ELECTRONICS SECTOR (Growth rate)

Mr John de Payva asked the Minister for Trade and Industry whether the present double-digit growth of the electronics sector is sustainable.

The Minister for Trade and Industry (Mr Yeo Cheow Tong): Mr Speaker, Sir, the electronics industry grew by 23% in 1993, 22% in 1994 and 16% in January-September 1995. This is due to strong global demand for electronic products like personal computers, disk drives and semiconductors.

However, not all segments did well. The consumer electronics segment declined by 4.6% in the first nine months of this year after expanding by 26% in 1994.

It is difficult to forecast growth accurately as the electronics industry is fast-moving and volatile. However, based on available information, the outlook appears good. Most analysts expect strong growth to continue up to the first half of 1996 because of the boom in personal computers and the present global shortage of components such as semiconductors. The latest survey of business expectations also shows that a net balance of 39% of electronics firms expect business to improve in the last quarter of 1995 and the first quarter of 1996, compared with 27% in the same period last year. We can expect double-digit growth for 1995 and 1996, though not as high as in 1994.

Over the longer-term, the prospects for the global electronics industry are good. Dataquest predicts that the global electronics demand will hit US$1.3 trillion by the year 2000. This represents an average annual growth rate of 8.7% over the period 1995-2000, compared to 7.4% over the period 1989-94. In addition, the Asia-Pacific's share of the global electronics demand will also grow from 19% in 1994 to 27% in the year 2000. By continuing to upgrade their core capabilities and moving into high value-added products, our electronics companies will be in a good position to benefit from this world-wide boom.