Food Manufacturers Serve Up A Healthy Contribution to Singapore’s GDP

Food Industry Asia’s (FIA) member companies are among those in the Singapore food manufacturing sector that made a healthy S$3.2 billion contribution to Singapore’s GDP, according to the recently published “The Economic Impact of the Food Industry in Singapore” report.

According to the report, launched last week by FIA and Oxford Economics, out of this total, around 80 per cent of the industry’s GDP contribution came from food manufacturing, and the remainder came from the manufacturing of non-alcoholic beverages. The report also highlighted that nearly 39,000 people were employed in the food manufacturing sector in the island state.

Matt Kovac, Executive Director at FIA, said that this is the first time a report specifically studying the food industry in Singapore has been carried out.

“The report provides FIA member companies involved in food manufacturing, food distribution and support services to the food industry a robust assessment of the economic contribution of the food industry in Singapore, across the complete value chain, from raw products to manufacturing, distribution and retail,” Kovac said.

Food manufacturers’ supply chain spending within Singapore supported S$1.6 billion of domestic procurement, and contributed a further S$610 million of GDP, 6,100 jobs, S$31 million in tax revenues, and S$37 million in CPF contributions in 2014.

To give a sense of the scale and importance of the food manufacturing sector: Its direct contribution to Singapore GDP is equivalent to around one-third of Singapore’s precision engineering cluster, and around one-sixth of the country’s electronics cluster.

Kovac pointed out that when comparing the individual industries within each of the five clusters against food manufacturing, the results from the study carried out by Oxford Economics show that the food manufacturing industry is equivalent in size to Singapore’s aerospace industry, and larger than industries for speciality chemicals, petrochemicals, medical technology and land transport engineering.

The report also highlights ongoing research and development (R&D) in areas such as nutrition, flavours and food packaging, which form part of the broader food industry ecosystem in Singapore.

“In addition to the contribution the food manufacturers make, in terms of GDP contribution and employment, it is critical to note that the food industry is also making a sizeable contribution to support Singapore’s status as a centre for advanced manufacturing, by investing and setting up R&D facilities in the country,” said Kovac.

Data shows that the Agency for Science, Technology and Research (A*STAR) estimates that organisations in Singapore spent a total of S$210 million on R&D in the field of agricultural and food sciences in 2013. The vast majority of this spending was undertaken by the private sector, and three-quarters of the funds spent were dedicated to the field of food science, with the remaining quarter going to agricultural science issues.

The A*STAR data also suggests that the majority of R&D expenditure was undertaken by foreign companies, although it is estimated that local small and medium enterprises (SMEs) spent S$31 million on R&D in 2013.

 Quantitative research carried out by Oxford Economics revealed that a number of companies reported that Singapore is the leading location for consumer goods firms in South East Asia, in terms of geographical location, connectivity, political stability and the availability of skills. Over half of the survey respondents reported that they undertake R&D activity in Singapore. Firms explained that these activities often focus on the development and testing of new products, as well as market research into consumer preferences and emerging trends. The benefits generated by this work include healthier and safer products, less resource-intensive packaging, and reductions in energy and water usage.

Oxford Economics calculated the contribution of the food and non-alcoholic beverage industry to the Singapore economy by looking at three areas: i) food manufacturers’ contributions to gross domestic product (GDP), employment, tax receipts and the Central Provident Fund (CPF); ii) the value-added contributions by companies involved in the distribution of food, such as wholesalers, retailers and restaurants across the same metrics; and iii) the wider economic impact through activities such as R&D, education and training.

FIA issues regular e-bulletins with analysis on relevant food and beverage industry issues across the region. To subscribe to this service, please click here