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Singapore pledges tax breaks, tech funding for electronics sector

Posted: 23 Feb 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Jonathan Hopfner?

Singapore Prime Minister Lee Hsien Loong unveiled a 2006 budget that contains several perks for the electronics and high-tech sectors.

Noting that manufacturing remains "a key part" of the city-state's economy, Lee outlined a new tax break for the electronics industry as well as increased funding for research and development to support the government's goal of doubling output by 2018.

Lee said the 5-percent goods and services tax currently applied to most imports was hurting contract manufacturers such as United Microelectronics Corp. and Chartered Semiconductor, who frequently bring in new tools and equipment to meet the needs of their overseas clients.

As a result, Lee said effective April 1 the tax will be dropped on tools imported for use in the manufacturing products for export, with Singapore's Inland Revenue Authority expected to release details on the break soon.

The prime minister also pledged seed money of $306 million for a new trust fund to be overseen by the National Research Foundation, which by 2011 will have $3 billion to invest in emerging technologies and the development of intellectual property.

The funding will be supplemented by another $4.6 billion the Ministry of Trade and Industry has pledged to spend over the next five years to groom R&D in important "industry clusters" such as electronics.

According to the Ministry's Science and Technology Plan 2010, unveiled Feb. 16, material technology, microelectronics, design and photonics are among the areas targeted for government support.

Figures released by the ministry Feb. 16 show the electronics industry continues to play an important role in domestic growth. According to the EDB the sector expanded nearly 9 percent in 2005 overall, a decline from the 15 percent growth registered in 2004 due partly to a decline in demand for computer peripherals.

The semiconductor industry, however, grew 9.8 percent last year, while the data storage market overcame losses in 2004 to register 20 percent growth in 2005.

Singapore also managed to attract $5.2 billion in fixed-asset investment commitments in 2005, with electronics and chemicals projects accounting for nearly 75 percent of the total, the ministry said.

- Jonathan Hopfner
EE Times

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