Future-Ready is Climate-Ready
and Digital-Ready
Leveraging government support
Singapore’s Budget 2021 was delivered earlier this year under the title “Emerging Stronger Together.” These words reflect a nuanced intention; to build greater strength in a post-Covid economy by creating new jobs more than saving existing ones, and by helping businesses digitize and innovate, more than survive. Implicitly, it calls for a build-better strategy, rather than re-building.
The total expenditure of S$102.34 billion set aside by the Singaporean government comes with a series of Covid-relief measures, focusing on financial risk-sharing for business loans, and a more tailored stimulus to particular sectors. Compared to the previous financial year, it allocates 37% more funds to the transport sector, 28.9% more to manpower, and 19.2% more to sustainability.
With an 8.8% year-on-year rise in expected total projected expenditure and lower government revenues, Singapore will go into its second consecutive deficit, after a zero-debt straight record since 1995. The country went into debt after releasing stimulus packages totalling S$100 billion to bandage the stressed economy. GDP growth is set to make a big leap from -5.8% in 2020 to a projected 4%-6% for 2021, according to the Ministry of Trade and Industry (MTI).
“I firmly believe the world will be dramatically changed after the pandemic. Compared to the 2008 financial crisis, sustainability and digitalization are now taken much more seriously. This is an opportunity for companies not just to derive more business value, but also to contribute more to society.”
Shirley Qi, President, Southeast Asia, Australia & New Zealand (SEAANZ) & Head of Nutrition and Care division, APAC, Evonik Industries
Globally, government spending as a percentage of GDP was three times higher compared to the 2008 financial crisis, making governments the biggest consumers in their economies, according to Accenture. If used well, these packages should not only alleviate current issues but also propel sustained and sustainable growth for a future-ready economy. Germany, for instance, is setting aside funds to develop its hydrogen market, while China is investing billions in 16 refinery projects, securing long-term dominance in this market.
The chemical industry tends to look at the 2008 crisis as the closest comparison to today’s environment. According to KPMG research, businesses that did well before the 2008 crisis did not necessarily do well afterward. A big disruptor like the pandemic creates profound change and expects nothing short of profound change to stay relevant and competitive. “In times of crisis, our device has been to invest. SEQENS did not hesitate and invested massively back in 2008, while the rest of the market did the opposite and waited,” shared Raymond Sinnah, Group EVP (APAC) & president of mineral specialties division at SEQENS. Following a similar logic, players with healthy cash flows put significant CAPEX into sustainability projects. Arkema chose Singapore to build its bio-based polyamide plant. The investment, amounting to €300 million, is one of the first green bonds placements issues by a chemical company, and it was oversubscribed by 10 times. The project will double Arkema’s bio-based high-performance polymers and is due to be complete in 2022. In anticipation of greater demand for green plastics, the world leader in green PE, Braskem, is tripling its 200,000 mt/y capacity at its Brazil facility. “Braskem began bio PE production 10 years ago, and we are scaling up to be prepared for a buoyant demand in the next decade,” said Roger Marchioni, Asia director for chemicals and polymers, Braskem.
“My advice to the industry is to look back at the lessons learned in this period, including industry’s over-reliance on foreign workers and sub-par productivity levels, with a view to change the way we work and emerge stronger from this pandemic.”
Wayne Yap, Executive Director, ASPRI (Association of Process Industry)
Though currently Europe and Japan are the main markets driving bio-polymers production, Marchioni believes more countries, including Singapore, South Korea, and China will become increasingly more open to renewable polymers that will help them reduce GHG. Neste, the world’s leader in biodiesels, picked Singapore to make the biggest single investment in the company’s history. The €1.5 billion investment will grow Neste’s global production capacity of biofuels by 1.3 million mt/y, bringing it to a total of 4.5 mt/y by 2023.
Preparation for a lower-carbon, smarter future also unravels through investments in digitalization and automation. Evonik inaugurated its Digital Labs Asia in 2020, designating a team of scientists to study AI and advanced digitalization. Though it does not have production capabilities in Singapore, Henkel has been running a digital hub within its Global Supply Chain Hub in the country since 2016.
With about 80 of the world’s top 100 technology companies present in Singapore, the opportunities to spur digitalization and automation have been present for longer; what changed since last year is the pace of adoption. Yokogawa, a leading engineering and software MNC, opened the first-of-its-kind Co-Innovation Center in Singapore, and the largest outside of its Japanese headquarters: “Two years ago, Yokogawa started the digitalization (DX) journey through our Co-Innovation Center together with several regional customers, yet the uptake was slow as the industry tends to adopt a ‘wait and see’ attitude. However, Covid-19 acted as a powerful catalyst to what a fully autonomous future can look like. In our most recent survey, 80% of respondents in the manufacturing business argued that they expect to see their companies fully autonomous in the next 10 years,” said Joseph Lee Ching Hua, Head of Co-Innovation Centre & general manager of Development Centre, Yokogawa Southeast Asia.
Image courtesy of Fluke Reliability