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Country Commercial Guides for FY 2000: SingaporeReport prepared by U.S. Embassy, released July 1999
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Chapter V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENTBest Prospects for Non-Agricultural Goods and Services
All figures are in millions of U.S. dollars. Exchange rates used are:
1997 US$1.0 = S$1.48
1998 US$1.0 = S$1.67
1999 US$1.0 = S$1.70
1 - Aircraft and Parts (AIR)
Singapore's aerospace industry, comprising primarily repair and overhaul (R&O) operations, continued to be competitive in 1998, enabling it to gain ground in the growing Asia-Pacific civil aviation market. In 1998, the industry registered a healthy 24 percent growth in output to reach US$1.38 billion. Repair and overhaul accounted for 86.3 percent of total output. Manufacturing operations made up the remaining which comprises largely the production of precision sub-assemblies and components such as aircraft passenger doors, landing gears, engine mounts, precision gears, engine and aircraft structural components and avionics components.Aerospace is one of the high value-added industries targeted for development by the Singapore government in its "National Technology Plan". Singapore is evolving into a "one-stop" aerospace hub in the Asia-Pacific with comprehensive, high value-added and critical aerospace manufacturing, repair and overhaul operations.
In the longer term, Asia is expected to be the main growing area for the world air travel market despite its current economic downturn. The region is projected to absorb up to 25 percent of the global aircraft deliveries over the next decade or so.
In June 1999, Singapore Airlines (SIA) announced the purchase of ten more Boeing 777 aircraft in a deal worth US$1.9 billion. The aircraft which were on option in an order placed in 1996, will be delivered between 2001 and 2004. The 1996 deal consisted of seventy-seven B777's aircraft comprising 34 on firm order and 43 on option. The latest acquisition will allow the airline to phase out progressively its Airbus A340-300 fleet. To date, SIA operates 89 aircraft, including seven freighters. It expects to have a fleet of around 120 aircraft by the end of financial year 2004-5 comprising Boeing 777s, 747-400s, the super long-range Airbus 340-500s and possibly one smaller-capacity aircraft type for regional operations. This, coupled with the deregulation of the Asian airline climate, would further fuel massive regional growth that will generate sales of aircraft over the next twenty years.
1997 1998 1999 A. Total Market Size 3486 3383 3721 B. Total Local Production 1243 1377 1514 C. Total Exports 588 598 657 D. Total Imports 2831 2604 2864 E. Imports from the U.S. 1811 1783 1961The above statistics are unofficial estimates.
2 - Industrial Process Control (PCI)
Over the past thirty years, Singapore has acquired considerable technical and process expertise in the manufacturing sector. The Singapore Government's long-term plan is to maintain the contribution of the manufacturing sector at 25 percent of Singapore's GDP. The government actively promotes high value-added activities in front-end engineering and process technology development. In addition, its new strategy, Industry 21, is aimed at widening the manufacturing sector's focus to include manufacturing services. This plan is committed to expand the manufacturing value chain into related services like research and development, process engineering, testing services and market research. The Process Control & Instrumentation sector will emphasize on providing total integrated process solutions, as customers values enhanced plant efficiency, productivity and optimization through real-time information feedback.Singapore's manufacturing activities provide good market opportunities for U.S. firms to supply instrumentation and control test equipment and services. Its petrochemical and petroleum industries are growing with a combined annual output of about US$12 billion. Pharmaceutical and semiconductor industries are also experiencing robust growth. Opportunities also abound in the infrastructural, environmental, pulp & paper and power markets in Singapore and the Asian region.
1997 1998 1999 A. Total Market Size 1478 1166 1370 B. Total Local Production 424 507 550 C. Total Exports 949 938 980 D. Total Imports 2004 1598 1800 E. Imports from U.S. 952 765 920The above statistics are unofficial estimates.
3 - Electronic Components (ELC)
Although the Asian economic downturn affected the performance of the electronics industry in 1998, the impact was alleviated by strong electronics exports to the U.S. and Europe. The sector's output is projected to pick up in the next couple of years and contribute substantially to the 43 percent share of Singapore's total manufacturing output. In 1998, electronics output dropped by 3 percent to US$36 billion. The lower output was due to reduced production in the computer and consumer electronics sectors. However, the output of semiconductors and printed circuit board assemblies increased in 1998 compared with 1997.The current downturn in Asian economies will have an impact on the rate of recovery for the electronics sector. However initial statistics for the first quarter of 1999 reflected a 10 percent growth. With the continued strong demand from the U.S. and Europe, the electronics sector will likely experience growth for 1999 and 2000. There are good opportunities for American companies to sell their products to Singapore and through Singapore to the Asian region.
