Singapore’s economy. In 2014, electronics manufacturing contributed about 5 per cent of Singapore’s Gross Domestic Product (GDP). Besides being singularly responsible for 30 per cent of the manufacturing sector’s value add, the sector also employs more than 80,000 people, boasting the second highest labour productivity among manufacturing industries. With that in mind, it’s not hard to see why electronics is a segment of such economic significance for the Republic.
In addition to its own manufacturing output, the electronics industry also spin-offs to many other segments of the economy. These include precision component manufacturers, chemicals and materials suppliers, manufacturing systems providers, and logistics and supply chain management providers. Singapore’s thriving research and development (R&D) ecosystem also benefits significantly from the electronics sector, which was the biggest contributor to business expenditure for R&D in 2013. In an affirmation of Singapore’s importance as a R&D hub for the electronics sector, US storage giant Seagate Technology unveiled its S$100 million state-of-the-art R&D building, “The Shugart”, here in July 2015.
Cyclical Blips, Long Term Trends
In recent years, the global economy has seen moderate growth with the rapid expansion of many Asian economies balancing out slower consumer demand from the developed world. But as of the second half of 2015, the global market outlook turned more uncertain, in large part due to slowing growth from China. This has seen in a slowdown of Singapore’s manufacturing output too. According to International Enterprise (IE) Singapore, electronic domestic exports contracted 2.7 per cent year-on-year in August 2015, due to a decline in the export of PC parts, integrated circuits and disk drives.
But looking beyond the cyclical blips, most analysts believe that there is still tremendous potential for the electronics sector in the years ahead. This stems from several trends such as the increasing importance of smart devices and machines in our everyday lives. New technologies such as wearable electronics and the Internet of Things are (IoT) are also expected to further increase demand for electronic devices and parts of an increasing level of sophistication. With its status as the region’s advanced manufacturing and R&D hub, Singapore is well-positioned to tap on this next stage of growth.
Growing From Strength to Strength
In many ways, Singapore’s strong position in electronics is a result of farsighted economic policies in the country’s early years. From its start as the only TV assembly plant in Southeast Asia in the 1960s, the Singapore government and the Economic Development Board of Singapore (EDB) successfully courted top players in the electronics sector to set up manufacturing operations here. Today, the Republic is an important node in the global electronics market, responsible for making critical parts that go into modern electronic products.
Through the years, the Republic has demonstrated a remarkable ability to punch above its weight in the electronics sector. This is in large part due to its commitment to developing end-to-end capabilities, with a full suite of business activities such as manufacturing, R&D, supply chain management, logistics and headquarter functions. For a country with a relatively small land mass, Singapore is home to 14 silicon IC wafer fabrication plants, 15 assembly and test operations, and about 30 integrated circuits (IC) design centres. Four of the world’s top five electronics manufacturing services (EMS) firms also have operations here, providing design, high-value manufacturing, supply chain management and regional management functions.
Formula for Success
Singapore’s pro-business stance and philosophy has been a critical factor for the development of its electronics manufacturing sector – as well as the economy at large – influencing many aspects of its policy-making decisions through the years. Notably, Singapore has been ranked the easiest place in the world to conduct business by the World Bank. It has also the world’s second most competitive economy, as ranked by the World Economic Forum (WEF), for several years now. In its 2015 report, the WEF noted that Singapore was one of the most consistent performers across economies, faring well in the 12 factors assessed such as infrastructure and technological readiness.
In terms of skilled manpower, the Republic is able to count on a base of high quality engineering talent – domestic and international – to support electronics manufacturing and R&D operations here. The Singapore government is also a key champion for skills development amongst Singaporeans. In his speech at the EDB Society’s 25th Anniversary Gala Dinner in July 2015, Deputy Prime Minister and Co-coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam shared how the EDB has been in the business of developing skills through close collaboration with businesses, citing the support Texas Instruments (TI) received when opening its first semiconductor factory in 1969. To support the needs of future industries, Singapore will also be embarking on a brand new phase of developing deep skills and capabilities, through programmes such as the SkillsFuture initiative.
Value Creation for the Sector
In order to maintain Singapore’s competitive advantage in electronics, especially the areas of data storage, semiconductors and integrated circuits, the Republic has been steadily building up its electronics R&D capabilities, which range from component-level design and process R&D to system level product design, firmware development, and industrial design.
In addition, there are also publicly funded research institutions such as the Institute of Microelectronics (IME), which plays an important role in the growth of the semiconductor sector here. Through the years, IME has been developing a broad spectrum of capabilities in partnership with industry leaders such as Applied Materials and Qualcomm.
With a view towards developing the capabilities of local electronics firms too, the EDB has been promoting the Partnerships for Capability Transformation (PACT) initiative, encouraging partnerships between global companies and their local suppliers. These collaborations are beneficial to local electronics firms, helping them in upgrading their technological capabilities and facilitating knowledge transfer of best practices and industry know-how. Through co-innovation, international electronics players and local SMEs can develop and test-bed new solutions to accelerate commercialisation opportunities and offer new products and services.
