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Exports from Singapore hit by factory relocation
Publication Date : 18-06-2014
Exports appear to be suffering as an increasing number of companies relocate factories offshore as part of the economic restructuring under way.
While economies across the region are starting to benefit from the pickup in global demand, shipments from Singapore shrank across almost all industries last month, data out yesterday showed.
Weak electronics exports were again a major drag, possibly due to operations being moved abroad, economists say.
Non-oil domestic exports sank back into negative territory last month, shrinking an unexpected 6.6 per cent from a year earlier after rising 0.9 per cent in April.
This caught out economists, who had tipped exports last month to rise 0.5 per cent over the same month last year.
The disappointing figures come amid signs of recovery in major economies such as the United States, which would usually boost exports from Asia.
Singapore has not seen a decisive pickup in shipments, in contrast to Asian neighbours such as Malaysia and Taiwan, said Bank of America Merrill Lynch economist Chua Hak Bin.
Taiwan's exports rose 1.4 per cent last month over the same month last year, registering a fourth consecutive month of growth.
Exports from Malaysia surged 18.9 per cent in April over a year ago, boosted by higher shipments of electronics, refined petroleum products and liquefied natural gas.
Higher business costs here from efforts to transform the economy may explain the weak export data, particularly in the electronics sector. Electronics shipments recorded their 22nd consecutive month of decline last month, contracting 15.3 per cent, mainly due to lower demand for integrated circuits, personal computer parts and consumer electronics.
"Restructuring is hurting the manufacturing sector, with signs of firms choosing to relocate or invest their manufacturing capacity elsewhere," said Dr Chua.
The electronics industry suffered a drop in output in April that was attributed to a "firm-specific factor", according to the Economic Development Board. Economists said this might have been due to a large firm relocating.
Barclays economist Leong Wai Ho offered an alternative explanation for the industry's sluggishness, suggesting that regional supply chains were disrupted by the larger number of public holidays in Taiwan and South Korea this year.
More electronics exports are also being classified under re-exports instead of non-oil domestic exports, he added.
Besides electronics, nearly every category of Singapore's exports shrank last month from the previous year except disk media products and petrochemicals, according to IE Singapore yesterday.
Non-electronic exports slipped 2.4 per cent, led by a 26.3 per cent dip in pharmaceutical shipments, a 13.1 per cent fall in specialised machinery and a 30.2 per cent decline in aircraft parts.
IE Singapore also said exports fell last month to all of Singapore's top 10 markets except China, Malaysia and Indonesia.
The latest numbers are a sign Singapore's growth is not yet on steady footing despite a more sanguine global outlook, said OCBC economist Selena Ling. "The export trajectory remains choppy for Singapore going into the second half of the year," she said.
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