SINGAPORE attracted S$12.7 billion in fixed asset investment (FAI) commitments in 2023, a sharp fall from record figures in 2022, but still above the country’s medium-to-long-term goals, said the Singapore Economic Development Board (EDB) at its annual year in review on Tuesday (Jan 30).

Despite the drop, 2023 had higher total business expenditure (TBE) per annum, job creation and expected value-add to the economy, as more projects were secured.

Singapore was still able to attract “a sizeable amount” of investments amid 2023’s challenging environment, said EDB chairman Png Cheong Boon at the briefing.

It remains uncertain, however, if the statutory board can surpass these numbers in 2024, he added, in view of increased competition and the uncertain global environment.

Many regions are facing slower growth and inflationary pressures, noted Png. Singapore is also dealing with stronger competition from other countries with “deeper pockets, more abundant resources, and much bigger domestic markets” to attract foreign direct investments.

“Rising business costs and resource constraints in Singapore have also impacted our relative competitiveness for these investments. Therefore, there is no guarantee that we will be able to secure all our desired projects,” he said, though EDB would still “try its best”.

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In 2022, an exceptional spike in semiconductor investments resulted in a record S$22.5 billion in FAI – “a bumper year” that was unlikely to be repeated, said EDB managing director Jacqueline Poh.

The lower S$12.7 billion figure was more in line with the historical average of FAI commitments for the previous five years, from 2017 to 2021, she said. It was also above EDB’s medium-to-long-term target range of S$8 billion to S$10 billion. “It wasn’t easy to secure this investment, but we are gratified that Singapore remains attractive across the board and a range of sectors, and a much larger number of projects,” said Poh.

The chemicals sector displaced electronics as the industry with the largest share of FAI commitments in 2023 at 35.6 per cent, up from 3.8 per cent the previous year.

Electronics had the second-largest share at 24.2 per cent, down from 66.7 per cent. This was followed by research and development (R&D) at 16.6 per cent, up from 6.3 per cent.

The rise in R&D and innovation-related investment commitments was due to more multinational corporations deepening their innovation footprint in Singapore and more foreign startups basing themselves here, said EDB.

Infocommunications and media did not contribute to any FAI commitments in 2023, as compared to a share of 9.9 per cent in 2022. This was due to a moratorium on new data centre projects, which was enacted in 2019 and in place until 2023.

With the moratorium now lifted, EDB has since awarded rights to companies to develop new data centres and expects FAI from this sector to pick up in the coming years, said Poh.

Investments in 2023 amounted to S$8.9 billion in TBE per annum. This was higher than S$6.2 billion in 2022 and above EDB’s goal of S$5 billion to S$7 billion.

Headquarters and professional services projects accounted for close to 70 per cent of TBE commitments, reflecting Singapore’s role as a services hub for the region, said EDB.

When realised, the commitments secured in 2023 are expected to create 20,045 jobs. This is up from 17,113 for those secured in 2022, and above the medium-to-long-term goal of 16,000 to 18,000.

Of jobs created, 58 per cent will be in services projects, 26 per cent in R&D and innovation, and the remaining 16 per cent in manufacturing.

A “vast majority” of total jobs will be for professionals, managers, executives and technicians, with most of these expected to be taken up by locals, said Poh.

The investments secured also have a projected contribution of S$26.7 billion in value-added per annum (VA), when realised. This is up from S$20.6 million for commitments secured in 2022. EDB does not provide a target range for this indicator.

For expected VA, headquarters and professional services accounted for the largest share at 61.6 per cent, followed by R&D at 20.6 per cent and chemicals at 9 per cent.

The US was once again the top source of FAI commitments at 51.9 per cent, up from 50.6 per cent in 2022. Europe remained the second-largest source at 24.8 per cent, up from 21.2 per cent.

Png said that to stay ahead of the competition, EDB will strengthen Singapore’s position as a global node for advanced manufacturing, and focus on key sectors which include semiconductors, healthcare and aerospace.

It also aims to target new engines of growth, such as the green economy, artificial intelligence (AI) and precision medicine.

Since 2021, EDB’s Corporate Venture Launchpad programme has helped 25 large companies nurture venture concepts in areas such as AI, data services, climate technology and agricultural technology.