Singapore scores record high of S$22.5b in fixed asset investment commitments in 2022

SINGAPORE secured a record S$22.5 billion in fixed asset investment (FAI) commitments in 2022, up from the previous year’s S$11.8 billion. However, the Economic Development Board (EDB) does not expect the same level of investment inflows this year in view of global macroeconomic uncertainties, increased competition for investments, and the sharp semiconductor slowdown.

At S$20.6 billion, the expected value-added per annum for the projects was similarly up from 2021, when it had been S$16.8 billion.

The record high figure was driven by an “exceptional inflow” of large manufacturing projects from the electronics sector, which accounted for 66.7 per cent of FAI commitments in 2022, a jump from 42.3 per cent in the previous year.

One reason for the surge in investments is the strong demand for chips due to the recent digitalisation wave, said EDB chairman Beh Swan Gin.

Another driver is companies choosing to build up capacity to ensure that they are not exposed to concentration risks, in response to when factories had to shut down during the Covid-19 lockdowns.

But these are expected to come down as the semiconductor “supercycle” is coming towards the tail end, said Beh. Singapore will still continue to see investments from the semiconductor sector, but “not at this kind of supercycle level”.

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When asked if the downcycle will have any impact on current investment commitments, Beh replied that EDB is confident that the investments will hold as it only commits the numbers when the projects are being implemented. “(But) some companies may decide that they will take longer to realise these investments... (in) response to the pressures on their financials, for instance.”

Infocommunications and media narrowed its share to 9.9 per cent, but it still displaced biomedical manufacturing as the industry with the second-largest share of FAI commitments. The latter plunged to 3.8 per cent, from 15 per cent in 2021.

For expected value-added, headquarters and professional services accounted for the largest share at 32.1 per cent, followed by infocommunications and media at 26.1 per cent, and electronics at 16.8 per cent.

Total business expenditure per annum from the projects secured in 2022 is expected to be S$6.2 billion, up from S$5.2 billion in 2021 and within the medium to long-term target range of S$5 billion to S$7 billion.

A total of 17,113 new jobs are expected to be created by the investments secured in 2022, down from 17,376 in 2021, but still within the target range of between 16,000 and 18,000. Of the jobs created, 61 per cent will be in hub and business services, 27 per cent in advanced manufacturing, and 12 per cent in innovation.

And around 70 per cent of the jobs will be for professional, managerial, executive and technician workers, said EDB managing director Jacqueline Poh at the briefing.

The United States continued to secure the top spot for the largest source of FAI commitments, though it narrowed its share to 50.6 per cent in 2022, down from 67.1 per cent in 2021.

Europe remained the second-largest source, accounting for 21.2 per cent. There was also “rising interest” from businesses in China and other North-east Asian economies seeking to participate in the growing markets of South and South-east Asia, noted EDB.

EDB continues to work with businesses to build and invest in Singapore-based new ventures. The S$10 million pilot Corporate Venture Launchpad programme supported 13 companies to nurture venture concepts.

Six new ventures are being launched with their parent companies committing almost S$50 million of follow-on seed investments to build them. EDB aims to work with companies on 20 to 30 projects over the next two years.

The investment commitments secured in 2022 “reflect Singapore’s standing as a trusted hub for business and as a critical global supply chain node”, said Beh.

Competition for investments is expected to become more intense as more economies roll out policies to attract investments amid the many uncertainties in the global economy. Nevertheless, Singapore will “harness our comparative advantages to remain attractive to global companies and founders, so as to continue creating good business and job opportunities that meet the aspiration of Singaporeans”, said Dr Beh.

Despite the challenging business outlook for 2023, EDB still sees opportunities in high-growth and high-value-added sectors, such as advanced manufacturing (electronics, healthcare and aerospace), the green economy and the digital economy.

In particular, there are opportunities from the growing digital economy in South-east Asia, in areas such as fintech, cloud, cybersecurity and gaming. “We expect resilient demand for tech skills across all industries in Singapore,” said EDB.