Major Industries in Singapore

Singapore was once a small country with limited natural resources and a small manufacturing base with mediocre infrastructure. It neither had domestic capital nor foreign investments. Today, the picture is quite a contrast. It is one the world's leading economies with robust infrastructure, sizable foreign direct investments and with an impressive record of phenomenal industrial growth.

This article highlights some of the major industries that are the engines of Singapore's economic growth.

Growth of Industries in Singapore over Time

1960s - Economic Uncertainty

Singapore, due to its strategic location on major sea lanes, was always dependant on entrepot trade. During the 1960s it was a small country with no natural resources, with a small manufacturing base, poor infrastructure, with little industrial know how and domestic capital. There was little or no direct foreign investment. However, there was soon a shift in economic policy resulting in the emergence of 'import substitution.' This was a key strategy for the nation's economic development. It encouraged industrial growth in order to reduce the imports of manufacturers, save foreign exchange, provide jobs and reduce dependency. Thus began the development of Jurong Industrial Estate which was to house factories and industries. The Jurong Town Corporation was created in 1968 to manage Jurong's development. Singapore's path towards industrialisation had begun. Factories started producing garments, textiles and toys. However, with Singapore gaining Independence from Malaysia in 1965, it lost its source of raw materials as well as a domestic market which used to buy its goods. Thus, the focus now shifted on export-oriented industries by attracting foreign investment in Singapore to develop its manufacturing and financial sectors.

1970s - Skill intensive industries

The 1970s saw the expansion of Singapore's industrial base. Unemployment was no longer a problem and infrastructure had developed. Factories were built ahead of demand and a skilled labour-force was readily available. Singapore started manufacturing more sophisticated products such as computer parts, silicon wafers and semi-conductor circuits. The electronics industry began to see unprecedented growth. Many MNC's shifted their R&D base to Singapore. Nationalised companies such as Singapore Airlines, Development Bank of Singapore and Sembawang Shipyard were set up. Manufacturing sector's share of GDP grew from 14% in 1965 to 24% by 1978 and it had become the largest sector in the economy surpassing trade. 

1980s - Knowledge intensive industries

During the 1980s Singapore faced stiff competition from other neighbouring countries for foreign investment and hence it embarked upon the 'Second Industrial Revolution'. The focus was on knowledge intensive activities such as R&D, engineering design and computer software services. Science, technology, skills and knowledge was cited as the mantra for success. Thus, the Science Park - Singapore's R&D and technology hub - was set up to provide the infrastructure for R&D to flourish. High technology industries meant specialised manpower. Hence, there was manpower development through education and training. The government encouraged automation, mechanisation and computerisation. The focus was to now market Singapore as a 'Total Business Centre' and attract service sector corporations. Soon firms from the financial, educational, lifestyle, medical, IT and software sectors began establishing their base in Singapore. Soon, manufacturing and services became the pillars of economic growth.

1990s and beyond - Globalisation of industries

During the 1990s the spotlight was on globalisation. Singapore had signed 13 Free Trade Agreements in order to expand its external ties. It tried to maintain competitiveness and flexibility by keeping taxes as low as possible and maintaining wage flexibility. It also promoted entrepreneurship and domestic companies. It began to build a competent labour force by attracting top foreign talent. The focus was on becoming Asia's business and financial hub, bio-medical research centre, health-care core and expand its other sectors like education, tourism and construction.

Key Industry Sectors

At present, following are the industry sectors that play an important role in the Singapore economy.

Established and growing industries

Banking and Finance

Singapore has become Southeast Asia's banking and finance hub. It houses international banks, wealth management firms and other financial institutions. Banking, foreign exchange and insurance have been the key growth areas in this sector. A sound economy, robust infrastructure, pro-business environment, talented international workforce and strong regulatory framework has made Singapore one of the major International Finance Centres of the world. Singapore's unique geographical location and excellent telecommunications network makes 24 hour trading possible and convenient. An important aspect of Singapore's financial centre is its deep and liquid capital markets. According to the Monetary Authority of Singapore, Singapore is one of the top 5 most active foreign exchange trading centres in the world; the second largest over-the-counter derivatives trading centre in Southeast Asia and is also the leading commodities derivatives trading hub. Singapore houses several internationally renowned names in the industry such as BNP Paribas, Barclays Capital, Prudential, Credit Suisse etc.

The Institute of Banking and Finance was set up to upgrade the expertise in the banking and finance industry in Singapore.

Biomedical Sciences

Biomedical sciences has been recognised as one of the pillars of Singapore's economy in recent times. Singapore has become a focal point of bio-med activities such as basic research, clinical development, product and process development, manufacturing and health-care services. Internationally renowned companies like GlaxoSmithKline, Aventis, Pfizer, Baxter, and Wyeth, to name a few have set up manufacturing units in Singapore. Singapore believes in a three pronged approach towards achieving excellence in this sector - Industrial Capital, Intellectual Capital and Human Capital.

