Singapore development board credits prosperous island nation transformation to manufacturing

Singapore, in the Malay language, means "Lion City." Considering its manufacturing prowess, the lion may be ready to roar.

Since gaining independence in the mid-1960s, Singapore has transformed itself from a trading outpost and fishing village into an island nation with the highest standard of living in Asia—and the 11th highest in the world. Establishing a versatile manufacturing base is the strategic centerpiece of its continuing emergence as an economic player in the region.

"Over the last four decades, we've focused on building up manufacturing as key to our economy," says Aylwin Tan, deputy director of Singapore's Economic Development Board (EDB), the agency chartered with engineering the transformation. "Manufacturing as a share of gross domestic product [GDP] has grown from 14 percent in the 1960s to 27 percent in 2005, while at the same time the gross national product has increased eightyfold. So you can see the impact manufacturing has had. And we aim to double manufacturing output to [U.S.] $189 billion by 2018."

The EDB sees manufacturing as the means to address high unemployment while nurturing development of skilled diversity in Singapore's workforce. "Manufacturing also allows us to connect to the rest of the world," says Tan.

The city-nation of Singapore is situated between China—with a population of 1.3 billion—and India, with 1.2 billion people. Add in another 500 million for the 10 countries that comprise the archipelago of Southeast Asian nations, or ASEAN, "and we have half the world's population at our doorstep," Tan asserts.

Being thusly situated has proven a boon to investment in Singapore. In 2005, fixed asset manufacturing in the country surpassed forecasts, totaling U.S. $5.3 billion—and investments in business services reached U.S. $1.6 billion. Biomedical sciences comprise the biggest contributor in terms of valued added per annum, with strong investments also seen in electronics, chemicals, and precision and transport engineering.

"Singapore accounts for 40 percent of ASEAN trade, and 40 percent of the investment in the region as well," Tan says. "We're going to continue to invest, especially in R&D in both manufacturing processes and products [pegged at close to U.S. $8 billion over the next four years]. This will hopefully bring the percentage share of R&D from 2.2 percent of GDP to 3 percent."

Companies benefiting from this focus on R&D, Tan adds, includes Seagate, the storage technology company; and Motorola, which doubled its R&D team to more than 700 in the last three years.

The EDB is looking for growth in new industries, including digital media, nanotechnology, energy, and security. It aims to nurture its engineering talent pool through collaborative programs with universities in Japan, Australia, and the U.S., including projects with both the Massachusetts Institute of Technology and Stanford University. It's also seeking to increase the pool of skilled manufacturing workers among its general labor force from 32 percent currently to 50 percent by 2018.