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.

Country Risk

Singapore Country Risk

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Core Views

  • Singapore's restructuring drive continues, and record tightness in the city-state's labour market is acting as a drag on real GDP growth. However, we do not see the ruling People's Action Party (PAP) easing its immigration measures in any significant way ahead of parliamentary elections.

  • The PAP is likely to call elections in H215 in order to capitalise on positive sentiment surrounding the country's 50 thanniversary since independence, as well as the government's bumper budget for FY2015/16.

Key Forecast Changes

  • Following a deceleration in real GDP growth to 2.9% in 2014, we believe that...

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Singapore Operational Risk Coverage (9)

Singapore Operational Risk

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BMI View: Singapore is an extremely attractive, low-risk destination for investment, and one which offers numerous opportunities with regards to trade. The extensive trade agreements, low tariffs and vast trade flows, due to its key geographic position on major global trade routes, offer significant advantages. Moreover, the well-developed legislation protecting investors and their intellectual property rights (IPR) further limit risks. The government is actively encouraging foreign participation in the economy, as the soaring levels of foreign direct investment (FDI) highlight. Although risks remain in the form of persistent corruption, and an overreliance on trade partners which are vulnerable to economic slowdowns, these do not detract...

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Singapore Crime & Security

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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...

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Singapore Labour Market

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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...

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Singapore Logistics

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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...

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Singapore Trade & Investment

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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...

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Singapore Industry Coverage (20)

Autos

Singapore Autos

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BMI View: After outperforming in the Singapore auto market in 2014, we expect volume brands to continue enjoying strong demand in 2015 on the back of a rising number of COEs, as well as a weak Japanese yen.

We previously highlighted in late 2013 that the proposed revision to the country's COE system would help mass market brands claw back market share from their premium segment counterparts, which had been outperforming before 2014 ( see 'New COE Regulation Could Reverse Sales Trends', September 17 2013). True enough, when the Land Transport Authority (LTA) introduced the additional horsepower criterion for Category A vehicles, most luxury brands were pushed out of it, which helped increase demand for volume brands in the segment.

This revision coincided with a rising quota of COEs in 2014 as an increasing number of cars were...

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Commercial Banking

Singapore Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Singapore Consumer Electronics

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BMI View: Singapore has one of the weaker growth outlooks in the Asia Pacific region as a result of the maturity of the market, which is evident in the high penetration of desktops, notebooks, digital cameras and flat-screen TVs, as well as for new device categories such as smartphones and tablets. This means the Singapore market has passed through the period of strongest growth associated with rapidly rising penetration. There is upside potential if wearable computing devices prove mass market appeal in Singapore, or if uptake of ultra-HD TV sets exceeds our...

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Defence & Security

Singapore Defence & Security

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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...

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Food & Drink

Singapore Food & Drink

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BMI View: Singapore has one of the highest levels of food consumption in the region, which effectively eliminates the possibility of substantial industry growth in the short or medium term. This is illustrated by our modest sales growth forecasts for a majority of sub-sectors to 2019. Nonetheless, we believe that the Singaporean alcoholic drinks market has not reached a saturation point yet and holds significant growth potential over our forecast period.

Headline Industry Data (local currency)

  • Total food consumption growth year-on-year (y-o-y) in 2015: +1.9%; compound annual growth rate (CAGR) to 2019: +2.1%

  • Per capita food consumption growth (y-o-y) in 2015: +0.1%; CAGR to 2019: +0.4%

  • ...

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Freight Transport

Singapore Freight Transport

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BMI View : Our forecasts for Singapore are mixed in the near term. Although we expect that air freight volumes will enjoy a positive - albeit fairly sedate - expansion, we envisage a moderate decline in road haulage. This disparity can be explained by the fact that while Singapore's road haulage volumes deal almost exclusively with the domestic market, air freight in the city state is geared hugely towards international transhipment, with Changi International one of the world's largest airports. Nevertheless, over the medium term growth will be predominately positive, although lacklustre, reflecting in part how developed a market Singapore is.