1997 1998 1999 A. Total Market Size 11012 8245 9500 B. Total Local Production 10611 9558 10500 C. Total Exports 20589 19473 21000 D. Total Imports 20989 18159 20000 E. Imports from U.S. 3060 3092 3200The above statistics are unofficial estimates.
4 - Electronic Industry Production/Testing Equipment (EIP)
Despite the slowdown in Singapore's electronics sector in 1998, confidence in Singapore and long-term potential in the Asian region is evident from the amount of foreign investments committed in 1998. Electronic investments in 1998 amounted to US$1.8 billion, accounting for 40 percent of the total investments committed for the year.The Singapore Government has been aggressively attracting investments in wafer fabrication facilities. It is projected that by 2003, there will be over 10 wafer fabrication plants (invested by multinationals such as Chartered Semiconductor, ST Microelectronics, Hitachi Nippon Steel, TECH Semiconductor, Chartered Silicon Partners and Philips & TMSC). Expansion in these facilities will become good opportunities for equipment suppliers.
In addition, the Singapore Government has a vision for the nation to be a world-class electronics in the areas of manufacturing solutions, the creation of new-generation electronics products and innovative applications for new markets. In the longer term, Singapore aims to secure 150 new electronics projects over the next ten years and generate US$88 billion worth of business by 2010. This will provide good opportunities for American firms to supply equipment, materials and services to current and future facilities.
1997 1998 1999 A. Total Market Size 2030 1498 1750 B. Total Local Production 942 1071 1200 C. Total Exports 1804 1690 1850 D. Total Imports 2892 2118 2400 E. Imports from U.S. 1009 750 850The above statistics are unofficial estimates.
5 - Construction Equipment (CON)
Construction growth moderated to 3.9 percent in 1998, down from a robust 15 percent in 1997. Given the narrowing pipeline of private sector construction projects in conjunction with the slowing demand in the property market, the expansion was largely underpinned by public sector construction activity. Notwithstanding the construction sector's sluggish growth in 1998, its share of the national GDP has climbed to 9.1 percent. The proportion of the construction share of the GDP is expected to remain in the 8.0 percent and 9.0 percent range in 1999.Based on the Development Plans surveys conducted in September 1998, the Building and Construction Authority (BCA) expects the total value of building contracts to be awarded in 1999 to range between US$6.5 billion and US$7.9 billion. The Singapore government is expected to remain the main force behind the 1999 construction demand. Among the major public projects would include the US$3.0 billion public housing developments, and several industrial projects like the fifth refuse incineration plant and the first sea water desalination plant worth a total of US$778 million. In addition, several reclamation projects, amounting to US$719 million, are expected to be awarded by the Jurong Town Corporation, the Urban Renewal Authority and the Housing & Development Board. This means that there is still a tremendous scope for the supply of construction and earthmoving equipment to the local construction industry. This is particularly so because there is no domestic production of construction equipment and there is minimal local assembly, such that the market is dominated by imports.
1997 1998 1999 A. Total Market Size 1090 791 854 B. Total Local Production 302 322 348 C. Total Exports 1156 1282 1385 D. Total Imports 1944 1751 1891 E. Imports from the U.S. 846 1006 1086The above statistics are unofficial estimates.
6- Computer Hardware and Peripherals (CPT)
Singapore was ranked the world's fourth most information driven economy (after the U.S., Sweden and Finland) in 1998, according to the Information Society Index published by International Data Corp (IDC). The survey projected that Singapore will move up to second place by 2002.The Singapore government's push to turn the country into an intelligent island early in the next century will boost the demand for computer hardware and peripherals in Singapore. The United States is viewed as the most important source of state-of-the-art computer technologies and products. Total market is much smaller than total imports as Singapore is a major trading center for information technology products; about two-thirds of Singapore's imports of computer hardware are re-exported to third countries. Most promising sub-sectors include networking equipment, multi-media systems and PCs.