A City Evolving Through its Architecture
Seeking the consultation of Dutch economist, Dr Albert Winsemius, Singapore’s leadership embarked on a rapid programme of industrialisation to drive economic growth and create jobs. Foreign investors were courted to set up business in the country, while the nation developed its workforce through education and training.This marked the beginning of Singapore’s rise to become a modern economy and its transformation from a Third to First World country too. In many ways, the evolution of Singapore’s built environment has mirrored that of its economic success and social development. Here, let us look at how the country’s architectural milestones have run parallel to its socioeconomic development.
Renewing the Past for the Future
Right from the start, Singapore’s architectural imprint was an eclectic mix of styles, reflecting its Malay, Chinese and Indian cultures, as well as western influences. This could be seen in the conservation buildings from the era, including major places of religious worship, British Colonial government structures, as well as community enclaves.Even while Singapore was rapidly modernising as a city, the government and urban planners took care to balance that against the preservation of important heritage buildings. This was carried out through the Preservation of Monuments Board, with an initial batch of eight buildings – including major places of religious worship such as the Cathedral of the Good Shepherd, Armenian Church, St Andrew’s Cathedral, Hajjah Fatimah Mosque, Thian Hock Keng and Sri Mariamman Temple – granted legal protection as national monuments.
The conservation efforts continued through the years, with clear principles drawn up for building owners, architects, engineers and contractors to apply in their conservation efforts. The key purpose was to ensure that the original structure and architectural elements of historic buildings are retained and restored as far as possible, without reconstructing the entire building. To date, over 7,000 buildings across more than 100 areas have been conferred conservation status.
Building for the People
One of the major issues facing Singapore as a young nation was the housing crisis. At the time, only 9 per cent of the population were living in public housing, with many inhabiting squatter colonies and city slums with poor hygiene conditions. In 1960, the Housing and Development Board (HDB) was formed with the mission of developing low-cost housing for the people.The initial HDB flats were simple and utilitarian in design and build. These were mostly 1-, 2- and 3-room flats with the most basic of amenities such as electricity and piped water. They were also high-rise and high-density to better cater for the long-term needs of the population. For a population used to urban slums and rural habitats, these spartan flats offered a better quality of life.
Much thought went into the planning of these new public housing estates. In the late 1960s and 1970s, the HDB adopted the New Town approach of integrating residential areas with a town centre, parks, commercial and industrial areas, as well as communal and residential facilities. Toa Payoh was the pioneer new town, while Ang Mo Kio and Bedok followed after.
From the precinct concept to more intimately scaled estates and right up to premium apartment blocks, HDB’s approach towards public housing has continually evolved through the years to cater to the diverse needs and aspirations of the Singapore people. One of the highlights of HDB’s public housing development in recent years has to be the iconic Pinnacle@Duxton in the central district of Tanjong Pagar.
The design for Pinnacle@Duxton was the work of two Singapore-based architecture firms, who emerged winners in an international competition. Completed in 2009, the development comprised of 1,848 premium flats spread across seven 50-storey buildings, which are in turn interconnected by sky bridges on the 26th and 50th levels. Flats from the development which have been resold on the market, have often broken price records – a testament to their desirability.
A Thriving New Business District
Singapore’s economic success in recent decades has seen the Republic elevated to become one of the major business and financial hubs internationally. Its architectural landscape has also seen a subtle transformation with more iconic designs dotting the landscape. One area which has seen significant change in recent years is the waterfront business district of Marina Bay.In 1983, the Urban Redevelopment Authority (URA) laid out its grand vision for the Marina Bay district in its conceptual master plan. The redevelopment groundwork took place through the years, setting the stage for new and exciting landmarks to populate the area. Taking pride of place in the downtown financial district is the sprawling Marina Bay Financial Centre (MBFC). Designed by New York based architects Kohn Pederson Fox, the MBFC is the new epicentre of Singapore’s financial district, with three distinctive office towers, two residential towers and a retail complex, all clustered around a waterfront park.
A Waterfront of Iconic Landmarks
For visitors to Singapore, there is the iconic Marina Bay Sands integrated resort. Its structural form is distinctive even from far, comprising of three connected hotel towers crowned by a giant SkyPark. There is also the prominent ArtScience Museum with its facade resembling that of an open lotus flower. Further afar, one can also spy the outline of the Singapore Flyer, Asia’s largest giant observation wheel.Living up to its moniker of the Garden City, Singapore also boasts the magnificent Gardens by the Bay. Built on 101 hectares of reclaimed land, this cooled conservatory – designed by Wilkinson Eyre, Grant Associates, Atelier One and Atelier Ten – is a breathtaking marriage of nature, architecture and engineering. It sports a Flower Dome, Cloud Forest and the iconic Supertrees - tree-shaped vertical gardens between nine to 16 storeys tall. In 2012, Gardens by the Bay won the World Building of the Year Award at the World Architecture Festival.
