More Evidence Singapore Restructuring Taking Hold
Singapore’s disappointing second-quarter economic data has a bright side: the country’s battle to restructure its economy may be showing some results.
That is encouraging news for an economy in the middle of a multi-year restructuring effort aimed at moving the city state up the value chain.
Policy makers have been trying to lure more high-end businesses to Singapore – creative companies, research and development institutes, design firms – and reduce the nation’s dependency on manufactured electronics goods.
It’s happening—slowly—and Tuesday’s revised GDP data may hold the clues. While non-oil domestic exports continue to slump, manufacturing activity has gained this year. Singapore’s local demand is too small to account for that extra production. So why is the manufacturing activity not showing up in the export data?
The answer, according to ING, is that Singapore-based firms are increasingly engaged in the design phase of manufacturing, not the physical production of goods. The phenomenon is known as the “servicization” of manufacturing – not the most catchy term, perhaps, but a serviceable one nevertheless.
Read more: http://blogs.wsj.com/economics/2014/08/12/more-evidence-singapore-restructuring-taking-hold/