In 2006, consultancy firm KPMG ranked Singapore as ‘the most competitive place to do business’ among nine industrialised nations surveyed. With a cost advantage of more than 20% over the US, in seventh place, it was found to have the lowest after-tax cost of business start-up and operation after comparing 27 key cost components – including labour, benefits, business facilities, taxes and utilities.
Earlier this year, the World Bank also rated Singapore the ‘easiest place to do business’, based on its relaxed regulatory environment and lack of red tape. Starting a company in the region takes just six days, after first registering it online with a minimum registration fee of US$400 depending on the capital amount.
An island nation at the southern tip of the Malay Peninsula, Singapore is just 272 square miles in area – officially considered as one of the world’s few city states. But nestled in the heart of Asia, Singapore is also one of the most connected cities in the world. Its container ports hail as the world’s busiest seaport, handling close to 25m twenty-foot equivalent units (TEUs) in 2006 and connecting Singapore with 600 ports in 130 other countries.
One of the top three global export refining centres, it is also one of the world’s top 10 petrochemical hubs, and top three bulk liquid ports, as well as home to eight of the top 10 flavours and fragrances companies.
For chemical companies looking to grow their business in Asia, Singapore is fast becoming an attractive alternative to China and India.
Growing interests
Since 2000, Singapore’s chemicals cluster has exhibited a compounded annual growth rate of 20%, according to figures available from the country’s Economic Development Board (EDB), and as such is one of the biggest contributors to the manufacturing sector.
In 2006, fixed asset investments in the chemicals cluster rang to the tune of €1.3bn, up 30% on the year before. The latest in this new wave of investments is Shell Eastern Petroleum’s multi-billion dollar investment in a world-scale ethylene cracker and mono-ethylene glycol (MEG) plant.
Later this year, Singapore will also hear from ExxonMobil on another world-scale steam cracker and derivative units to be integrated with its existing refinery and chemical plant in the near future. Should ExxonMobil decide positively for Singapore, it will, together with Shell’s new cracker, catalyse a wave of new projects that will double Singapore’s chemical output.
Lying at the south-western tip of the country, Jurong Island is the nerve centre of the chemicals cluster. Over 90 companies are engaged in a range of manufacturing activities in petroleum, petrochemicals, speciality chemicals and supporting industries. An integrated approach means that chemical products and raw materials can be conveniently traded among companies, while shared third-party utilities and services translate to cost savings.
The ‘plug-and-play infrastructure’ includes a chemical logistics park, one of Asia’s biggest oil and chemical storage capacities, and a multi-layered security framework. Work has also begun on new underground rock caverns which will add as much as 23% storage space when fully developed and make Singapore one of Asia’s biggest oil and chemical storage capacities.
With Singapore’s reputation for the respect of intellectual property, it is gaining ground as a partner for companies to debut their key technologies. UK firm Lucite International is expected to implement its new alpha technology for methyl methacrylate (MMA) for the first time in Singapore at the end of this year. Close by, Swiss chemical giant Ciba Specialty Chemicals has chosen to locate its largest antioxidant manufacturing plant in Asia.
In the near future, Shell will also be implementing its proprietary Omega technology – touted as the most efficient in the world to convert ethylene to MEG – in the new MEG plant. If this trend continues, Singapore will be expected to play host to other first-in-the-world technologies and, in time to become a creator of technology.
New knowledge
Looking to meet the challenges of global markets, Singapore has aligned its strategy to focus on developing a knowledge economy, with R&D spending to increase to 3% of GDP by the year 2010.
Already, roughly three-quarters of private companies are engaged in some form of in-house R&D. And with roughly 106 researchers/10 000 members of the labour force, the country’s R&D resources are comparable to those of other developed countries.
One sign that chemical companies are starting to take notice of this fact is the opening of BASF’s nanotechnology research centre in Singapore last year. ‘This centre will help us better pick up new emerging technology trends. It allows us to strengthen our ties with innovative, technology-driven customers in Asia and open up new market opportunities,’ says Martin Brudermüller, member of the board of executive directors of BASF and responsible for Asia Pacific.
In the same vein, Mitsui Chemicals has opened the Mitsui Chemicals Singapore Technical Centre in Singapore, its first R&D centre outside Japan, to focus on catalysis and asymmetric synthesis. Akihiro Yamaguchi, group executive, R&D Centre, sums it up: ‘To conduct R&D efficiently and consistently, we need a number of things including human resources, excellent facilities, up-to-date information on science and technologies, and researchers should feel secure. And Singapore satisfies these requirements.’
Place to invest
So why should chemical companies look to Singapore to grow their businesses? The Singapore economy as a whole is expected to grow between 5% and 7% in 2007. The country’s chemical industry will be a big contributor, with rising confidence in Asia, a greater demand for energy worldwide, and growing global consumerism all fuelling the sector’s growth.
