Singapore enjoys a very stable political system, attracting a number of our clients. It is a leading party in signing regional free trade agreements, which is likely to give the country more influence in Asia. In the face of regional competition for both exports and investment, the government is encouraging economic diversification to boost competitiveness. New areas being promoted include biomedical sciences, medical services, financial services and tourism.
We keep our clients informed of the latest market moves and political developments in Singapore, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 18 of Singapore’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our results-proven research teams. Our aim is to keep you one step ahead, so you can operate with confidence in Singapore.
Singapore Country Risk
The ruling PAP's landslide victory in 2015's elections, along with a comfortable by-election victory in May 2016, support our assertion that the party is experiencing a resurgence in popular support. However, we expect the party to broadly retain its policy strategy adopted in 2011, as its more consultative approach to governance appears to have paid significant dividends.
Singapore's ongoing restructuring drive continues, with the ruling People's Action Party (PAP) pushing ahead with stricter foreign labour rules despite an increasingly tight labour market. We believe that the tight labour market is acting as a significant headwind to real GDP growth, but do not see the ruling People's Action Party (PAP) easing measures in any significant way despite its landslide victory in September's parliamentary elections....
Singapore Operational Risk Coverage (9)
Singapore Operational Risk
Singapore Operational Risk
BMI View : Singapore offers the most appealing destination for investment in the world. This is largely because the government has successfully developed the city-state into a major global hub for trade, investment and finance by providing a stable and secure operating environment, world-class logistics connections and an open economy which is highly conducive to foreign direct investment (FDI). There are no significant risks facing businesses located in Singapore, with the main concerns stemming from increasing restrictions on the employment of foreign nationals. The city-state's minimal risks and manifold attractions are reflected in a global ranking of first out of 201 states in the overall BMI Operational Risk Index, with a score of 83.4 out of 100.
|Strong Trade and Investment Environment Improves Operational Risk Score|
|Singapore - Operational Risk Scores...|
Singapore Crime & Security
Singapore Crime & Security
Overall Singapore fares very well on the BMI Crime and Security Risk Index, with the low domestic crime rate, strong regional and international relations and well developed police and armed forces giving the country a score of 79.6. This puts Singapore in third position in the Asia region, pointing towards a very secure operating environment for potential international investors.
We see the greatest (albeit still limited) security risk to Singapore coming in the form of piracy on the Straits of Malacca, which would drastically affect the country's position as a global trade and shipping hub. We would also note that risks are heightened somewhat by Singapore's close ties with the US, and the ever-present threat of the expansionist tendencies of the militant terrorist organisation Jemaah Islamiyah. The country's strong record on counter terrorism capability helps to redeem Singapore's overall assessment for terrorism...
Singapore Labour Market
Singapore Labour Market
Singapore offers limited risks to incoming investors and businesses with regards to the labour market. The key risks are the increasingly stringent regulation surrounding the importation of foreign labour into the country, a limited overall labour participation rate as female participation is still below 60%, and the threat of rising wages. However, these risks are outweighed by the significant advantages, which include a 100% urbanised population, extremely flexible labour market and one of the best education systems in the world, resulting in a highly skilled workforce. Overall, the country receives a score of 75.1 out of 100 for Labour Market risks, leaving it in first place before New Zealand.
With regards to the school education system in Singapore, the risks to businesses are minimal as the country's...
BMI View: Singapore is a well-established regional and global trading hub, with a highly developed transport infrastructure and a government that is welcoming of international trade. There are few risks to investors with regards to the supply chain in Singapore, though we do highlight some key downward factors in terms of potential market size and utilities which could limit future growth as well as raise operating costs in the future. These considerations lead to a score of 79.9 out of 100 in the Logistics Risk rating.
Singapore's economy is heavily reliant on manufacturing, with machinery and electronics two key sectors. Pharmaceuticals are also a growth area, and the country is one of the largest crude oil refiners globally. The supply chain is well set up to cater for these industries, with specialised facilities at the...
Singapore Trade & Investment
Singapore Trade & Investment
We view Singapore as an extremely attractive, low risk destination for investment, and one which offers numerous opportunities with regards to trade. The extensive trade agreements, limited tariffs and vast trade flows due to its key geographic position offer significant advantages. Moreover, the extensive legislation protecting investors, and their intellectual property rights further limit risks. In addition, the government is actively encouraging foreign investment, as the soaring levels of FDI highlight. However, risks remain in the form of persistent corruption, and an overreliance on trade partners who are vulnerable to economic slowdowns. Therefore overall, Singapore receives a Trade and Investment risk score of 92.2, which puts it first from both a regional and global perspective, ahead of competitor Hong Kong with a score of 87.8
A commitment to a low tax regime and high levels of investment in infrastructure ensure Singapore has a...