1997 1998 1999 A.Total Market Size 2258 1302 2200 B.Total Local Production 18362 16294 15000 C.Total Exports 23276 20372 18000 D.Total Imports 7172 5379 5200 E.Imports from the U.S. 1093 948 1000The above statistics are unofficial estimates.
7 - Telecommunication equipment (TEL)
Despite the economic slowdown in Singapore and the region, there are still excellent opportunities for U.S. vendors of telecommunication products. The Singapore government's liberalization of the industry and its push to turn the country into an "intelligent island" by 2002 will drive demand for telecommunication products and services. Singapore depends heavily on imports as the indigenous manufacturing industry is small and dominated by foreign firms. The U.S. plays a dominant role in the Singapore telecommunications market. It is viewed as the world leader in telecommunication products, and Singapore end-users look to U.S. companies for the latest state-of-the-art technologies.Singapore is a major distribution center; more than half of all telecommunication imports is re-exported to other countries. The republic serves as a regional showcase, and it is not uncommon that equipment that is type-approved in Singapore is generally accepted in the surrounding countries. Best prospects are multi-media, electronic commerce and internet related solutions including gigabit internet switches, voice- over Internet Protocol products, value-added network products and security products.
1997 1998 1999 A.Total Market Size 1672 1174 1300 B.Total Local Production 2289 1882 2000 C.Total Exports 4079 3223 3500 D.Total Imports 3462 2515 2800 E.Imports from the U.S. 508 358 400The above statistics are unofficial estimates.
8 - Franchising (FRA)
Singapore boasts one of the most developed industrial, commercial, financial and consumer economies in the world with a per capita income of more than $24,000. The republic is a city-state with a population of 4.0 million people, including foreigners and permanent residents. Despite its small size, it is home to many franchises from around the world, particularly from the United States. The U.S. dominates franchise concepts in Singapore both in numbers and variety. According to the Singapore Trade Development Board, there are some 140 foreign franchises concepts and 137 local franchise concepts in Singapore in 1998. The figures are expected to grow to 200 and 165 respectively by the year 2005.Despite the regional economic crisis, the market outlook for U.S. franchises is still excellent as many cash rich Singapore firms and individuals continue to seek new opportunities. With its well developed infrastructure, the country serves as one of the region's principal distribution centers and showcase for imported products and services. It is therefore a good launching pad and pilot market for U.S. franchisors wishing to enter the markets of the Asia Pacific region. Most promising sub-sectors include children-related franchises, training and food-related franchises.
1997 1998 1999 A.Total Sales 3036 2660 2750 B.Sales by Local Firms 30 266 270 C.Foreign Sales by Local Firms 31 26 20 D.Sales by Foreign-owned Firms 2763 2420 2500 E.Imports from the U.S. 2493 2180 2200The above statistics are unofficial estimates.
9 - Building Products (BLD)
The construction industry is forecast to chalk up some US$7.9 billion worth of projects in 1999, with the public sector expected to award between US$4.67 billion and US$5.33 billion of projects, which will make up about 70 percent of the total construction demand in 1999. The bulk of the public contracts would go to the construction and retrofitting of Housing Board flats, building of industrial plants and educational institutions and social welfare and sports complexes. Public civil engineering demand is expected to be in the improvement and expansion of road networks, construction and upgrading of sewerage and drainage systems as well as land reclamation projects.Although private residential contracts are not expected to pick up in view of the current economic situation, private commercial construction demand is anticipated to remain at the level comparable to that of 1998, while private industrial construction demand is expected to range from US$420 million to US$659 million. With long-term growth opportunities anticipated in the petrochemical sector, 1999 is likely to see several petrochemical plants being developed. Construction demand for private institutional and other buildings is expected to lie between US$114 million and US$222 million. Private civil engineering construction demand is expected to continue to be generated by the port, telecommunications and utilities providers such as PSA Corporation, Singapore Telecoms, PowerGas and PowerGrid in their bid to improve efficiency and market share. These developments would provide great opportunities for U.S. firms to supply building materials to the Singapore construction industry, especially state-of-art building products.
1997 1998 1999 A. Total Market Size 2965 3186 3441 B. Total Local Production 660 1001 1081 C. Total Exports 1749 1056 1140 D. Total Imports 4053 3241 3500 E. Imports from the U.S. 260 122 132The above statistics are unofficial estimates.
