EDB remains upbeat on pharma biotech, semiconductor sectors

The semiconductor and pharmaceutical biotechnology sectors have thrived amid the Covid-19 pandemic and are expected to keep attracting global investments into the Republic, said Economic Development Board (EDB) chairman Beh Swan Gin yesterday.

Recent investments by industry giants are telling: Semiconductor manufacturer GlobalFoundries announced in June that it would invest US$4 billion (S$5.4 billion) in a new fab, or manufacturing plant.

Vaccine maker BioNTech will set up its South-east Asia regional headquarters and an mRNA manufacturing facility in Singapore, while pharma giant Sanofi Pasteur is investing €400 million (S$639 million) to build a vaccine production centre here.

"The semiconductor industry seems to continue to have very strong tailwinds because of the overall digitalisation of industries and the economy, and the electrification that's taking place in many sectors like the automotive sector," Dr Beh told reporters in a virtual interview held in conjunction with EDB's 60th anniversary.

Companies that produce medical devices such as polymerase chain reaction machines are also doing well and expanding capacity amid the pandemic-driven demand, he added.

The technology sector is also performing well, with American as well as Chinese tech companies, such as ByteDance and Tencent, having expanded their presence in South-east Asia and Singapore, said Dr Beh.

But Singapore will have to navigate several "drivers of change" and transform itself to keep growing, he added. The first consideration is the rise of Asia, which has contributed much to Singapore's economic success.

"Asia is definitely a major part of our operating landscape today, much more so than even as late as a decade ago," said Dr Beh, adding that the Republic has seen capital inflows from Asian companies, and local businesses are also keen to tap the pockets of talent in many parts of the region.

Technological advancements - accelerated by the coronavirus outbreak - have also disrupted many industries and enabled young companies to scale up and become industry leaders.

Dr Beh said another driver of change is the shifting geopolitical environment, including the United States-China contestation: "Many countries have become a bit less enthusiastic about globalisation... I won't call it a reversal of globalisation but it's definitely a slowdown."

Countries, including Singapore, also have to address climate change and take steps to decarbonise businesses and economies, as well as spur innovation.

The Republic needs to respond to these trends by shifting from an investment-driven economy to one with Singapore-based regional leaders that have innovative products and services, said Dr Beh, citing tech firms Sea and Grab as examples.

Asked about the impact of regional Covid-19 resurgences on Singapore's economic growth, Dr Beh said there are lingering uncertainties such as new waves of Delta variant infections in the country's trading partners and possible new variants.

But Singapore will continue to diversify its sources of investments as well as the markets and industries of its trading partners to mitigate these risks, he said.

The Republic's small population is also attractive to global vaccine makers, as the production capacities of their potential manufacturing facilities can easily exceed the vaccine needs of the local population, and they are therefore less worried about export controls.

"It will definitely help us to have early access to vaccines in the future if new pandemics emerge," said Dr Beh.

Asked how Singapore will be affected by a landmark deal to back a global minimum corporate tax rate of at least 15 per cent, Dr Beh reiterated EDB's stance that it supports a multilateral effort to create a level playing field for attracting investments.

But he added that tax incentives are not unique to Singapore and have therefore "not been a differentiator for a long time".

"We are quite comfortable and confident that over the past five, six decades of development, Singapore has built up very strong value propositions that can attract companies to come... Companies are here for Asia, and not just choosing a location that allows them to maximise their profits."