With more than 90 per cent of the world's trade carried by sea, it is no wonder the fortunes of the global shipping sector are inextricably linked to that of the wider economy.

Moderate Economic Growth Globally

However, looking forward to the future, the outlook for the global economy is less than certain with the International Monetary Foundation (IMF) lowering its 2015 economic growth forecast from 4.0 per cent in July 2014 to 3.8 per cent in October 2014.

In its economic survey released in November 2014, Singapore’s Ministry of Trade and Industry (MTI) echoed these sentiments, stating that global growth will pick up moderately, though the pace of recovery is likely to remain uneven across different economies. In December 2014, International Enterprise (IE) Singapore forecast non-oil domestic exports (NODX) to contract between 1.0 and 1.5 per cent in 2014, and gain between 1.0 and 3.0 per cent in 2015 on the back on a modest pickup in global growth.

Asia Pacific Still a Bright Spot

Meanwhile, the economic outlook for Asia-Pacific is more positive, with the region expected to be a key economic growth engine for years to come. The rapid growth of Asia’s middle class is fuelling global demand for goods, energy, and raw materials, while many of the governments in these countries have placed economic growth at the top of their agenda.

Besides emerging economic powerhouses China and India, Southeast Asia is also expected to see strong economic and trade growth in 2015. With the ASEAN Economic Community (AEC) set to take shape in 2015, creating a single market with free movement of goods, services and investments, experts are predicting intra-regional trade flows to surge ahead. All this is expected to create greater demand for the Singapore shipping industry, which in recent years has been grappling with depressed freight rates due to overcapacity, and tight margins caused by high fuel and manpower costs.

A Premier Shipping Hub

From its humble beginnings, Singapore has risen to become one of the world’s premier hub ports and a leading international maritime centre. Its maritime industry is an important component of the domestic economy, contributing around 7 per cent of Singapore’s GDP and providing over 170,000 jobs. The Republic is also home to about 130 international shipping groups, and 5,000 maritime companies.

The Port of Singapore is one of the busiest in the world and has received many accolades over the years. In June 2014, it received the “Best Seaport in Asia” award for the 26th time at the 28th Asian Freight and Supply Chain Awards (AFSCA), edging past strong contenders from China. The contenders were judged on a host of factors, including cost competitiveness, container shipping-friendly fee regime, provision of suitable container shipping-related infrastructure, timely and adequate investment in new infrastructure to meet future demand, and the facilitation of ancillary services.

Staying Ahead of the Pack

With the maritime sector being such an important component of the Singapore economy, the government is continually looking for different ways to enhance the competitiveness of the Port of Singapore. This constant drive for improvement is one of the key reasons Singapore has been able to maintain its position as a premier international maritime centre.

One way Singapore has maintained its competitiveness is investing in maritime research and development (R&D), to meet future challenges and tap on future growth opportunities. In 2003, the Maritime and Port Authority of Singapore (MPA) established the S$100 million Maritime Innovation and Technology (MINT) Fund for a period of 10 years. Since then, the MPA has extended the MINT Fund for another 5 years with a top-up of S$50 million.

Two other aspects in which Singapore is enhancing its competitiveness are increasing productivity and manpower development. They are critical given the limited manpower and land resources, as well as the universal challenges of cost pressures. To support the industry’s productivity efforts, MPA launched a S$25 million Productivity Programme under its Maritime Cluster Fund (MCF) in 2013. There are also many academic and internship programmes, as well as scholarships and recruitment schemes for the sector.

Building for the Future

With shipping set to be the lifeblood of Singapore’s economy far into the future, it is of vital importance that Singapore’s port infrastructure development keeps pace. In 2004, Singapore made the decision to develop the Pasir Panjang Terminal to meet future growth in container volume, with total completion of all phases expected in 2020. The new port development will feature best-in-class infrastructure and the latest technology, to serve the next generation of container ships, increase productivity and promote environmental sustainability.

With the port leases for the City Terminals at Tanjong Pagar, Keppel and Pulau Brani set to expire in 2027, Singapore has already announced that it will work towards consolidating all its container port activities in Tuas – located at the western part of the island – over the long term. With its sheltered deep waters and proximity to major industrial areas and international shipping routes, Tuas is an ideal location with the planned port set to handle up to 65 million TEUs per annum.

The year 2014 has turned out to be an eventful year for the global oil and gas sector, with record low oil prices significantly impacting players across the entire oil and gas value chain.

