UPDATE - Singapore 2001 chemicals investments, output hit
Date: 01-Feb-02
Country: SINGAPORE
Author: Godwin Chellam
Investments in the sector fell 13.6 percent from 2000 levels to S$1.9 billion ($1.04 billion) last year while output fell 10 percent to S$28.9 billion, the EDB said.
"2001 was a very tough year, not only for this industry but for business in general," said Aw Kah Peng, deputy director of EDB's chemicals group.
"There were a number of factors that collided that did not help anyone, including a severe downturn and the addition of new capacity. Taken together, you'll see that both output and margins were impacted."
The EDB, a government body that promotes investment in Singapore, said output for the petroleum industry fell 13 percent to S$17.5 billion in 2001, but petrochemicals output only eased 1.8 percent to S$6.7 billion.
Singapore's petroleum industry was hit hard by weak demand for refined products in Asia-Pacific and the addition of new refining capacity in the region, the EDB said.
EDB's assistant managing director Tan Suan Swee said refineries in Singapore were currently operating at about 60 percent of installed capacity.
STRONG POTENTIAL
The EDB said the chemicals industry in Singapore continued to hold strong potential for growth in the long term as interest to invest in new activities remained firm.
To help the industry grow, Tan said Singapore would focus on three areas: strengthening its existing chemicals base, expanding into higher value-added products and sharpening its competitiveness.
The government body has already taken the first step toward alternative energy products by signing a letter of intent with oil major BP to develop and supply a hydrogen refuelling infrastructure for clean fuel cell cars, the EDB said.
It added that Singapore has also made inroads into sharpening its competitiveness by investing in research and development, and e-business and manpower, with U.S. oil major ChevronTexaco choosing Singapore as one of its three global e-hubs.
The hub will provide Internet connectivity and infrastructure, and serve as a centre of expertise for ChevronTexaco's Asia-Pacific IT operations.
Despite these positive signs of local growth, Aw stopped short of predicting the results for the coming year.
"The outlook for this year is uncertain and a lot will depend on a recovery in the global economic situation," she said.
Tan added that Singapore hoped investments in chemicals would be steady this year against the last.