Although real growth in Singapore's total trade will be fairly slow in 2015, at just 1.4%, we expect that it will pick up over the remainder of our medium-term forecast period, averaging 4.2% from 2016 to 2019...

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Information Technology

Singapore Information Technology

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BMI View: We made a minor downgrade to our forecast Singapore's IT market in 2015 in the Q2 2015 update, with the revision a reflection of the weaker economic outlook in terms of economic growth and currency performance. However, we still expect growth in Singapore will outperform the majority of developed markets in 2015 and over the medium term. Growth from the sales of PC and devices will be sluggish as high device penetration in the city state means there is...

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Infrastructure

Singapore Infrastructure

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BMI View: We expect growth for Singapore's construction sector to moderate over the coming years, as softening residential property demand, a weaker export outlook, and longer construction periods will be a drag on growth. Consequently, we forecast the sector to grow by an annual average of 2.8% between 2015 and 2019, which represents a significant slowdown from the 10-year historical average growth rate of 8.8% registered between 2005 and 2014 annually.

Key Trends And Developments

We believe that Singapore's construction sector will continue to moderate over the coming years, and forecast the sector to grow by an annual average of 2.8% between 2015 and 2019. This represents a significant slowdown from the 10-year historical average growth rate of 8.8% registered between 2005 and 2014 annually.

  • The...

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Insurance

Singapore Insurance

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BMI View : Singapore's Central Provident Fund (CPF) is a key institution that promotes organised savings in a country with a high savings rate. In other countries, the retirement income solutions that are delivered by the CPF might come from the life insurance sector. However, life insurance premiums and density should continue to rise - from already high levels - thanks to official initiatives to promote the segment and innovation by the insurers themselves. The ageing of the population also augurs well for the likely development of health insurance, both through the forecast period and beyond. The general growth of the ASEAN economies, and the boost to trade through the regional Free Trade Area, provide opportunities for non-life (re)insurers in offshore non-life insurance.

The excellent business environment of...

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Medical Devices

Singapore Medical Devices

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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.

Headline Industry Forecasts

  • The Singaporean medical device market, in US dollar terms, is expected to grow by a CAGR of 14.3% which should take it from USD465.5mn in 2013 to USD908.3mn in 2018. By individual product area, performance is expected to range from...

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Oil & Gas

Singapore Oil & Gas

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BMI View: LNG imports will make up an increasingly significant part of Singapore's gas mix, as it ramps up on LNG import capacity and as pipeline supplies from neighbours dwindle. Oil consumption will continue to be supported by Singapore's status as the world's busiest port, though increasingly stringent environment regulations could shift bunker demand away from heavy fuel oil and towards middle distillates.

...
Headline Forecasts (Singapore 2013-2019)
2013 2014e

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Petrochemicals

Singapore Petrochemicals

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BMI View: Singapore's petrochemicals industry continued to surge in 2014 as aromatics production capacity was boosted by projects on Jurong Island, securing the city state's position as a major supplier to the Chinese market, according to BMI's latest Singapore Petrochemicals report.

In 2014, BMI estimates petrochemicals output growth of around 16%, compared to 7% chemicals growth. The completion of SK Global Chemical (SKGC) subsidiary Jurong Aromatics Corporation (JAC)'s aromatics project in Q314, added condensate splitter and plants with capacity for 800,000 tonnes per annum (tpa) of paraxylene (PX), 200,000tpa of orthoxylene (OX) and 450,000tpa of benzene. This should sustain output growth over 2015.

The task now facing the industry is to add value to...

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Pharmaceuticals & Healthcare

Singapore Pharmaceuticals & Healthcare

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BMI View: Challenges to Singapore's medical tourism sector will intensify. Critically, the high cost of medical treatment relative to its regional peers will serve as a financial deterrent for foreign patients, which are further exacerbated by the strength of the Singapore dollar. In addition, government support has remained limited as compared with Thailand and Malaysia, which will see Singapore losing medical tourists to these competing hubs. This will in turn pose downside risks to multinational drugmakers as medical tourism has been a strong source of demand for high value medicines.

