Singapore—The coronavirus pandemic disrupted supply chains and logistics all over the world when China, (where the infection first broke out last December) closed down its factories in order to contain the outbreak.
According to Inderjit Singh, a former Member of Parliament under the People’s Action Party (PAP), this served as notice to the world concerning over-reliance on China for manufacturing, and, as a result, nations are restoring manufacturing on their own shores.
This, therefore, is an opportunity for Singapore as it would mean the country going back to its glory days of manufacturing, which has seen a smaller and smaller share of the GDP in the last 30 years.
Moreover, “Boosting manufacturing’s contribution to the economy would enable the city state to remain in control of major parts of the supply chains it relies on, helping it to react in times of emergency and remain self-sufficient in critical goods,” he added, writing for the South China Morning Post (SCMP).
Singapore’s manufacturing industry was at par with that of South Korea and Taiwan in the 1990s, when manufacturing made up about 30 percent of the GDP. While this figure still holds for the other two countries. In Singapore, however, manufacturing only makes up 19 percent of the economy.
In its heyday in 1994, one quarter of Singapore’s workforce was working in manufacturing, but by 2019, this figure had dropped to 13 percent. In South Korea, in comparison, one quarter of its workforce in the last decade has worked in manufacturing.
According to the former PAP MP, this may still be reversed as long as the country acts immediately. “The city state can still call on the skilled manpower that has been displaced in recent years as manufacturing companies made their exit. But it must act fast before these skills become obsolete.
The coronavirus is a timely reminder of the need to refocus on manufacturing, to make it a bigger pillar of Singapore’s economy and a bigger employer,” writes Mr Inderjit.
He then gave several suggestions as to how this can be accomplished, including continuing as the global prototyping factory, revive sectors where Singapore was once strong in manufacturing, such as semiconductors, focus on emergent tech such as artificial intelligence or 3D printing, and others.
For this to happen, however, operating costs in Singapore must be lowered, allowing firms to invest in capital expenditure and upscaling.
He added, “Singapore needs an integrated strategy to manage land costs, utilities and labour that constantly adjusts to benchmarks with manufacturing centres such as South Korea, Taiwan, mainland China, India and even the US. It could offer differential pricing of industrial land, rentals and utility rates to stay competitive and ensure companies remain in Singapore.”
The belief that labour costs are too high no longer hold water in this day and age of automation, robotics and AI, all of which serve to lower manufacturing costs. Additionally, “Trained workers can upskill to manage highly automated factories. Output per capita will rise and meaningful jobs will be created.”
Mr Inderjit also wrote that this would be advantageous not only to Singapore but to other countries in the ASEAN region, as it would contribute to its economic development. Thus, just as former Prime Minister Goh Chok Tong had once envisioned, the country would develop into a growth corridor for the whole region, with cities in countries such as Thailand, Indonesia and Vietnam ready for this purpose.
He sees a golden opportunity for the country despite the severe economic impact of the pandemic. He writes,
“An exciting future calls, one in which manufacturing is built upon a more competitive and digitally connected landscape of supply chains, that relies on the latest technologies in 3D, automation, design and advanced prototyping. One in which new products are developed in Singapore. The creation of a National Innovation and Enterprise Foundation with a decisive funding shift towards product development and a shorter time to market can reboot the industry rapidly….
It is time to re-fire the industry as a pillar of the economy, one that can create many more meaningful jobs for Singaporeans.” —/TISG