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SINGAPORE : Manufacturing companies will have to relook their position in today's market, according to some economists.
This is especially as the outlook for the electronics sector remains cloudy. They said that in order to stay ahead, the manufacturing sector should look towards high value-added segments.
Electronics products have been key to Singapore's economic growth. However, economists said the future is in more sophisticated products.
Edwin Khew, President, Singapore Manufacturers' Federation, said: "I think the trend in the manufacturing industry obviously is going towards more the high-end, high value-add manufacturing. For Singapore particularly, it's important that we go that way because we can't compete with China and India."
According to DP Information Group, the manufacturing firms in Singapore's top 1,000 companies saw double digit growth in high value segments in the year ended May 2007.
The total number of companies in precision instruments almost doubled during that period, while those in special metal fabrication grew by 40 per cent. This came amid a 17 per cent drop in companies manufacturing electrical and electronics products.
Song Seng Wun, CEO and Regional Economist, CIMB-GK Research, said: "Many manufacturers now... (will) be looking at themselves and (saying), okay the manufacturing processes that I'm currently doing - is it applicable to another industry which is still growing.
"Certainly at this juncture in Singapore, the oil and gas industry is the one which is still the bright spark, (and) transport engineering is a bright spark."
And apart from new sectors such as medical technology, biotechnology and precision engineering, economists said clean energy will also be a major growth driver going forward.
Industry players said local manufacturers already have the skills set to leverage on this growth.
Mr Khew said: "The whole value chain for this industry is actually quite large, and actually it leverages on all the technologies and all the supporting manufacturing industries that we currently have in Singapore.
"For example, people who make moulds to inject precision parts that are required, the precision engineering people that can machine out parts that are required for the photovoltaic cells, and even the contract manufacturers who actually can put all these cells together and make them total units... I think this is important that these people don't need to move out of Singapore. And the skills and know-how that they have can be applied to new sectors."
According to DP Information, manufacturers from Singapore's top 500 small- and medium-sized companies are also moving up the ladder. They are shifting away from fabrication of non-metallic products like cement and marbles, and rubber plastics, towards electronic products and machinery.
The total number of companies in non-metallic fabrication dropped 70 per cent in FY 2007, while the rubber plastics segment saw a 60 per cent drop in representation. - CNA/ms
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