Singapore sees slowdown in 2005 factory investment
Reuters
Singapore, January 10, 2005
Singapore's government forecast on Monday a mild slowdown in manufacturing investment in 2005, citing the effects of a weakening US dollar, a stronger European currency and higher oil prices.
But the Economic Development Board (EDB), a trade promotion body, said more money should flow into services, reflecting a retooling of Singapore's export-reliant economy away from low-end factory production as competition grows from China and India.
The EDB said it was targeting manufacturing investment of S$8.0 billion ($4.9 billion) in 2005, compared with last year's total of S$8.4 billion but up from S$7.5 billion in 2003 when SARS virus outbreaks led some companies to curb factory spending.
"We expect some challenges in 2005. There are signs of softening in the electronics industry and we are not yet sure of the impact of the weakening U.S. dollar, the strengthening euro as well as volatility in oil prices," EDB chairman Teo Ming Kian told a news briefing while releasing an annual year-end review.
"We are prepared to set commitments that are not too far from last year. They are realistic targets," he said.
The EDB forecast a rise in services investments to S$2.4 billion from S$2.3 billion in 2004 and S$1.9 billion in 2003, when a deadly outbreak of the Severe Acute Respiratory Syndrome virus emptied Singapore's hotels and restaurants.
Last year's investments beat the government's targets of S$8.0 billion for manufacturing and S$2.0 billion in services, reflecting strength in Singapore's economy, which grew 8.1 per cent in 2004, the fastest rate in four years and the second-fastest in Asia after China.
Facing inroads from cheap manufacturers such as China and India, Singapore's planners are placing increasing emphasis on top-end services such as funds management, transport and tourist-related businesses such as a proposed new casino.
Singapore's main sources of investment have been the United States, Europe and Japan, though investment interest from emerging economies in the Asia-Pacific, particularly from China and India, has been rising.
© HT Media Ltd. 2004.