SINGAPORE: Singapore wants to grow its manufacturing sector by 50 per cent over the next 10 years as it works to ensure that the sector continues to contribute to about a fifth of economic output over the medium term.
This is more than just a quantitative target, said Trade and Industry Minister Chan Chun Sing on Monday (Jan 25), but a goal to pave the way for a “qualitative transformation” of the sector with advanced manufacturing making up a bigger share.
“In the past, many of the older generation of manufacturing that depends on cost competitiveness … will increasingly be displaced by cheaper alternatives in other countries,” he told reporters following a visit to local precision engineering firm Univac.
“Instead, beyond the 50 per cent increase in value, we want to see a greater proportion of our manufacturing going into advanced manufacturing, where the competition is not based on cost but based on the intellectual property that we can generate, the quality of the products and the precision that we can provide for the sector.”
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To do so, the Government hopes to attract more Singaporeans into the sector, while continuing to draw “frontier investments” into the country and grooming more local companies in the area of advanced manufacturing, said Mr Chan.
Currently, manufacturing accounts for about 21 per cent, or around S$106 billion, of Singapore’s total gross domestic product (GDP).
The sector hires about 450,000 workers, or around 12 per cent of the workforce, with median wages of around S$4,700. This is 10 per cent higher than the economy-wide median, said the minister.
Mr Chan noted that the COVID-19 pandemic has underscored the sector’s importance to Singapore.
“In a COVID and in a post-COVID world, having a more diversified economy is important for us,” he said, pointing to how the biomedical electronics and precision engineering sub-sectors have been bright spots in the economy last year due to increased demand for their products amid the pandemic.
It is also important for Singapore to have “unique capabilities and products”, he added.
“In the fight with COVID, 19, securing essential supplies sometimes became a barter trade, and may continue to be so as we see global supply chains continue to be disrupted,” the minister said.
“So whether people will sell us things or not very often also depends on whether we have things that other people value, that they want to obtain beyond just an issue of whether people are willing to pay the price for it.”
But it will not be easy, said the minister who described his latest announcement for the sector as a “very stretch target”.
Given how manufacturing was already growing at about 50 per cent in the past decade, the latest target looks at maintaining the growth trend “from a bigger base” over the next 10 years.
“So by any means, this is a stretch target,” he said.
There are also other challenges, such as manpower.
Mr Chan said: “In the next 10 years, we will have to achieve this (growth) with a much smaller manpower footprint. The era whereby we can bring in cheaper foreign manpower … to augment the Singaporean workforce will increasingly become more difficult.
“We will have to do this with possibly a smaller but a much higher quality talent pool, so that we can go into the era of advanced manufacturing, whereby we complement the local workforce with high quality machines.”
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As such, the Government will ramp up efforts to grow the local talent pipeline. Apart from upgrading the skills of older workers, the Government can also do more to attract the younger generation.
This includes collaborating with the institutes of higher learning to ensure graduates are equipped with the relevant skills, as well as supporting companies and schools to improve career progression and skills upgrading opportunities.
“We want to attract more Singaporeans into manufacturing, across all levels and especially in the critical roles,” said Mr Chan, who noted that work in the sector is “no longer about repetitive tasks done in a very structured environment”.
“In fact today, the biggest challenge for the engineering and advanced manufacturing sector is how fast we are able to innovate and prototype new products and services. So the challenges are very interesting,” he added.
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In the other two prongs of its strategy, the Government will continue to attract “frontier investments” to Singapore and keep grooming the capabilities of local enterprises in advanced manufacturing.
Noting that the pandemic has accelerated many of the disruptive trends already underway in the sector, Mr Chan said this is an opportunity for Singapore to reposition its manufacturing sector.
“Beyond aiming for that stretch target of quantitative growth, more importantly, we want to see the qualitative transformation of the Singapore manufacturing sector … where we are able to use data and the latest computing power to help accelerate the redesign of products and services, (as well as) production systems, so that we can capture a larger share of the knowledge-intensive market (and) not be easily displaced by other people based on low cost,” he said.
“While the workforce may shrink a bit in the manufacturing sector, the kind of work that the manufacturing sector will provide will be higher quality (and) much more exciting.”
10-YEAR PLAN A CHALLENGE BUT NECESSARY
In a press release issued to the media on Monday evening, the Singapore Manufacturing Federation (SMF) said the Government’s new vision for the sector is challenging but necessary.
“The velocity for transformation and change for the future in the manufacturing sector cannot just be driven by how the sector achieved its growth in the last decade,” it said.
“The components of cost competitiveness in contract manufacturing as well as the easy availability of foreign labour can no longer be the main ingredients as we look ahead to the future.”
This is why it has been encouraging firms to digitalise, change their business models to be in line with Industry 4.0 and help workers be equipped with relevant skills since early last year.
But some of its member companies have noted difficulties in hiring and retaining local employees.
On this, SMF said it has been in touch with key partners in the Government, the private sector, other trade associations and chambers, as well as institutions of higher learning “to champion the interests of the future of manufacturing”.
For instance, it is working with schools like Republic Polytechnic and Singapore Polytechnic to have students serve internships at the SMF.
“Many of our members acknowledge that it is a necessity to transform and inculcate digitalisation, resiliency and sustainability into their business models for manufacturing of the future,” said SMF President Douglas Foo.
“The key goals of the 10-year plan are a challenge but the SMF believes that they are a necessity, and, are attainable with the unified efforts of different stakeholders."