Record Low Oil Prices

The fall in oil prices was relatively swift, catching many players off their guard towards the last quarter of the year.

This sudden decline in oil prices was largely a result of the shale oil revolution in the US, flooding the markets with plentiful supply while global oil demand remained tepid amidst economic uncertainty. The fall was further accelerated by the decision of the Organization of the Petroleum Exporting Countries (OPEC) in November to maintain oil production levels, in a bid to protect its market share from US players. Oil prices have almost halved since the start of the year, with the benchmark Brent crude oil touching US$60 a barrel in December.

In a media interview, Saudia Arabia Oil Minister Ali al-Naimi – whose country is the lead producer for OPEC – stated that OPEC will not cut oil production even if oil prices drop to US$20 a barrel, pointing out that it was unfair to expect the group to reduce output if non-members do not. A Bloomberg survey of analysts conducted in December has predicted Brent crude oil prices to fall to US$50 a barrel in 2015, with some respondents saying that prices need to fall further to clear the current oil glut in markets.

Emerging Issues

While cheaper oil is seen as providing a boon for the global economy, its sharp decline has also stoked geopolitical tensions worldwide. As a result of falling oil prices, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE – which form the Gulf Cooperation Council (GCC) – are bracing themselves to lose around US$350 billion in oil revenues in 2015.

Oil producers such as Venezuela, Nigeria, Iran, Iraq and Russia are in an altogether more precarious position, and are hoping for prices to rise so that they can balance their budgets and rescue their economies. Russia has been hit particularly hard, with falling oil prices and ongoing Western economic sanctions – a result of the Ukraine crisis – having triggered a collapse of the Russian ruble.

Meanwhile, US oil and energy firms are also grappling with the current state of oil markets. Tumbling oil prices have forced banks to reassess their credit lines to some US energy firms, while US shale drillers who failed to hedge against a drop in oil prices are facing a dramatic fall in revenues. The oil slump has also driven US oil drillers to idle the most rigs in two years, with oil majors such as ConocoPhilips International and Chevron putting much of their capital spending plans on hold.

Riding it Out

The Singapore economy is strongly linked to the oil and gas industry in many ways. For one, the Republic is the region’s premier hub for oil and gas – a valuable sector, which contributed almost 5 per cent of GDP in 2007. Despite its relatively small geographical size, Singapore is one of the world’s top three export refining centres, while also being involved in oil storage, trading and pricing. The oil refining sector has also been the catalyst for the chemical industry, providing advantaged feedstock as well as other spin offs including oil & gas equipment and oil rig manufacturing sectors.

Despite the turbulence in the oil and gas industry at the moment, the long-term outlook for the industry here in Singapore still remains strong. In an interview with The Business Times in December, ExxonMobil’s new Singapore chairman Mr Gan Seow Kee stressed that his firm was not focused on where oil prices are headed, but rather improving their operations here. While acknowledging the challenges brought about by the US shale revolution and record low oil prices globally, Mr Gan stressed the need to take a long-term view. He also pointed out the Asia-Pacific region’s strong economic growth, and how it has accounted for more than two-thirds of oil demand growth since 2000.

In his opening address at the International Oil and Gas Industry Conference and Exhibition (OSEA 2014), Singapore’s Second Minister for Trade and Industry Mr S Iswaran also echoed the sentiments, noting that strong economic fundamentals in Asia-Pacific, together with rapid population growth and economic development, will continue to drive energy demand and thus expenditure on exploration and production (E&P).

He also pointed out that Singapore’s well-established marine and offshore ecosystem offers an attractive value-proposition to companies seeking to serve the growing offshore E&P activities in the region. More than 3,000 marine and offshore players, including oil majors, drilling operators, specialised equipment manufacturers, service providers and shipyards, have chosen to establish a presence in Singapore, achieving a total output of S$21 billion and value-added of S$5.9 billion for the Marine & Offshore Industry in 2013.

Taking Stock and Moving Forward

In conclusion, while the global outlook for the oil and gas sector remains cloudy, with a high degree of uncertainty, there is still room for Singapore to ride out the turbulence by keeping its focus on improving business fundamentals and operations efficiencies for oil and gas-related industries. The strong economic growth outlook for the Asia-Pacific region should also prop up demand, and insulate industries here from the worst of the fall-out from the current slump in oil prices.

The global oil markets have seen much turbulence of late, with oil prices falling sharply in the second half of 2014, and only slight recovery as of March 2015.