10- Medical Equipment (MED)
Demand is not expected to increase given the completion of hospital projects by the Ministry of Health. Private hospitals have reduced spending due to the decrease in patients from neighboring countries. Total imports of medical equipment will continue to be affected by demand from neighboring countries as more than 40-45 percent of imports are re-exported. Prospects for U.S. medical equipment in 1999 remains positive given that imports from the U.S. grew by 3.0 percent in real terms in 1998. The U.S. accounted for more than 40 percent of the import market share. There is potential for growth for U.S. exporters in devices for critical care, wound care, patient care, devices for cardiology and oncology, and furniture and fittings for elderly care.
1997 1998 1999 A. Total Market Size 396 285 285 B. Total Local Production 588 716 645 C. Total Exports 702 794 730 D. Total Imports 510 363 370 E. Total Imp. from U.S. 166 150 155The above statistics are unofficial estimates.
11 - Laboratory & Scientific Instruments (LAB)
Singapore continues to attract overseas partners to enhance itself as a hub for life sciences research. The private sector increased its research and development (R&D) spending by 7.0 percent in 1997 while the public sector spending rose by 18 percent. Singapore's gross expenditure on R&D grew to US$1.37 billion. The regional economic downturn had affected demand as more than 25 percent of imports are re-exported to neighboring countries.
1997 1998 1999 A. Total Market Size 950 870 875 B. Total Local Production 260 359 360 C. Total Exports 580 599 595 D. Total Imports 1270 1110 1110 E. Total Imp. from U.S. 581 538 530The above statistics are unofficial estimates.
12 - Pollution Control Equipment (POL)
Projects currently under implementation include the deep tunnel sewerage system project, the 4th incineration plant with a possible fifth incineration plantin the near future. In addition, the development of a group of offshore islands into an integrated chemical island will see strong demand for environmental control technology in the next five years. Moreover, the authorities plan to tighten air emission standards which imply that new air pollution controls need to be purchased.The Ministry of the Environment (ENV) is the authority on environmental matters and is the prime mover of environmental projects. ENV has set up two private companies called SEMES to provide consultancy services and SEMAC to provide refuse collection and treatment of solid waste. From April 1999, other companies are able to bid for refuse collection contracts for 9 different sectors and this exercise will take approximately 18-24 months to complete.
1997 1998 1999 A. Total Market Size 580 405 400 B. Total Local Production 113 80 70 C. Total Exports 273 195 180 D. Total Imports 740 520 500 E. Imports from the U.S. 236 180 150The above statistics are unofficial estimates.
13 - Pumps, Valves, Compressors (PVS)
Major projects under development in Singapore such as the Jurong Petrochemical island complex, the Tuas Power station, chemical and pharmaceutical plants will continue to generate demand for pumps, valves and compressors. Growth in this sector has been revised downwards due to the regional economic turmoil. Approximately 70 percent of total imports are re-exported to the region. Currently, demand from the region comes mainly from the state-owned petroleum refineries. The proposed 480-kilometer gas pipeline from West Natuna (Indonesia) to Singapore, to be completed by end of year 2001, will boost demand in the next two years. Equipment incorporating newer technologies will have market potential.
1997 1998 1999 A.Total Market Size 859 721 600 B.Total Local Production 418 330 300 C.Total Exports 822 679 620 D.Total Imports 1263 1070 920 E.Imports from the U.S. 364 311 260The above statistics are unofficial.
14 - Electric Power Systems (ELP)
Demand for electricity decreased in 1998 due to the regional economic downturn but it rebounded in the first quarter of 1999 in line with recovery in the manufacturing sector. Tuas Power Station will invest about US$600 million in equipment and services in the second stage of its power plant. Singapore Power (SP) will spend about US$1.0 billion on building transmission systems of 400 kilovolts at various substations in the country. SP will also install systems for direct transformation (step-down) of electricity from 230 kv to 22 kv for high-density developments. SP will also invest in the development of an underground cable tunnel network which will provide for the installation of transmission cables for bulk power transportation. Electrical cables will also be laid by end of 1999 to connect two substations to a major industrial zone. The connection, which will cost about US$80 million will include an undersea cable tunnel. Two underground cable tunnels have also been planned: two-km tunnel and 16-km tunnel due for completion by 2001 and 2003. SP will spend US$349 million to refurbish PowerSenoko to boost efficiency by 39 percent.
