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2016 investments target lowered to S$8-10b

The amount of investments in Singapore in 2015 may have exceeded the government's forecasts, but the uncertain global economic outlook will likely result in the numbers falling this year.


THE amount of investments in Singapore in 2015 may have exceeded the government's forecasts, but the uncertain global economic outlook will likely result in the numbers falling this year.

The Economic Development Board (EDB), the country's main economic planning agency, revealed on Tuesday that fixed-asset investments dropped to S$11.5 billion last year, down slightly from S$11.8 billion in 2014.

This latest figure, however, exceeded the higher end of the statutory board's original target of S$9-11 billion for the year. For 2016, it projects that these investments will dip to the S$8-10 billion range.

EDB's top management said at its annual year-in-review press conference that investment commitments this year are expected to be "moderate" due to continued weakness of global aggregate demand.

"It's fair to say that the global economy has had a rough start to 2016, and understandably many businesses are quite cautious about the operating environment," said EDB chairman Beh Swan Gin.

He added that the latest numbers for 2015 were proof of the resilience of Singapore's attractiveness as a global business hub for firms seeking both long-term competitiveness and growth opportunities in Asia.

Total business expenditure (TBE) per annum - a company's increase in operating expenditure, excluding depreciation - came up to S$5.6 billion last year, just making the EDB's S$5.5- 6.5 billion forecast.

Fixed-asset investments from the United States more than tripled to S$7 billion in 2015 compared to a year ago. This made up 60.6 per cent of fixed-asset investments in Singapore, a nearly four-fold increase from 15.3 per cent in 2014.

Yeoh Keat Chuan, the board's managing director, noted that while the US is typically Singapore's largest source of foreign investment, the significant jump recorded in 2015 was due to a large number of investments that were completed last year.

Europe, meanwhile, was the second-highest source of investments as it contributed 13.2 per cent, while Japan chipped in with 3.7 per cent.

The chemicals industry accounted for the bulk of the investments in 2015 with S$3.6 billion, or 31.3 per cent of the total. Electronics was a close second with S$3.3 billion, or 28.6 per cent.

On the whole, last year's investments will generate some 16,800 skilled jobs in Singapore when the projects are fully implemented, mostly in the professional services, transport, and engineering sectors.

For 2016, EDB reckons the investment commitments can create 20,000-22,000 skilled jobs and bring in S$12-14 billion in value-add to gross domestic product. The investments in 2015 contributed S$12.3 billion in value-add to GDP.

In his remarks to the media, Dr Beh said that while the outlook was far from a rosy one, it was worth noting that the Asian region is one of continuing growth.

While there are worries that China's economy - the world's second-largest at US$11 trillion - grew just 7 per cent last year, Dr Beh noted that was equivalent to an additional US$700 billion in GDP. That, he added, is more than double the size of Singapore's economy.

As for South-east Asia, he said that Asean was collectively now a US$2.5 trillion economy and would register 5 per cent GDP growth annually over the next few years.

Dr Beh said that Singapore was "fortunate" to be in a region that is still registering growth, and local companies should still be able to tap new business opportunities in the region.

While the Republic is not a low- cost economy, it should not be regarded as being less competitive than others. He shared how the country's stock of foreign direct investment (FDI) stood at S$900 billion last year, up from about S$240 billion in 2004.

"This shows that Singapore has increasingly become the preferred location for many businesses to orchestrate their activities in the region, and this region has become an important growth engine for many industries," he said.

"It may be a challenging economic situation compared to previous years, but the underlying tailwinds are in favour of Asia. Singapore remains an attractive and competitive business location."