Singapore’s economy is generally regarded as one of the most interesting in the world. A remarkably young country almost completely devoid of natural resources, Singapore, nevertheless, is consistently ranked as one of the richest countries in terms of GDP per capita—in addition to being recognised as one of the most advanced by almost every widely accepted economic performance metric.
The Singaporean government is also extraordinarily stable, having zero net debt, frequent revenue surpluses, and high revenue, allowing it to provide citizens and permanent residents with some of the world’s best public services.
The diversity of Singapore’s economy is also impressive, with public policymakers consistently making attempts to invest in small but promising sectors to spur innovation and reduce the country’s vulnerability to global market shocks.
Over the past several years, however, certain industries have come to drive the country’s growth more than others. Below are pillar industries in Singapore that not only give the city state its outsized economic might but also make it a world leader in key areas.
Pharmaceuticals and Biotechnology
Singapore is an important Asian hub for many of the world's leading pharmaceutical and biotechnology companies, including some highly recognisable names such as Merck Sharp & Dohme, Roche, Novartis, Sanofi, Pfizer, and GlaxoSmithKline. The country’s high density of high-quality manufacturing facilities and support services as well as its excellent logistics infrastructure have made it the preferred choice for businesses and other organisations involved in high-level biomedical science research.
The country also offers a host of solutions that help biotechnology researchers optimise their research expenses. Unique publicly funded incentives and subsidies are available to biotech companies as well as supporting industries, helping bring down the cost of top-level research. Additionally, specialised local businesses offer such services as biotech lab space for rent and contract research, permitting cost-sensitive biotech and pharmaceutical startups to avoid high capitalisation and running costs.
Singapore also has a rich domestic talent pool, with three of the country’s universities ranking among the best in the world in Scimago’s 2022 Institutions Rankings for Biochemistry, Genetics, and Molecular Biology. The Singaporean government is also well-known for scrupulously protecting intellectual property, motivating biotech entrepreneurs and venture capitalists to set up and invest in locally based enterprises.
Professional Services
Modern Singapore’s economy is heavily centred around professional services, covering an extremely wide array of industries from legal services and finance to market research and technical consultancy and everything in between.
In 2019, Singapore’s services sector employed 74% of the domestic workforce and generated up to 72% of its output, percentages that may expand as the country’s economic planners expand its innovation ecosystem.
The low barriers to entry, favourable business policies, and access to global markets through a mature logistics sector have made Singapore a highly desired place to set up a regional or global headquarters for multinational service firms. The country also offers service firms access to a high-quality local workforce as well as many of the best talents from all over the world, capable of serving both global and hyperlocal needs.
Energy and Chemicals
Singapore, despite having no natural fossil fuel reserves of its own, is one of the world’s most important exporters of refined petroleum products. Since the 1970s, Singapore has consistently remained a global leader in oil refining, petrochemical manufacturing, and speciality chemical production. Recently, in 2019, Singapore was ranked the world’s 8th largest exporter of chemicals in the World Trade Statistical Review published in 2020.
As with many other top Singaporean industries, the energy and chemical industry leverages the city-state’s strong geographic advantage and its access to the world’s best talents to competitively offer a range of products and services on the world market. Today, it is a vital link in the global energy and chemical industries, producing an extremely wide array of critical products and innovations.
The energy and chemical industries have also shown themselves to be remarkably adaptable. Singapore’s energy and chemical firms have recently started to pivot to meet the growing demand for sustainable, eco-friendly products. As different economies and businesses commit to reducing their use of fossil fuels, Singaporean firms will be well-positioned to offer leading solutions for their speciality chemical needs.
Precision Engineering
Singapore is one of the world’s leading hubs for precision manufacturing, with over 2,700 precision engineering (PE) firms creating components for a wide array of industries where extremely high tolerances are required.
PE firms based in Singapore make components for semiconductors, aerospace products, medical devices, and much more. If you have a modern precision tech product in your home or workplace, it’s almost certain that it features some components or patents that originated in Singapore.
The country’s excellent technical education system and its attractiveness to the world’s top tech talents have made it a hotspot for innovation in various PE subfields. The country’s world-leading IP protections also give it an edge in attracting PE multinationals and thought leaders.
In addition, the closeness of so much engineering talent in one place has given Singapore a highly enviable innovation ecosystem capable of consistently closing knowledge gaps and making technological leaps
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Consumer Businesses
With Singapore having a favourable business climate, excellent logistics services, and knack for attracting the world’s best minds, many of the world’s top consumer goods companies have made it a primary base for their Asian or global operations. Names such as L’Oreal, Unilever, and Nestlé are just some of the few global firms that have made significant investments in the country.
Singapore’s vibrant and diverse professional services industry plays an important part in attracting and retaining these global consumer firms. Businesses in Singapore can expect to engage with some of the world’s best marketing think tanks, advertising agencies, international trade and finance law firms, and creative services, helping them gain market shares and reduce their risk exposure.
The country’s service industry workers are notably sensitive to the diverse and sometimes divergent needs of different groups and cultures, giving them a distinct advantage in ensuring their clients' success in any market.
Despite its small size and lack of natural resources, Singapore’s consistency in developing its human capital and willingness to make long-term investments has made its economy one of the most competitive in history. By and large, it’s these traits that have allowed its pillar industries to go beyond powering the local economy and allowed them to achieve global importance. Given the country’s track record, we’re likely to see even more domestic industries rise to prominence in the future.
