Services Now Over 25 Percent of Singapore’s Exports
SINGAPORE – Singapore’s Ministry of Trade and Industry has announced that services now make up over a quarter of the country’s exports, reflecting a structural shift in exports in which services are growing faster than goods.
Services as a share of total trade increased from 19.7 percent in 2004 to 26.7 percent in 2014. As a share of total exports in the same period, services rose from 16.9 percent to 25.5 percent. Singapore’s service trade increased by 2.4 percent to S$357.3 billion in total for 2014.
The ministry expressed that while the near-term outlook for Singapore’s merchandise exports remains modest, services including finance and insurance are expected to support overall exports growth. In Q4 2014, manufacturing contracted an annualised 2.5 percent, and services expanded 7.8 percent, in which finance and insurance rose 36 percent. Financial and other business services, including accounting, make up approximately 40 percent of the country’s service exports.
The divergence of the tertiary sector is not only taking place in exports. Although overall labor productivity dropped by 0.8 percent in 2014, the financial services and insurance sectors saw productivity growth of over 2 percent. As the Singapore dollar recently reached its weakest levels against the US dollar since 2010, the weakened currency has made prices of Singapore’s exports more attractive in this global hub for accounting, financial, and insurance services.
Minister of State for Trade and Industry Teo Ser Luck has spoken out to encourage professionals offering accounting services in Singapore to branch out beyond traditional audit services and offer higher value-added business advisory services. Teo encouraged accountants to “stay ahead of the curve” by providing services such as integrated reporting to present a holistic view of a company, and that providers should offer business valuation, internal audit, risk management and international tax services.
With reduced manufacturing output, services continue to play an increasingly prominent role in Singaporean exports. Following GDP growth of 2.9 percent in 2014, Minister of Trade and Industry Lim Hng Kiang has described 2-4 percent growth as the “new normal that we are aiming at”, yet deep changes are taking place beneath the figures.
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