Foreign demand for professional services up
It is playing an increasingly important role in driving professional services growth
By TEH SHI NING
SINGAPORE’S professional services have been traditionally dependent on domestic demand but external demand for them has risen in recent years and will be key to the sector’s future growth, says a Ministry of Trade and Industry (MTI) report.
Growth in professional services also led to jobs growth - 4.7% in the second quarter, versus Singapore’s overall employment growth of 2.2%.
Professional services defied the downturn to grow 3.5 per cent in the first three quarters of this year, as the overall economy and the services sector contracted 4.1 per cent.
For architectural and engineering services, this was thanks to a strong pipeline of construction projects. Recent liberalisation moves in the legal sector have attracted foreign law firms to Singapore, boosting legal services.
And accounting firms have been kept busy by continued demand for restructuring and forensic reporting services, despite the slowdown in their auditing business, the MTI report says.
Growth in professional services also led to jobs growth - 4.7 per cent in the second quarter, versus Singapore’s overall employment growth of 2.2 per cent.
Examining the longer-term growth trend of professional services here, MTI economist Kenny Goh says in the report that their compounded annual growth rate of 8.8 per cent from 2000 to 2008 outpaced the nominal GDP growth of 6.1 per cent over the same period.
A key driver has been the growth of other sectors of the economy that use professional services - such as the wholesale and retail trade, manufacturing, other business services and the financial services sector.
Professional services have traditionally catered mainly to domestic demand. But exports have risen in recent years, and foreign demand is playing an increasingly important role in driving professional services growth.
According to the report, accountancy, legal and architectural and engineering services were the most inward-looking segments with over 70 per cent of output consumed domestically in 2000.
But all three segments showed double-digit growth in their export receipts from then until 2008.
Mr Goh thinks that the sector’s medium-term prospects are bright, as domestic demand rises in tandem with Singapore’s economic growth, and Asia’s growth spurs greater overseas demand for professional services too.
One challenge for the sector will therefore be ‘to ensure an adequate supply of qualified manpower to meet the expected increase in demand’, Mr Goh says.
Source : Business Times - 21 November 2009
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