Business investments in 2020 hit 12-year high despite pandemic; EDB ‘cautiously optimistic’ about 2021
SINGAPORE — Despite the economic headwinds brought on by the Covid-19 pandemic, businesses committed to investing S$17.2 billion in facilities, equipment and machinery in Singapore last year, the highest in the past decade.
- Businesses committed to investing S$17.2 billion in facilities, equipment and machinery in Singapore in 2020
- This is higher than the S$15.2 billion that Singapore attracted in 2019
- An estimated 19,352 jobs are expected to be created by the 2020 investments, much lower than in 2019
SINGAPORE — Despite the economic headwinds brought on by the Covid-19 pandemic, businesses committed to investing S$17.2 billion in facilities, equipment and machinery in Singapore last year, the highest in the past 12 years.
This was based on the Economic Development Board's (EDB) year-in-review report released on Wednesday (Jan 20).
Last year’s figure is higher than the S$15.2 billion that Singapore drew in such fixed asset investments in 2019 and is expected to add S$31.2 billion to Singapore’s economy, including wages and profits, EDB said.
It is the highest since 2008, when Singapore raked in more than S$18 billion in such investments.
Even so, there was a sharp decrease in the number of jobs expected to be created when these investment projects are completed.
An estimated 19,352 jobs are expected to be created by the 2020 investments, compared with 32,814 jobs from the previous year. Last year’s data, though, exceeded EDB’s goal of 16,000 to 18,000 jobs created yearly.
Total business expenditures also tumbled to S$6.8 billion last year, a drop from S$9 billion in 2019.
Speaking to reporters, Trade and Industry Minister Chan Chun Sing noted that Singapore’s attractiveness as an investment destination allowed it to overcome the pandemic’s uncertainties and that things could look up for the country's economic prospects in the coming year.
“EDB’s figures today are promising and encouraging and, if all things go well, we can expect to see some recovery in the global economy towards the second half of this year,” he said.
“However, we should not think that the road ahead will be a walk in the park because we have managed to do well up till now.”
He urged companies and workers to be nimble and adaptable, given the challenges ahead. Companies will take a longer time to decide on their investments in the next year or two, and countries will also compete harder for investments and jobs, he said.
“While Singapore continues to be an attractive investment destination, we also need to be mindful that things can change very quickly.”
EDB's chairman Beh Swan Gin said that much of the investment momentum this year will hinge on how vaccinations against Covid-19 are rolled out in countries around the world, though investments are unlikely to reach the same level as last year’s.
“But we are cautiously optimistic that come 2021, if vaccinations roll out successfully… prospects and sentiments will improve,” Dr Beh said, adding that recovery in the first half of this year would likely still be patchy.
Giving a breakdown on the types of jobs spawned by the 2020 investments, EDB said that around 45 per cent of them are production-related positions, such as those for manufacturing technicians and production engineers. Less than a quarter (24 per cent) are job roles in the digital arena, such as data scientists and product designers.
This is a reversal from 2019, when almost half of the new jobs expected to be created were digital jobs (49 per cent), compared with production work (29 per cent).
Job distribution data goes back only to 2019, Dr Beh said, as EDB wanted to give more granularity in the type of jobs arising from investments.
Mr Chan said that the types of jobs created from investments have been diverse and that investments occur over many years. Therefore, certain types of jobs could see fluctuations in the data by the year.
“Going forward, it will be harder to find a linear correlation between the investment amount and the number of jobs created. It is more important that they are higher-quality jobs that allow our workers to earn better wages,” he said.
Other challenges include the prominence of remote work, which will change the competition for jobs around the world, he noted.
Mr Chan emphasised the need to manage the balance between Singaporeans and foreigners in the job market carefully, given the heightened sensitivity over the issue in the past year.
“We must remember our competitiveness comes from our ability to aggregate talent from across the world to complement ours. The real competition is never within Singapore, but beyond Singapore with the rest of the world,” he said.
STRATEGIES TO WOO INVESTMENTS
Mr Chan also outlined four strategies Singapore needs to position the economy for growth this year:
To strengthen its position as a critical part of the global value chain, a role that it has been playing
To forge new trade rules in forward-looking areas such as data and finance, having launched talks on new bilateral deals and digital agreements with other nations such as South Korea and the United Kingdom
To pursue a sustainable economy led by innovation, tapping Singapore’s commitment to protect the environment
To help companies and workers stay resilient and competitive post-pandemic
Referring to the final point, Mr Chan said that the Government’s Covid-19 support for businesses would move progressively beyond stabilisation towards the goal of pursuing new opportunities.
For workers, the Government will continue to invest in new skills to help them stay competitive.
“I want to strongly urge our workers to keep an open mind to the new possibilities that are emerging. While we understand that change can be difficult and even scary, it is inevitable in the new economy.”
One study had predicted that by 2027, three out of four of the world’s top 500 companies will cease to exist. This means that jobs will change significantly and skill sets will have to be upgraded constantly.
Mr Chan said: “As a small and open economy, Singapore will feel these pressures earlier and more than any other country.”
Echoing this point, EDB’s managing director Chng Kai Fong said that Singapore’s trade-exposed economy was highly investment-driven, which is why it must keep up with the latest trends or risk irrelevance.
“Sixty years ago, our first few investments were not about energy and chemicals, and instead, we were making mosquito nets, fishing nets. Clearly, those are not viable to be manufactured in Singapore now.
“Keeping up with the trends is a constant theme for Singapore,” Mr Chng said.
CLARIFICATION: A previous version of this report stated that the S$17.2 billion that Singapore attracted in fixed asset investments in 2020 was a 10-year high, based on comments from an EDB press conference. TODAY's checks showed that it was a 12-year high.