Stagnating Singapore yields electronics manufacturing crown to rapidly rising Vietnam

Vietnam will lead exports by 2017.

Emerging electronics manufacturer Vietnam will snatch Singapore’s crown as Asia’s fifth-largest electronics exporter within the next two years, according to a report by DBS.

Electronics exports, once the bastion of Singapore’s robust economic growth, has been stuck in the doldrums for the past three years on back of rising external headwinds and the effects of domestic restructuring.

“Vietnam will overtake Singapore to become the fifth largest electronics exporter in Asia within the next two years. Unless Singapore can find 'greener pastures' in manufacturing, otherwise, this sector could be in for a steady structural decline,” DBS said.

Data released today by the Ministry of Trade and Industry (MTI) showed that manufacturing output contracted by 4.9% on a year-on-year basis in the second quarter, extending the contraction of 2.4% in the previous quarter.

The electronics cluster grew by a mere 0.7% in Q2. Growth was supported by expansions in the computer peripherals, data storage and other electronics modules & components segments but dragged by a 7.9% contraction in the semiconductors segment.

“Beyond the rising external headwinds and global uncertainties, Singapore manufacturers are also struggling with the double whammy of higher business costs and domestic labour crunch. While manufacturers are finding it difficult to take on new orders given supply side constraints, they are also losing their price competitiveness to regional players,” DBS said.