The whole world is reeling under the effects of strong economic headwinds coupled with the US-China trade tensions. But that has not stopped Singapore from charming and pulling in huge unexpected amounts of investment commitments.
In first six months of 2019, Singapore has already attracted a whopping $8.1 billion of investment commitments particularly in the manufacturing and services sectors.
This is way higher than the last year’s figure of $5.3 billion of investment commitments for the same period.
In fact, the figures quoted in the Economic Survey of Singapore recently, have already exceeded the lower bound of the Economic Development Board’s (EDB) estimations done in February for the year 2019.
The EDB has forecasted that Singapore is all set to attract anywhere between $8 billion to $10 billion worth of fixed-asset investment commitments in this year, which is in line with previous few years.
In 2018, the country pulled in $10.9 billion worth of investment commitments – a target which seems well within reach.
Song Seng Wun, CIMB economist said last week that these are positive signs, particularly in the technology and chemicals sectors and a good time for company formation in Singapore.
He also said that near-term growth apprehensions, higher operating costs and issues related to manpower should not discourage companies with deep pockets.
It is not surprising that the top ranking foreign investors still continue to be the US and Europe, said Mr Song. The technology, data services, and chemicals industries continue to be dominated by American organizations, closely followed by European companies.
Technology firm named Micron, the social media leader and giant Facebook and British home appliance company called Dyson are just a few of the known companies that have established their shop here.
Chua Hak Bin, Maybank economist cautioned that though companies may state envisioned investment commitments, the real spending could come in much lower.
New fixed-asset investment is pouring in at an important juncture, given that Singapore is in need of boost of a capital expenditure to shield the export downturn.
“We hope that these commitments materialise into actual capex spending and job creation, as there have been episodes in the past where the two have not been correlated,” said Mr. Chua.
He also said that it is not clear that Singapore is gaining from shifts in supply chains because of the US-China trade war or not. “Singapore appears to be gaining more US investments than from China,” he said.
Though manufacturing sector still remains an important pillar of the Singapore economy, Mr. Song is of the view that the services sector could pull in more fixed-asset investments as compared to the manufacturing sector by the end of 2019 and company incorporation in Singapore in services sector would be more.
He also said that the requirement for data, research and development and scientists will surely create jobs and that is why the Singapore Government has been so engrossed in the knowledge economy and the skill-sets that are required to participate in it.
It is also very important to translate investment commitments into real and actual jobs.
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