DPM Heng Swee Keat at Opening of Industrial Transformation Asia-Pacific 2022

Minister of State Alvin Tan

Ambassador Dr Norbert Riedel

Your Excellencies
Ladies and gentlemen,  

Good morning! 

Welcome to Industrial Transformation Asia-Pacific 2022! ITAP returns this year with a physical gathering of 10,000 attendees with another 8,000 joining us online. I have attended ITAP for several years now including the previous two editions held in the shadows of COVID-19. I am glad that the crowd and the atmosphere is truly back this year. My heartiest congratulations to organisers Constellar and Deutsche Messe!

Global manufacturing output continues to grow this year, after the pandemic slump in 2020 and a remarkable rebound last year. But the pace of growth is much more subdued. Manufacturers continue to face supply chain instability, adding to higher cost and slowing production cycles. Global inflation and the ongoing war in Ukraine are also putting pressure on growth. Despite these headwinds, Industry 4.0 marches on. The global market for Industry 4.0 is projected to grow at over 20% per annum in the coming years. 

Underpinning this strong demand is a recognition that Industry 4.0 is a critical competitive edge for the future. From digital factories and IoT, to additive manufacturing and industrial automation, these advancements are changing how products are designed and produced. By transforming and riding on these waves of change, manufacturers can unlock many new possibilities. But, if they stood still, they would almost certainly be disrupted. Harnessing Industry 4.0 requires strong partnerships to set standards, share best practices, and invest in the industry commons. Today’s gathering is an opportunity for leading stakeholders like you to gain new insights strengthen collaborations. 

Industry 4.0, and manufacturing in general, is an international business. This is because no country or single location can efficiently produce complex products entirely on its own. Complete self-sufficiency is neither desirable nor possible. Economies will need to tap on one another’s strength, leveraging on complementarities to strengthen competitiveness and better capture new opportunities. This is the basis of globalisation which is in turn premised on strong connectivity across economies. While support for globalisation has weakened in recent years, the foundations of trade have generally remained strong. If we look at our region – Southeast Asia, it has the potential to become a regional manufacturing powerhouse. Already, we are the fourth largest exporting region in the world. As companies plan for greater resilience of supply chains, Southeast Asia is emerging as an attractive alternate base for manufacturing.

The fundamentals for manufacturing in Southeast Asia are strong. The ASEAN Free Trade Area enables the free flow of goods and the protection of investments within the region. RCEP – the largest free trade agreement in the world – connects ASEAN economies with its major training partners.  With increasing regionalisation of supply chains, companies can tap on the Southeast Asia Manufacturing Alliance to grow your presence in the region by tapping on the complementary advantages of participating industrial parks. Singapore can be your launchpad to Southeast Asia. Wherever you are based, we would be happy to work with you to create greater value for your products and contribute to the dynamism of the regional economy and to improve the lives of people in the region. 

Connectivity is vital for manufacturing. But there are at least three other key priorities for Industry 4.0. These are: Innovation, Sustainability and People. Let me cover each in turn. 

Innovation

First, innovation. Innovation defines the frontiers of Industry 4.0. Here in Singapore, we have been steadfast in the pursuit of innovation. Over the decades, Singapore has consistently invested in Research, Innovation, and Enterprise. For the five years up to 2025, we are committing US$19billion to R&D, of which advanced manufacturing is one key area of focus. But it goes beyond funding. We are also building a close-knit eco-system where industry, academia, and the government work in partnership to push new frontiers, and where companies see each other not only as competitors, but also as potential collaborators with common interests. One example is the Innovation Factory at the Singapore Institute of Manufacturing Technology, which was set up in 2020.The Innovation Factory works with start-ups and SMEs to turn ideas into design, and designs into proof-of-concept products. Starting out as a pilot, the Innovation Factory has recently moved to a much larger facility at Cleantech Park, to expand its support to even more companies. 

Semiconductors make up a big part of our advanced manufacturing sector, accounting for more than one-third of our manufacturing value-add. The pace of innovation in semiconductor has always been rapid and is now moving at an even faster pace. Innovation in semiconductor materials have opened new frontiers and many new possibilities.One emerging material for chips is Gallium Nitride, which can perform better and more reliably at high power, especially in emerging areas such as 6G communications.This is potentially a high growth segment. 

To ride on this new wave, Singapore will be setting up the National Gallium Nitride Technology Centre, with an initial investment of around US$85million over the next five years. The Centre will serve as a shared resource and translation centre, in a partnership hosted by A*STAR and leveraging on technology developed by the Nanyang Technological University and DSO National Laboratories. This will be a boutique foundry that can provide small volume production, building on existing capabilities.  The Centre will be reaching out to industry in the coming years, both multinationals and local enterprises, to work on joint projects.  

What Singapore spends on R&D is small, relative to the rest of the world but by working with like-minded partners, we can make the most of every dollar spent, and maximize value creation and the impact of each partnership. We welcome more of you to be part of our Research, Innovation and Enterprise community, by setting up your research presence here. 