Moving forward, Singapore will continue to expand by strengthening its base, moving towards a more diversified chemical industry, and focusing on higher value-added downstream activities.
With a slate of new investments coming onstream, the Singapore economy can look forward to continued growth for some years to come.
Julian Ho is executive director of the energy, chemicals and engineering services cluster at the Singapore Economic Development Board.
Logistics infrastructure
Singapore has one of the top three bulk liquid ports in the world and the number of tankers calling has increased by 17% over the last five years. To cater to the needs of the industry and optimise efficiency, Singapore has invested in infrastructure and developed an ecosystem of logistics players.
• There is 1m m³ of bulk liquid chemical storage with jetty infrastructure and access to support chemical manufacturers and product distribution.
• Belgian company Katoen Natie provides silo storage capabilities for bulk solid chemicals.
• Many companies use Singapore as their main hub for Asia, such as the world’s leaders in tank terminalling – Vopak and Oiltanking.
• 17 of the world’s top 25 third-party logistics players have significant operations in Singapore, serving local manufacturing plants and regional distribution centres.
• On Jurong Island (below), the Banyan LogisPark is a dedicated logistics infrastructure that serves manufacturers on the Island.
Industry support
The Singapore Chemical Industry Council, or SCIC (www.scic.org.sg), besides representing Singapore’s chemical industry in the private sector, also represents the industry regionally and internationally on matters of workplace safety and environmental standards. With the European Union’s regulation on the registration, evaluation and authorisation of chemicals (REACH), SCIC is currently working with industry members and various government agencies to monitor the developments of the REACH regulation.
The Chemical Process Technology Centre (www.ices.a-star.edu.sg) is a fully operational ‘live’ plant dedicated to building up manpower competencies needed by the chemical industry. Likewise, the Institute of Chemical and Engineering Sciences (www.ices.a-star.edu.sg) is responsible for improving the science and technology base by providing highly trained R&D manpower, and to develop technology and infrastructure to support future growth.
Big investors
ExxonMobil’s history in Singapore dates back to 1893 with the establishment of the Vacuum Oil Company, which sold mainly kerosene and lubricants under the Mobiloil brand name. By 1993, Mobil had ploughed in a total of US$1.6bn. These included the building of a $130m hydrocracker as well as a $720m catalytic reformer and aromatics unit. That same year, Exxon Chemical also announced it would build an aromatics complex and a hydroprocessing plant in Singapore. After the merger in 1999 of Exxon and Mobil , a multi-billion petrochemical plant was built. To date, ExxonMobil is the biggest single foreign investor in Singapore, having invested more than $4.3bn since the early 1960s.
Royal Dutch Shell, which enjoys a local presence dating back to 1891, gave Singapore’s petrochemicals industry a major shot in the arm with the announcement of a new world-scale petrochemicals complex integrated with its existing Bukom refinery in July 2006. This investment is Shell’s biggest investment yet in Singapore. Back in 1961, Shell was responsible for building the Republic’s first-ever oil refinery and the company has sunk in an excess of $6bn in petroleum, petrochemicals and other activities here. Today, Singapore is home to Shell’s largest petrochemical production and export centre in the Asia-Pacific region.
Mitsui Chemicals opened its first R&D centre outside Japan in 2006. Known as the Mitsui Chemicals Singapore Technical Centre, this focuses on catalysis and asymmetric synthesis – two areas of collaboration with the Institute of Chemical & Engineering Sciences. In July 2007, Mitsui further deepened its roots in Singapore by establishing a new plant for its Tafmer polyolefin. The new plant will be managed by Mitsui Elastomers Singapore Pte and will allow Mitsui Chemicals to secure stable supply of the material, in response to rapidly growing demand in Asia.
BASF opened a new Competence Center for Organic Electronics in Singapore in May this year. The $2.6m investment represents the second part of its plan to expand its research activities in Asia-Pacific, which already includes a new project on organic photovoltaics with the Institute of Materials Research and Engineering. The new centre follows the $3.9m initial investment in the BASF Competence Center for Nanostructured Surfaces opened in April 2006. Between 2006 and 2009, the total research expenditure for both centres is expected to be $19.6m, and the company intends to hire a total of 40 employees by the end of 2007.
DuPont started its first Lycra fibre plant in Singapore in 1992. Seven years later, a second plant was put into operation. And in 2002, a third $80m Lycra facility was opened which increased production capacity by another 50%. In addition to these three plants, DuPont also recently announced the opening of its new R&D centre and a global operations centre to manage the entire supply chain in Asia, from sourcing to inventory management. In 2005, the company extended its business in Singapore and decided to produce the speciality engineering polymers, Zytel and Vespel, in Singapore.
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