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 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. While we believe that the tight labour market is acting as a headwind against economic growth, we do not foresee any easing from the government in the near future.

  • Singapore's real GDP growth accelerated slightly to 2.4% y-o-y in Q314, but this remains below the government's forecasted range of 2.5-3.5% for 2014. We retain our below consensus real GDP growth forecast of 2.5% for 2014, and note that risks to our 3.3% growth forecast for 2015 are likely to the downside given domestic and external pressures.

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Singapore Operational Risk Coverage (9)

Singapore Operational Risk

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BMI View: Singapore offers limited operational risks to incoming businesses. Remaining risks include the introduction of minimum wage in certain areas, increasingly stringent regulations governing the number of foreign migrant workers allowed, persistent corruption, and an overreliance on trade partners who are vulnerable to economic slowdowns. In addition, the country suffers from a lack of natural resources: It is forced to import much of its water supplies and fuel and is reliant on its neighbours for much of its energy too. This drives up costs and leaves consumers at the mercy of international tensions.

Moreover, there is limited trade flow growth potential, owing to the small population and comparatively static demand curve. However these risks are minimal in comparison to risks offered by other Asian countries, and Singapore has an overall score of 81.7 in BMI's...

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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...

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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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As we have highlighted previously, we believe an expected large number of car owners looking to replace their cars nearing the 10-year validity period will result in a surge in sales and certificate of entitlement (COE) prices will remain elevated. This has largely played out and domestic auto sales have been on a strong uptrend since June 2014, with domestic auto sales growing by 22.0% year-on-year from January to October, while COE prices have also been on an uptrend over the past few months.

We expect that policy changes announced by Singapore's Land Transport Authority (LTA) which will be implemented over the coming months to continue supporting certificate of entitlement (COE) prices across all vehicle categories. Given that the government has cut the vehicle growth rate from 0.5% to 0.25% (with effect from February 2015), we foresee fewer COEs being issued from February 2015 onwards pushing COE prices. At the same time, having more COE...

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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's consumer electronics market will continue to be lucrative for vendors, with high levels of spending per capita a feature of the market due to high incomes, a strong economic outlook, consumer demand for the latest devices and short replacement cycles. However, in terms of spending growth Singapore has one of the weaker outlooks in APAC as a result of the maturity of the market. There is high penetration of desktops, notebooks, digital cameras and flat-screen TVs, as well as for new device categories such as smartphones and tablets, meaning the Singapore market has passed through the period of strongest growth associated with rapidly rising penetration. There is upside potential if...

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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...

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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 2018. 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 2014: +1.9%; compound annual growth rate (CAGR) to 2018: +2.1%

  • Per capita food consumption growth (y-o-y) in 2014: -0.1%; CAGR to 2018: +0.3%

  • Alcoholic...

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Freight Transport

Singapore Freight Transport

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Singapore's role as a global transhipment hub is both a blessing and a curse. In times such as these, when key markets in Europe and the US are either recessionary or growing sluggishly, it can be hit by depleted freight volumes. In 2015, we forecast growth in both port and airport total tonnage volumes, benefitting from the global economic recovery - especially that in the eurozone. Both the port of Singapore and Changi airport are investing considerably, and we are confident of growth over the medium and long term.

Headline Industry Data

  • 2015 air freight tonnage through Changi International Airport to grow 1.1% after an estaimated 1.1% expansion in 2014. Growth over our forecast period (2015-2019) to average 1.2% a year.

  • The Port of Singapore's gross tonnage will grow by 5.3% in 2015, with average annual growth at 5.4% during our forecast period....

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Information Technology

Singapore Information Technology

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BMI View: Despite a downgrade to the growth outlook for Singapore's IT market in the Q115 update to reflect diminished opportunities in the hardware segment, we still expect growth in Singapore will outperform the majority of developed markets. Growth from the sales of PC and devices will be sluggish as high device penetration in the city state means little prospect for first time sales, but strong demand for premium devices will ensure it remains a lucrative market for vendors. Meanwhile, high incomes, exposure to the APAC growth story and government policy incentivising adoption of emerging technologies among...

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Infrastructure

Singapore Infrastructure

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BMI View: We continue to expect construction and infrastructure growth in Singapore to moderate over the 2014-2020 period. Real growth for the construction sector is forecast to slow from 5.9% in 2014 to 3.0% in 2019, while real growth for the infrastructure sector is expected to fall from 12.7% in 2014 to 4.0% in 2019. This moderation is primarily due to declining housing demand, longer construction periods for planned infrastructure projects and a poor export outlook, which could curb investment in non-residential buildings.

Key Trends And Developments

  • In September 2014, Singapore's Land Transit Authority (LTA) announced that Phase 2 of the Mass Rapid Transit (MRT) system's Downtown Line would open ahead of schedule in Q116. The project had previously been delayed by financial troubles at one of its key contractors, and was expected...

