SINGAPORE – The semiconductor and pharmaceutical biotechnology sectors have thrived amid the Covid-19 pandemic and are expected to keep attracting global investments into the Republic, said Singapore Economic Development Board (EDB) chairman Beh Swan Gin on Tuesday (Aug 17).
Recent investments by industry giants are telling: Semiconductor manufacturer GlobalFoundries announced in June that it would invest US$4 billion (S$5.4 billion) in a new fab, or manufacturing plant.
Vaccine maker BioNTech will set up its South-east Asia regional headquarters and an mRNA manufacturing facility in Singapore, while pharma giant Sanofi Pasteur is investing €400 million (S$639 million) to build a vaccine production centre here.
“The semiconductor industry seems to continue to have very strong tailwinds because of the overall digitalisation of industries and the economy, and the electrification that’s taking place in many sectors like the automotive sector,” Dr Beh told reporters in a virtual interview held in conjunction with EDB’s 60th anniversary.
Companies that produce medical devices such as polymerase chain reaction (PCR) machines are also doing well and expanding capacity amid the pandemic-driven demand, he added.
The technology sector is also doing well, with American as well as Chinese tech companies, like ByteDance and Tencent, having expanded their presence in South-east Asia and Singapore, said Dr Beh.
And local firms are not left out of this growth spurt either, with biotech companies and tech firms raising a “substantial amount” of venture capital funding and ramping up their activities and hiring, he added.
But Singapore will have to navigate several “drivers of change” and transform itself to keep growing, said Dr Beh. The first consideration is the rise of Asia, which has contributed much to Singapore’s economic success.
“Asia is definitely a major part of our operating landscape today, much more so than even as late as a decade ago,” said Dr Beh, adding that the Republic has seen capital inflows from Asian companies, and local businesses are also keen to tap the pockets of talent in many parts of the region.
Technological advancements – accelerated by the coronavirus outbreak – have also disrupted many industries and enabled young companies to scale up and become industry leaders.
Dr Beh said another driver of change is the shifting geopolitical environment, including the United States-China contestation: “Many countries have become a bit less enthusiastic about globalisation… I won’t call it a reversal of globalisation but it’s definitely a slowdown.”
Countries, including Singapore, also have to address climate change and take measures to decarbonise businesses and economies, as well as spur innovation.
The Republic needs to respond to these trends by shifting from an investment-driven economy to one with Singapore-based regional leaders that have innovative products and services, said Dr Beh, citing tech firms Sea and Grab as examples.
Asked about the impact of regional Covid-19 resurgences on Singapore’s economic growth, he said there are lingering uncertainties such as new waves of Covid-19 Delta variant infections in the country’s trading partners and possible new variants.
But Singapore will continue to diversify its sources of investments as well as the markets and industries of its trading partners, to mitigate these risks, he said.
The Republic’s small population is also attractive to global vaccine makers, as the production capacities of their potential manufacturing facilities can easily exceed the vaccine needs of the local population, and they are therefore less worried about export controls.
“It will definitely help us to have early access to vaccines in the future if new pandemics emerge,” said Dr Beh.
He added that the growth of local biotech companies and new technologies makes it “not unimaginable” that these local firms can create either therapeutic treatments or vaccines effective against Covid-19.
“Having said that, Covid-19 might end soon and there might not be a need for new vaccines… then that window of opportunity might not be there.”
Asked how Singapore will be affected by a landmark deal to back a global minimum corporate tax rate of at least 15 per cent, Dr Beh reiterated EDB’s stance that it supports a multilateral effort to create a level playing field for attracting investments.
But he added that tax incentives are not unique to Singapore and have therefore “not been a differentiator for a long time”.
“We are quite comfortable and confident that over the past five, six decades of development, Singapore has built up very strong value propositions that can attract companies to come… Companies are here for Asia, and not just choosing a location that allows them to maximise their profits.”
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