By Koh Hui Theng

SINGAPORE expects to draw more businesses and up to $12 billion in investments this year, said the Economic Development Board (EDB) yesterday.

Total fixed-asset investment, or the cumulative capital that firms invest over the entire period of their project, may hit $12 billion, up from last year's $11.8 billion.

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The Government hopes to attract as much as $9 billion in total business spending in industries such as electronics and biomedical manufacturing. And the inflow is likely to add between $13 billion and $15 billion to annual gross domestic product here, and create up to 17,000 jobs for the workforce.

Improving business sentiments across the world, courtesy of the global economic recovery story, is buoying confidence here, too.

Singapore's strategic location makes it a prime spot for firms seeking an Asian base for their operations, said EDB chairman Leo Yip.

The board saw strong interest from the G-3 economies - the United States, Europe and Japan - as well as Asian enterprises seeking to locate their business headquarters here so they can tap into opportunities arising from Asia's growth.

Said DBS economist Irvin Seah: "Singapore has always emphasised that it is the gateway to Asia.

"So, it makes sense for companies to locate their HQ here if they want to tap on the strong domestic demand from countries like Vietnam and Indonesia and expand into the region."

While electronics and chemicals remain the "bread and butter" of the manufacturing industry, he expects to see a more broad-based improvement across all sectors in the days ahead.

He is especially optimistic about the electronics sector's prospects.

Mr Seah said: "Despite the layoffs, there is light at the end of the tunnel. Electronics is enjoying a cyclical upswing, though there may be some structural drag caused by firms relocating to places with lower wages and lower manufacturing costs."

Mr Seah also felt the bulk of business spending would be channelled into the pharmaceuticals and green-energy sectors, especially on research and development in green technology. While pharmaceuticals is expected to remain volatile, he is upbeat about its overall performance, adding: "Pharma was manufacturing's saviour last year, which bounced back in Q209 and Q309 largely on the back of Influenza A (H1N1).

"Though the surge is unlikely to repeat itself this year, pharma will still do well in the first half of the year, with two new plants starting production."

Another potential growth area is complex manufacturing, said EDB managing director Beh Swan Gin.

Being capital- and technology-intensive, it would play to Singapore's strengths in constantly innovating and creating value.

Recommendations from the Economic Strategies Committee in the next few weeks would also identify more areas that can help Singapore grow faster than other Asian economies.

While the G-3 countries continue to be the main source of funding, Mr Seah foresees more investments coming from the Bric - Brazil, Russia, India and China - economies in the next three to five years, particularly China and India, countries that have free-trade agreements with Singapore.

But he stressed that it is services - which contributes to two thirds of the economy - that will remain the key driver.

Mr Seah said: "We expect 6 per cent growth in this year's GDP and services is likely to make up 4.4 per cent of that." Last year, American companies accounted for over a third of total fixed-asset investment here.

They included big names like Quintiles, the world's largest pharmaceutical-services firm, nutrition-product manufacturer Abbott and Pall, a filtration, separation and purification technology specialist.

Quintiles expanded its regional headquarters in Singapore by doubling its lab facility to 7,340 sq m to meet growing demand for its services throughout the Asia-Pacific.

Shell opened a monoethyleneglycol plant in Singapore last quarter, while Renewable Energy, a Norwegian maker of solarpower components, is expected to start production in Singapore this year.

kohht@sph.com.sg

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