Mr Lee Yi Shyan at the Rotary Regional Conference 2012, 16 Feb 2012

SPEECH BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY AND NATIONAL DEVELOPMENT AT THE ROTARY REGIONAL CONFERENCE 2012, 16 FEBRUARY 2012, SENTOSA GOLF CLUB, 10 AM

Mr. Chia Kim Piow, Chairman and Managing Director, Rotary Engineering Limited

Distinguished Guests,

Ladies and Gentlemen,

Good Morning.

I am delighted to join you today for the Rotary Regional Conference and 40th Anniversary celebration.   

THE OIL AND GAS INDUSTRY IS AN IMPORTANT CONTRIBUTOR TO THE SINGAPORE ECONOMY

The oil & gas industry and its related activities are key contributors to Singapore’s economy. In 2010, petroleum and petrochemicals contributed S$3.2 billion of added value to the economy, a 30% increase over 2009[1]. In the same year, the offshore and marine industry posted a turnover of S$13.47 billion, and employed some 106,000 people[2]. 

However, the year ahead looks challenging for our economy, including the oil & gas industry. The US economic slowdown and EU sovereign debt crisis have slowed down global growth. Weak consumption and austerity measures together might mean an extended period of sluggish or lacklustre growth for the global economy, which in turn would reduce the demand for oil and gas and related services.

Amidst this rather bleak picture, there are still bright spots in and around Asia, and some emerging markets. While these markets are not immune to the global slowdown, urbanisation, industrialisation and a growing middle class of hundreds of millions will drive growth and consumption. There will still be opportunities that our companies can tap on.

SEIZING GROWTH OPPORTUNITIES IN ASIA

The Asian growth story thus remains relevant. Our trade data shows a steady increase in our domestic exports to Asia, which now accounts for around 60% or more than half of our domestic exports as of 2011. According to IMF, China and India have been forecasted to grow at levels above 8% and 7% respectively in 2012 and 2013. Their continued growth, coupled with ASEAN’s, would provide the support for intra-regional trade and growth across all Asian economies[3].

Singapore is in a prime position to capture the increasing goods and services trade flows in the region. This applies to our oil & gas industry too. Supported by our strategic location along major shipping and trading routes, and a strong cluster of oil and gas players operating across the whole value chain, Singapore has grown to become the leading oil hub in Asia. The question now is, how can our companies respond and leverage on these strengths to seize these opportunities?

First, our companies should seek to expand their market space as part of their long-term growth strategy. By venturing overseas into new markets and expanding their base out of Singapore, our local companies could then grow into globally competitive players. For example, I understand that our companies are very well-received in the Middle East, and this has allowed them to build up their track record, develop and grow. In this regard, IE Singapore has a broad range of schemes and programmes to help our companies.

Second, companies need to continually invest in innovation and productivity so that they can remain competitive. The Government is committed to help companies achieve this, and there are many assistance schemes available to help companies deepen their capabilities and boost productivity. One example is the Productivity and Innovation Credit (PIC), which was introduced in the Singapore Budget 2010. PIC provides enhanced tax benefits for investments by companies in a broad range of activities along the innovation value chain, such as automation, training, design, research and development, as well as acquisition and registration of intellectual property rights.

For instance, if a company invests $5,000 in a piece of equipment that improves its productivity and qualifies for the PIC, it will be able to enjoy an enhanced tax deduction of 400%, or $20,000, on top of the productivity gains that it would already enjoy. This is very generous, and I urge all companies to seize this opportunity to improve their productivity.  

The Government will continue to work closely with companies, especially Singapore companies, to grow this sector. The National Productivity and Continuing Education Council (NPCEC) recently announced that it has identified four new sectors of interest with the potential to boost the national productivity drive, and the Process Construction & Maintenance (PCM) sector is one of them.

The PCM sector needs to shift its focus to productivity-led growth as its current reliance on labour is unsustainable in the long run. It should seek to move up the value chain, by investing in and acquiring design capability and intellectual properties.  The Government will work closely with the industry, both companies and associations, to develop a comprehensive productivity roadmap to address the productivity gaps in the sector. I look forward to the productivity road map for the PCM industry to be finalised in the months ahead.

CONCLUSION

In closing, I would like to congratulate Rotary on the launch of its new brand. The company’s continual efforts in acquiring new capabilities and reinventing itself have served as a role model for the industry. May I wish Mr Chia and his team all the best in their future endeavours. I would also like to wish everyone in this room a bright future in years to come.

Thank you.

[1] MTI, Economic Survey of Singapore 2010, Feb 2011

[2] ASMI

[3] The economies of Indonesia, Malaysia, Philippines, Thailand and Vietnam have been collectively forecasted by the IMF to grow at 5.2% and 5.6% in 2012 and 2013 respectively.