Navigating Headwinds
State of the industry
Singapore is a leading hub for chemicals; Singapore exported over S$80 billion in chemicals and chemical products in 2022 and over 25,000 people are employed by the industry. The meteoric growth of the chemical sector in Singapore is a result of years of heavy investments in infrastructure and the success of the industrial Jurong island complex, where over 100 global chemicals firms have located operations. Along with a strong physical and financial structure, Singapore’s stable social and political environment and its skilled workforce have nurtured innovation and collaboration in the industry for decades.
The last few years have been turbulent, such that Singapore’s overall chemicals output in March 2023 fell by 11.8% year on year. Petrochemical exports experienced a steep drop, with June marking the tenth straight month of contraction, falling 34% year on year to S$1.07 billion.
Some players, such as those in the food and ingredients market, have been sheltered from this softening demand. Jun Saplad, the region president APAC at dsm-firmenich, a global nutrition, health, and beauty company, said: “Demand for our solutions has not dipped significantly as food is always a necessity.”
Like elsewhere, Singapore is still dealing with the fallout of the pandemic as well as ongoing inflationary pressures that result in consumers spending less on goods, leading to a global slowdown in growth for industrial production and trade volumes. Global inflation in 2022 is estimated to have reached 8.75%, the highest annual increase in inflation since 1996. The IMF’s World Economic Outlook Report predicts this number to fall to 6.8% in 2023 and 5.2% in 2024. As a result, consumers have been spending less on goods, leading to a global slowdown in growth for industrial production and trade volumes.
This difficult environment has forced rapid innovation and adaptation to stay afloat. Singapore, one of the world’s leading nations when it comes to embracing and developing new technologies, has turned to digital and automation solutions to address many of the challenges that its chemical industry is currently facing.
The nation maintains its position as a top 10 chemical exporter worldwide and remains an attractive place to do business. “[Singapore] has proven its resilience and growth potential, especially during the pandemic when it attracted numerous businesses from Hong Kong,” explained Sudheer Vijapurapu, managing director at New Asia Shipbrokers.
“The Singaporean government was a pioneer in attracting talent. The Overseas Networks & Expertise Pass, as well as other immigration schemes, made it easier for skilled foreign workers to move to Singapore and establish themselves in the job market.”
Charles Pfauwadel, Senior Vice President - Asia & PNG, Airswift
“Besides strong IP protection, research capabilities, and the country’s location, Singapore has an excellent talent pool. With innovation, you need multidisciplinary talent such as scientists and engineers, and we are open to bringing in people who have the necessary expertise and know-how.”
Josephine Moh, Vice President and Head, Chemicals & Materials, Singapore Economic Development Board (EDB)
Singapore’s population is replete with talent and well suited for such an adjustment. More than 30% of the workforce holds a university degree, and most people are proficient in English. The city-state is host to six autonomous local universities as well as 14 foreign universities, and numerous specialized educational institutes, many of which have established partnerships with leading companies in the chemical sector. “Singapore is a very business-friendly city, with an immense amount of knowledge to be found locally,” said Andreas Igerl, President APAC at IMCD Group.
In addition to its highly skilled workforce, Singapore also benefits from its world-class port infrastructure and its status as a leading shipping and bunkering hub. Branches of the government, like the Maritime and Port Authority (MPA), have gone through great efforts to maintain the country’s position as the world’s largest trans-shipment hub and the top bunkering hub globally. Kenneth Lim, the assistant chief executive at the MPA, shared with us the various digitalization and sustainability initiatives the MPA is currently undertaking, including the first methanol bunkering operations in Singapore, AI-powered vessel traffic management systems, and 5G network rollouts. “The successful completion of the first methanol bunkering operation in July 2023 marks a significant milestone for Singapore’s development towards a multi-fuel future and is a testament to Singapore’s commitment as the world’s largest bunkering hub,” he said.
On Jurong Island, the chemical industry is also keen to adopt technologies, particularly after the pandemic showed just how quickly a physical workforce can be decimated overnight by quarantine measures. This was felt acutely in Singapore, where over 350,000 Malaysians cross the Johor-Singapore Causeway daily to work.
The alarm over the climate crisis has reached a fever pitch, and the pressure on energy-intensive industries to decarbonize is growing stronger by the day. Singapore must also confront this pressure on its energy-intensive industries such as chemicals. Josephine Moh, vice president and head, chemicals & materials, Singapore Economic Development Board (EDB), explained Singapore’s ambition: “We have a vision for how we want to transform our industry for the future and support international efforts towards sustainable growth. We want the energy and chemicals industry to be sustainable and competitive, producing more sustainable products via sustainable pathways.”
Despite the challenges facing the chemical industry globally, most of the interviewees featured in this report firmly believe that Singapore’s chemical industry will emerge from this storm stronger and that the small island will continue to punch well above its weight.
“Singapore’s industry has developed well thanks to its openness, skilled workforce, and understanding of integrated product management. It has most recently pushed further downstream, as it continues to diversify the product and company mix with an emphasis on more specialty and mid-sized companies.”
Gina Fyffe, CEO, Integra Petrochemicals
Article header image courtesy of Borouge