Global Oil Prices See Stark Plunge

This sudden fall in oil prices is due to the confluence of three factors: the shale oil revolution in the US flooding its markets with plentiful supply, global oil demand remaining tepid amidst an uncertain global economic outlook, and the decision of OPEC (Organization of the Petroleum Exporting Countries) in November to maintain oil production levels to protect its market share.

While cheaper oil is a boon for the global economy – lowering the costs of economic production and making goods cheaper in general – the sharp decline in oil prices is sending shockwaves throughout the oil exploration and production value chain, with many oil majors shutting down oil rigs in operation and putting exploration activities on hold. So far, oilfield services providers Baker Hughes, Halliburton and Schlumberger have all announced significant job layoffs in the wake of falling oil prices and declining revenue.

Playing the Long Game

While the current climate is a challenging one, the long term outlook for the oil and gas sector – especially within the Asia-Pacific region – is much more sanguine. Speaking at the International Oil and Gas Industry Conference and Exhibition (OSEA) in December 2014, Singapore’s Second Minister for Trade and Industry Mr S Iswaran pointed out that despite the short-term price volatility, the strong economic fundamentals in Asia-Pacific – together with rapid population growth and economic development – will continue to drive energy demand and thus expenditure on exploration and production.

Indeed, this is a point of view is echoed by ExxonMobil’s Singapore chairman Mr Gan Seow Kee. In an interview with the Business Times, Mr Gan acknowledged the challenges brought about by the US shale revolution and record low oil prices globally, but highlighted the need to take a long-term view. He too pointed to the region’s strong economic growth, and how it has accounted for more than two-thirds of oil demand growth worldwide since 2000.

Singapore’s Offshore and Onshore Sectors

Over the years, oil and gas exploration has moved to deeper waters and harsher environments, to keep up with the growing energy needs of the global economy. This calls for more sophisticated technologies and offshore vessels to cope with the challenges presented by such environments. Singapore’s marine and offshore sector has benefitted greatly from this upturn in exploration and production activity, growing from strength to strength to become a global market leader in the building of jack-up rigs and conversion of Floating Production Storage Offloading (FPSO) units. Roughly 70 per cent of the world’s jack-up rigs used for oil exploration and drilling are produced here.

In the local landscape, the two large shipyards groups Keppel Offshore & Marine and SembCorp Marine stand out as the largest and second largest rig-builders in the world respectively. Over the years, companies in Singapore have managed to build up quality ship repair capabilities as well as know-how in the construction of oil rigs. In 2012, the offshore rig building sector generated a total turnover of S$9,082 million, underlining its importance to the Singapore economy.

Singapore’s status as a regional oil and gas hub has also attracted major oil and gas specialist equipment companies such as Halliburton, Cameron, FMC Technologies, Baker Oil Tools and Schlumberger, who have established their regional headquarters and critical manufacturing lines in Singapore to produce sophisticated components such as drill bits, wellheads, downhole equipment and production equipment.

Besides Singapore’s reputation as an advanced manufacturing hub with a talented and skilled workforce, these multinational companies can also count on a well-established eco-system of supporting industries, offering critical turnkey manufacturing support and ancillary services to global standards. These local enterprises are able to meet the most demanding of specifications and the highest levels of quality control and safety. To offer one-stop support throughout the value chain, the supporting industries offer a myriad of activities ranging from precision engineering, EPC services, special processes, system integrators and equipment/components production.

Peeking Through the Hazy Outlook

With relation to the current environment of record low oil prices, Singapore’s Minister for Trade and Industry Mr Lim Hng Kiang spoke in Parliament in January, saying that prospects for the offshore and marine sector remain stable for the immediate future. However, he also cautioned that the sector could eventually be affected should oil prices continue to stay low for the long term. Investment analysts are generally of the same view too, noting that Keppel and SembCorp shipyards have built up strong order books prior to the decline in oil prices, insulating them somewhat from the worst of the market’s volatility.

Meanwhile, experts from the International Energy Agency (IEA) have said that a reversal in trend for oil prices is possible this year, though may not have bottomed out at the start of the year yet. They note that while price recovery – barring any major disruption – may not be imminent, signs are mounting that the tide will turn and a rebalancing may begin to occur in the second half of the year.

Due to its strategic location along major shipping routes, the Singapore marine sector has long been a leading centre for ship repair.