The Tuas Biomedical park plays a key role in attracting investment from global biomedical companies. In addition, the S$500 million Biopolis, spread over two million square feet is another stepping stone. The Biopolis is an integrated R&D complex that houses research institutes and R&D laboratories of major biomedical and pharmaceutical companies. Researchers can access state-of-the-art facilities, scientific infrastructure and specialised services. The advantage is that this helps companies cut R&D costs and speeds up development time lines. According to Singapore's Economic Development Board, there are now more than 2000 international researchers in Singapore working on drug discovery, medical technology and translational research.

Singapore's global connectivity, world class infrastructure, highly skilled workforce and pro business environment are some of the reasons as to why it is becoming a popular destination for biomedical and pharmaceutical companies. Additional factors include a rigorous Intellectual Property regulatory framework, drug approval capabilities, promotion of good clinical practices and bio safety. For more information on Singapore's bio-med industry click here.

Tourism

Singapore aims at evolving into a Tourism Capital. Tourism is one of Singapore's largest service sector fuelling the nation's economic growth. By marketing the Uniquely Singapore brand, the Singapore Tourism Board aims to triple tourism receipts to S$30 billion and double visitor arrivals to 17 million by 2015. It is aggressively promoting medical tourism, business tourism, retail tourism and has also included education in its foray. There are numerous initiatives being undertaken on a continual basis to make Singapore a "must-visit" destination. Singapore has already launched initiatives such as the Singapore Flyer (an observation wheel similar to the London Eye), building two iconic Integrated Resorts to feature two casinos as well, remaking of Orchard Road as one of the best shopping streets in the world, hosting the Youth Olympics in 2010 etc. It recently hosted the Formula One Grand Prix, first ever Night Race. Such initiatives also complement the Food & Beverage industry and Hotel industry which has seen tremendous growth. The Business Traveller Awards 2008, has voted Singapore Airlines as the Best Airline in the world and Asia, Singapore's Shangri-La as the Best Business Hotel Worldwide and Singapore's Changi Airport as the Best Airport in the World.

Logistics

In order to remain a regional logistics hub, Singapore has been upgrading its infrastructure and connectivity to the world. Singapore's logistics industry is encouraged to adopt best practices, develop supply chain security guidelines and create an industry wide IT platform.

Located at the cross roads of major sea lanes, Singapore's port is one of the busiest in the world, offering strong connectivity to the Asia-Pacific region. Singapore's port is a focal point, linking the nation to more than 700 ports in 130 countries. It is estimated that there are around 1000 ships in the port at any given point in time. There are six terminals which can accommodate container ships, bulk carriers, cargo freighters, coasters and lighters.

Singapore's Changi Airport is also one of the busiest airports for air cargo. An extensive air network, liberal aviation policies and efficient cargo handling services have contributed to its growth. The Changi Airfreight Center is a 24 hour one stop Free Trade Zone. This means that companies can repack, move, consolidate or store cargo without the need for documentation or customs duties, unless the goods are being moved out of the Center. There are eight air freight terminals and ten aircraft parking bays. The Airport Logistics Park of Singapore provides value-added logistics and regional distribution activities.

The Singapore Logistics Association represents the logistics industry in Singapore.

Chemicals

The chemical industry in Singapore is huge, varied and is growing at a fast rate. According to Singapore's Economic Development Board, Singapore is among the top 10 petrochemical hubs in the world. It is a global leader in oil refining and is among the world's top three oil trading locations. Singapore provides a conducive environment to this sector with its available infrastructure and integrated approach. It binds together innovation, research, manufacturing, distribution and even marketing. Some of the industry's major players like Exxon Mobil, Shell and Sumitomo Chemical are based in Singapore. Jurong Island, an amalgamation of seven islands south of Singapore, houses 94 companies from this sector who have made an investment of S$31 billion in fixed assets on site.

According to the Minister of Trade and Industry, Mr. Lim Hng Kiang, "Singapore is investing heavily in our technology infrastructure, and working with companies to establish new innovation centres to develop new products that serve the Asian and global markets." According to Prime Minister Lee Hsien Loong "Economies of scale translate into cost and operational efficiencies. This is what makes Singapore competitive, despite not producing any oil or gas, the raw materials for petrochemicals. We want to bring in more companies and talent, not to do just laboratory research, but to translate that research into commercial applications. This will ensure that chemicals manufacturing in Singapore continually evolves to meet ever changing market requirements."

The Institute of Chemical and Engineering Sciences (ICES) provides highly trained manpower and infrastructure required for future growth. The Singapore Chemical Industry Council (SCIC) is the official body representing the chemical industry of Singapore in the private sector.

