Up & Coming Outsourcing Regions: Singapore

Your manufacturing company needs a global footprint, but you don't want to go to China. Now what?

This scenario is discussed at length in a recent report issued by Charlie Barnhart & Associates (CBA), which profiles 18 developing regions around the globe. The report takes into consideration a number of factors, including socio-economic. The best place to consider? Singapore, based on a number of criteria.

I'm not entirely surprised by this — a lot of EMS activity takes place in Singapore — but I am surprised how high the country ranks in terms of ease of doing business. Singapore is at the top of the list of the 18 countries in the CBA report based on the World Bank’s Ease of Doing Business Index. Some of the key measurements in this index are starting a business, dealing with construction permits, registering property, getting credit, protection of shareholders, paying taxes, and trading across borders. Singapore rates in the top three in all of these categories — in many of them, it ranks first.

CBA believes Singapore to be one of the best manufacturing locations for electronics in the world, and the country is a well established high-tech hub for medical, industrial, and consumer electronics. The country first started assembly services in the 60s. The electronics sector output for September was up 28 percent over the previous year. There are hundreds of electronics companies doing business in Singapore. These include EMS companies {complink 12152|Benchmark Electronics Inc.}, {complink 691|Beyonics Technology Ltd.}, {complink 987|Celestica Inc.}, COB Technology, {complink 2085|Flextronics Corp.}, {complink 2125|Foxconn Electronics Inc.}, {complink 2862|Jabil Circuit Inc.}, Jurong Technologies, {complink 4773|Sanmina-SCI Corp.}, and Venture.

Singapore — and other regions studied by CBA — may not be the least expensive. Barnhart has long been a skeptic of the manufacturing industry's move to China and emphasizes cost is not the most important factor to consider in outsourcing. For example, Singapore's location is a valuable hub for the rest of Asia. In 2009 electronics was more than 30 percent of the manufacturing value-add; manufacturing is 20 percent to 25 percent of Singapore’s GDP. The country is near the top of the value chain, with deep expertise in semiconductor manufacturing, design, test, and R&D, as well as systems build. According to CBA research, Singapore’s capacity is the most underutilized among the locations tracked.

Singapore’s supply chain infrastructure is arguably the most robust on the planet. Companies that support the entire product cycle, as well as logistics and even R&D, are located in the city-state, and the level of expertise available is very high. The costs are higher than others in the area; CBA can provide a cost comparison tool.

Many of the complaints about China — red tape, monetary policy, IP protection, and the ease of setting up a business — are almost non-issues in Singapore. In future blogs, EBN will look at some of the other regions companies should consider before moving offshore. If your company has had an experience in Singapore, positive or negative, let us know on the message board below.

4 comments on “Up & Coming Outsourcing Regions: Singapore

  1. Mydesign
    January 6, 2011

          Barbara, you are right, the trend shows that Singapore may be the next hub for outsourced works. Singapore is a good country with lots of man power pool and hifi living style. In my opinion it’s a country with beautiful greenish valley and pampered by god’s grace.  When we compare the economic growth of Singapore with any other Asian or European countries, it’s far better and always showing a steady graph of growth from 90’s onwards. This economic growth and stability is from revenue earnings through tourism and industrial growth, especially from electronic industries.

          One of the major advantages of Singapore is its stable administration with liberal values and foreign investment policy.  Geographically Singapore is placed in a strategic location, which is well connected by air and sea. So it can be easily accessible by both the west and European countries easily. Some of the major intercontinental networking cables have landing points in Singapore and hence the internet connectivity is also very high. These are some of the key factors which can influence the foreign investment agencies.

  2. Franky Li
    January 7, 2011

    Dear Barara,

    Just my view, correct me if I am wrong.  We are in compoents distribution business, and we set up Singapore office in 2002.  Cost is the  major concern now. There is not much factory in Singapore, some of the companies you stated there do not really have factory in Singapore, it is only the IPO office, their factories are in Malaysia,Thailand and in most case China.  Singapore do have talent people, but the cost of doing business in Singapore is not lower than in US / EU. In comparsion, Hongkng may be a better place for components and EMS outsourcing.  Almost all distributors in the region have office in Hongkong, and like Singapore we are tax free ( for Singapore, you have GST 7%- refund back if you ship the good out of Singapore ).

    I have customer in Hongkong, bring in PCBA / box built project from Austrilia, Italy and make them in China.  I tryly agreed IP protection in China, however, it all depend on who you working with.  Please take note 60%+ of IT products and 85%+ of consumer product is made in China, and Hongkong in the Hub for all these activities.

    The cost of borrowing and time to get that done is much longer in Singapore than in Hongkong.  To set up a compnay in Singapore , you need a director either a Singaporean/Malaysian or having a work permit.  But in Hongkong, foreigner can set up company and bank account within one day.


  3. Barbara Jorgensen
    January 10, 2011

    Hi Franky Li,

    I appreciate your feedback, especially since you have first hand experience in Singapore. As journalists, we don't always get to see things first hand, and if your experience is contrary to published reports, it's important to represent your point of view. Thanks for taking the time to reply. 

    Cost and ease of doing business are huge issues for compnaies, particularly when making decisions where to locate their offices or businesses. In the course of due diligence, examples such as yours should be considered. I'll ask about it when I get the opportunity and report in future blogs. Thanks again for your contribution to EBNonline.

  4. hwong
    January 22, 2011

    Exactly. The cost is #1 reason why companie are not moving there. The country is very advanced and the cost of living is very high as well. I know that semiconductor companies like AMD has some back end manufacturing there but it definitely did not beat other countries like Thailand, Malaysia or China.

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