Feature Articles
Business Costs of Singapore's Manufacturing and Services Sectors
24 February 2016
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Between 2011 and 2015, the unit business cost index for the manufacturing sector (UBC) rose by 2.5% on a compounded annual growth rate (CAGR) basis, while the unit business cost index for the services sector (USCI) rose by 1.9% CAGR. In 2015, the UBC rose by 1.4%, slower than the average increase over the period of 2011-2015. On the other hand, the USCI rose by 2.5% year-on-year in the first three quarters of 2015, higher than the average seen in the last four years (Exhibit 1).
Labour cost, work given out and royalties payments make up the bulk of business costs in the manufacturing sector
In the manufacturing sector, labour cost accounts for the largest share of total business costs, followed by work given out and royalties payments. Collectively, these three components account for 64% of the business costs of large enterprises and 71% of the business costs of small- and medium-sized enterprises (SMEs) in the sector. The other services cost components, including utilities, fuel, rental of building/premises and charges paid to other firms for inland transportation, make up a far smaller 16% and 11% of the business costs of large enterprises and SMEs respectively. Details of the cost structure of the large enterprises and SMEs in the manufacturing sector, as well as in the various manufacturing clusters, are in Annex A, Exhibit A1.