Decoding the secret to Singapore’s economic development

By Debra Vogler, Senior Editor

Singapore’s Economic Development Board (EDB) has a lot to tout these days. The island city-state already boasts 14 silicon wafer fabs putting out ~400K wafers/month (200mm-equivalent wafers), along with 40 IC design companies and 20 assembly and test companies. Singapore’s electronics manufacturing output in 2004 was about $43.5 billion, 39% of which was in the semiconductor area. It has a vertically integrated industry representing several top tier companies in each segment, including Chartered Semiconductor and UMC.

And Singapore’s chip industry reach is expanding. A new US$30 million state-of-the-art wafer bumping operation, announced on Oct. 4 by United Test and Assembly and South Korea’s Nepes Corp., will complete Singapore’s front-to-back semiconductor manufacturing capabilities, according to Tan Choon Shian, EDB’s director of marketing communications. Further, during a recent event arranged by Chartered Semiconductor, the EDB — an agency reporting to the Ministry of Trade & Industry, tasked with creating sustainable GDP growth for Singapore — announced that Bernie Meyerson, IBM Fellow and VP and CTO of IBM’s systems and technology group, is providing consultation to the government.

The “secret” to Singapore’s success boils down to a strategy that calls for widening its lead in supply chain management, strengthening its enterprise ecosystem, deepening the country’s manufacturing culture and skillsets, expanding its reach as a manufacturing hub, growing emerging areas, and intensifying technology innovation and development. At the strategy’s “core” are connectivity, openness, reliability, and enterprise.

According to Tan, these concepts explain why companies should base operations in Singapore instead of Japan or Taiwan. With respect to connectivity, he pointed to the country’s status as a hub for shipping, information, logistics and people — for example, PSA’s Singapore Terminals operates the world’s largest trans-shipment hub. The Internet penetration rate in the city-state is >59%, with 99% island-wide broadband coverage, and >96% mobile penetration rate.

Regarding openness, the EDB spokesman stressed predictability, and noted the government welcomes foreign workers needed for the industries it’s trying to grow. Because the local pool will never be large enough to fill all the needs for human resources — of the approximately four million people in the city-state, only three-quarters are Singaporean — “Its very important to have open immigration…An open society is very important for competition [for talent],” Tan noted. “Even Middle Eastern companies are coming to Singapore.” He also emphasized Singapore’s blend of eastern and western cultures, which provides an environment in which other companies can internationalize their workforces.

Tan also noted that there are more than 7000 multinational companies located in Singapore, with a growing presence of Chinese and Indian firms. And as proof that the EDB doesn’t just talk about investing in Singapore, its investment arm, EDB Investments Pte. Ltd, has a 26.5% stake in Chartered Silicon Partners (CSP), a joint venture supported by Chartered Semiconductor (51%), Agilent Technologies Europe BV (15%), and Singapex Investments Pte. Ltd (7.5%).

Explaining the island’s claim to being reliable is difficult to quantify. However, this visitor to the city-state can attest that there was no graffiti or evidence of vandalism in public areas, and the Changi airport appeared to be a model of efficiency. One non-Singapore born worker present at the meeting said that it only took him three hours to get a work permit. Echoing EDB literature, Tan simply said, “Everything works!” — D.V.


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