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SINGAPORE: Singapore wants to grow its manufacturing sector by 50 percent over the next 10 years, as it works to ensure that the sector continues to contribute about a fifth of economic output over the medium term.
This is more than a quantitative goal, Trade and Industry Minister Chan Chun Sing said on Monday (January 25), but rather a goal to pave the way for a “qualitative transformation” of the sector with advanced manufacturing representing greater participation.
“In the past, many of the older generations of manufacturing that rely on cost competitiveness … will be increasingly displaced by cheaper alternatives in other countries,” he told reporters after a visit to the local engineering firm of Univac precision.
“Instead, beyond the 50 percent increase in value, we want to see a greater proportion of our manufacturing going to advanced manufacturing, where competition is not based on cost but on the intellectual property that we can generate, quality of the products and precision that we can offer to the sector ”.
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To do so, the government hopes to attract more Singaporeans to the sector, while continuing to attract “cross-border investments” to the country and grooming more local companies in the advanced manufacturing area, Chan said.
Manufacturing currently accounts for around 21 percent, or about S $ 106 billion, of Singapore’s total gross domestic product (GDP).
The sector hires around 450,000 workers, or around 12 percent of the workforce, with average wages of around S $ 4,700. This is 10 percent higher than the median for the entire economy, the minister said.
Chan noted that the COVID-19 pandemic has underscored the importance of the sector for Singapore.
“In a COVID and in a post-COVID world, having a more diversified economy is important to us,” he said, noting how the subsectors of biomedical electronics and precision engineering have been bright spots in the economy in the past year due to the increased demand for their products amid the pandemic.
A Univac employee operating the computer numerical control (CNC) milling machine during a visit from the Minister of Commerce and Industry, Chan Chun Sing, on January 25, 2021 (Photo: Ministry of Commerce and Industry).
It is also important that Singapore has “unique capabilities and products,” he added.
“In the fight with COVID, 19, securing essential supplies sometimes became a barter trade, and it may continue to be as we see global supply chains continue to be disrupted,” the minister said.
“So whether or not people will sell us things very often also depends on whether we have things that other people value, that they want to get beyond the question of whether people are willing to pay the price for it.”
“STRETCH TARGET”
But it will not be easy, said the minister who described his latest announcement for the sector as a “very stretched objective.”
Given that manufacturing was already growing about 50 percent in the last decade, the most recent goal is to maintain the growth trend “from a bigger base” for the next 10 years.
“So either way, this is a tough target,” he said.
There are other challenges too, like manpower.
Chan said: “In the next 10 years, we will have to achieve this (growth) with a much smaller workforce footprint. The era where we can bring in cheaper foreign labor … to increase Singapore’s workforce will be increasingly difficult.
“We will have to do this possibly with a smaller but much higher quality talent pool so that we can enter the era of advanced manufacturing, whereby we supplement the local workforce with high-quality machines.”
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As such, the Government will intensify its efforts to grow the local talent pool. In addition to improving the skills of older workers, the government can also do more to attract the younger generation.
This includes collaborating with institutes of higher education to ensure graduates are equipped with the relevant skills, as well as supporting companies and schools to enhance career progression and skill upgrade opportunities.
“We want to attract more Singaporeans to manufacturing, at all levels and especially in critical roles,” said Chan, noting that working in the industry “is no longer about repetitive tasks performed in a very structured environment.”
“In fact, the biggest challenge for the advanced manufacturing and engineering industry today is how quickly we can innovate and prototype new products and services. So the challenges are very interesting, “he added.
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In the other two aspects of its strategy, the Government will continue to attract “cross-border investments” to Singapore and will continue to enhance the capabilities of local companies in advanced manufacturing.
Noting that the pandemic has accelerated many of the disruptive trends already underway in the sector, Chan said this is an opportunity for Singapore to reposition its manufacturing sector.
“Beyond targeting that sweeping quantitative growth target, more importantly, we want to see the qualitative transformation of Singapore’s manufacturing sector … where we can use data and the latest computing power to help accelerate product redesign and services, (as well as) production systems, so that we can capture a greater share of the knowledge-intensive market (and) not be easily displaced by other people on the basis of low cost, ”he said.
“While the workforce may shrink a bit in manufacturing, the kind of work that manufacturing will provide will be of higher quality (and) much more exciting.”
10-YEAR PLAN A CHALLENGE BUT NECESSARY
In a press release issued to the media on Monday night, the Singapore Manufacturing Federation (SMF) said the government’s new vision for the sector is challenging but necessary.
“The speed of transformation and change for the future in the manufacturing sector cannot be driven simply by how the sector achieved its growth in the last decade,” he said.
“The components of cost competitiveness in contract manufacturing, as well as the easy availability of foreign labor, can no longer be the main ingredients as we look to the future.”
This is why he has been encouraging companies to go digital, change their business models to be in line with Industry 4.0, and help workers be equipped with the relevant skills since early last year.
But some of its member companies have found it difficult to recruit and retain local employees.
On this, SMF said that it has been in contact with key partners in the government, the private sector, other associations and commercial chambers, as well as higher education institutions “to defend the interests of the future of manufacturing.”
For example, it is working with schools like Republic Polytechnic and Singapore Polytechnic to have students do internships at SMF.
“Many of our members recognize that there is a need to transform and instill digitization, resilience and sustainability in their business models for the manufacturing of the future,” said SMF President Douglas Foo.
“The key objectives of the 10-year plan are a challenge, but SMF believes that they are a necessity and that they can be achieved with the unified efforts of different stakeholders.”
