Impact of Rise of Factoryless Goods producing Firms on Singapore's Economic Competitiveness and Exports
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the impact of factoryless goods producing firms (FGPFs) on Singapore’s economic competitiveness and job creation as raised by Mr Liang Eng Hwa. Minister for Trade and Industry Chan Chun Sing stated that FGPFs contributed 5.2% of manufacturing value-added in 2016 and provided 2,700 jobs, 80% of which were high-paying skilled roles. These firms bolster the economy through R&D partnerships with local suppliers and by generating business for supporting sectors like logistics and marketing. Minister for Trade and Industry Chan Chun Sing noted that two-thirds of these roles were filled by Singaporeans, reflecting a shift toward higher-value manufacturing activities. The Government will continue to attract investments in production and related services to strengthen the manufacturing ecosystem and boost productivity.
Transcript
60 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.
Mr Chan Chun Sing: 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 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.