Singapore: prudent management and buoyant foreign demand sustain tradition of robust economic growth - Business Outlook Abroad

Business America, Nov 19, 1990

The Best Prospects

The following is a list in priority order of some industry sectors with good sales potential and market size.

Computers, Peripherals, and Applications Software--The Singapore government continues to support and promote the information technology industry. The hardware market improved considerably in 1989, with imports increasing 40 percent to U.S.$1.22 billion, while expenditure on computer software totaled $89 million. The largest user is the government, followed by the banking and finance sector and manufacturing. In 1989, the United States was a major supplier of data processing equipment to Singapore, with imports from the United States alone totaling $479 million, a 39 percent share of this market. The second largest supplier was Japan, with a 23 percent share.

Singapore's information technology market has become quite mature and sophisticated. It has now grown large enough to warrant the attention to small- and medium-sized U.S. firms that fill niches in the U.S. market. Most of the top international data processing companies already have a presence in Singapore, and there is great receptivity on the part of the government and the private sector toward new market entrants. Abundant joint-venture and licensing opportunities exist. The Singapore market is still primarily an IBM-compatible and DOS-operating system market, but the use of other architecture and operating systems is also growing rapidly.

Telecommunications Equipment and Services--Singapore is a well-developed, modern communications center with worldwide air, sea, and telecommunications links. Singapore Telecoms makes continuous efforts to upgrade and expand its national and international telecommunications system and has budgeted $900 million from 1988 to 1992 on an improvement program. To maintain high revenue growth, Telecoms is also branching out into the international market brought about by the growing globalization of business. It is currently liberalizing its policies, especially regarding international value-added networks (IVANS), and encourages joint ventures and research and development projects. Total imports of telecommunications equipment into Singapore in 1989 were about $580 million and are expected to grow steadily during the next few years.

Electronic Components and Equipment--The presence of multinational electronic component manufacturers in Singapore bodes well for suppliers of electronic equipment. With the labor shortage and government encouragement to upgrade production methods, electronics manufacturers are keen to invest in labor-saving equipment and automation.

Given the strong growth in all end-user markets and the high export orientation for local producers, Singapore's imports of electronic components will remain high. The potential for U.S. suppliers is excellent, as a majority of the disk drive and computer manufacturers are U.S. multinationals.

Aviation and Avionics Support Equipment--Singapore has succeeded in establishing itself as the most comprehensive aviation repair and overhaul center in Asia, and is also moving rapidly into parts and component manufacture. The industry faces new challenges in the acquisition and assimilation of the latest technology and specialized skills as it moves on to more sophisticated manufacturing and assembly. As it has matured and strengthened, the industry has found new Asian markets beyond Singapore. Imports of aerospace equipment (including aircraft/helicopters) in 1989 amounted to about $830 million and are estimated to increase to some $850 million in 1990, as Singapore Airlines continues to take delivery of B747-400s. The United States had an 84 percent market share in 1989.