Mr Lim Hng Kiang at the Groundbreaking Ceremony of Sembcorp Marine New Yard, 21 June 2010

SPEECH BY MR LIM HNG KHIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE GROUNDBREAKING CEREMONY OF SEMBCORP MARINE NEW YARD ON MONDAY, 21 JUNE 2010, 1725 HRS AT TUAS EXTENSION 

His Excellency Gao Hongfeng, Vice Minister of Transport, People’s Republic of China

His Excellency Wei Wei, People’s Republic of China Ambassador to Singapore

Mr Goh Geok Ling, Chairman of SembCorp Marine

Distinguished guests, ladies and gentlemen,

A very good evening.

Introduction

I am pleased to join you today to witness the groundbreaking ceremony of SembCorp Marine’s New Yard.

Bright Outlook for the Marine and Offshore Industry

The marine and offshore industry has undergone significant transformation since the 1960s when plans were first made to grow a marine industry in Singapore. Today, the industry embraces a wide range of capabilities such as rig-building, ship repair and conversion and specialised vessel construction. It is one of the fastest growing sectors in our economy.In the past five years, the industry has grown by a compounded growth rate of 18 per cent. Last year, despite the global downturn, manufacturing output was close to S$20 billion. This represents about 10 per cent of our total manufacturing output.

Indeed, the long term prospects for marine and offshore industry remain bright. Singapore continues to be a leading ship repair centre and the top offshore rig builder in the world. We account for as much as 70 per cent of the world’s output of jack-up and semi-submersible rigs, as well as Floating, Production, Storage and Offloading (or FPSO) vessel conversion.

To retain our global share, the sector continues to seek out new markets.Some of our major shipyards have ventured into Brazil, for deepwater offshore projects. Others have secured contracts in South and Southeast Asia. We are also further consolidating our position as an integrated marine and offshore hub. We currently have world class shipyards and companies offering complex oil and gas systems and components, and offshore-related services. Our companies are now expanding and undertaking an even wider range of activities, such as manufacturing, headquarter services, training, research and development, engineering, regional distribution, and more.

SembCorp Marine’s New Yard will be an important contribution to our integrated marine hub. Much of the marine and offshore industry is clustered around the activities of shipyards, attracting high value system and component repair and aftermarket services. SembCorp Marine contributes nearly 30 per cent of the industry’s manufacturing output in Singapore, and their investment in building capacity will have a strong spin-off effect for the entire industry cluster

Boosting Productivity for Long Term Sustainable Competitiveness

To stay ahead in the global marine and offshore arena, Singapore’s marine and offshore industry also needs to continually improve its competitive edge. I am therefore pleased to note that many companies in the sector have made the goal of improving their innovation and productivity levels a top priority.

For instance, SembCorp has maximised their operational effectiveness by improving process flow and facility layout, offering higher value products and services, and increasing supply chain efficiency and resource productivity. Sembcorp Marine’s New Yard reflects their commitment towards raising productivity levels. The yard will have the latest production technology and processes so as to achieve faster turnaround time and is designed so that it optimises land use. It will enable SembCorp Marine to further boost its competitive advantage.

I look forward to seeing more companies follow SembCorp Marine’s lead in this regard. The government has recently set aside S$2 billion for a National Productivity Fund to encourage greater productivity growth across 12 priority sectors, including the marine and offshore sector. I encourage companies in the marine and offshore sector to come forward and tap on these funds. Boosting productivity levels will be a key factor in ensuring that our marine and offshore industry continues to grow and achieve long term sustainable competitiveness.

Strengthening R&D Capabilities

R&D is yet another key driver for the industry’s further growth. In the fast growing global marine and offshore industry, improving and upgrading is essential in order to stay ahead of the competition. 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, or are in the process of doing so. The government through agencies such as EDB and A*STAR, is also committed towards helping our companies grow their R&D capabilities. For example, in April this year, the Singapore Institute of Manufacturing and Technology, a research institute of A*STAR, and Astoria Consulting Pte Ltd, jointly developed an algorithm technology that promises productivity boosts for shipyardsby allowing better optimisation of planning and deployment of critical resources.I encourage all sectors of the marine and offshore industry, be it, classification societies, offshore engineering companies, and equipment manufacturers to invest in and strengthen their R&D capabilities so as to keep their competitive edge sharp.

Conclusion

In closing, I would like to extend my heartiest congratulations to the management and staff of SembCorp Marine on your groundbreaking ceremony for your New Yard.This marks a new milestone, not just for SembCorp Marine, but also for the Singapore marine and offshore industry.I wish you every success.Thank you.