Debated in Parliament on 10 Sep 2018.
Mr Liang Eng Hwa asked the Minister for Trade and Industry how has the rise in the number of factoryless goods producing firms changed Singapore's economic competitiveness and its capacity to export; and (b) what are the implications to job creation and prospects as well as overall economic value-add in Singapore.
Singapore's manufacturing ecosystem has become more diverse over the years, with a shift towards higher-value activities. This includes a rise in the number of Factoryless Goods Producing Firms (FGPFs). These are firms that undertake pre-production activities, such as research and development (R&D) and product design in Singapore, but outsource the physical production to another company, which could be located in Singapore or overseas.
FGPFs contribute to our economy in several ways. First, due to the high-value nature of their activities in Singapore, FGPFs contributed to 5.2% of the value-added of the manufacturing sector in 2016, even though they accounted for around 0.5% of manufacturing firms. They also provide business to firms in supporting industries that are engaged in logistics, sales and marketing.
Second, FGPFs generate skilled and well-paying jobs. In 2016, FGPFs accounted for around 2,700 jobs in the manufacturing sector. Around two-thirds of these jobs were filled by Singaporeans. About 80% of the 2,700 jobs were skilled jobs that provide higher salaries for the workers.
Third, FGPFs conduct R&D with local contract manufacturers and equipment suppliers to jointly develop advanced production processes. Such partnerships help to strengthen the capabilities and competitiveness of our manufacturing sector.
Manufacturing remains an important part of Singapore's economy. The Government will continue to strengthen and upgrade our manufacturing capabilities by attracting investments in both production and production-related services and helping Singapore companies to raise their productivity and move into higher-value manufacturing activities.
PAPERCUTS