From Strength to Strength

Since its humble beginnings, the Republic has grown to offer a comprehensive range of marine services, providing a one-stop marine centre for shipowners, managers and agents around the world.

Singapore’s marine and offshore industry is an important component of the economy. According to the Association of Singapore Marine Industries (ASMI), the industry managed to bring in a total turnover of S$15.3 billion in 2013, up 1.93 per cent from the year before, despite challenging market conditions. The sector was also responsible for the employment of some 109,700 workers in 2013.

The key activities of Singapore’s marine and offshore industry include shipyard operations, vessel design and marine supporting services. In recent years, the country has grown from strength to strength, becoming a global market leader in the building of jack-up rigs and conversion of Floating Production Storage Offloading (FPSO) units, in addition to ship repair. Singapore is also a niche player in the construction of customised and specialised vessels.

Amongst the companies in the marine and offshore sector in Singapore, two large shipyard groups stand out – Keppel Offshore & Marine and SembCorp Marine. The two dominate the local industry landscape and are the largest and second largest rig-builders in the world respectively. In addition, there is also a cluster of medium-sized shipyards, with varying capabilities for building and repairing of vessels.

Fortunes From Deep Waters

Major oil players have been venturing to offshore deep waters and harsh environments to drill for more oil, creating demand for new oil rigs with stringent and exacting specifications. With its reputation for consistent high quality and timely delivery, Singapore’s marine and offshore sector has benefited from this upturn in oil exploration and production (E&P) activities.

According to ASMI, the offshore rig building sector has grown the fastest in the recent years and accounts for a significant volume of work undertaken by the industry in general. In 2013, this sector generated a total turnover of S$9,717 million, up 7.0 per cent from the year before. This was also 63.5 per cent of the total turnover for the entire industry, a 3.0 per cent increase from 2012.

While there are concerns over the impact of record low oil prices on the oil and gas industry in the short term, the long-term outlook still remains in a good position. The Asia-Pacific is the fastest growing region in the world, backed by strong economic fundamentals and rapid economic growth. This will drive incremental energy demand, and expenditure on E&P activities. The region alone accounts for nearly a quarter of global E&P expenditure, which is expected to hit a record US$723 billion in 2014.

Setting Ships Sailing

Besides rig building, other areas of the marine and offshore sector, such as ship building, repair and conversion are also showing good progress. In ship building, Singapore has wisely built up its niche as specialist builders for smaller and customised vessels. Similarly, in ship repair and conversion, Singaporean players are moving more into niche market segments of LNG carriers, passenger ships, cruise ships and offshore support vessels.

In 2013, shipbuilding generated a total turnover of more than S$841 million. This was a decrease of 25.3 per cent from the turnover of S$1.1 billion earned in 2012. Meanwhile, for the same year, total turnover for ship repair and conversion was also an encouraging S$4.7 million.

Deep Knowledge and Talent

Looking forward, Singapore will continue to invest in research and development (R&D) and talent to create greater economic value add and ensure the competitiveness of the marine and offshore sector. For example, the Singapore Maritime Institute (SMI) has worked with industry players and institutes of higher learning to identify key research areas and tackle practical industry problems, such as exploration and production in harsher environments as well as asset integrity and risk management.

In the area of talent development, investments have been made to nurture a pool of industry-ready talent for the sector. Amongst the initiatives include the launch of the Subsea Professorships Programme and Petroleum Engineering Professorships Programme by the National University of Singapore (NUS) in 2012 and 2014 respectively, as Singapore looks to continue building up R&D capabilities and talent for the industry.

With a clear commitment to staying ahead through technology advancements and talent, allied its existing leadership position and natural advantages, Singapore’s marine and offshore sector looks set to benefit from strong regional fundamentals and power ahead in growth.

From its early days as leading centre for ship repair, Singapore’s marine and offshore sector has grown from strength to strength, extending into areas such as shipyard operations, vessel design and marine supporting services.

An International Maritime Centre

In recent years, Singapore has risen to become a global market leader in the building of jack-up rigs and conversion of Floating Production Storage Offloading (FPSO) units, while also becoming a niche player in the construction of customized and specialised vessels.

With such a highly developed marine and offshore industry, it is no surprise that the sector forms an important part of the economy. According to the Association of Singapore Marine Industries (ASMI), Singapore’s maritime sector brought in a total turnover of S$15.3 billion and employed some 109,700 workers in 2013. Singapore is home to a good number of leading marine and offshore firms, the two largest being Keppel Offshore & Marine and SembCorp Marine.

