Will Singapore reach S$9bn manufacturing investment target?

Will 2007 be another record year for foreign manufacturing investments into Singapore? Last year, manufacturing investments hit a four-year record high of $8.8 billion with contributions from companies such as Intel, Micron Technology and Royal Shell Dutch. The Singapore government aims to attract as much as S$9 billion (US$5.8 billion) of manufacturing investment to spur growth and increase job creation in 2007.

The island-nation's Economic Development Board also aims to attract up to S$2.9 billion in business spending from service industries including information, communications and media, education and health care.

But what about the competition? “The competition is intense in all areas,” said Ko Kheng Hwa, the board's managing director. “We see developing countries, developed countries, newly-industrialized economies competing to get investments.” These lower-cost countries include China and neighbours Malaysia and Thailand.

But Singapore still has the edge over its competition. Economists are convinced that Singapore's plan to reduce corporate taxes will enhance the city-state's ability to attract new investments. The Southeast Asian island-nation will cut its company tax rate by at least 1 percentage point from 20 percent, the Sunday Times on Jan. 21 reported Minister Mentor Lee Kuan Yew as saying. The government, which is expected to announce the corporate tax cut in its Feb. 15 budget, has shaved six percentage points off the rate since 2000 to the current 20 percent.

Increased investment this year should help generate an additional 20,000 to 25,000 new jobs and add S$11.5 billion to gross domestic product annually when completed, the EDB’s report said. About 26,800 jobs were generated from the 450 projects that were committed last year, and the investments will add S$13.4 billion to GDP yearly.

Singapore's $134 billion economy expanded 7.7 percent in 2006, accelerating from the year before. Growth in Southeast Asia's fourth-largest economy is forecast to be between 4 percent and 6 percent this year.

But there are dark clouds on the horizon. Slowing growth in the US and Japan are damping sales of chips and electronic gadgets. This has put additional pressure on the local economy to reduce dependence on the electronics manufacturing sector, which accounts for more than one-third of Singapore's industrial output.

Will Singapore succeed in attracting $9bn worth of factory investments? Who can give Singapore a run for its (investors’) money?

Let us know what you think.

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Are the new travel projects on the right track?




Singaporeans who prefer to travel to Kuala Lumpur by land may soon have the option of a quicker and more comfortable ride. At the moment, travellers who are avoiding the more expensive flight tickets are turning to the seven hours journey by traditional train line or a slightly faster but more taxing bus ride. But all this might change when Singapore said that it would be open to a proposal for a high-speed rail link between the city-state and the Malaysian capital of Kuala Lumpur.

"We're open to all proposals that may benefit both countries - Singapore and Malaysia," Singapore's Transport Minister Raymond Lim said. "I look forward to receiving the proposal so that we can study it and see how best we can proceed."

The proposed $2.3 billion high-speed train line by YTL, owner of the railway from Malaysia's Kuala Lumpur International Airport to the city, will offer commuters quicker access between Kuala Lumpur and Singapore. The island-state is located 300 kilometers south of the Malaysian peninsular. More than 7.1 million Singaporeans visited Malaysia in the first nine months of last year, while 443,736 Malaysians traveled to the city-state.

Although the Malaysian government have yet to fully approve the proposal by YTL, it does support it after a study showed the plan is feasible.

The two governments are also in talks to relax the restrictions on the air route between the two nations. Singapore’s willingness to discuss the issue stems from its goal to boost traffic and help preserve Changi airport's status as a regional hub.

Other than the inevitable opinions from Singapore Airlines and Malaysian Airlines who are currently dominating that flying route, there are no clear obstacles to prevent the project from taking off.

If the two plans materialize, travellers will have more options and the tourism industry in both countries may just see a significant growth from these two projects. What do you think?

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Will Singtel win more market share with its mio plans?

Singtel has finally started offering discounted plans in a bid to retain and win more market share for its mobile phone services. Mio, an acronym that means more-in-one, encompasses fixed line Voice Over Internet Protocol (VOIP), broadband as well as mobile phone services.

The service is built around a new all-in-one broadband modem which provides wireless access, VOIP over a four-port wired router. Mio also brings a new service from Singtel; subscribers can now make calls over VOIP using their Wi-Fi enabled mobile phones either at home or at any location with internet access.

Starhub, Singapore's second-largest telephone company is already offering discounts for multiple services. Starhub users enjoy 15 percent off mobile-phone plans, 10 percent off cable television as well as 5 percent off high-speed internet, but only if users subscribe to all three services. On the other hand, Singtel's mio plans offer as much as 30 percent savings.

Responding to questions on Singtel's delay on providing multiple service packages, Singtel CEO Allen Lew said "We didn't just want to come up with a 'me too' package of giving discounts because customers take more services from us. "

"We wanted to make sure we had an integrated package that was forward-looking," he added. "We were waiting for the right technology to come along and the right momentum in the market."

So did Singtel wait too long? Would mio be enough to help Singtel attract new customers and hold on to existing ones? How would Starhub respond?

Let us know what you think.

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Singapore experiences fastest economic growth in Q4 2006 despite lower electronics exports: what’s the outlook for 2007?

Singapore's economic growth unexpectedly accelerated to the fastest pace in a year as surging tourist arrivals and increased consumer spending helped offset lower electronics exports. Southeast Asia's fourth-largest economy grew an annualized 7.6 percent in the final three months of 2006, after expanding a revised 5.6 percent in the third quarter, the trade ministry said in a report. Economists expected a 4.1 percent gain.

Prime Minister Lee Hsien Loong wants to reduce Singapore's dependence on manufacturing and enhance the city's role as a regional financial services and tourism hub, boosting construction projects and lifting property prices for developers such as CapitaLand. Growth may slow this year as weaker global demand for electronics and a currency at a nine-year high takes the luster off the island's overseas shipments.
From a year earlier, Singapore's economy expanded 5.9 percent in the fourth quarter after growing a revised 7 percent in the previous three months, the government said. The economy grew 7.7 percent last year, PM Lee said on December 31.

PM Lee said in his New Year's message that the pace of expansion may ease in 2007 due to a U.S. economic slowdown and weaker global demand for electronics, which account for about half the $118 billion economy's exports. The economy may expand between 4 percent and 6 percent this year, PM Lee said.

Do you agree with PM Lee? Or will 2007 be a year of further surprises for Singapore’s economy? Will the SingDollar keep rising and weaken export receipts further? Will tourism numbers continue to bolster the economy?

Let us know what you think.

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