The government is "very reluctant" to let the industry's contribution to gross domestic product drop "sharply" because of its multiplier effects on other parts of the economy, including logistics and business services, Lim said in an interview in Singapore today. Manufacturing accounts for about a quarter of the island's gross domestic product.

"Over the years, we've built up some competitive strengths and good market share of some niches, whether it's in electronics sectors, pharmaceuticals, petrochemicals, transport engineering, shipbuilding, rigs or maintenance overhaul of aircraft," Lim said. "These are fairly good positions that we will try to continue to maintain."

Singapore's dependence on electronics and pharmaceutical exports has made it vulnerable to fluctuations in global demand and business cycles, pushing it into a deeper recession than many neighbors in the global economic slump of the past year. The island's electronics output has also shrunk as manufacturers move to lower-cost countries such as China.

That's prompted the government to promote investments in industries such as pharmaceuticals and transport engineering to boost industrial production.

"We do recognize that some segments of manufacturing may not be competitive in Singapore and may have to move out, but this is the constant restructuring that takes place," Lim said. "We try to build up other new sectors as well."

Economic committee

Singapore is seeking ways to ensure its economy grows in a more sustained manner after three recessions in the past decade. The most recent slowdown was its deepest since independence 44 years ago. Prime Minister Lee Hsien Loong announced the formation of the Economic Strategies Committee in May, which will unveil its main recommendations in January.

"I believe the Economic Strategies Committee studying the importance of manufacturing would subscribe to this importance and see how we can continue to encourage manufacturing investments to take place in Singapore and to grow it," Lim said. "It's an important, integral part of the economy."