Singapore unveils investment strategy
Singapore unveils investment strategy
SINGAPORE (Reuter): Singapore's Economic Development Board (EDB) unveiled yesterday its 1996 strategy to keep the booming island ahead of the competition and to rocket it into the ranks of the developed economies.
Among its main initiatives are incentives to encourage manufacturing firms to set up regional headquarters in Singapore, boost innovation and improve advanced training.
The EDB, one of several key government agencies charged with masterminding Singapore's economy, also said it would offer soft loans to encourage Singapore firms to invest in the region.
EDB chief Philip Yeo, speaking to reporters about the annual review, said Singapore's economy had a good year in 1995 but needed to keep ahead of its competitors.
"The good news last year was that investments were strong but the bad news was that there were some major projects that we lost and, surprisingly, we lost not to our neighbors, but to Europe," Yeo said.
"Our competition will come from countries where we are positioning for the same high value-added technology investments," he added.
Singapore currently provides preferential tax and other incentives for multi-national corporations (MNCs) which set up regional headquarters on the island.
But Yeo said many of the companies making goods in Singapore did not qualify for current incentives directed at those with headquarters here.
"We have today 3,600 manufacturing companies. A lot of them are MNC's," Yeo said. "We think we should give them incentives to expand in the region."
He said the aim was to increase the number of companies with regional headquarters in Singapore. He said there were now 2,000 such companies of which 80 he considered "significant and substantial".
He said the incentives for firms with a significant presence would be detailed later in the year, but the aim, he said, was to boost their number to 200 in 2000.
That, he added, would boost total business spending from S$2.0 billion now to S$3.0 billion in 2000.
Yeo said the board would set up a S$500 million scheme which would pay half the cost of developing innovative projects in products, processes, applications and services.
Singapore also needed to focus on people, Yeo said, and the board would increase its new technology training fund from S$50 million to S$250 million.
The fund would cover grants for specialist training, the establishment of an international business institute and a S$15 million scholarship program, he said.
The board would also increase its joint investments with multinational and local companies in risk-sharing ventures in Singapore and regionally.
Senior EDB officials said about one-third of EDB's co- investment fund of S$1.3 billion had been invested. They said the fund was expected to grow as investment opportunities increased, but did not give further details.
EDB has also set a 7.0 percent target for annual growth in the manufacturing sector, the pillar of the Singapore economy. Manufacturing grew by 12 percent in the third quarter of 1995.
Yeo said that fixed asset commitments in manufacturing reached a record S$6.8 billion, a 17 percent increase over the S$5.8 billion in 1994.
The chemicals and electronics sectors accounted for 42 percent and 39 percent respectively of investment commitments.
The services sector recorded S$1.1 billion in total business spending in 1995, almost double the S$580 million in 1994.