Speech by Minister S Iswaran at the Tourism Industry Conference 2016

SPEECH BY MR S ISWARAN, MINISTER FOR TRADE AND INDUSTRY (INDUSTRY), AT THE TOURISM INDUSTRY CONFERENCE 2016, 25 APRIL 2016, 9AM, SUNTEC CONVENTION & EXHIBITION CENTRE

Chairman and Members of the STB Board

Partners from the tourism industry

Colleagues from STB

Ladies and gentlemen

Good morning

1. I am pleased to join you at the annual Tourism Industry Conference. It is an important annual opportunity to take stock of trends and developments in our tourism industry, as we look ahead to new opportunities and seek to implement new initiatives.

Tourism sector: challenges, opportunities, partnerships

2. Our tourism industry statistics for the first half of this decade paint an interesting picture. From 2010 to 2015, tourism receipts increased from S$18.9 billion to an estimated S$22.0 billion; a commendable compounded annual growth rate (CAGR) of 6%. Over the same period, international visitor arrivals grew from 11.6 million to 15.2 million, or at a CAGR of 3%.

3. However, the recent two years have been more challenging. In 2014, visitor arrivals fell by 3% to 15.1 million, while tourism spending was flat at S$23.6 billion. In 2015, visitor arrivals grew a modest 0.9% to 15.2 million, and tourism receipts fell below expectations, dipping by 6.8% to an estimated S$22.0 billion.

4. These somewhat contrasting numbers, within a short span of 5 years, offer important insights into the nature of the operating environment of our tourism industry. On the one hand, there is the promise of significant long term opportunities. These are underpinned by strong fundamentals such as the economic rise of Asia, the growth of Asia’s middle class, the consequential increase in intra-Asia travel, as well as the wave of outbound travel growth to Asia. On the other hand, we must contend with periodic fluctuations caused by uncertainties in the global economy, adverse developments in key source markets, growing competition in the region, and domestic resource constraints.

5. Against this backdrop, we need two types of responses - strategies that will best position us to benefit from long term growth opportunities - and tactical measures to deal with volatility and challenges in the short term. Essential to the efficacy of both these responses is the need for all stakeholders in the tourism sector to come together to coordinate efforts and resources.

6. A case in point is STB’s efforts and the industry’s collective response to the challenging environment of recent years. Last year, in a bid to attract more visitors, STB intensified its marketing efforts. This culminated in a S$20 million Golden Jubilee campaign in seven key markets, including China, India and Indonesia, with the active participation of stakeholders from the tourism industry and hospitality sector.

7. It was complemented by strategic partnerships with Changi Airport Group, Singapore Airlines and TripAdvisor to promote Singapore as the destination-of-choice. Working with the Ministry of Home Affairs (MHA) and the Immigration and Checkpoints Authority (ICA), we were also able to extend the validity of Multiple Journey Visas (MJVs) for nationals from the People’s Republic of China. This helped sustain our competitive position, relative to other regional destinations, to attract Chinese visitors.

8. As a result, we have seen early and encouraging signs of improvement in the latter half of 2015 and early 2016. In the first two months of 2016, visitor arrivals grew 12.3% year-on-year to reach 2.7 million.

9. The partnership between government and industry stakeholders is central to sustain these nascent improvements, and also to support the sector’s further development for the long term. It is also consistent with the thrust of the Industry Transformation Programme announced in Budget 2016. The aim is to ensure our industries are well-positioned for changes in a complex and competitive global environment. Key to the efficacy of this transformation effort is strong partnerships between government and industry. The tourism sector is no exception. We want to deepen partnerships with all tourism stakeholders, including large and small companies, trade associations and chambers (TACs), and unions. These partnerships, based on trust and collective effort, are essential to ensure our competitiveness as a vibrant tourism destination.

Government support for industry

10.      To underscore the government’s continued commitment to work with the industry to drive tourism growth, we are allocating S$700 million to a third tranche of the Tourism Development Fund (TDF) from 2016 to 2020.

11.      Similar in scale to the second tranche of the TDF, this next phase of government support for tourism will focus on three areas to support the transformation of the tourism sector: (i) product development to ensure that Singapore remains a destination-of-choice for visitors; (ii) technology adoption and innovation to improve productivity; and (iii) enhancing manpower capabilities to ensure that our people have the right skills to benefit from industry growth.

Product development

12.       First, we will continue to invest in the quality of our products to ensure that Singapore’s tourism landscape remains innovative and attractive to visitors. Some of these investments will be directed to niche sectors with high growth potential, like the cruise industry, which also generates significant spill-over economic benefits for ground handling services, bunkering, and ship repair. It is also an example of public-private partnership to diversify Singapore’s product offerings and pursue new avenues of growth.

13.      Asia has emerged as the new growth frontier for cruise tourism, despite being a relatively young cruising region compared to the Caribbean and Mediterranean. In the past three years, the number of ships deployed in Asia grew at a CAGR of 10%; passenger volume grew even faster, at a CAGR of 34%[1].

