SPEECH BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY AND MANPOWER, AT THE INAUGURATION CEREMONY OF SINGAPORE OXYGEN AIR LIQUIDE (SOXAL) ON FRIDAY, 3 JUNE 2011, 12.30 PM AT THE CHEMICAL PROCESS TECHNOLOGY CENTRE, JURONG ISLAND

Your Excellency, Mr Oliver Caron, Ambassador of France

Mr Jean Marc De Royere, Senior Executive Vice President, Air Liquide Group

Mr Mok Kwong Weng, Executive Vice President, Air Liquide Group

Mr Christophe Chalier, Managing Director, SOXAL

Distinguished guests

Ladies and gentlemen

Introduction

Good afternoon. Thank you for inviting me to this joyous occasion to celebrate the inauguration of SOXAL’s S$500mil investments (Air separation Unit, Hydrogen Plant, Gas Pipeline Network) on Jurong Island.

Jurong Island is the home to Singapore’s Energy and Chemicals industry. It is also a world-class petrochemical complex and a case study of industry integration.

But back in 1990 when the idea of an amalgamated island for petrochemical industry was first proposed, it appeared like a far-fetched vision. As part of the EDB team conceiving and implementing the idea led by Mr Philip Yeo, we had no idea if we could convince enough companies to form a critical mass on this amalgamated island. Nevertheless we proceeded with the land reclamation.

Fast forward 20 years, we wish today Jurong Island has more space to grow. We wish we could accommodate the expansions of existing players and entrants of new players.

For sure, our Energy and Chemicals industry has grown to be a sizeable and productive industry in our economy. It accounts for almost 2.5% of Singapore’s GDP (30% of manufacturing output) and has created 50,000 jobs. value-added per worker stands at $0.26 million, 1.9 times the average of the manufacturing. It is a great example of knowledge-based industry.

Manufacturing remains a key contributor to Singapore’s Economy; Importance of partners like SOXAL.

The success of Jurong Island reflects the Government’s commitment to enhancing the operating environment for the manufacturing industry. It takes years to put the required pieces together – land, infrastructure, human resources, industry players and meticulous planning in this case, to develop it to a scale and sophistication that we see on Jurong Island today. We can be justifiably proud of the standing and achievements of Jurong Island as one of the world’s largest and most competitive energy and chemical hubs.

In fact, our focus on manufacturing has also paid off in other ways. One key reason for the strong rebound of our economy after the recent financial crisis was because of manufacturing. Our GDP grew 14.5% in 2010, led by a 29.7% surge in the manufacturing sector. Manufacturing is thus a good counter-weight to our services sector, whose reach is usually limited to the immediate region.

The growth momentum has continued healthily at 8.3% into the first quarter of this year. Manufacturing sector again outpaced other sectors by growing higher in 1Q at 13.1%. Sub-sectors such as the biomedical manufacturing (BMS), precision engineering and electronics clusters – the many sub sectors which companies like SOXAL supports, were the star performers.

As a result, MTI has also revised our annual growth rate from 4-6% to 5-7%.

Yet, the contributions of manufacturing sector goes beyond itself but encompasses spin-offs for other sectors such as logistics, communications, business services, insurance and banking. Our commitment is to render manufacturing even more competitive and synergistic as part of the knowledge-based economy we are building for the new century.

Jurong Island Version 2.0 - New Growth Strategy for E&C Industry in Singapore

In this context, SOXAL has played a very constructive role in the industry integration of the Jurong Island. Many of the petrochemical plants now need not worry about costly auxiliary investments but tap on SOXAL’s network for industrial gases supply. In other words, because of SOXAL, many of its clients can focus on what they are supposed to do best in running their operations.

I am glad to learn that going forward, SOXAL and its industry partners would continue to seek progress further. They will embark on the vision of “Jurong Island 2.0” to drive collective sustainability and competitiveness. They will do so by working on new infrastructure development and system-level optimization of valuable resources such as energy, carbon, water and land. I would elaborate on two ideas currently being studied.

Firstly, the product grid initiative. As Jurong Island grows, companies are exploring the feasibility of an island-wide common pipeline infrastructure. This would diversify the supply of feedstock (including industrial gases) and optimize land use, raising competitiveness and reliability of supply in the process.

Secondly, system-level energy efficiency solutions. Under Jurong Island Version 2.0, Jurong Island can be a “living lab” for companies to develop and demonstrate innovative solutions that can improve collective energy efficiency. An example of a project currently under study, is the harnessing of cold energy generated by the Liquefied Natural Gas (LNG) terminal slated to come on-stream in 2013. By utilizing the cold energy from the LNG terminal for an air separation unit, one can reduce overall energy requirement which in turn results in lower operating costs for the end users.

Conclusion

In closing, allow me to extend my heartiest congratulations to the management and team at SOXAL on the successful building and implementation of your most recent phase of $500 mil investments. This investment brings SOXAL’s investments over the years to S$1 billion.

SOXAL has been a long-standing partner for Singapore industries since 1916, I am certain that we would want to extend this strong partnership long into the future. May I wish SOXAL every success in your future endeavors.

Thank you.