Construction

Singapore's construction industry has been witnessing tremendous growth in recent years and promises a bright future. The two proposed Integrated Resorts, new shopping malls, hotels, residential projects, expansion of MRT lines and building business parks and a sports hub, will ensure that the construction industry grows strongly in the years to come. Despite the current economic recession Singapore's future does not seem bleak as all eyes are set on the construction sector which shows no signs of slowing down. According to a Channel News Asia report, this industry is expected to lead Singapore's economic growth this year, as per a poll by 19 economists. The construction sector grew 20.3% in 2007. Safety, quality, sustainability and user-friendliness are the four key areas which distinguish Singapore's built environment from those of other cities.

The Building and Construction Authority represents this sector in Singapore.

Emerging industries

Casinos

The casino industry which had been strictly banned in Singapore for the past 40 years is today being talked about as two world class casinos are expected to open by 2009 and 2010 respectively. The driving force behind this move by the government can be attributed to the steady shift in manufacturing jobs from Singapore to China. The casinos are believed to boost the tourism and hospitality sector, along with other service industries. The government believes that this will be a stepping stone towards shedding Singapore's image from a "nanny state" to a more tolerant and fun-loving place.

Given Singapore's strategic location and the fact that gambling is banned in China (except for Macau), this industry is expected to boost tourism and hopes to triple the amount spent by tourists here, to S$ 30 billion by the year 2015. With the emergence of this lucrative industry, the job market is set to expand as well. It is believed that the casino industry will generate more than 30,000 direct and indirect jobs. 20 new specialised courses on tourism and hospitality management are being rolled out by educational institutions. A highly specialised course on Casino operation and Management has already begun. According to Singapore's Minister for Community Development, Youth and Sports, Mr. Vivian Balakrishnan, "What we're really after is to create a compelling, critical mass of attractions and services, which will then attract sufficient flow of human traffic to Singapore and make all this viable."

Health-care

Singapore is poised to become the medical hub of Asia, thanks to its world-class, affordable and safe health-care services. Singapore's health-care sector which boasts of a transparent system, well trained doctors, internationally accredited hospitals and speciality centres, global reputation as a medical convention and training centre, and a clinical research hub has led to an influx of international medical travellers. Patients travel to Singapore for essential, affordable, quality and premium health-care. Some of the services include basic screening, cosmetic surgery, high end surgical procedures and speciality care in areas like Cardiology, Neurology, Oncology etc. According to the World Health Organization's Report 2000, Singapore's health care system is the sixth best in the world and the best in Asia. Thus, the health-care sector is growing by leaps and bounds and presents myriad opportunities to players in this field. John Hopkins International has set up a medical facility in Singapore. Another leading player with offices in Singapore, Hong Kong, India and China is Pacific Healthcare Holdings.

For more information on Singapore's health-care system, refer to Healthcare in Singapore.

Education

Singapore positions itself as a global education hub. This can be attributed to its strategic geographic location, reputation for academic excellence, a safe environment and opportunities for institution-industry collaboration. It also has a unique strength of bringing the best of East and West i.e. an Asian school system with western styled practices. Since English is the medium of instruction, there are greater chances of attracting students to the country. It is also a financially viable option, vis-a-vis other popular education destinations like USA, UK and Australia.

Today, several internationally renowned institutions like INSEAD, James Cook University, University of Chicago Graduate School of Business, Stanford University to name a few, have set up campuses in Singapore. Singapore's education industry is one of its core competencies, where it competes in the global market place. With a large MNC base, increasing number of companies are using Singapore as a platform for corporate training. According to Singapore Economic Development Board, there are more than 16 leading foreign universities from Europe, USA and Asia with substantial activities in Singapore.

To find out more about Singapore's education system, refer to Education in Singapore.

Info-communications and Media

Singapore's info-comm sector is a key component of its economy. Singapore aims to become a 'global media city.' Local media companies are beginning to forge partnerships with foreign businesses and are making their presence felt in the international media scene. Home grown content is receiving international recognition.

• 'Rouge', a 14 part TV action-comedy drama produced in partnership with MTV Asia.

• 'Samurai-Behind the Blade', a documentary co-produced by Singapore and Canada, was telecast on National Geographic Channel.

• The world premiere of local feature film, 'My Magic' was held at the Cannes Film Festival in May 2008.

Singapore's media industry is braced for growth, with the Asia Pacific media industry expected to grow by 9.6% over the next three years. According to a Channel News Asia report, some of the games played online are fed from servers in Singapore.

