Singapore’s investment pledges drop 44% to $12.7b in 2023: EDB

Commitments from electronics firms were more than halved last year.

Singapore secured $12.7b in fixed asset investment (FAI) pledges in 2023, down 44% from the $22.5b it attracted the year prior as semiconductor commitments eased from the “exceptional spike” in 2022, the Economic Development Board (EDB) said Tuesday.

EDB’s latest year-in-view report showed the total business expenditure (TBE), or the incremental annual operating expenditure of businesses in the city-state, still climbed by 44% to $8.9m last year from $6.2b the year before. 

When realized, last year’s FAI and TBE commitments are expected to create 20,045 new jobs and contribute an estimated $26.7m in value-added per annum, up 30% from the projected $20.6m economic contribution in 2022.

EDB said global manufacturers of chemicals, electronics, healthcare and aerospace continued to invest in the country to promote supply chain resiliency, led by chemical-focused companies which accounted for 36% of last year’s FAI commitments.

Electronics companies followed with a 24% share of all the pledges last year, shrinking by more than half from its 67% FAI share in 2022.

Headquarters and professional services projects, meanwhile, accounted for 70% of all the TBE commitments last year, reflecting the city-state’s growing role as a key business hub in the region. 

EDB noted how more global companies are setting up their regional bases in Singapore as they expand in Asia, while Asian firms are using the Lion City as a launchpad for their overseas expansion plans.

“Against the backdrop of a challenging global operating environment that impacted business and investor sentiment, the flow of investment commitments demonstrate confidence in Singapore as a trusted hub for business, innovation and talent, and a gateway to a growing Asian region,” the state agency said.

Commitments related to research and development as well as innovation also increased in 2023 over the previous year, which EDB traced to the country’s growing reputation as a gateway for R&D and innovation in the region.

The United States accounted for more than half of all FAI investments last year, followed by Europe with a 25% share and Singaporean firms at 10%. 

Pledges from local firms, meanwhile, made up more than a third of all the TBE commitments last year, followed by American companies (28%) and Chinese firms (17%)

“While we have built a good pipeline of projects for the future, we are cognisant of needing to stay ahead of the competition so that Singapore remains attractive to both global and Asian corporates and start-ups,” said EDB Chairman Png Cheong Boon.

Last year’s FAI and TBE pledges also beat the government’s long-term goals of $8b to $10b in annual FAI commitments, and $5b to $7b in TBE each year.