1997 1998 1999 A.Total Market Size 2292 2055 1850 B.Total Local Production 1223 1150 1100 C.Total Exports 2072 2119 2130 D.Total Imports 3141 3024 2880 E.Imports from the U.S. 566 484 410The above statistics are unofficial estimates.
Best Prospects for Agricultural Products
The following agricultural sectors offer the best prospects for increased U.S. agricultural exports to Singapore. Dairy Products PS&D:022/023/024The EU, Australia and New Zealand are major suppliers in this category of products which include fresh milk, milk powder, condensed milk, yogurt and cheese. As Singapore consumers are particularly brand conscious, it is difficult to displace existing established European and Australian brands in the market.
However, there is significant market potential for bulk dry milk powder for repacking into consumer size packs. The re-packed milk powder is distributed to other emerging Asian markets by Singapore traders. There are market opportunities for U.S. companies in products like cheese, yogurt and ice cream. Singapore consumers are avid consumers of ice cream and yogurt and hold U.S. brands in high regard.
1997 1998 1999 Total Market Size 232 151 156 Total Local Production 0 0 0 Total Exports 105 75 81 Total Imports 337 226 237 Imports from the U.S. 15 10 11Fresh Vegetables PS &D Code 054Singapore imports practically all the vegetables it consumes domestically. The high percapita incomes together with the large number of annual tourist arrivals contribute to the purchase of higher quality and higher priced vegetables from Australia, New Zealand, EU and the U.S.
The economic downturn in the neighboring ASEAN countries are to some extent responsible for the significant reduction in re-exports of vegetables. However, with the expected pickup in the regional economies, it is expected that the import and re-export trade of high value vegetables will increase significantly.
The U.S. is a major supplier of frozen vegetables to the Singapore market occupying about 60 percent market share. In this category, frozen fries is the dominant product. Other significant product categories include frozen prepared and cut vegetables.
1997 1998 1999 Total Market Size 126 128 131 Total Local Production 0 0 0 Total Exports 84 59 64 Total Imports 210 187 195 Imports from the U.S. 18 16 18Fruit & Nut, fresh and driedPS& D Code: 057Fresh fruit imports form one of the major categories of agricultural imports into the country. As Singapore does not produce any fresh fruit, it imports from a wide range of countries all of the tropical and temperate climatic fruit consumed domestically. Malaysia, Thailand, Indonesia and Philippines supply most of the tropical fruit while the EU, Australia. New Zealand and China and South America and the U.S. provide the temperate climatic fruit. The U.S. is a major supplier of apples, oranges, pears, summer fruit and raisins. Competitor countries include Australia, New Zealand, China, Brazil and Chile . In recent years, South Africa has become an increasingly important supplier of apples, pears. stone fruit and oranges.
Singaporeans like to try newer and more exotic fruit. There is a good market potential for new stone fruit varieties. In addition, the market for dried temperate fruit has not been fully tapped.
1997 1998 1999 Total Market Size 209 179 194 Total Local Production 0 0 0 Total Exports 148 103 129 Total Imports 357 282 323 Imports from the U.S. 77 62 72Significant Investment Opportunities
Singapore continues to attract foreign investments. Petroleum, electronics and computer manufacturing, telecommunications, banking and financial services head the list, but opportunities abound as well in shipping, pharmaceuticals, franchising and regional distribution of food and consumer goods. Singapore's firms are usually very receptive to joint venture proposals from American firms and, especially in the case of the government-linked companies, are good business partners who can offer excellent regional contacts and access to capital.The Singapore government's recent move to liberalize the finance/banking, legal services and telecommunication industry offers significant opportunities for U.S. firms to gain a toehold in the market place. In addition, the implementation of several major infrastructure development projects including the reclamation of Jurong Island (to house the oil refining and chemicals industries); deep tunnel sewerage; extension of the sub-way system and expansion of the airport will result in opportunities for U.S. participation.
The Government of the United States acknowledges the contribution that outward foreign direct investment makes to the U.S. economy. U.S. foreign direct investment is increasingly being viewed as a complement or even a necessary component of foreign trade. Nearly 60 percent of total U.S. exports originate with American firms with investments abroad. Recognising the benefits that U.S. outward investment brings to the U.S. economy, the Government of the United States undertakes initiatives, such as Overseas Private Investment Corporation (OPIC) programs, bilateral investment treaty negotiations and business facilitation programs, that support U.S. investors.
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
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