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Mr Liang Eng Hwa: To ask the Minister for Trade and Industry whether the recent weakness in our export and industrial production numbers are indications of a declining trend in our economy's competitiveness and whether there are early signs of hollowing out within our manufacturing and industrial sectors.

 

 

Singapore’s sluggish performance in exports and industrial production was largely due to the challenging external economic conditions. In particular, exports to developed economies such as the US and EU were weighed down by the slow growth of these economies. Other East Asian economies that export to these markets, such as South Korea and Chinese Taipei, were similarly affected.

While the small and open nature of our economy has made us vulnerable to swings in global economic conditions, international rankings indicate that our economy remains competitive. For example, Singapore maintained its position as the second-most competitive nation globally, after Switzerland, in the 2012 Global Competitiveness Index by the World Economic Forum. In addition, according to a 2012 report by the Economist Intelligence Unit, Singapore is the third-most competitive city in the world, after New York and London. 

Our manufacturing sector also remains attractive to investors. In 2012, fixed asset investments totaled S$16 billion, a 17% increase from the preceding year. Furthermore, rather than a hollowing out of businesses, net business and company formation in the manufacturing sector rose by 14% year-on-year in the first three quarters of 2012.[1] Beyond investor interest, industrial production has been supported by our diversified manufacturing base, which limits the impact of global industrial shocks. For instance, the electronics cluster’s weak performance in 2012 was offset by strong growth in the biomedical manufacturing and transport engineering clusters.

Going forward, our position as a Global-Asia Hub – where international companies can access opportunities in Asia and Asian companies can expand beyond their domestic markets – as well as our strong fundamentals, such as our highly skilled workforce and excellent connectivity, will continue to put us in good stead to attract high-value manufacturing investments.

At the same time, we will continue to encourage exports directly by facilitating market access for local companies. Besides pursuing good-quality Free-Trade Agreements (FTAs) with key economic partners such as the EU and members of the Trans-Pacific Partnership, we have also increased our economic linkages with emerging economies in South Asia, the Middle East, Sub-Saharan Africa and Latin America.

 

These strategies will help to keep our manufacturing sector and the overall economy competitive and resilient.

 

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