Singapore keeps its factories open despite crippling cost increases: Bloomberg

The country has found an interesting solution.

Squeezed in among Singapore’s shopping malls, banking office towers and its casinos are thousands of factories that contribute about one-fifth of the island’s economy.

According to a report by Bloomberg, that’s the same as in Switzerland, and almost 10 times the share in rival Hong Kong. Success in shifting toprecision engineering helps provide a cushion for fluctuations in sectors such as tourism, and creates high-wage jobs that buttress spending.

“In Singapore right now more people are working on R&D rather than manufacturing; the value-add would be very much on design,” said Adeline Wong, director of Superworld Electronics Pte.

Wong’s company is another example of Singapore’s shift to niche fabrication. It has moved from mass producing batches of 10,000 to 20,000 standard-sized magnetic components for electronics products to customizing miniature transformers in batches of 500 to 1,000. The customized products are used in Hewlett-Packard Co. laptop chargers, Nvidia Corp. and Advanced Micro Devices Inc. graphic cards and mobile phones.

Here’s more from Bloomberg:

Smaller firms, which make up most of the nation’s enterprises, can tap a government program to improve productivity. Officials pledged S$3.6 billion over three years in the latest budget to extend the initiative. Among the beneficiaries is Lien’s Coway.

“We have to get ourselves ready to make these high-end products, then we are able to stay put in Singapore,” he said. “A lot of people are giving up.”