Overview
Singapore's chemical engineering sector recognised worldwide, driven by petrochemicals segment
The chemical engineering sector in Singapore contributes to many industries including construction and maintenance, logistics and warehousing, and processing. Singapore is one of the top chemical engineering centres in the world, with more than 100 international chemical corporations locating their main operations in the country. Further, the energy and chemicals (E&C) sector contributes to approximately 3.0% of Singapore’s GDP, while representing approximately 20% of all manufacturing output in 2020 and employing over 27,000 professionals.
As of end-2021, Singapore’s chemical engineering sector was the ninth largest exporter of chemicals in the world, driven by its strong refining, olefins production and chemicals manufacturing, business and innovation capabilities. Singapore's main hub for petrochemical, speciality chemical and refining operations is Jurong Island, comprising seven offshore islands. Facilities have been established, attracting more than SGD 50 billion in investments as of end-2021. Customers and suppliers are connected tightly by its highly integrated infrastructure, mainly over the fence through pipes. This integrated ecosystem, which includes utilities and logistical service providers, generates cost-saving production synergies for businesses.
Energy & Chemicals Industry Transformation Map to assist in Singapore’s aim to maintain position as global chemical engineering hub
In 2017, the Ministry of Trade and Industry (MTI) launched the Energy & Chemicals Industry Transformation Map (ITM), which was developed by a multi-agency team together with industry partners, unions and trade associations, strategising Singapore’s future development as a globally competitive and leading E&C hub. The medium-term plan aims to achieve a manufacturing value added of SGD 12.7 billion and introduce 1,400 new jobs by 2025.
The ITM expects to work on two broad strategies, which include:
- Transformation of the existing base through the adoption of innovative technologies focusing on boosting productivity, anchoring high value-added advanced manufacturing activities and new constructions of plants adopting advanced manufacturing technologies.
- Diversification of new growth markets and developing innovation capabilities to capture growth, focusing on diversifying and upgrading the country’s product slate towards high value-added petrochemicals and speciality chemicals, and growth and development of innovation capabilities to shorten innovation cycles. Further, the approach targets the development of at least 20 new or expanded application development centres by 2025, with an SGD 55 million increase in R&D expenditure.
Key Trends
Sustainable chemical engineering operations to drive sector growth
In November 2021, the Singapore Economic Development Board (EDB) released the ‘Sustainable Jurong Island’ report, explaining the government’s plans to transform Jurong Island into a sustainable E&C park that operates sustainably and exports sustainable products globally.
The long-term plan was built on sustainability ambitions first announced in the Green Economy pillar of the Singapore Green Plan 2030. Singapore believes that the E&C industry must change and play a crucial part in creating solutions for a worldwide low-carbon future in the light of the global energy transition and Singapore's 2050 Long-Term Low-Emissions Development Strategy, which was submitted to the United Nations Framework Convention on Climate Change in 2020.
The envisaged strategy is driven by the following key milestones to be achieved:
- Increase the output of sustainable products by 1.5 times from 2019 levels,
- Ensure that refineries and crackers in Singapore are in the top quartile of the world in terms of energy efficiency, and
- Realise at least two million tonnes of carbon capture potential.
In order to realise the above targets for the chemical engineering Industry, the government has established broad infrastructure initiatives and support measures. The Carbon Capture and Utilisation Translational Testbed (CCUTT), a test-bedding facility for carbon capture and utilisation (CCU), is being experimented with and studied by the Agency for Science, Technology and Research (A*STAR), EDB and JTC. This facility will take advantage of cutting-edge test-bedding innovations such as modularization and digitalization to hasten the advancement and expansion of CCU technologies in Singapore.
EDB will continue to help businesses in Singapore embrace decarbonization and sustainability solutions.
Recent updates to the Resource Efficiency Grant for Energy (REG(E)) and Investment Allowance for Emissions Reduction (IA-ER) schemes now encourage carbon capture, utilisation and storage, in addition to energy efficiency gains and the reduction of non-CO2 greenhouse gases for the chemical engineering industry in Singapore.
Conversion to digitally enabled operations to improve efficiency and robustness among chemical engineering SMEs
Singapore’s chemical engineering industry has adopted the Process Construction and Maintenance (PCM) Industry Digital Plan (IDP) to transform small and medium-scale enterprises (SMEs) in many sectors, including the refineries and petrochemicals sectors in the chemical engineering industry, towards technology-enabled industries in the medium term. The IDP provides a step-by-step guide to the adoption of digital solutions in operations and also assesses the digital readiness of a company.
The IDP lists down a three-step guideline to implement its plan, which includes listing the basic digital solutions SMEs can adopt to streamline operations and optimise the use of their resources; provision of solutions to enable SMEs to leverage the Internet of Things (IoT) and data analytics to enable better planning decisions, thereby optimising the use of resources, such as manpower or equipment; and identification of advanced technologies that SMEs can adopt to strengthen their competitive edge.
Evolution and expansion of environment and climate change laws to prompt sector attention
In July 2021, the European Commission proposed a Carbon Border Adjustment Mechanism (CBAM) implementing a carbon tax, initially focusing on energy-intensive products in five industries: electricity, iron and steel, fertilisers, aluminium and cement, with the possibility of expanding the CBAM's purview to include indirect emissions as well as other goods and services.
There were concerns that Singaporean exporters would struggle under the planned CBAM given that the majority of Singapore's exports to the European Union (EU) consist of products in the chemical or related industries as well as machinery and appliances. However, the government believes that the CBAM would have a limited impact on Singapore’s exports to the EU, which averaged approximately SGD 19.0 billion during 2016-2020, of which a mere 0.08% is represented by the products covered under the proposed CBAM law. The government believes that any broadening of the scope should not hinder or raise barriers to international trade, consistent with World Trade Organization (WTO) principles, and take into consideration the existing carbon tax or other mitigation mechanisms implemented by exporting countries.
Key Statistics
- As of 2020, the total number of establishments in Singapore’s chemical engineering sector was 312, representing a 4.0% year-on-year (YoY) increase.
- As of end-2021, Singapore’s chemical and chemical products manufacturing segment recorded an output of SGD 56.2 billion, which denotes a significant 34.7% YoY increase.
- During 2020, total fixed asset investments in the chemical engineering sector declined by 15.8% YoY to SGD 4.1 billion, while expected value addition per annum rose 5.2% YoY to SGD 1.1 billion.
- In July 2021, chemical output grew 5.7% YoY with the specialities segment rising a significant 21.8% YoY, driven by higher production of food mineral oil additives. However, the cumulative year-to-date July 2022 chemical output fell 2.5% YoY.
