EDB warns of slowdown in foreign investments
THE big foreign investments that keep Singapore's economy humming are set to fall again this year.
The trend took hold ever since Singapore tightened its manpower policies and lost its attraction to companies that depend on cheap foreign labour. This year, the uncertain global outlook could dampen investments further.
In its latest forecast, the Economic Development Board (EDB) said that it expects to attract $9 billion to $11 billion worth of fixed asset investments and create 13,000 to 14,000 skilled jobs this year.
The targets are down from $11.8 billion worth of inbound investments last year, which is expected to eventually yield some 16,100 skilled jobs.
The slowdown started somewhat before that. Singapore attracted $12.1 billion worth of investments in 2013 while, in 2012, when labour policies had just started to tighten, it raked in investments to the tune of $16 billion.
This moderating trend reflects a "sharper focus on attracting projects that are in line with Singapore's stage of economic development, manpower policies and planned international commitments on carbon emissions", EDB said.
Apart from chasing new, high-quality investments, EDB will work closely with companies that already have operations here - including those that are looking to restructure or relocate. This would include handling the associated layoffs in a "planned manner" said EDB chairman Beh Swan Gin.
"In so doing we can work with unions so that workers who may be affected can be re-trained," said Dr Beh.
Even if companies shrink their footprint, the key is for their remaining operations here to be more productive, he said.
Singapore International Chamber of Commerce chief executive Victor Mills said Singapore remains an attractive investment destination and is being sensible in weaning itself off cheap foreign labour. But he asked for more flexibility.
"At the end of the day, there needs to be recognition that the local workforce doesn't want to do certain jobs," said Mr Mills. "The manpower policy needs to have a different approach for different sectors (and ease up on sectors which find it tougher to hire Singaporeans)."
DBS economist Irvin Seah added: "The EDB is being more selective with the types of foreign investment they bring in given the tight labour market here. Singapore is no longer aiming for high growth, but sustainable and quality growth. The type of foreign investments EDB brings in should reflect that."
Meanwhile, last year's investment reflected the changing landscape with the chemicals sector accounting for the largest chunk - about $2.6 billion or 22 per cent of the total.
The share from electronics was 13.6 per cent last year, sharply down from 26.9 per cent in 2013.
EDB said Singapore remains plugged into major growth trends in the electronics industry, such as the Internet of Things and cloud computing.