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 capitalised on positive sentiment amid Singapore's 50 th anniversary to put in an extremely strong performance in September's parliamentary elections, capturing 69.9% of the popular vote. 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...
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 set to grow 22.5% in 2016 supported mainly by a forecasted growth of 25% in passenger vehicles as most of the national fleet nears its 10-year validity period and COE's (Certificate of Entitlement) are de-registered.
|Passenger Vehicle Growth To Be Supported By 10-Year Validity Period And COE De-registration|
|Passenger Vehicle Segment Sales|
|e/f = BMI estimate/forecast. Source: BMI/LTA|
|* Total vehicle sales...|
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: Food consumption will remain modest over our forecast period, registering a compound annual growth rate of 2.1% over 2014-2019.Technological innovations and cost-saving measures by mass grocery retailers will be realised in 2017, and a steady rise in food consumption will be observed. We forecast real GDP growth of 2.5% in 2016, with economic activity remaining tepid over our forecast period. A tight labour market will continue to put upward pressure on labour costs, reducing food manufacturing competitiveness. Rising incomes will bode well for the food and drink industry...
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: After a contraction of the hardware segment dragged down the IT market growth rate in 2015 we forecast slightly stronger performance over the medium term, with a CAGR of 4.3% forecast for 2015-2019 to a total market value of SGD9.1bn in 2019. Stabilisation of the tablet market after the boom and decline associated with the concentration of first-time buyers over 2011-2013 will support the hardware segment, but it will still underperform the software and services segments. Singapore is a leading market for the adoption of cloud services, as well as being a regional hub, and we expect strong growth to continue over 2016-2019 as vendors capitalise on the lucrative enterprise base in Singapore's economy...
BMI View: Singapore is home to a mature infrastructure sector, with extensive and modern transport, utilities and social infrastructure in place across the city-state. A slowdown in domestic economic growth has dampened short-term growth prospects in the construction sector, particularly in terms of residential construction, however overall growth is expected to be maintained throughout the forecast period, driven largely by public investment in transport infrastructure.
Forecast And Latest Updates
One of the largest projects due to enter the pipeline is the development of a high speed rail connection between Kuala Lumpur in Malaysia and Singapore - with a current estimated completion date of 2022. While no construction firms have yet been appointed, China may have an advantage following the late 2015 acquisition of a 60% stake in...
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: Despite the small size of the Singaporean pharmaceutical market, the country's consistent drive into R&D, strong government commitment towards healthcare provision and its ageing population continue to present significant commercial opportunities for pharmaceutical firms. Furthermore, per capita pharmaceutical spending is high relative to the region which will be a strong plus for innovative drugmakers.
Headline Expenditure Projections
Pharmaceuticals: SGD1.04bn (USD822mn) in 2014 to SGD1.1bn (USD788mn) by 2015; +5.4% in local currency terms and -4.1% in USD terms. Forecast maintained from previous quarter.
Healthcare: SGD18.27bn (USD14.42bn) in 2014 to SGD19.67bn (USD14.13bn) by 2015; +7....
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 witnessed a contraction in growth over H1 2015 as the slowing China economy and uneven global market recovery weigh down on investment activity and regional demand. However, the position of Singapore as a global financial hub, coupled with strong economic fundamentals, indicates great potential for the commercial real estate sector in the long-term.
Singapore constitutes an appealing location for investment activity, owing to its thriving services sector and robust financial industry that means the nation can withstand the external pressures exerted by the current global economic woes. We attribute the recent contractions in growth to the trade-orientated sectors, which have been affected by headwinds arising from moderations in regional growth and demand. Access to capital in the nation has been a benefit for investors in prior years, however lending activity is continuing to suffer from...
BMI View: We see little prospects for a significant recovery in Singapore's economic growth over the coming year, amid poor external demand conditions and ongoing domestic structural difficulties. Following a 2.1% expansion in 2015, we hold our forecast for real GDP growth to hit 2.3% in 2016. Nonetheless, we maintain our view that strong economic fundamentals will continue to drive expansion in Singapore's retail market. Supported by an extremely tight labour market and gradual wage rises, we forecast real private consumption growth to accelerate to 4.3% in 2016 (up from 3.5% in 2015).
|Headline Household Spending|
BMI View : We believe 4G and fibre-optic technology will power growth in Singapore's telecommunications market as consumers demand more complex, bandwidth-intensive premium 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 in 2016, and SingTel , M1 and StarHub...
BMI View: Singapore is a well -established and popular tourism destination in the competitive Asia Pacific region. Despite being a small city state, the country is home to a large number of attractions and the government has invested heavily in the tourism sector in recent years in order to attract more, as well as longer-stay visitors, including developing a range of tourism related attractions, from casinos through to theme parks. With visitor numbers steadily increasing and occupancy rates already high, the hotel market is attracting significant foreign investment and we are seeing a number of new properties under development, focusing particularly on the high end and luxury travel market. Supporting these positive growth expectations is...
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.