Sailing in Tandem

To cater to the requirements of the marine and offshore sector – with its focus on ship building, repair and conversion, as well as offshore rig building – a thriving marine supporting industry has also evolved alongside it. The players in this sector range from small and medium-sized workshops to comprehensive factory facilities. There are also many international manufacturers who have set up local agencies for their own manufacturing, sales and services facilities.

All in all, there is a comprehensive range of firms manufacturing or servicing marine equipment and components in Singapore, spanning areas such as navigation, communication, electronics, propulsion and auxiliary equipment. This is in addition to the in-house design and production capabilities of local and international shipyards and marine and offshore firms.

The local marine equipment sector further benefits from Singapore’s strengths as an advanced manufacturing hub. With its strong base in precision engineering – a core enabler for the manufacture of complex equipment – Singapore has risen to become the leading location in the region for the production of oil and gas equipment.

Setting Up Shop

In recent years, many global offshore and marine companies have established and expanded their operations significantly in Singapore. One of them is global power systems giant Rolls Royce. In a nod to the growing importance of the Asia-Pacific market, Roll Royce shifted the global headquarters for its marine business to Singapore in 2011.

Singapore now houses the marine services business, marine repair and overhaul service centre and Asia ship design centre at the time. With the shifting of headquarters, Singapore has taken on key global responsibilities including business development, marketing and corporate services too.

With Asia accounting for over 80 per cent of global commercial shipbuilding, other leading marine equipment makers have also established their manufacturing plants in Singapore, to be closer to their markets. These includes Berg Propulsion, a leader in marine propellers and thrusters from Sweden, and MacGregor-Plimsoll, which has established an offshore crane manufacturing plant for their most advanced range of active-heave compensation cranes.

Teaming Up Together

Besides setting up in Singapore, one other way international marine equipment makers are tapping the Asia-Pacific market is through the setting up of joint partnerships with local firms. In 2010, locally listed SME Mencast Marine entered a joint venture with Becker Marine Systems GmbH & Co. KG, a German company that manufactures 70 per cent of the world’s steering components, and Machinefabriek Amersfoort B.V., a Dutch company that specialises in large and heavy turning and boring machine work.

Under the joint venture, a manufacturing plant has been set up in Singapore to design and produce heavy rudder assemblies and high-end stern gear equipment for the marine and offshore industries. Mencast Marine will take charge of production, while Becker will provide the technical know-how of rudder design, with Amersfoort sharing its expertise in the shaping of metal pieces.

Looking Towards the Future

The report “Global Marine Trends 2030” by QinetiQ, Lloyd’s Register and Strathclyde University has predicted that the three sectors of commercial shipping, naval defence and offshore energy are expected to continue growing in the years ahead. By 2030, global population is expected to reach 8 billion, global GDP is expected to triple, and seaborne trade will double from nine billion tonnes per annum to somewhere between 19 and 24 billion tonnes.

As a result of this rapid growth, there is expected to be accompanying growth in demand for shipping, shipbuilding and marine equipment manufacture. With Singapore right at the epicentre of economic growth here in Asia, the marine equipment sector looks set for brighter horizons ahead.

Singapore’s economy grew by 2.9 per cent in 2014, and the Ministry of Trade and Industry (MTI) expects this to continue in 2015, with a projected growth of 2.0 to 4.0 per cent as the global economy strengthens modestly.

The maritime industry is one of the key contributors to Singapore’s gross domestic product (GDP), making up 7.0 per cent of the economy. As a major global builder of jack-up rigs and semi-submersible drilling rigs, Singapore is also one of the world’s premier ship repair centres. The conversion of Floating Production, Storage and Offloading (FPSO) and Floating Storage and Offloading (FSO) units, as well as the building of customised and specialised vessels are also significant contributors to the industry. There are currently more than 5,000 maritime companies in Singapore, employing 170,000 workers.

The manufacturing sector, which includes the transport engineering cluster, contracted by 1.3 per cent year-on-year, a reversal from the 1.7 per cent growth in the previous quarter. The contraction was primarily due to the transport engineering and electronics clusters. Based on International Enterprise (IE) Singapore’s Trade Report 2014, oil domestic exports rose by 0.5 per cent in 2014, compared to the 0.3 per cent decline in the previous year. In volume terms, oil domestic exports rose by 7.2 per cent in 2014, following a growth of 5.3 per cent in 2013. Meanwhile, oil re-exports contracted by 14.1 per cent in 2014, following the 23.3 per cent decrease in the previous year. In volume terms, oil re-exports contracted by 7.9 per cent in 2014, following the previous year’s decrease of 19.3 per cent.

