Singapore Chemical Industry

The Singapore chemical industry is a cornerstone of the nation's economy, serving as a leading global hub for energy and chemicals. Situated in the heart of Asia, its strategic location, world-class infrastructure, and pro-business environment have attracted over 100 multinational chemical companies. The industry is undergoing a strategic transformation, pivoting towards higher-value, sustainable products to navigate evolving global dynamics and remain competitive

Key features of the industry

• Integrated hub on Jurong Island: The industry's centerpiece is Jurong Island, an industrial complex that integrates refining, petrochemical, and specialty chemical activities. This ecosystem offers significant cost savings through shared utilities and logistical infrastructure.

• Economic pillar: The energy and chemicals sector is Singapore's second-largest manufacturing sector. In 2022, it contributed S$113.1 billion to total manufacturing output and employed more than 27,000 people in 2020.

• Strong export position: Singapore is a major chemical exporter, ranking 9th globally in 2022. Its extensive network of free trade agreements facilitates access to regional and international markets.

• Shift to specialty chemicals: The government is actively guiding the industry to move up the value chain from commodity petrochemicals to higher-margin specialty chemicals. Growth areas include nutrition, health, smart materials for electronics, and sustainable biotech materials

Drivers of transformation

The Singapore Economic Development Board (EDB) is guiding the industry's transformation through its Energy & Chemicals Industry Transformation Map (ITM) 2025. This strategy aims to position Singapore for sustainable, high-growth opportunities.

Key initiatives and focus areas include:

• Sustainability and decarbonization: The "Sustainable Jurong Island" strategy encourages decarbonization through carbon capture, using alternative feedstocks like recycled plastics and biomass, and developing sustainable aviation fuels (SAF).

• Innovation and R&D: The government is investing heavily in research and development, particularly in industrial biotechnology and low-carbon solutions. This fosters collaboration between companies, research institutes, and startups.

• Digitalization: The industry is embracing digital transformation, including AI-driven analytics, for smart manufacturing, optimizing processes, and enhancing supply chain visibility.

• Talent development: Programs like SkillsFuture ensure a strong talent pipeline, while schemes like the Overseas Networks & Expertise Pass attract skilled foreign workers

Outlook and challenges

Despite a mature and robust foundation, the Singapore chemical industry faces both challenges and opportunities in the coming years.

Outlook:

• Growth is expected to be moderate, influenced by global macroeconomic conditions and trade policies.

• The shift to specialty and sustainable chemicals is expected to provide greater resilience and new profit opportunities compared to traditional petrochemicals, which have faced oversupply.

• Investments are continuing, particularly in projects focusing on cleaner energy and bio-based products, such as Neste's large SAF plant and Evonik's biodiesel catalyst facility

Challenges:

• Global competition and demand: The industry faces stiff competition from major chemical manufacturers in other countries, and fluctuating global demand can impact growth.

• Energy transition pressures: As a traditionally carbon-intensive sector, the chemical industry is under immense pressure to decarbonize. This requires significant investment to remain viable in a low-carbon world.

• Raw material volatility: Like the global industry, Singapore's chemical sector must navigate volatile raw material costs and potential supply chain disruptions.

• Workforce and compliance: The sector must contend with manpower constraints and stringent environmental, safety, and regulatory compliance requirements