SINGAPORE'S new industrial structure will be shaped by technology- and innovation-intensive activities, the central bank said on Tuesday, as it stressed the crucial role of intellectual capital in the next phase of development.
This leap forward to a knowledge- and skills-based economy - alongside its associated productivity gains - will help Singapore to overcome supply-side constraints, said the Monetary Authority of Singapore (MAS) in its twice-yearly Macroeconomic Review.
"Singapore's role in a highly-liberalised and integrated global economy will be as a supplier of high-tech and high-value goods and services, supported by a vibrant domestic technology and innovation cluster," said MAS.
Capital inputs associated with the digital revolution - such as information and communications technology (ICT) hardware, software and research and development - will be the key drivers of economic activity in the future, it added.
With increasing demand for skilled workers in these industries, Singapore's labour force will need to possess the relevant technical expertise to support and drive growth; given this, graduates with science, technology, engineering and math-related qualifications will therefore form an important component of Singapore's human capital stock.
The central bank said: "It will take focused effort over time to ensure that the typical resident worker masters the multi-disciplinary mix of technical, innovative and soft skills required in these new jobs. The launch of the SkillsFuture initiative, which will help Singaporeans develop and master skills in new growth clusters, is therefore an important step to prepare the labour force for a rapidly changing work environment."
Intellectual property will also continue to gain in importance, as part of the economy's upgrade to a new production frontier. MAS noted that Singapore's share of intellectual property products in total real capital stock (excluding construction and works) has increased gradually since 1990 to just over 20 per cent - with "strong impetus" to grow further.
MAS estimates show that technology and innovation activities, taken together, already accounted for about 18 per cent of the country's real gross domestic product in 2014. Companies that engage in technology- and innovation-related activities span both the manufacturing and services sectors; clusters include electronics and pharmaceuticals, to architectural & engineering, and professional, scientific & technical services.
But although Singapore already has one of the highest capital-to-labour ratios in the world, the central bank emphasised that there is still much room for improvement.
"The adoption of ICT capital is currently not widespread throughout the corporate sector, with a significant number of SMEs (small- and medium-sized enterprises) not owning a computer or having a presence on the web.
"In particular, sectors such as health, social & other services, construction, and transport & storage rank relatively low in these ICT-adoption indicators," said MAS.
This article was first published on October 28, 2015.
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