Oil prices fell to record lows in the last quarter of 2014, before dropping further in January this year. However, prices have started to recover with OPEC raising the official selling prices (OSPs) for oil deliveries to Asia and the United States in March, a move widely seen as a vote of confidence in oil prices. Brent crude rose and held above US$60 a barrel despite global concerns of oversupply due to the shale oil revolution in the United States. Iraqi Oil Minister Adel Abdel Mahdi has also been quoted as expecting prices to recover to US$64 or US$65 a barrel.

Port Statistics and Developments

Singapore’s port has played a major role in the country’s economic growth, and is now the second busiest port in the world. No mean feat for a country facing fierce competition from China’s Shanghai port. However, constant evolution is the name of the game in Singapore, and continual technological advances means that port operating systems such as PORTNET and CITOS are part and parcel of the port experience in Singapore.

In 2014, total cargo reached 581.268 million tonnes, an increase over 2013’s 560.888 million tonnes. Of this, containerised general cargo made up 353.538 million tonnes; conventional general cargo made up 30.880 million tonnes; oil bulk cargo made up 181.679 million tonnes; and non-oil bulk cargo made up 15.170 million tonnes.

Total vessel arrivals numbered 134,883 while vessel arrivals by gross tonnage reached 2,371.107 million. Total tanker arrivals numbered 22,218. Tanker arrivals by gross tonnage reached 707.464 million.

Total container throughput reached 33.869 million TEUs, an increase compared to 2013’s 32.579 million TEUs. Bunker sales was slightly lower in 2014 compared to 2013 at 42.417 million tonnes.

In order to expand port capacity, space remains one of the main challenges in the nation state. To battle this, all container operations will be consolidated at a single terminal in Tuas, on the west side of the island. Chosen for its sheltered deep waters and proximity to international shipping routes, the consolidated terminal will benefit from economies of scale and increased efficiency, especially from eliminating the need for inter-terminal haulage. Land reclamation and dredging works will provide about 300 hectares of additional land from the sea, while dredging will deepen the harbour and enable it to accommodate larger vessels, especially in light of the trend towards ever expanding container vessels.

When completed and operational, the consolidated port at Tuas will be able to handle up to 65 million TEUs per year. Work on the Tuas port is scheduled to begin in May this year, and is expected to be completed by 2021.

Liquid Natural Gas and Bunkering

The Maritime and Port Authority of Singapore (MPA) is looking to establish a Liquid Natural Gas (LNG) bunkering pilot programme, and it aims to have it set up by early 2017, which could make LNG a viable a fuel option by 2020. As the International Energy Agency (IEA) recommends Asian economies to reform their natural gas markets to enable expansion of the sector, this pilot programme comes at an opportune time.

MPA has also declared that revised bunkering guidelines will come into effect on 1 September 2015. Announced last year at the SIBCON 2014 conference, once the revised guidelines come into effect all bunker suppliers, bunker craft operators and bunker surveyors in Singapore are required to comply with the Singapore Standard SS 600 : 2014 – Code of Practice for Bunkering and SS 524 : 2014 – Quality Management for Bunker Supply Chain. According to MPA, the SS 600 : 2014 sets out guidelines and procedures to ensure that the correct quality and quantity of bunkers are being delivered safely and efficiently while the SS 524 : 2014 puts in place a comprehensive quality management system for the bunker supply chain.

Research for the Future

In a bid for constant enhancements and improvements, various research and development programmes and collaborations are being put in place. MPA and ship classification society ClassNK signed a memorandum of understanding (MOU) to collaborate on maritime technologies research and development (R&D) to enhance ship safety and environmental sustainability. The collaboration will result in both organisations promoting and sharing maritime thought-leadership on technology through activities such as conferences, workshops and joint R&D projects.

As part of the MOU, Singapore’s Nanyang Technological University and Sembcorp Marine Technology Pte. Ltd. are teaming up with Nippon Yusen Kabushiki Kaisha, the Monohakobi Technology Institute and ClassNK for research on an exhaust gas cleaning system (EGCS) that is intended for use outside of emission control areas (ECAs) to control sulphur oxide emissions. This is to ensure compliance with future sulphur oxide emission regulations which are expected to come into effect by 2020 or 2025. The MOU will also cover R&D in areas such as safe ships, smart ships, environmentally friendly ships and marine renewable energy.

