When Dutch economist Dr. Albert Winsemius first arrived in Singapore in 1960, tasked by the United Nations with salvaging the struggling island economy, he gloomily remarked upon “this poor little market in a dark corner of Asia.” Yet, beyond everyone’s expectations, and to the world’s surprise, Singapore has miraculously risen as one of the strongest economies in Asia and in the globe, being the first proud Asian tiger only after half a century. This miracle has triggered curious minds as many have wondered which drives Singapore to its current economic state. The answer lies in the manufacturing sector in Singapore!
Despite the limitations of labor size, land area, and lack of natural resources, the manufacturing sector in Singapore still has great contributions to the economic development of this island nation ( around 20% GDP a year since the 2010s).
Realizing those barriers, vertical expansion is not a wise choice for Singapore’s context and conditions, the government has made the right decisions to (i) focus on high-value sectors and (ii) utilize international commerce to take benefit of external resources.
In the period 1959-1965, Singapore had policies to focus on developing the domestic manufacturing industry, reflected in Import substitution industrialization strategies. At this initial stage, Singapore made full use of external resources – specifically, MNCs and FDIs.
However, this does not mean that Singapore pursues an industrial policy that is completely at the mercy of market movements, but on the contrary, in areas considered important, determines national competitiveness, the Singapore government established state-owned enterprises (SOEs) to operate and limit the participation of multinational corporations.
The development of Singapore’s industrial sector can be summed up with a number of key drivers as follows:
- Strong state intervention to promote industrialization;
- Strengthening restructuring of the economy and a number of priority areas;
- Attracting resources based on free trade and foreign direct investment;
- Investing in infrastructure and human resources to improve product supply;
- Maintaining a stable business environment and industry relations;
- Using fiscal stimulus tools to reduce the cost burden for businesses.
This development strategy is still true with the “new” Singapore – the Asian Tiger.
In the first quarter of 2022, the country’s economy grew 3.4% year-on-year (the Ministry of Trade and Industry-MTI, Feb 2022). Economists expect the sector to grow by 4.1%, higher than the forecast of 3.3% three months ago (Monetary Authority of Singapore-MAS, March 2022).
The Lion Island has been developing and maintaining its position as a world manufacturing hub by applying advanced manufacturing and Industry 4.0 at significant levels of integration. Electronics, semiconductors, and chemicals are the priorities of the development of Singapore.
Singapore’s manufacturing platform today is being promoted based on 3 main pillars:
- Human resources: MTI will also help develop human capital for the manufacturing sector through an M2030 Careers Initiative announced in 2021, training polytechnic and Institute of Technical Education (ITE) graduates
- Technology: Singapore has invested 3.2 billion Singapore USD (2.1 billion USD) in R&D in Advanced Manufacturing and Engineering, to build up the innovation capacity of companies embarking on Industry 4.0.
- Infrastructure: Singapore’s research institutions opened two model factories that will help companies accelerate the adoption of cutting-edge technologies by implementing a collaborative environment to research and test-bed solutions before deploying them.
In parallel with policies to develop domestic industry and attract FDI, Singapore also encourages investment abroad and leverages more resources from other countries in the region to build a regional value chain serving the region. for domestic production.
As one of the world’s emerging manufacturing spots with noteworthy potential in investment and trading, Vietnam has caught the eye of Lion Island.
“While Singapore has advantages in financial resources and science-technology knowhow, Vietnam has market potential, land, and human resources. There are great opportunities for cooperation and investment to capture the gains of these synergies,” emphasized Tao Thi Thanh Huong, Vietnamese Ambassador to Singapore.
Former Singapore Minister for Trade and Industry (Trade) Lim Hng Kiang highlighted the economic cooperation between Singapore and Vietnam, as well as considered Vietnam as a potential manufacturing base in Asia thanks to its stability and growth prospects. Mr. Douglas Foo, President of the Singapore Manufacturing Federation (SMF) and co-chairman of the Vietnam-Singapore Business Council concurred on the interest of thousands of Singaporean manufacturers in Vietnam as a promising investment destination, particularly in smart cities, energy, and new areas involving Industry 4.0 and startups.
The most nationwide and outstanding project between Singapore and Vietnam is Vietnam-Singapore Industrial Park (VSIP) with its first establishment in 1996 in Binh Duong province. Since then, there have been a total of 11 industrial parks VSIPs across the whole country namely in Bac Ninh, Hai Phong, Quang Ngai, Hai Duong, Nghe An, among others.
VSIP III was recently built with a complete, green, and smart synchronous infrastructure to attract investment in electricity, electronics, manufacturing, transport assembly, high-tech industrial ancillary products, textiles, food, and logistics services. With extensive VSIPs in Vietnam, Singapore has a reliable outsourcing manufacturing pool for its development of the domestic advanced manufacturing sector.
With strong diplomatic bonds between Singapore and Vietnam, along with numerous incentive policies in technology transfer and the unbreakable linking in Singaporean FDI and Vietnam domestic enterprises in the regional value chain, Singaporean investors are strongly encouraged to venture into Vietnam. Viettonkin takes a positive perspective on the joint venture among two countries manufacturing firms under Vietnam’s new FDI attraction policy. Confident in the professional team of experts in the Singaporean market and legal system, Viettonkin willingly helps you to start your new business journey in Singapore. Contact us now for more information!