There is a growing trend by manufacturers and traders to focus on their core activities and to outsource their logistics needs. With this development, there is now an increasing demand for integrated logistics services covering physical distribution, warehousing and information management.

Singapore, with its strategic location and network of comprehensive infrastructure, is well positioned to serve as a logistics hub for international companies. To promote the growth of the logistics industry, I have decided to grant industrial building allowance (IBA) to buildings owned and used for storage of goods or materials by companies providing logistics services, and which currently do not qualify for IBA. These would include companies which provide integrated logistics services covering warehousing, distribution, information management and other high value-added logistics operations. The change will apply to approved buildings with effect from the Year of Assessment 1997.