Jul 25, 2013

    Will Singapore's space industry foray take off?

    SINGAPORE'S foray into the US$300-billion-a-year (S$380-billion-a-year) space industry may seem like a lucrative venture, but the path is lined with risks, especially in satellite manufacturing where entry barriers are high.

    The push into space technology, announced earlier this year, will initially focus on satellites to meet growing demand for top-speed Internet connections as well as high-resolution images commonly used in surveillance, forestry and energy exploration.

    The venture may also help rekindle Singapore's electronics sector by creating high-paying jobs in the satellite-components segment to replace jobs lost during the decline of disc-media and computer-parts manufacturing.

    Industry observers said success is hardly assured, as Singapore will be fighting tooth and nail for satellite orders with big names such as Thales SA and Lockheed Martin Corporation.

    Asian contenders include companies in China and India that are already involved in domestic space programmes, as well as emerging firms like South Korea's Satrec Initiative which builds satellites at competitive prices.

    "In the satellite-manufacturing industry where existing firms have a big head start, new entrants might face high hurdles to succeeding," said Mr Thiam Hee Ng, a senior economist at the Manila-based Asian Development Bank.

    As it did with the biomedical industry, Singapore's bid to carve out a niche in the space industry involves supporting local champions and enticing industry leaders to set up or expand operations in the country through a mix of favourable laws, tax incentives and skilled workers.

    Mr Gian Yi Hsen, director of Singapore's Office for Space Technology and Industry, said: "In the immediate term, our efforts are focused on developing our satellite industry, particularly in areas of small-satellite design and manufacturing and satellite-based services."

    In its satellites venture, Singapore will take advantage of its capabilities in areas like precision engineering, electronics and infocommunications, he said.

    Mr Adrian Ballintine, founder and chief executive of Australian satellite firm NewSat, which has an office in Singapore, said growth areas include providing high-speed Internet services to airline passengers.

    Satellite-based surveillance systems are also in high demand to monitor everything from forest fires to illegal migrants trying to enter Australia by boat, he said.

    Asked about its relatively late entry, ST Electronics said it was confident of carving a niche in small earth-observation satellites that could be built in two to three years, in contrast to larger models that would require up to five years.

    A spokesman for the firm said: "Our business model is to own and operate the satellites, sell the imagery data and provide value-added services."