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MTI’s mission is to promote economic growth and create jobs, so as to achieve higher standards of living for all. A total budget of $1,983 million has been allocated to MTI in FY2007 to achieve its mission.
The Singapore economy grew by 7.7% in 2006, with broad-based growth across manufacturing and services. More than 124,000 jobs were created in the first 3 quarters of 2006. Investor confidence in Singapore remained strong. The Economic Development Board (EDB) attracted $8.8 billion in Fixed Asset Investment (FAI). Visitor arrivals to Singapore reached a new high of 9.7 million in 2006. Total external trade grew by 13% to a record $810 billion.
The economic outlook for 2007 remains favourable although there are some external risks. Barring unforeseen setbacks, we expect growth of 4-6%.
In FY2007, MTI will continue to ride on the favourable economic environment and position ourselves for growth. We will strengthen and rejuvenate existing sectors, while nurturing promising new growth sectors. We will also keep a vigilant watch on our cost competitiveness. In addition, we will press on with economic restructuring and continue building up our capabilities to strengthen our long-term competitiveness.
Key Economic Thrusts
Expand economic space
Promote free trade
In 2006, we concluded the Singapore-Panama Free Trade Agreement (FTA) and reviewed the US-Singapore FTA, the Japan-Singapore Economic Partnership Agreement (JSEPA) and the Singapore-India Comprehensive Economic Cooperation Agreement (CECA). The JSEPA and CECA reviews are scheduled to conclude and the Korea-Singapore FTA due for review in 2007. Negotiations for our FTAs with China, the Gulf Cooperation Council Countries, Peru and Canada are expected to pick up tempo in 2007. Our efforts to increase the utilisation of our FTAs, spearheaded by IE Singapore, are yielding positive results. At the multilateral level, Singapore will continue to work with others to bring the Doha Round of WTO negotiations to a successful conclusion.
ASEAN
Singapore will assume the ASEAN chairmanship and host the ASEAN Leaders’ Summit in 2007. Building on the planned realisation of the ASEAN Economic Community (AEC) in 2015, we will look for opportunities to further accelerate economic integration within ASEAN. This year, we expect to see further progress in ASEAN’s FTA negotiations with Japan, India, New Zealand and Australia. At the same time, we will continue to further our bilateral economic relations with ASEAN countries.
Tapping market opportunities
We will step up our efforts to engage emerging markets and economies which present potential, like China, India, Middle East and Russia. We will also further our relationships with mature economies like the US, Japan and Europe, including possible partnerships to venture into emerging markets.
To help local businesses tap overseas opportunities, IE Singapore organised and supported over 267 outgoing missions and trade fairs in FY2006, benefiting more than 3,300 companies. IE Singapore's iPartners programme also successfully catalysed the formation of seven alliances.
Grow manufacturing and services as mutually reinforcing growth engines
The manufacturing sector grew strongly by 11.4% in 2006. The service producing industries also registered robust growth of 6.9%. We secured several major projects, including Shell Chemical’s world-scale petrochemical plant, Intel-Micron Flash Technologies’ (IMFT) 12-inch NAND flash wafer fab, Siltronic-Samsung’s silicon substrate and ingot pulling plant, and Lonza’s 2nd biologics plant. We also saw successes in the new growth areas of Environmental and Water Technologies, Interactive and Digital Media and Biomedical Sciences sectors. Some key projects secured include GE Water’s 100-man Global Water R&D centre, Anark Corporation “Gameface” R&D centre in next-generation games user interface, and Abbot’s fully integrated facility for nutritional powder products.
In FY2007, we will continue to harness the strong investment climate to strengthen our clusters. EDB has projected that it will attract $8.5-9.0 billion of FAI commitments from manufacturing and $2.7-2.9 billon of Total Business Spending (TBS) commitments from services under its purview. It expects to generate $11.0-11.5 billion of VA per annum from its projects and create 20,000 to 25,000 jobs, of which more than 70% would be skilled/professional jobs. To help achieve its target, EDB will be provided with an operating budget of $120.31 million.
Our efforts at rejuvenating the tourism industry are also paying off. The sector generated an estimated $12.4 billion in tourism receipts, registering a growth of 14% over 2005. 2006 saw the award of the two Integrated Resorts (IRs) at Marina Bay and Sentosa with a total investment of more than $10 billion (including land price). New tourism attractions were also added in 2006, including VivoCity, the integrated entertainment outlets at St James Power Station, and The Cannery at Clarke Quay.
