FDI here creating more value but fewer jobs than before

February 13, 201412:15 pm372 views
FDI here creating more value but fewer jobs than before
FDI here creating more value but fewer jobs than before

[SINGAPORE] The Republic appears to be losing steam when it comes to attracting foreign direct investment (FDI) – when these are measured by job spin-offs.

But a recently released study that points to this also said that the number of jobs created is not the only gauge of the performance of FDI these days. The type of investment projects drawn into a country and their value to the economy count for as much – and Singapore does well here.

The “Global Location Trends” study by IBM Global Business Services, the world’s biggest technology and business-services provider, concluded that Singapore is still an attractive location for foreign investors, thanks to its “city competitiveness”.

The results of the study were made public just as the Economic Development Board (EDB) unveiled its investment forecasts for this year. The investment promotion agency predicted that this year will bring a steady flow of FDI into Singapore, but that the number of jobs spun off by these committed investments is likely to be 25-35 per cent lower than last year.

Working from actual, realised investment figures, the Global Location Trends study reached a similar conclusion.

It noted that, three years ago, FDI in Singapore produced an estimated 1,800 jobs for every one million Singaporeans – the third highest in the world.

A year later, in 2012, the number of jobs fell more than 30 per cent, sinking Singapore to sixth in a global ranking of countries by FDI-generated jobs (see Table 1).

The study suggested that the decline in number of jobs could be a result of a transformation taking place across Asia Pacific, as companies spread their investments across a larger number of alternative investment destinations.

This trend has led to Singapore experiencing decreases in investments in key segments such as financial services and electronics.

Still, Singapore has remained the top FDI-generated jobs centre in the rankings for Asia Pacific. Thailand was ranked second; the Philippines, third; and Malaysia, fourth.

By type of investment, Singapore was ranked third, having snagged a big chunk of research-and-development (R&D) investment projects (see Table 2).

In fact, EDB said the reason FDI is creating fewer jobs here than before is that the Republic is attracting more high-quality R&D investment projects – which, being less labour-intensive, are more in tune with Singapore’s more advanced economy.

The countries with which Singapore was compared – Costa Rica, Serbia, Jamaica and Slovakia among them – are less developed, low-cost locations which pull in labour-intensive investments.

The study said that it is increasingly recognised that cities are becoming more important as vehicles for economic growth and dynamism. A growing share of investments are thus located in or around metropolitan areas, so that their talent pools, market opportunities and creativity can be tapped.

The report noted that Singapore attracted some 150 investment projects in 2012 – 25 per cent higher than the year before. This put it in second place globally.

London continued to be the world’s top destination for foreign investments at the level of cities, despite the number of projects it drew falling 12 per cent to around 250.

Among Asian cities, Bangkok is third in the global ranking, followed by Shanghai (fourth), Hong Kong (eighth), and Bangalore (ninth).

source: businesstimes.com.sg
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