Manufacturing should remain a cornerstone for Singapore economy: PwC
Leveraging FTAs to help businesses.
Core manufacturing should be one of the focus of the upcoming budget proposal of Singapore as it will support the growth of the services industry and will attract whole ecosystems, according to PwC.
In its proposal for Budget 2021, PwC noted that manufacturing should remain a cornerstone of the Singapore economy.
PwC suggested giving priority focus to industries that are low on labour and overhead demands, but where final stage processing can economically and viably be carried out in Singapore. They cited final-stage food processing and advanced bioengineering as examples.
“At the same time, this processing should increase the ability of companies to benefit from Singapore’s wide and strong Free Trade Agreement (FTA) network which would offset the probably higher cost base (including land cost) perspective in overseas markets,” PwC said.
The enhanced use of FTAs can go through direct exports or support companies that are processing in Singapore and requiring small and medium-sized enterprises’ (SMEs) inputs.
PwC said involving SMEs through an industry-wide FTA approach based on technology would go a long way in achieving this goal.
Technology would be a key enabler for SMEs to meet requirements of an FTA, which involves determining whether a product made meets the FTA qualifying criteria. Technology can be a key enabler to document or certify that accordingly.
“For example, a tool that would allow companies to upload bills of material so that they can be analysed for meeting the value-add qualifying criteria of specific FTAs would be useful to many SMEs,” PwC added.
Aside from helping SMEs to leverage FTAs, digitalisation would be especially hard for new businesses that have to incur expenditure that spans from hardware infrastructure costs to labour costs of digitising data, information migration, and staff training.
PwC suggests targeted reliefs and funding to help businesses alleviate the investment cost of going digital, and encourage them to digitise their data and modernise their processes.
“To safeguard revenue and reward investments in productivity, the scheme can be tied to the Government’s current areas of focus; for example, companies which have invested in staff training and are able to demonstrate incremental job creation (local hires) alongside the staff training programmes for the year could opt for a co-funding scheme or be given enhanced allowances / deductions,” PwC added.