In FY2007, with a budget allocation of $123.47 million, the Singapore Tourism Board (STB) will be stepping up its investment promotion efforts to attract new investments into key tourism precincts. With the launch of the $170 million “BE (Business Events) in Singapore” incentive scheme in August 2006, STB will also continue to anchor more MICE (Meetings, Incentives, Conventions, Exhibitions) events in Singapore.
Build R&D capabilities
The competitiveness of our industry clusters needs to be supported by a strong intellectual and knowledge capital base. A total of $7.5 billion has been allocated to MTI for FY2005-10 to strengthen Singapore’s R&D capabilities. Of these, $5.4 billion are allocated for public sector research and research manpower development in the areas of science, engineering and biomedical sciences (BMS). The remaining $2.1 billion are for the Research Incentive Scheme for Companies (RISC) to promote private sector R&D investments in Singapore. RISC provides project-based grants to companies to support the building of R&D capabilities.
Between 2004 and 2005 (latest data available), Gross Expenditure on R&D (GERD) had increased from 2.24% to 2.36% of GDP, with the private sector making up 66.2% of GERD in 2005. The number of Research Scientist and Engineers per 10,000 labour force also increased from 81 to 90.
A*STAR’s budget for FY2007 is $750 million. For BMS R&D, A*STAR will work closely with MOH and the National Medical Research Council to integrate basic, translational and clinical research. A*STAR’s Science and Engineering Research Council’s (SERC) Research Institutes (RI) were involved in 217 projects with 204 companies in FY2006 (as at end Nov 2006). In FY2007, A*STAR will continue to intensify industry development efforts to catalyse greater commercialisation of technologies, leveraging on the SERC RIs’ multi-disciplinary capabilities.
Ensure competitive business environment
MTI will maintain a close watch on business costs, to ensure that we remain a globally competitive investment and business location. We will ensure that adequate resources and infrastructure are available to support the growth of our industries.
Industrial infrastructure
A total of $76.03 million is set aside for developing industrial infrastructure. This includes basic infrastructure works at one-north, a 200-ha area around Buona Vista. The JTC Corporation (JTC) is developing one-north into an integrated work-live-play-learn environment for the biomedical science, info-comm technology and media industries. This budget also includes infrastructure development to prepare Industrial Government Land Sales (GLS) sites in various parts of Singapore.
Another $835.09 million is set aside for land-related expenditure. This includes the construction of underground hydrocarbon storage caverns at Jurong Island, as well as the development of land in areas like Tuas View Extension and Jurong Island, to support the long-term growth of Singapore’s manufacturing sector.
Competitive and secure energy
We will ensure that our economic growth is supported by access to competitively priced and secure energy supply. The liberalisation of our energy markets has helped to bring costs down. MTI is leading the inter-ministry Energy Policy Group to formulate forward-looking holistic energy policies that will take into consideration our priorities for economic competitiveness, environmental sustainability, energy security and industry development.
Encourage entrepreneurship and grow Singapore-based companies
MTI will continue to help raise the productivity and upgrade the capabilities of SMEs. We have committed $725 million in FY2007 to do so.
Increase access to financing
To increase local enterprises’ access to financing, SPRING and IE Singapore will continue to partner financial institutions to increase financing-related facilities and sources of financing. A total of $670 million (including loans) will be committed to financing schemes in FY2007. This includes the existing Local Enterprise Finance Scheme (LEFS), Micro Loan Programme, and Loan Insurance Scheme (LIS) which have provided $490 million of loans to about 3,334 companies in 2006.
Build strong enterprise capabilities
In 2006, a $150 million 5-year Technology Innovation Program was introduced to support technology innovation projects of SMEs. SPRING also launched a $35 million 5-year Capability Development Program (CDP) in Oct 2006, which aims to help SMEs move up the value chain and provide better support to large enterprises. Under the Local Enterprise and Association Development (LEAD) Program, $65 million of funding has been jointly committed by 14 industry associations and the government for industry development initiatives since May 2005.
In FY2007, SPRING will be developing new programmes for business leadership and management development in SMEs. An inaugural SPRING SME Summit will be held in Apr 2007 to share how it can help SMEs to upgrade their capabilities and grow their businesses. IE Singapore will also be initiating the formation of a Singapore Exporter Club for new exporters to develop their export competencies.
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