Firms spent record $5.2b on R&D in 2014

Companies spent a record sum on research and development in 2014 despite the slowing economy, according to an annual survey.

The latest National Survey of Research & Development shows that private-sector R&D spending hit an all-time high of $5.2 billion in 2014.

This was the highest level since the first such survey was conducted by the then Ministry of Science and Technology in 1978.

Private-sector R&D investment was up 16 per cent in 2014 from 2013, and complemented public-sector expenditure of $3.3 billion.

The Government intends to spend $19 billion on R&D from this year until 2020, up from a budget of $16.1 billion for the 2011 to 2015 period.

The survey is conducted annually by the Agency for Science, Technology and Research (A*Star), which released the numbers to The Straits Times yesterday.

Local companies contributed the most to the rise in corporate R&D spending. Their R&D expenditure rose 23 per cent from $1.36 billion in 2013 to $1.67 billion in 2014.

Electronics firms spent the most on R&D at $2.3 billion, or about 44 per cent of total private-sector expenditure. This was largely thanks to multinationals and large local enterprises in the semiconductor industry, said A*Star.

Other sectors which saw steady R&D investment growth include biomedical sciences, precision engineering, infocomm and media, and chemicals.

Small and medium-sized enterprises (SMEs) also pumped in more money - SME spending on R&D hit a record high of $795 million in 2014, a 38 per cent jump from 2013.

The survey also showed that the number of R&D jobs here reached 42,100 in 2014, up 2 per cent from 41,300 in 2013.

"Weak economy or not, companies see the long-term value in investing in R&D, as it will help them to boost productivity and churn out unique products as well as value- added services," said Associate Professor Tan Sze Wee, executive director of A*Star's Science and Engineering Research Council.

Companies said R&D has given them a stronger edge and contributed towards better sales.

Optical solutions firm Moveon Technologies, for instance, spends almost $2 million a year on R&D and has a team of about six research engineers. Its products are embedded in mobile phones, projector lenses and thumbprint scanners, among other applications.

The company developed a faster and cheaper method of manufacturing optical components about four years ago. The idea was conceived in-house, but A*Star researchers worked with the firm to fine-tune the mass production process.

Founder and chief executive Chee Teck Lee said products made with this method now comprise about 35 per cent of the company's revenue.

"We see strong growth opportunities as more customers become familiar with the technology," he said.

Moveon Technologies has 80 staff in Singapore and another 150 in its factory in Malaysia.

Manufacturers here are facing rising business costs and a tight labour market, on top of having to deal with the ongoing global demand slowdown. But Mr Chee said that about a quarter of the company's manufacturing is still done here.

"It's important that we keep some manufacturing operations in Singapore to retain the engineering expertise here.

"We should not be in the cost game. Instead, we should be developing businesses and solutions that are innovative."

The company is now developing a process for manufacturing optical components invisible to the naked eye, which can be used in autonomous vehicles and high-resolution augmented reality screens.

This article was first published on February 4, 2016.
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