Sustainability

A second focal area is sustainability. The carbon footprint for manufacturing industries is large, accounting for one-fifth of total carbon emissions. The urgency to transform is particularly evident for the global energy & chemicals sector. Those based in Singapore are shifting from traditional fuels to higher-value chemicals and sustainable products. For example, Shell is building a pyrolysis oil upgrader in Pulau Bukom that can transform plastic waste into chemical feedstock. Neste is building its largest sustainable aviation fuel facility in Tuas South. When completed next year, Singapore will have the world's largest sustainable aviation fuel production capacity.More broadly, manufacturing companies and governments must also work towards cleaner energy sources, as energy consumption forms a significant proportion of carbon footprint. Singapore is in the process of decarbonising our power sector, with a target of low-carbon electricity imports making up at least 30% of our energy sources by 2035. Our advanced manufacturing hub – the Jurong Innovation District – has also made sustainability a key focus, with at least 30% green coverage spanning the District to help companies based in Singapore get started with sustainability, we launched the Enterprise Sustainability Programme last year. Since its launch, the programme has benefitted more than 400 enterprises and supported over 50 sustainability-related projects.

I am happy to also note that seven parties will be inking an MOU at ITAP to pledge their commitment to help local businesses improve on environmental sustainability, through the use of the Green CompassTM assessment and road-mapping tool. These parties include industry players, institutes of higher learning, trade associations and government agencies. I encourage more of such ground-up commitments to not only pursue your own green trajectory, but to also enable others to do so.

The sustainability journey will be a long and arduous one. The ongoing energy crisis may slow some countries down in their sustainability journey. But we must not be deterred by these bumps. While sustainability is still viewed by some as a cost centre, it will be your competitive advantage when the climate goals bite, and as investors and consumers increasingly prioritise ESG goals. So, I encourage all of us to remain steadfast in the sustainability journey, just as we do for innovation. 

People

The third focus area I would like to touch on is people. We are seeing a record number of unfilled skilled manufacturing jobs. This shortfall is estimated to number 2.1million  by 2030 in US alone. If no action is taken, the potential of manufacturing cannot be realised. Manufacturing jobs have to be made more attractive. Existing workers must continuously upskill, and more must be done to recognise and retain them. This is as much a company effort, as it is a collective industry effort. 

At the company level, it is critical to address talent attraction and retention. To support this, we will be launching the Manufacturing Employer Handbook today. The Handbook is supported by Enterprise Singapore and developed by the Singapore Precision Engineering & Technology Association and the Institute for Human Resource Professionals.

The Handbook will provide companies with the best human resource practices, tools, and templates. This will help smaller companies as they develop and adopt progressive HR strategies to support their business growth needs.

But a company only approach is not sufficient. Many a times, smaller firms have limited resources and opportunities to train and grow. Hiring from competitors works in the near term, but is a zero-sum game for the industry. 

This is why Singapore started a Skills Future Queen Bee programme, which also includes Bosch Rexroth, OMRON, Siemens, and HP from the manufacturing sector. This programme aims to “recruit” 40 larger firms or Queen Bees, to train more than their actual needs so that the excess trained workers can benefit 4,000 smaller enterprises. 40 for 4000. This is an industry-led solution. I believe such a collective approach, applied in Singapore and elsewhere, will serve to make manufacturing stronger especially in advanced manufacturing where higher skills is in significant shortage.  

ITM: The Collective Approach 

I have highlighted three priorities for Industry 4.0. Innovation, sustainability, and people, underpinned by strong connectivity. If we work on each issue individually, the result might still pale in comparison to tackling industry-wide issues holistically. We need rallying points to re-envision and uplift manufacturing, in a way that not only encourages greater industry partnership, but also ownership and trust. So, in Singapore, we brought each industry together to collectively set out what we want to achieve in 5 years, and chart the course on how we can get there. 

We call this the Industry Transformation Maps, or ITMs in short. ITMs is holistic in more than one way. Not only do they tackle industry-wide issues in an integrated way, but they also bringing together all the stakeholders involved. Underpinning the partnership examples which I described earlier is a tripartite approach to growing the economy where companies, unions, and government work closely together.  

Tripartite stakeholders know that the fortunes of companies and workers are intertwined, and they work together to transform the economy and industry and push the frontiers in a way that benefits all parties. This collective tripartite approach has served Singapore well, including our manufacturing sectors. 

Manufacturing makes up 20% of our economy. We have several ITMs in the advanced manufacturing and trade cluster including Precision Engineering, Electronics, Aerospace, Energy & Chemicals, and Logistics. Within each ITM, there were frank discussions to forge a common vision and systematically developed roadmaps to ride on Industry 4.0, drive transformation efforts, and deepen skills. 

Our overall goal is to grow manufacturing value-add by 50% in the ten years to 2030. The results of the past two years have been encouraging. Manufacturing value-add grew by 13.2% in 2021 and more than 5% in first half of this year. The initial set of ITMs have served us well. 

Today, we are launching a refreshed set of ITMs that will bring us to 2025 and contribute to our manufacturing goals for 2030. The refreshed ITMs feature the themes of innovation, sustainability, and people, underpinned by strong connectivity. ITMs are our roadmap for collective change. This set of ITMs underscores our commitment to make Singapore a smarter, greener, and more connected advanced manufacturing hub while making partnerships and people at the core of creating change. 

Conclusion

On this note, let me once again welcome you to Singapore. Innovation, people, and sustainability are key areas that we must focus on. But as important is the how. We need to do so working in partnership taking a holistic industry-wide approach. I hope you forge new bonds and collaborations at ITAP. Here is wishing you a productive and fulfilling week ahead. Thank you.