Singapore was the leading destination for greenfield foreign direct investment (FDI) in the first half of 2022 within the Association of Southeast Asian Nations (Asean) trade bloc, as companies continued to choose the relatively small city state for their capital intensive expansion plans.
Foreign investors in Singapore announced 142 projects worth $8.2bn in the first six months of the year, following two consecutive half-year periods in which FDI topped $9bn, according to the latest figures from investment tracker fDi Markets. The estimated capital expenditure of $8.2bn in the city state was double that of Malaysia, the next best-performing southeast Asian country.
The success of the Lion City is in stark contrast to China, where FDI has fallen to a record low in the first half of 2022. Foreign investors have become increasingly weary of making long-term plans in China, due to the detrimental effects of draconian zero-Covid policies and rising geopolitical tensions with the West.
During the first six months of 2022, Singapore attracted more FDI than any other country in the ‘Asean plus three’ group of countries, which includes the southeast Asian trade bloc along with China, Japan and South Korea, fDi Markets figures show.
Amid the continued shortfall in global chips, companies in the semiconductor sector have announced significant expansions in Singapore, accounting for more than half of FDI pledges in the Lion City during the first six months of 2022.
The vast majority was made up by Taiwanese chipmaker United Microelectronics Corporation (UMC). In February the company said it would invest $5bn into a new wafer fabrication plant and research and development centre.
“Over the past two decades, UMC has benefited from Singapore’s vision to attract high-tech firms through strong infrastructure, ecosystem, and talent pool,” Stan Hung, chairman of UMC, said in a statement.
The French semiconductor material maker Soitec also announced in June that it would plough €400m into expanding its factory in Singapore. The semiconductor industry accounts for almost 7% of Singapore’s gross domestic product, according to EDB Singapore, and is a major part of the country’s attempts to expand its manufacturing sector by 50% by 2030.
Other foreign investors have also sought to do highly specialised and innovative activities in Singapore. In July, Chinese biomanufacturing company Wuxi Biologics said that it would invest $1.4bn to open a contract research, development and manufacturing centre in the city.
“Singapore has established itself as one of the most advanced pharmaceutical hubs in the world,” said Chris Chen, the CEO of WuXi Biologics, in a statement. The biotech firm expects to employ 1500 staff in their new Singapore site.