Headline Expenditure Projections

  • Pharmaceuticals: SGD1.04bn (USD822mn) in 2014 to SGD1.1bn (USD808mn) by 2015; +5.3% in local currency terms and -1.7% in USD terms. Forecast maintained from previous...

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Power

Singapore Power

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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...

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Real Estate

Singapore Real Estate

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BMI View: The Singaporean commercial real estate continues to boast some of the strongest fundamentals in the Asia Pacific region and we expect this to continue in the long term despite the current slowdown within the real estate sector and the wider economy. The country's position as a global financial centre combined with rising income levels and a one of the world's busiest ports bolster the overall potential of the sector.

Singapore's reputation as a global financial centre is helping to ensure that the commercial real estate market remains relatively unaffected by the slowdown experienced in the wider economy. Demand remains robust across at the office, retail and industrial segments owing to the country's...

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Retail

Singapore Retail

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BMI View: Despite being a small country and economy, with a population of around 5mn, Singapore has seen robust growth compared with other regional countries. The expected growth in the economy is likely to translate to higher levels of income and spending levels of the local population. The extremely high levels of disposable income represent excellent opportunities for retailers as there are many purchases for non-essential goods, particularly those of which are deemed fashionable and modern.

Singapore is home to some of the most modern retail formats on the globe, with a huge amount of shopping mall complexes relative to their small population size. With shopping malls often being located adjoining the subway (MRT) stations throughout the city. Orchard...

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Shipping

Singapore Shipping

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Our projections for the Port of Singapore indicate positive growth rates over the next five years. Gross tonnage in terms of throughput tonnes will expand an average 2.6% yearly from 2015 to 2019. During the same period, box handling capacity and total trade will grow by a y-o-y average of 1.9% and 3.9%, respectively. Negotiations over a possible Trans Pacific Partnership trade deal are advancing and the deal will increase the port's trade flows. Expansion projects at the port are continuing and will help Port of Singapore remain competitive in the evolving industry. Pasir Pejang development phases are under way to allow mega vessels to use the port and a liquefied natural gas (LNG) bunkering project is planned, to provide refuelling services to the increasing number of LNG-fuelled vessels.

Headline Industry Data

  • The...

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Telecommunications

Singapore Telecommunications

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BMI View : Premium products are services that will further drive the development of Singapore's telecommunications market. We believe 4G and fibre-optic technology will power this growth as consumers increasingly demand more complex, bandwidth-intensive rich media services. With most citizens now online, the digital services sector generates high levels of turnover. It is not surprising, therefore, that at least two companies have expressed interest in the country's fourth mobile licence. A cost-focused new entrant would disrupt the market and existing players - SingTel , M1 ...

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Tourism

Singapore Tourism

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BMI View: Singapore has a very well developed tourism market, benefiting from the country's position as a regional and global transit hub. The hotel market is competitive and maintains high occupancy rates which, along with Singapore's stable economic and political environment, makes for an attractive investment prospect. There are some short-term headwinds to growth, including a decline in arrivals from some Asian markets due to the strong Singapore dollar; but over the long term, we expect to see significant growth across all key market indicators.

2014 was a difficult year for the tourism sector in Singapore as a change in tourism laws in China led to a decline in arrivals...

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Water

Singapore Water

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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.

Water is a precious resource is Singapore - a country with few traditional water sources of its own that has conventionally imported water from Johor, Malaysia. The World Resources Institute (WRI) classed Singapore as in the 'extreme' category of water stress - putting it on a par with arid nations such as Saudi Arabia and Kuwait. Evidence of this stress can be seen in the recent water shortages and threats of rationing which loomed in the first two months of...

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