Strategy for Attracting Foreign Direct Investments in Post COVID-19 Era

Mr Patrick Tay Teck Guan asked the Minister for Trade and Industry how will the Government continue to attract foreign direct investments during these challenging times and moving ahead given that Singapore is one of the most expensive cities and companies are reviewing their investment plans, restructuring, and offshoring their businesses after experiencing the viability of remote work/ or work-from-home arrangements.

Attracting foreign investments will be much more difficult in this environment where supply chains will be reshuffled. Various countries are rolling out generous incentives to compete for investments, and businesses are considering relocating their supply chains closer to final demand markets.

Despite these challenges, there are opportunities to be captured. In the Asia-Pacific region, the Regional Comprehensive Economic Partnership (RCEP) is likely to accelerate regionalisation. Southeast Asia may also grow as a production base as countries and companies seek to diversify their footprint. To seize these new opportunities, we, i.e. the Government, our businesses and our people, must work together to adapt quickly and chart a new path.

First, we seek to be a critical node in the global system, by strengthening all dimensions of connectivity with the world – physical, financial, and digital. Singapore may be an island nation, but we cannot be cast away in a globally connected world. We must continue to keep our physical links open, so that companies can trade with the rest of the world. We must strengthen our financial hub, for capital is the lifeblood of the global economy. COVID-19 has also emphasised the importance of the digital economy and we must leverage this by establishing greater digital connectivity with like-minded partners to facilitate the exchange of data.

Second, we must be in a position to value-add to businesses who choose to work with us. Investors choose Singapore not because we have a large domestic market, abundant resources or that we are cheaper, but because we have an integrated eco-system of strengths that is hard to replicate elsewhere and add value to their businesses. These strengths include being trusted, open and consistent. We have also been restructuring our economy – focusing on productivity, innovation and skills upgrading – to build capabilities that are hard to replace.

Third, we must remain open to ideas, technology and talent. We seek to be the place where new business ideas, new technologies can find its roots to grow. At the same time, we must remain open to talent, especially in emerging industries and to supplement our labour force. The availability of foreign talent is a major consideration for multinational companies on whether to invest in Singapore. Many are concerned about the ongoing public debate on foreign talent in Singapore, and are asking us whether we are no longer as welcoming as before. As Prime Minister shared in Parliament on Wednesday, we must strike this new balance carefully – continue to stay open, but making sure that our own workers can compete fairly with the world’s best.

During this challenging time, we need to continue to be intentional and exceptional in our capabilities, connectivity and other eco-system value propositions, and remain open to compete for these investments so that we can build a future Singapore with opportunities for all.