14.      Southeast Asia, with its cultural diversity and natural beauty, has benefitted from these broader trends. In 2015, it was projected to account for 50% of all port calls in the whole of Asia. In January this year, ASEAN member states co-launched the “Cruise Southeast Asia” Brand. Within this market, Singapore is the leading regional homeport, and the first Asian country to win the award for Cruise Destination of the Year in 2014[2].

15.      Our cruise infrastructure capacity (berths) was doubled in 2012 with the opening of the Marina Bay Cruise Centre Singapore. That same year, STB also initiated the S$12 million Cruise Development Fund (CDF) to support cruise ship deployments out of Singapore. Between 2014 and 2015, cruise passenger throughput rose by 14% to reach 1 million. Cruise operators new to Southeast Asia, such as TUI which specialises in German-speaking cruises, have also committed to an inaugural deployment in Singapore.

16.      STB’s partnership with industry will continue to evolve with changing needs. For example, STB is test-bedding the idea of supporting cruise charterers, including travel agents and event organisers, who have good distribution channels, are able to consolidate demand, and unlock greater spend.

17.      The cruise industry is but one example of our broader effort to develop new tourism hardware and software. Lionel will share more on STB’s efforts to improve support for leisure and business events under the Leisure Events Fund (LEF) and Business Events in Singapore Fund (BEiS).

Technology adoption and innovation

18.      Second, I would like to touch on the importance of harnessing technology and innovation to ensure that our tourism sector is well-positioned for the future. Technological developments are reshaping industries, disrupting business models, and profoundly changing the way we live, work and play. To stay relevant, we must be nimble and quick to adopt relevant new technologies.

19.      For example, big data and predictive analytics present significant opportunities for the tourism sector.   It can revolutionise the way we understand our visitors, their tastes and preferences, how we reach out to them, and tailor our products and services to meet their needs. Data from payment gateways, telecommunications companies, and booking platforms, for example, has the potential to provide invaluable insights about our visitors. And STB and industry can work together to deepen our expertise and capabilities in this area.

20.      Robotics is another technology area that can be leveraged to increase productivity, and free our limited manpower to focus on high-touch activities. The use of the technology in the services sector is at a nascent stage but it is important that we invest early in trials and acquire a sophisticated understanding of its potential. I am therefore encouraged by the robotics project that Park Avenue Rochester Hotel will be implementing in July this year with STB’s support. It will involve the deployment of two robots for housekeeping and back-of-house functions such as transporting linen, refuse and bulky items. The robots rely on laser navigation software and controls that allow them to intelligently navigate their surroundings and unplanned obstacles. If successful, it could be extended to front-of-house functions such as the delivery of luggage and room service to guests. This is an excellent example of STB partnering industry to seek out innovative solutions and test-bed applications.

21.      Retrofitting is another area that STB and hoteliers have identified to improve productivity. Through retrofitting works, hotels are better able to adopt and deploy technology-based productivity solutions, such as the centralization of back-of-house functions. Hence, STB will expand the scope of support under the Business Improvement Fund with time-limited Hotel Retrofitting Grant for hoteliers seeking to redesign their existing premises to implement productivity-enhancing solutions.

Manpower

22.      Finally, we must ensure that our people are well-equipped to benefit from these developments. Our ultimate aim is to create good career opportunities for our people. And we have made good progress on this front with the hotel sector, for example.

23.      Under the SkillsFuture effort, the tripartite partners are working closely with education and training institutions to equip Singaporeans with the requisite skillsets through the Hotel Sectoral Manpower Plan (SMP) launched last October. For example, through the SkillsFuture Earn and Learn programme, ITE and polytechnic graduates have the opportunity to undergo structured on-the-job and institution-based training. As of March 2016, 41 graduating polytechnic students have been offered places in 22 hotels under this programme.

24.      The SkillsFuture Leadership Development Initiative will also support the next generation of Singaporean hotel leaders in developing the necessary leadership and management capabilities. This includes skills such as general management, cross-cultural team management, and exposure to local and global hotel operations.

25.      Beyond the hotel sector, STB and the Workforce Development Agency (WDA), are working with industry partners on plans to attract, develop and retain talent across the tourism sector. Lionel will further elaborate.

Conclusion

26.      Each year, the Tourism Industry Conference fosters engagement and learning between industry and government, and seeds new ideas and initiatives for growth. The three prongs I have outlined - product development, leveraging on technology, and upskilling the tourism workforce - will help sustain the long term competitiveness of our tourism industry, enable us to seize new opportunities, and create good jobs for Singaporeans.

27.      To be effective, these initiatives need strong industry-government partnerships to harness the collective effort of all tourism industry stakeholders. I urge all of you to actively engage STB, with your ideas, effort and support, to contribute to our shared goal of building a vibrant tourism industry in Singapore and sustaining its growth.

28.      On this note, I wish everyone a productive Tourism Industry Conference 2016 and a successful year ahead. Thank you.

[1] Based on the Asian Cruise Trends by the Cruise Lines International Association (CLIA)

[2] Seatrade Insider Cruise Awards

Speech by Minister S Iswaran at the Tourism Industry Conference 2016