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Insurance

Singapore Insurance

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BMI View : The most recent results from the leading players in Singapore's life and non-life insurance segments confirm that gross written premiums have been, and will continue to grow at high single-digit rates through our 2015-2018 forecast period. The country's insurance sector is expansive, dynamic and well-developed. Notably within the non-life segment, significant opportunities will arise from changes in the country's demographic structure. More specifically, an ageing population and consequently growing healthcare expenditures are expected to boost rapid growth within the insurance sector in the foreseeable future.

Singapore has a very well developed insurance sector, both in the life and non life segments, and is also expected to experience considerable future growth in written premiums at high single-digit rates; these are strong...

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Medical Devices

Singapore Medical Devices

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BMI Industry View: One of the richest markets in the Asian region, Singapore's medical device market continues to grow strongly, with growth at over 10% per annum. 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 US$465.5mn in 2013 to US$908.3mn in 2018. By individual product area, performance is expected to range from 6.2% for patient aids to 17.1% for other medical devices.

  • As Singapore acts as a trading hub for the region, the majority of imports are re-exported. In US dollar terms, imports grew by 18.2% to reach US$3,550.5mn in 2013....

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Oil & Gas

Singapore Oil & Gas

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BMI View:  Singapore will remain a key oil hub and will likely emerge as the region's gas trade hub over our 10-year forecast period given aggressive investments into new facilities. LNG will also overtake pipeline gas imports from Indonesia and Malaysia as Singapore's dominant source of gas. While it will remain a significant refining country, it faces growing competition from emerging markets for the regional oil products market.

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Headline Forecasts (Singapore 2012-2018)
  2012 2013...

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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...

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Pharmaceuticals & Healthcare

Singapore Pharmaceuticals & Healthcare

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BMI View:  Driven by a rapidly ageing population and growing government health expenditure, Singapore's pharmaceutical sales will continue its steady growth over the next decade. This growth is only constrained by its small population. The country's high levels of education, strong patent protection and good infrastructure also makes it a highly competitive location for international pharmaceutical companies to establish research and development and manufacturing facilities as the region integrates closer with the ASEAN Economic Community.

Headline Expenditure Projections

  • Pharmaceuticals: SGD990mn (USD790mn) in 2013 to SGD1.04bn (USD830mn) in 2014; +5.5% in local currency...

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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 plan to fuel additional capacity with LNG.  Similarly, Singapore is one of the leader in renewable energy in the region. Yet feedstock constraints weigh on the overall development of renewable...

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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...

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Retail

Singapore Retail

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BMI View: Despite disappointing levels of economic growth over 2014, Singapore's disposable incomes have continued to rise, unemployed has remained low and the tourism sector remains robust. As a result of this, we forecast further growth in the retail sector over the coming five years and expect to see areas such as health, education and recreation and culture to receive the largest amounts of household spending. The city state's high cost of living will mean that the highest proportion of the household budget is channelled to housing and utility expenses. Singapore's retail market may face certain headwinds during 2015 owing to the government's ongoing economic restructuring as well as the slowdown in the Chinese economy....

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Shipping

Singapore Shipping

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BMI View:  Our 2015 outlook for the port of Singapore is that it will not overtake the port of Shanghai for the crown of the world's largest container port. We now see such a scenario as unlikely to play out, and we believe that Shanghai will in fact increase its lead over Singapore, not only this year but over our medium-term forecast period to 2019. 

Nevertheless, growth in Singapore will remain positive, buoyed by a return to growth (albeit tentative and uneven) in Europe, and the ongoing recovery in the US. 

Headline Industry Data

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Telecommunications

Singapore Telecommunications

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BMI View : Singapore continues to demonstrate its outperformance as the country continues to harbour growth opportunities due to consumers' high purchasing power and strong appetite for new products and services. In particular, 4G and fibre optics are growing rapidly and cannibalising subscriptions from older 3G, xDSL and cable technology. Its small geographic size lowers the burden of capital expenditures, and mobile penetration and blended average revenue per user (ARPU) are among the highest in the region. It has one of the smallest populations in the region, limiting its overall growth opportunities, and fierce competition between SingTel, M1 and StarHub is weighing on margins....

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Tourism

Singapore Tourism

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BMI View: We are forecasting very healthy growth across a range of key indicators for Singapore's well-established tourism market. Building upon its reputation as a well-connected regional travel hub, Singapore is increasingly targeting longer-term holidaymakers through far-reaching marketing campaigns and extensive tourist infrastructure investment. The tourism market benefits from a well-developed transport and accommodation network, as well as a highly supportive government.

Already home to one of the busiest airports in the world, Singapore is investing heavily in further expanding and modernising Changi...

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Water

Singapore Water

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BMI View: This quarter we have expanded and revised our forecasts. We now forecast water extraction by source, mains and non mains consumption, losses, treated wastewater and household connections, on top of our previous content. Overall we view the Singaporean water services sector as one of the most advanced globally, but offering limited opportunities for private sector involvement. The water infrastructure sector on the other hand is far more open. However, although the volume of available water is rising, the continued reliance on imported water can pose a risk of water shortages to heavy water-consuming industries.

Although pipelines and water projects are very much secondary in terms of value, we are seeing more activity in the water utilities...

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