Written reply to PQ on Strategies and Mitigation Efforts to Counter Decline in Singapore's Appeal to MNCs

Question

Mr Yip Hon Weng: To ask the Deputy Prime Minister and Minister for Trade and Industry given reports that foreign companies are leaving Changi Business Park (a) whether there is an observable trend of MNCs moving their back-end operations to more cost-effective countries; (b) what are the factors leading to a perceived decline in Singapore’s business appeal and what are the strategies being implemented to counteract this trend; and (c) beyond financial grants, what other proactive measures are being adopted to ensure that businesses continue to view Singapore as a conducive environment for growth and innovation.

Written Answer by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong

1. Singapore’s economy remains competitive. This year, we ranked first in the International Institute for Management Development’s World Competitiveness Ranking. EDB’s and the Singapore Department of Statistics' latest surveys of companies in the manufacturing and services sector respectively also indicate that firms continue to hold a positive outlook of business conditions.

2. We also continue to be an attractive location for new investments. For example, the cloud service provider Amazon Web Services is investing S$12 billion in Singapore over the next four years for cloud and AI projects. In addition, pharmaceutical company AstraZeneca is building a S$2 billion manufacturing facility for antibody drug conjugates. Vanguard and NXP Semiconductors plan to invest $7.8 billion in a new wafer manufacturing facility in Singapore. These new investments will create significant job opportunities for Singaporeans and generate economic growth.

3. As we continue transforming our economy to be more innovative and productive, we expect that more companies will renew and refresh their activities here in Singapore. This may include relocating some of their existing operations to other locations while pursuing new economic activities. Furthermore, as markets evolve, companies, especially those in the technology sector, must adapt by transforming their business models. This often requires them to drive greater productivity and rightsize their workforce. The rise of hybrid work arrangements has also led some companies to reduce their office footprint. These trends have affected tenancy rates at Changi Business Park.

4. MTI will ensure that Singapore’s ecosystem continues to be attractive to businesses. For example, Prime Minister Mr Lawrence Wong announced in Budget 2024 that we will introduce a new Refundable Investment Credit (RIC) for firms anchoring high-value and substantive economic activities in Singapore. Beyond financial incentives, we continue to invest in research and development, nurture talent, and support our enterprises to seize opportunities in external markets and new growth areas.