Capability of firms, workers can buffer against present economic challenges: DPM Heng

Deputy Prime Minister Heng Swee Keat urged companies here to tap programmes that help them deepen industry partnerships.
Deputy Prime Minister Heng Swee Keat urged companies here to tap programmes that help them deepen industry partnerships.ST PHOTO: MARK CHEONG

SINGAPORE - Singapore is vulnerable to uncertainties in the global environment and its buffer against present headwinds are companies and workers' capabilities, which will enable it to ride the eventual upturn, said Deputy Prime Minister Heng Swee Keat on Tuesday (Sept 24).

"But capabilities can only be built if we have strong partners who have confidence in us, and who are willing to stick with us through business cycles," he added at the Distinguished Partner in Progress Award ceremony at the Mandarin Oriental Hotel.

Companies such as US firm Applied Materials, which supplies equipment and software for the manufacturing of semiconductor chips, is one such example.

Its commitment here is a "vote of confidence in Singapore", said Mr Heng, who conferred this year's award to the firm. It has invested over $100 million here over the past decade.

The award, which was last given out in 2016, recognises companies that have contributed significantly to Singapore's economic growth, and promoted the country's interest in the social and community arena.

This is at least the third time in over a month that Mr Heng, who is also Finance Minister, is shoring up confidence in the Republic's semiconductor sector, as business outlook continues to be clouded by trade war worries, lower demand and slowing economic growth.

Singapore's semiconductor equipment industry had a total output of $21 billion last year, representing more than 20 per cent of the global semiconductor equipment market.


"We were able to achieve this, because world-leading semiconductor equipment original equipment manufacturers have built up a significant presence in Singapore," said Mr Heng, adding that Applied Materials stands out among them.

About half of the company's global semiconductor equipment is manufactured in Singapore.

It is also the single largest employer in the semiconductor equipment industry here, accounting for over 10 per cent of a 9,000 workforce.

Meanwhile, the overall semiconductor industry makes up about 7 per cent of Singapore's economy, accounting for 11 per cent of global market share.

But business sentiment in the manufacturing sector has taken a hit in recent months amid expectations of a prolonged trade war, with firms in the semiconductor industry saying they are freezing headcount.

On Tuesday, Mr Heng urged companies here to tap programmes that help them deepen industry partnerships, noting that Applied Materials has worked with both small and medium-sized enterprises and public research institutions.

These have helped boost local capabilities.

"Building win-win partnerships with world-leading companies, such as Applied Materials, is how we have grown our semiconductor industry," he said.

He stressed that manufacturing remains a key pillar of the economy, with advanced manufacturing critical to the sector's transformation and productivity growth.

To this end, the Government has committed $19 billion over five years towards its Research, Innovation and Enterprise 2020 plan, which includes advanced manufacturing as a key thrust. It is in the early stages of working on a new plan for the five years after 2020.

With Applied Materials planning to transform its facility at Changi into a smart factory, marking its first dedicated advanced manufacturing initiative, Mr Heng said he hopes its lessons can be scaled globally and that other companies can take on similar moves.

Past winners of the award include medical technology firm Becton, Dickinson in 2016. It had been in Singapore for three decades and sited its regional headquarters here, along with its largest manufacturing site and research hub in Greater Asia.

The Economic Development Board, which administers the award, said Applied Materials' support and partnership continue to create good business and job opportunities here.

At the event, EDB chairman Beh Swan Gin outlined Applied Materials' growth in Singapore, from its set-up in 1991 to the opening of its US$60 million (S$82.6 million) Singapore operations centre in 2010. This is its largest manufacturing facility outside of the United States, supported by close to 50 suppliers, both foreign and local.

"I believe the close partnerships with the supplier ecosystem is one of the contributing factors to Applied Materials' continuing growth in Singapore," he said.

Dr Beh added that at least five new products from the company’s etch and deposition product lines were designed and developed from Singapore, showing the value public research players bring to industry, and the importance of partnerships.

Applied Materials’ chief executive and president Gary Dickerson said its relationship with Singapore is at the foundation of future infrastructure for the data economy – which some say will create over US$10 trillion in economic value.

Beyond manufacturing, new areas for collaboration could include life sciences, he said. He added that the safe environment and access to talent here make it among the best places for collaboration.