Living in Wonders of Architecture
Singapore has witnessed in recent years several new luxury condominiums with highly distinctive designs by internationally renowned architects. One such development is the Reflections at Keppel Bay, designed by master architect Daniel Libeskind. Completed in 2011, the development features six curved glass towers and 11 fan-shaped villa blocks affording panoramic views of Mount Faber and Sentosa.Another condominium development which has captured the architectural imagination in recent years is The Interlace at Depot Road, which clinched the World Building of the Year at the 2015 World Architectural Festival. Completed in 2013, the residential property was designed by OMA/Ole Scheeren and features 31 blocks of apartments stacked in a hexagonal arrangement, winning the praises of the judges for its bold, contemporary architecture and thinking.
Singapore’s Ascent as a Major Offshore and Marine Centre
Already a regional ship repair and building centre in its early days of independence, Singapore has since built itself up to become a major player in the offshore and marine industry globally. With international clients from all corners of the globe, the Republic is today a leading ship repair and ship conversion centre, with the largest market share for the building of jack-up rigs and conversion of FPSO (Floating Production Storage and Offloading) units. Singapore is also a niche player in the construction of customised and specialised vessels.With Singapore rising from a small regional player to a global leader in the field, its offshore and marine sector has also transformed into a key pillar of the country’s economy, contributing some 2 per cent of the Republic’s GDP (Gross Domestic Product) today, on top of providing numerous good jobs to Singaporeans. The industry here mainly encompasses ship building and repair, as well as rigbuilding and offshore engineering. The Republic also supports a full ecosystem of marine supporting services, as well as being a one-stop marine centre for shipowners, managers and agents, generating an annual turnover of close to S$10 billion.
Onset of Challenging Times for the Industry
The global offshore and marine sector has seen reasonably strong growth in the years following the international financial crisis. This is largely due to a confluence of factors such as improving economic and trade conditions, a global commodities boom, as well as high oil prices stimulating further exploration and production.However, the global outlook has changed considerably in the last 12 months. The global powerhouse that is China is experiencing slowing economic growth, even while it is embarking on an ambitious path of economic reforms. This has had a knock-on effect on global trade and commodities demand. Meanwhile, a mismatch between abundant oil supply and lacklustre energy demand has resulted in a plunge in oil prices, and oil and gas exploration activities grinding to a halt globally. For the offshore and marine sector, the net results of these developments has been an increase in the number of project cancellations and contract delays, against a backdrop of fewer new orders.
Meanwhile, Singapore is also undergoing an economic transformation of its own on the domestic front. Through a reduction in foreign manpower supply, the Singapore government has been encouraging local businesses to increase labour productivity, while making the shift towards economic value creation. Having already started a few years ago, the economic transformation has been gaining momentum, with local businesses getting onboard the bandwagon.
Charting a Way through Choppy Waters
With the offshore and marine sector beset by such a multitude of troubles, it can be easy to lose sight of the bright spots that still exist. Speaking at the Association of Singapore Marine Industries (ASMI) anniversary dinner in October 2015, Senior Minister of State for Transport Josephine Teo addressed these points to a gathering of industry professionals.She noted that the Republic’s industry remains robust, underpinned by strong fundamentals and a strong order book. Furthermore, the industry can also leverage on its expertise in offshore conversions and repair to make further inroads into the Floating LNG Vessel (FLNGV) sector. For example, Keppel Shipyard was awarded a contract worth over US$600 million to convert an LNG (liquified natural gas) carrier into a FLNGV. This was their third such project.
Given a global shift to cleaner fuels such as LNG – as well as Singapore’s own ambitions to become a regional LNG trading hub – there are definitely opportunities in this sector to be realised. One of these is the niche market segment for the repair and maintenance of LNG vessels. It is in this area that Sembawang Shipyard is recognised globally as a leader for LNG vessel repairs, refits, and life extension works.
Finding a Way Forward with Productivity and Technology
In alignment with the national push towards greater productivity and technology adoption, the Singapore government is also keen to implement these measures to help the offshore and marine sector here. For one, a Marine Transformation Plan (MTP) has been drawn up to boost the productivity of the marine industry. The Operations Management Innovation Programme for the marine industry (OMNI@Marine) programme was launched in 2012 – a joint collaboration between ASMI, the Singapore Workforce Development Agency (WDA) and the Singapore Institute of Manufacturing Technology (SIMTech) – with the objective of helping marine firms identify and address productivity gapsMeanwhile, the Marine and Offshore Technology Centre of Innovation (MOT-COI) – established since 2006 – has also been helping companies with more than 150 technology adoption projects. One such project resulted in the development of an automated machine to service old, used and rusted scaffold couplers.
On the talent development front, the government has also launched the SkillsFuture Earn and Learn Programme for Marine & Offshore Engineering. This year-long programme allows candidates to gain a specialist diploma in marine production and the attainment of specialised skills, through learning and working stints at local firms.