Singapore Industry Coverage (19)
BMI View: Total vehicle sales will reach its peak in 2016 as the vehicle de-registration and replacement process drives growth. Vehicle sales will grow by 67.3% in 2016 before entering a period of sustained decline for the remainder of our forecast period to 2020.
|Passenger Vehicle Growth To Be Supported By 10-Year Validity Period And COE De-registration|
|Passenger Vehicle Segment Sales|
|f = BMI forecast. Source: LTA, BMI|
Singapore Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Singapore Consumer Electronics
BMI View: Singapore is a lucrative consumer electronics devices market, reflecting the high incomes of households and consumer appetite for the latest devices. Premium-oriented vendors have performed particularly well, most notably Apple and Samsung Electronics. The downside to these characteristics is that by 2016 most device categories are saturated, including traditional PCs, tablets, flat-panel TVs and smartphones - meaning growth prospects are limited compared to much of the rest of APAC. The market will nonetheless remain attractive due to relatively short replacement rates and high average selling prices, and there are a few product categories with potential for outperformance such as Ultra-HD TV sets once the supply of content increases, and wearable devices if vendors can make significant progress on functionality and price to truly move into...
Defence & Security
Singapore Defence & Security
BMI View: Defence spending remains a top priority for the Singaporean government which is executing a prudent military procurement agenda with a long-term outlook that will transcend the Singapore Armed Forces (SAF) into a third generation fighting force. In the future, we expect to see sustained levels of weapons imports from American and European arms manufacturers, as well as continued support for domestic defence company, ST Engineering. The key downside risk Singapore's defence expenditure stems from a GDP downturn, but we forecast positive and stable economic growth through to 2018.
BMI forecasts Singaporean defence expenditure to reach USD11.6bn in 2015 as the Ministry of Defence upholds its commitment to steady and sustained spending policy, which is focused on hi-tech weaponry. This bodes well for domestic and international security and defence firms, which will...
Food & Drink
Singapore Food & Drink
BMI View: Singapore's food and drink industry will continue to benefit from high levels of spending and tourist inflows over our forecast period. However, growth in the industry will be slow paced as consumers remain highly price-conscious. Convenience and price will be dominant cues for consumer purchasing decisions throughout our forecast period.
|Food and Drink Spending|
|f = BMI forecast. Source: BMI, national sources|
Singapore Freight Transport
BMI View : We hold a positive view on Singapore's freight transport sector in 2016. Although the highly developed nature of the market means that growth will be steady rather than spectacular, an improving outlook in the global economy and ongoing investment in the freight transport network will ensure a continued expansion this year and beyond.
Trade growth in Singapore will remain positive in both real and nominal terms in 2016 and over our medium-term forecast period to 2019. Domestic demand does not paint the whole picture when it comes to Singapore's freight transport sector, however, and as a major global transhipment hub the country handles trade volumes from all over the world. As such, the freight transport sector can be seen as a barometer for the global economy.
According to our projections, road haulage volumes in...
Singapore Information Technology
BMI View: The brightest areas of Singapore's IT market in our medium term outlook are cloud computing and emerging technology solutions around the internet of things. The advanced and high value enterprise mix in Singapore, combined with a supportive policy environment and strong network infrastructure, make it a leading regional market for the latest solutions. This is in contrast to the core market for devices and solutions, where saturation means growth potential is diminished and spending is expected to be flat over the medium term. Singapore will however continue to be a lucrative market for vendors, with high levels for IT spending per capita. We expect total IT spending will increase at a CAGR of 3.4% over 2016-2020 to SGD8.8bn in the final year of our forecast.
Latest Updates & Industry Developments
BMI View: Singapore's construction sector will grow at a subdued pace over the coming years particularly due to the slowdown in residential construction as property prices continue to fall. However, continued public investment in transport infrastructure will prevent construction growth from slowing down significantly.
Latest Updates And Structural Trends
We revised lower our 2016 construction growth forecast to 1.5% (versus 2.6% previously) as a result of a weak domestic economic growth environment, which is compounded by slowing activity in residential construction.
Over the next decade through to 2025, the Singapore government's continued commitment to invest in public infrastructure such as transport and non-residential infrastructure will support construction activity.
BMI View: Aside from motor vehicle insurance, most sub-sectors of Singapore's non-life segment - and the life segment - should benefit from the continuing growth of the emerging markets of ASEAN over the course of the forecast period. We have increased our forecasts for both major segments relative to those of Q116.
