A shift towards higher-value activities in the electronics sector is helping manufacturing output stay resilient but weighing on Singapore's goods trade.
In response to queries from The Straits Times, the Ministry of Trade and Industry (MTI) said the divergence between the gradually strengthening manufacturing sector and still-lacklustre merchandise trade is due largely to shifts in electronics production.
Non-oil domestic exports fell 5.4 per cent in the third quarter over last year, according to data released on Thursday by IE Singapore. This came as the manufacturing sector expanded 1.3 per cent in the same period, supported by growth in electronics and precision engineering. The figures appear contradictory, given that about two-thirds of manufactured goods are exported.
The MTI said Singapore's electronics cluster has seen a shift towards "fabless" semiconductor firms.These tend to locate factories elsewhere in the region and focus on higher-value activities in Singapore. This has weighed on shipments of electronic goods from Singapore, while contributing to the growth of the domestic electronics cluster.
Chia Yan Min