Parliament: More 'high-mix, low-volume' investments coming to Singapore with US-China trade war

British pharmaceutical giant GSK opened two manufacturing facilities in Singapore last week, worth a total of $130 million.
British pharmaceutical giant GSK opened two manufacturing facilities in Singapore last week, worth a total of $130 million.ST PHOTO: MARK CHEONG

SINGAPORE - More investment involving small-batch production is coming to Singapore in the wake of escalating trade tensions between the United States and China, said Trade and Industry Minister Chan Chun Sing on Monday (July 8).

Mr Chan told Parliament that such investment - known as "high-mix, low-volume" with plants producing small numbers of varied items - is the kind of manufacturing that can relocate to Singapore.

He noted that these kinds of processes gravitate to countries like Singapore that have a strong intellectual property regime, agile regulatory frameworks and robust distribution networks.

Mr Chan's comments were in response to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), who asked how Singapore will lure investment in the light of the US-China trade war.

"Singapore doesn't compete with the rest of the regional economies for the entire shift in the global production chain," the minister said.

"There are some things that we do much better, there are some things that will not be relocated here."

Most production of "low-mix, high volume" goods will not come to Singapore, as high labour and land costs will prove deterrents, he added.

"But what will come to Singapore will be what we call high-mix, low-volume (production). This is where trust, standards, quality, assurance, intellectual property protection, will become very important. We have seen more of such investments siting in Singapore."

Mr Chan cited British pharmaceutical giant GlaxoSmithKline, which opened two new manufacturing facilities here last week.

 
 
 

The firm is investing more than $100 million to produce new medicines - an example of a company keen to site "high-mix, low-volume" production here, he noted.

"There are, and will be sectors that play to Singapore's advantage, but it doesn't mean that everything that moves out of China... will necessarily come to Singapore and that's not our strategy," he said.

Mr Saktiandi also asked about the potential impact of a US proposal to impose export controls on 14 categories of technology.

Mr Chan said restrictions on exports of what is deemed sensitive technology will have implications for the whole ecosystem. In the short term, companies and countries can take measures to shift their production or supply chains.

But the greater worry is that this will lead to a fragmentation of the global technology sector, which means the production system cannot be optimised.

"Our Singapore strategy remains that we will try to be able to inter-operate across the different jurisdictions... but we must also inspire confidence in people who put their investments here that even in such a world, we are able to manage the different sensitivities across different countries properly," he said.