Singapore Medical Devices
BMI Industry View: Rising healthcare costs have led to a revamp of the country's medical insurance scheme in 2015 making it compulsory for all. Demand for healthcare has also resulted in new healthcare development projects announced through to 2020. The large biomedical production industry continues to be a major sector in Singapore's total manufacturing output and the country continues to serve as a distribution hub for the region.
|Total (USDmn)||Per Capita (USD)||...|
Oil & Gas
Singapore Oil & Gas
BMI View: Singapore will remain a large net importer of crude oil due to the country's large downstream sector, which is the largest in South East Asia. While the country will retain its refining hub status in the region, it will face increasing competition from refiners in emerging markets such as China and India. The maritime sector will continue to account for the largest source of domestic oil demand over the next decade.
Singapore will struggle in 2016 in the face of a Chinese downturn and regional oversupply, which is undermining export growth and reducing margins. However, recovery is expected in the medium term as producers diversify markets, with India and Indonesia likely to compensate for losses in exports to China.
The Jurong Aromatics Company (JAC) complex, of the world's largest aromatics complexes, is now in the control of receivers following its shutdown in December 2014 after just four months of operation. The complex consists of a condensate splitter and plants with capacity for 800,000 tonnes per annum (tpa) of PX, 200,000tpa of OX and 450,000tpa of benzene using UOP technology. It can also produce 2.5mn tpa of fuels, including jet fuel and kerosene. Receivers will seek a debt resolution which could see it back in operation in 2016.
The JAC shutdown and sluggish markets meant that the...
Pharmaceuticals & Healthcare
Singapore Pharmaceuticals & Healthcare
BMI View: Non-communicable disease will continue to dominate Singapore's epidemiological profile, creating strong commercial opportunities for medicines addressing these illnesses. Companies seeking to benefit from these revenue earning prospects will have to compete with the population's ongoing use of alternative treatments as a supplement to conventional medicine.
Headline Expenditure Projections
Pharmaceuticals: SGD1.10bn (USD798mn) in 2015 to SGD1.15bn (USD790mn) by 2016; +5.1% in local currency terms and -0.9% in USD terms.
Healthcare: SGD19.67bn (USD14.31bn) in 2015 to SGD21.15bn (USD14.50bn) by 2016; +7.5% in local currency terms and 1.3% in USD terms.
BMI View: While other thermal sources - mainly oil - play a role, most of Singapore's electricity is generated from natural gas. From this perspective it should be noted that the country plans to fuel additional capacity with LNG. Similarly, Singapore is one of the leaders in renewable energy in the region. Yet feedstock constraints weigh on the overall development of renewable capacity. G...
Singapore Real Estate
BMI View: Singapore is a global financial and retail hub, with a strong tourist trade and a resilient economy. The commercial real estate market is mature, and has a large number of domestic and international players. However, Singapore's economy is externally oriented, and as such growth in the commercial real estate sector could be dampened by a global slowdown.
Economic growth was slow over 2015 due to a slowdown in major trade partner China. Although a recovery in global markets is expected to boost the Singaporean economy in 2016, we expect growth in the commercial real estate sector to be subdued. The office sub-sector should be more dynamic than the other two sub-sectors that we cover, retail and industrial. Indeed, the industrial sub-sector is currently affected by oversupply, and rental values may fall.
Singapore's economy managed to stave off...
BMI View: Exposure to international financial and product markets will cause a slowdown in Singapore's economy. Worsened consumer sentiment will negatively affect retail sales and push smaller, niche retailers out of the market. However, the shift towards e-commerce will prevail as firms rush to offer not only top-notch online shopping services but also new ways of combining physical and online retail environments. The trend will likely provide the market with more resilience in the medium term.
|Headline Household Spending|
|e/f = estimate/...|
BMI View : With most citizens online, the digital services sector generates high levels of turnover and provided the impetus for the formation of a new regulator, the Info-communications Media Development Authority (IMDA now). We expect the launch of more new services and innovative products in 2016 as incumbent operators step up efforts to safeguard profits and subscriber market shares from the threat of a potential new operator.
|New Entrant Will Need A Disruptive Strategy To Wrestle Subscribers Away From Incumbents|
|Singapore Mobile Market Forecasts|
BMI View: Singapore has a very well-established and developed tourism sector. The country remains a popular stopover destination for long-haul travellers and is a growing short-haul destination for visitors from countries throughout the Asia Pacific region, particularly China and Indonesia. Although a small city state, Singapore offers a broad range of tourism attractions. We expect international arrivals to increase at a robust pace throughout our forecast period to 2020, supported by ongoing public investment in transport infrastructure and the hotel sector as well as benefitting from a pro-active global marketing campaign, providing a boost to already high tourism related expenditure and healthy industry value.
BMI View: The government has made water availability, water technologies and environmental conservation the key areas of focus over the past few years, and this, in conjunction with the surging demand for residential and industrial water solutions, has driven interest in the Singaporean water industry, with rising numbers of domestic and international players present in the infrastructure, management and utilities sectors.