Despite the economic crisis that was accelerated by the COVID-19 pandemic, Singapore managed to draw S$17.2 billion in fixed asset investment (FAI) commitments last year. The Economic Development Board (EDB) reported yesterday that this is higher than the S$15.2 billion Singapore secured in 2019.
FAI refers to a company’s incremental capital investment in facilities, equipment and machinery. Aside from exceeding the EDB’s goal of securing annual commitments of S$8 to S$10 billion investments over the medium to long term, the 2020 figure is also the highest in more than a decade since Singapore attracted S$18 billion in investments in 2008.
The EDB, which is a statutory board under the Ministry for Trade and Industry, also reported that companies incurred S$6.8 billion in Total Business Expenditure (a companies operating costs like wages and rental) per annum last year, compared to S$9 billion in the previous year.
The top two sources of investments last year were in electronics and chemicals, with investments of S$6.5 billion and S$4.1 billion respectively. Over half (53.4 per cent) of investments came from the United States with the homegrown market and Europe accounting for 17.3 per cent and 17.1 per cent of investments respectively.
The Government expects 19,352 new jobs to be created when these projects are fully implemented in the coming years with a projected contribution of S$31.2 billion in value added per annum – which is a measure used to estimate a company’s direct contribution to Singapore’s Gross Domestic Product using factors like wages and profit.
The number of jobs that will arise from the investments Singapore drew last year also exceeds the EDB’s estimates of 16,000 – 18,000 but is lower than the 32,814 that were expected to be created in the previous year. Some 45 per cent of jobs from last year’s investments will be in production while another 24 per cent will be digital-related jobs.
Pointing out that the investment commitments were secured despite a challenging business environment due to the COVID-19 pandemic, EDB noted that global foreign direct investment (FDI) flows fell 49 per cent in the first half of 2020 with a a 30-40 per cent decline expected for the full year.
Explaining why companies chose to trust Singapore despite the worldwide economic crisis, the EDB said: “However, many companies proceeded with their investment plans in Singapore because of our strong fundamentals, including our value proposition as a trusted and connected place to do business; the economic potential of Southeast Asia and Asia; and EDB’s long-standing engagement of the companies.”
On top of this, the EDB said that Singapore attracted investors by enhancing its digital capabilities, making progress in promoting innovation and the creation of new businesses and products, and developing new areas of opportunity such as Agrifood and Mobility.
Revealing that its aim is to maintain the investment commitment numbers for the medium- to long-term, the EDB said that the new year will be challenging as nations compete aggressively for investments to revive their economies and companies review their strategies in view of the way the pandemic has impacted operations.
In spite of such challenges, the EDB assured that it remains focused on creating good business and job opportunities for Singapore and Singaporeans. It said: “EDB will continue to strengthen our fundamentals that have been driving business interest in Singapore.
“These include opportunities from: Asia and Southeast Asia; digitalistion and the digital economy; innovation; the deep skills of our workforce; the ecosystem of suppliers locally and in the region; our connectivity and open trading posture; and our business-friendly and rules-based environment.”
EDB chairman Beh Swan Gin said that the 2020 figures could represent grounds for “guarded optimism” in the second half of this year as long as the COVID-19 situation stabilises in the coming months.
Calling the investments in Singapore a sign of companies’ trust in Singapore and an indication that companies take a long-term view of their investments, Dr Beh said: “While 2020 has been a challenging year, companies that take a long-term view of their investments still see Singapore as a trusted and attractive business location for transformation, innovation and growth.
“We are approaching the first half of 2021 with some caution. But if the COVID-19 situation stabilises in the coming months, there could be grounds for guarded optimism in the second half of 2021.
“We must continue to work closely with companies, industry stakeholders and government agencies to strengthen our economy and enhance our competitiveness, so that we can continue to create good business and job opportunities that meet the aspirations of Singaporeans.”