Singapore drawing more high-mix, low-volume investments

Most production of "low-mix, high-volume" goods will not come to Singapore as high labour and land costs will prove deterrents.
Most production of "low-mix, high-volume" goods will not come to Singapore as high labour and land costs will prove deterrents.ST PHOTO: KEVIN LIM

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 yesterday.

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 MP Saktiandi Supaat (Bishan-Toa Payoh GRC), who asked how Singapore will lure investment in the light of trade diversions and supply-chain shifts in the region.

"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 (and) intellectual property protection will become very important. We have seen more of such investments siting in Singapore."

 
 
 

Mr Chan cited British pharmaceutical giant Glaxo SmithKline (GSK), which opened two new manufacturing facilities here last week.

The firm is investing more than $100 million to produce new medicines, and is 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 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.

Seow Bei Yi

A version of this article appeared in the print edition of The Straits Times on July 09, 2019, with the headline 'Singapore drawing more high-mix, low-volume investments'. Print Edition | Subscribe