SPEECH BY MR S ISWARAN, SENIOR MINISTER OF STATE FOR TRADE & INDUSTRY AND EDUCATION, AT THE 42ND ANNIVERSARY DINNER OF THE ASSOCIATION OF SINGAPORE MARINE INDUSTRIES (ASMI) ON FRIDAY, 29 OCTOBER 2010, 1930 HRS AT FAIRMONT HOTEL SINGAPORE

Mr Wong Weng Sun, President, Association of Singapore Marine Industries,

Ladies and Gentlemen,

Good evening.

Introduction

I am pleased to join you this evening to celebrate the 42nd Anniversary of the Association of Singapore Marine Industries or ASMI.

Transformation of the Singapore’s Marine and Offshore Engineering Industry

The advent of the marine and offshore engineering industry in Singapore dates back to 1963 when the first commercial shipyard was established in Jurong. Back then, the Government’s priority was to develop Singapore’s marine capability while creating employment for the population.That first commercial venture was Jurong Shipyard Limited.Today, it is better known as Sembcorp Marine.From that modest beginning, it now has a network of seven shipyards in Singapore and Indonesia.

Sembcorp Marine’s growth is reflective of the successful broader transformation of the marine and offshore industry as a whole. In the last four decades, the industry has expanded its range of capabilities to include rig-building, ship repair and conversion, and specialised vessel construction. It is now one of the fastest growing sectors in our economy.

Today, Singapore is a leading ship repair centre and the global leader in the building of jack-up rigs and offshore platforms, with a global market share of some 70 per cent. Singapore is also a world leader in the conversion of Floating, Production, Storage and Offloading vessels (FPSO) and Floating Storage and Offloading (FSO) units, commanding two-thirds of the world’s market share. In shipbuilding, Singapore is amongst the world leaders in the construction of customised and specialised vessels.

Over the past five years, the marine and offshore engineering industry has grown at a compounded rate of 18 per cent.Last year, despite the global downturn, the industry’s output was $16.83 billion.

To retain our global market share, the industry needs to continually sharpen its competitive edge and seek out new markets. Some of our major shipyards have already ventured to Brazil, for deepwater offshore projects, as well as to South Asia and Southeast Asia. The industry has also expanded to encompass a wider range of activities, such as manufacturing, headquarter services, training, research and development, engineering, regional distribution, and more. We now have world class shipyards and companies offering complex oil and gas systems and components, and offshore-related services. This will further consolidate our position as an integrated marine and offshore hub.

Sharpening our Competitive Edge

The long term outlook for the industry is also promising. The International Energy Agency (IEA) has projected that global oil demand will continue to grow at an average of 1 per cent per annum on average till 2030. This translates into an increase from 85 million barrels per day in 2008 to 105 million barrels per day in 2030. And even as we gear up to meet the boom in demand for marine and offshore services, we must strive to maintain and enhance our competitive edge in the face of rising competition from lower-cost countries. At the same time, our resident labour force is expected to grow only half as fast over the next decade, as compared to the last 10 years.

The marine and offshore engineering industry must seek more innovative and efficient ways of operating, and pursue higher value added activities. Only through productivity gains can we achieve sustainable growth that benefits both employers and employees.

Earlier this year, the National Productivity and Continuing Education Council was formed. Chaired by Deputy Prime Minister Teo Chee Hean, the council will oversee and drive the national effort to boost productivity.‘Transport Engineering’, of which the marine and offshore engineering industry is a part, has been identified as one of 12 priority sectors that the Government will focus on. The Economic Development Board (EDB) is spearheading a productivity review of the sector, and I strongly encourage marine and offshore companies to work closely with the EDB to identify the bottlenecks, and formulate strategies to enhance productivity in the sector.

Another key driver of the industry’s further growth is R&D. A number of the world’s largest oil and gas equipment companies and oil field services companies have already set up R&D operations in Singapore. The Government, through agencies such as EDB and the Agency for Science, Technology and Research (A*STAR), is committed to helping companies grow their R&D capabilities. R&D presents opportunities for companies with technologically superior product and service offerings to pull ahead of the competition. As the exploration and exploitation of oil and gas reserves moves to less hospitable terrains and becomes more complex, technological capability will be a key differentiator.I therefore encourage companies in the local marine and offshore engineering industry to invest in and strengthen your R&D capabilities in order to sustain your global competitive edge.

ASMI –Industry Champion

At this juncture, I would also like to acknowledge the efforts of ASMI in helping to drive development in the marine and offshore sector, and launch initiatives to further improve the capabilities of companies within this sector. ASMI has served its members well over the years, enhancing the knowledge and skills of the marine workforce, promoting the collective interests of the marine industry, and linking up and integrating the industry. Recently, SPRING and IE Singapore awarded ASMI a grant of up to S$2.64 million, under the Local Enterprise and Association Development (LEAD) Programme, for projects to upgrade the association’s capabilities and further enhance the competitiveness of the industry. I am confident that ASMI will continue to play a leading and catalytic role in helping the marine and offshore sector build deeper industry capabilities and expertise that will lead to sustained economic growth for the sector and ultimately for Singapore.

Conclusion

On that sanguine note, let me extend my congratulations to the association on its 42nd Anniversary and I wish ASMI and its members continued success in the years ahead. Thank you.