Esp in SMEs: They are not daft.
The latest figures show the manufacturing sector contracted by 2% in the same period, a reversal of the 1.7% expansion seen in the previous quarter. On a quarterly basis, manufacturing contracted by 5.8%, the MTI said.
And this very late Dec CNA report paints a gloomy picture of the sector. Better not to work, rely on parents and KPKBed against PAP administration in cyberspace?
The Republic’s manufacturing sector has been undergoing a transition as manufacturers seek to revamp their businesses and move up the value chain. With an uneven global economic outlook, analysts have said growth in the sector could continue to remain depressed.
This year, Singapore manufacturers continued to grapple with rising labour costs and structural shifts in the economy.
Some firms are starting to look ahead, in the hope that regional initiatives such as the ASEAN Economic Community could unlock more opportunities.
Mr Douglas Foo, president of the Singapore Manufacturing Federation, said: “It continues a work in progress in terms of transformation. With the ASEAN Economic Community 2015, there will be on-stream a lot more harmonisation within the whole ASEAN community, and that actually creates a huge opportunity because right now, there are a lot of different barriers, trade barriers and different types of areas which people have to manage and work with in terms of challenges.”
“But with that push at the top end to move and try to harmonise the whole ASEAN Economic Community, I think the manufacturing (sector) will have a very key potential in playing a much bigger role in how you place yourself within that bigger ecosystem,” Mr Foo added.
Electronics – a mainstay of manufacturing – accounts for almost a quarter of output annually. However, the cluster has remained sluggish in 2014, partly due to a global shift in technological preferences from computers to mobile devices.
Economists said restructuring efforts and a concerted shift toward manufacturing services are especially critical for the cluster if it wants to remain relevant.
Mr Francis Tan, an economist from United Overseas Bank, said: “Increasingly, we are seeing semiconductor firms transforming themselves, no longer making the product in Singapore but doing a lot more higher value-added services in Singapore.”
“By that I mean looking at things like research and development, or design or even looking at the logistics distribution or product testing capabilities, and these are actually the kind of services that will attract even higher value-add. And if you attracting even higher value-add, it means you are seeing an increase in the labour productivity, and I think in the long term, this is a good strategy and a good way to go,” he added.
ECONOMISTS WARN OF POSSIBLE PERIOD OF MUTED GROWTH
Looking ahead, economists said an uneven global recovery going into next year would continue to weigh on the manufacturing sector.
With the majority of manufacturing going to Singapore’s external economy, they warned that if global conditions do not pick up, the sector could be in for a period of muted growth.
Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said: “If you still continue to see that uneven growth and demand trajectory you saw in 2014, then you are going to see some of these pockets of volatility in the manufacturing sector.”
“So I am cautiously optimistic but I will not say I am really optimistic about manufacturing per se, because I think the growth story for Singapore going forward is going to be one that is fairly steady, but not quite spectacular. So you will not get any outperformers on a sectoral basis like what manufacturing used to do in the past recoveries,” she added.
Manufacturing remains a key pillar for Singapore, contributing almost 20 per cent of the country’s GDP. In the third quarter of this year, the sector grew 1.9 per cent year-on-year, mainly driven by the biomedical and chemicals sectors.
CNA 26 December 2014