Mr. David Ng, Deputy CEO of IAH Games said, "Using the very strong infrastructure that we have in Singapore, we're able to reach out to all the companies in the region, so we target 20 million gamers within the next five years." Singapore houses approximately 500 local and foreign media companies with animation, post-production and distribution being their focus areas. BBC, CNBC Asia, Discovery Channel Asia, MTV Asia, Walt Disney, Star Sports, ESPN etc. have opened offices in Singapore. Special Effects house Lucasfilm; gaming firms like Electronic Arts, Koei Entertainment and Ubisoft have also established Singapore operations.

With the convergence of media, telecommunications and computing, the Digital Media and Entertainment sector (DME) has undergone rapid changes in recent times. High-speed connectivity, excellent infrastructure, strong Intellectual Property rights regulation are the strengths Singapore leverages upon to grow in this sector.

• Singapore ranked fifth globally, as the Most Networked Economy, in the World Economic Forum's Global IT Report 2007-2008.

• Singapore ranked first among 22 countries, ahead of Canada and USA, in Accenture's e-government study: Leadership in Customer Service - Delivering on the Promise, 2007.

• 79% of households in Singapore had access to at least one computer in 2007.

• Computer usage by enterprises grew by 5% to reach 73% in 2007.

To provide more information about Singapore's info-comm industry, the Infocomm Singapore Portal was set up as a government initiative.

Established but declining industries

Electronics

Electronics is a key component of Singapore's manufacturing sector. It is reputed for its quality and reliability. Key industry players such as Seagate Technology, STMicroelectronics, Murata Manufacturing Co and Venture Corporation to name a few, have established themselves in Singapore. The electronics industry comprises of semi-conductors, computer peripherals, data storage, info-comm and consumer electronics as well as component manufacturers. This industry has received international acclaim for manufacturing, assembly, testing, design, R&D, product development and distribution.

According to Singapore's Economic Development Board, Singapore is home to over 14 semi-conductor wafer fabrication plants, 20 assembly and test operations, and 40 Integrated Circuit Design centres. It houses the world's top 3 wafer foundry companies, assembly and test foundries and four of the world's top 10 fabless design companies. The government is continually investing in developing a trained work-force who can make significant contributions to this industry. According to Mr. S Iswaran, Senior Minister for Trade and Industry, " short product cycles, technology obsolescence and intense competition add to the fast paced nature and competitive pressures of the industry." Singapore continues to grow in the R&D sector and provides a supportive business environment for the electronics industry.

The Association of Electronics Industries (AIES) represents the electronics business in Singapore.

Industrial Parks

Singapore is home to a number of world-class industrial and business parks. These parks provide integrated infrastructure in one region that help reduce the per-business expense. Business Parks also help companies operate in a highly conducive, environment friendly setting. It offers lots of open space and easy access to transportation. This is especially useful for creative work or innovation.

The parks are self-sufficient with convenient stores, food courts, child development centres and recreational facilities. The Jurong Town Corporation (JTC) has developed two Business Parks - International Business Park in the West and Changi Business Park in the East. These parks are suitable for high technology businesses, data and software enterprises, R&D divisions of MNCs and knowledge intensive enterprises. Honeywell, IBM, Acer Computer and Mobile One are few of the many companies that are located in these parks. A third park, Paya Lebar iPark is located in the central region of Singapore and caters to lifestyle and knowledge driven enterprises.

There are also specialised Industrial Parks like:

Jurong Island - Petrochemicals

An amalgamation of seven small isles, Jurong Island is Singapore's very own chemical hub, housing 94 companies in this sector. Chevron Philips, Exxon Mobil, Eastman Chemical and Shell, among many others are some of the companies here. The island offers a broad range of integrated utilities like energy and water resources, tankage and terminalling facilities, warehousing, maintenance and repair support. The Banyan Logis Park and Meranti Logis Park were set up on the island, to provide logistics and supply chain support to the companies.

Wafer Fabrication and Advanced Display Park

The semiconductor industry in Singapore can be traced to the 1960s, when there was a high concentration on assembly and testing activities. Today, it has come a long way and is one of the leading cities for wafer fab production capacity. Given the exponential growth this sector has witnessed, there are four wafer fabrication parks and one display park in Singapore's eastern and northern regions. Siltronic Samsung Wafer, United Microelectronics Corporation (Singapore branch), IM Flash Singapore are some of the names found in these parks.

Biomedical

Tuas Biomedical Park provides the necessary infrastructure and environment for companies from the bio-med sector to flourish. Novartis, Pfizer and Wyeth are some of the companies located here. The second park is One-North, focusing on bio medical sciences, info-comm technology and media industries.

The Airport Logistics Park at Changi which provides air freight logistics support; Tuas Food Park which provides a conducive environment for companies from the F&B industry to establish themselves; and six technopreneur parks to act as niche incubators for start up companies have also been established.

Industry Sector Overview