A*STAR’s Institute of High Performance Computing (IHPC), Sembcorp Marine Ltd, University of Glasgow and University of Glasgow Singapore (UGS) have also signed an MOU to develop new hull designs for large ocean-going vessels to make them more environmentally friendly. The new hull designs will improve hydrodynamics and better fuel efficiency. Under the three-year MOU, features to reduce exhaust emissions and discharges through enhancing the vessel’s scrubber and ballast treatment systems will also be researched.

Academic training will also be provided as part of talent training and development. The University of Glasgow, which one of the top 100 universities in the world, and UGS will provide academic training and certification to staff of Sembcorp Marine who enroll as students under the Industrial Postgraduate Programme.

These MOUs, together with other programmes and initiatives, will help propel Singapore’s maritime industry to further heights. Furthermore, the combination of additional capacity and capabilities of the new Tuas port and other developments in Singapore brings exciting new infrastructure that will support future growth and advancement.

In today's globalised marketplace, manufacturers need to intensify their usage of technology to improve productivity levels, stay ahead of the competition and ultimately ensure sustainable growth.

Need for Automation

Automation technology and software represent one way for manufacturing firms to leverage on the latest technological advances to improve their business results and bottom line.

New developments in precision machinery, mechanical systems and robotics, integrated with the latest automation software systems are pushing the automation markets to greater heights. While their upfront investment is great, the comparative advantages these automation technologies offer are also many, including increasing production speed, reducing manufacturing issues, promoting waste reduction, improving cost efficiency and overall greater ease in production monitoring and management.

Outlook for Growth

According to the International Monetary Fund (IMF), the global economy is set to grow 3.3 per cent in 2014 and 3.8 per cent in 2015. The pace of growth will be uneven across countries though. While the United States is experiencing a major industrial revitalisation, boosted by economic resurgence from the North American shale gas boom, other major economies such as China, India and Japan will have to contend with growth, tempered by the challenges of structural reforms.

Looking forward, the outlook for the automation technology market is a bright one. According to Frost & Sullivan’s 2013 Automation Market Factbook, the global automation market will see strong demand as a result of rising industrial capital investment, global competitive pressures, declining workforce, and the increasing convergence between operational technologies and IT systems.

Another report from Markets and Markets is projecting the Industrial Controls and Factory Automation market to reach US$301.9 billion by 2020, from US$171.2 billion in 2013, with a CAGR of 8.53 per cent. In particular, the industry is expected to grow well in the emerging economies of Asia Pacific. This is largely attributed to the relatively low penetration rate of industrial automation in some countries at the moment, leaving space for faster growth.

Internet of Everything

One emerging technological trend that is expected to shake up the industry is the Internet of Things (IoT). IoT is a computing concept, describing a future in which objects and devices can be connected wirelessly to the Internet, identify themselves to each other and transmit information through these connections. And while IoT has the potential to impact many industries, it is set to revolutionise the automation sector in particular.

What IoT represents is a paradigm shift, allowing industrial automation systems to become responsive and intelligent. For example, manufacturers would be able to delve into the interaction data between components, making adjustments instantaneously to improve production. Some German industry leaders are already calling IoT the fourth industrial revolution, poised to trigger a wave of technological change that will lead to better ways of doing things and greater quality and productivity in industrial operations.

Restructuring Singapore

In recent years, Singapore has been embarking on a phase of economic restructuring, with the intent to position the country for better quality and more sustainable growth. Improving the productivity levels of businesses will be critical, with the Government having set the ambitious target of 2 to 3 per cent in productivity growth till 2020.

Manufacturing remains a key pillar for Singapore's economy, but companies in the sector here have had to contend with a rising cost base and manpower shortage in recent years. These issues have severely impacted companies across the entire manufacturing spectrum, from foreign multinationals to local Small and Medium Enterprises (SMEs), from makers of advanced electronic components to manufacturers of consumer food products.

Technology Adoption

The Singapore government has been strongly encouraging manufacturers to embrace automation technology as a means to increase productivity and overcome manpower and resource constraints. To support companies in adopting automation technology and other productivity measures, it introduced the well-received Productivity and Innovation Credit (PIC) scheme, which partially subsidises capital investment through cash or tax breaks.

Meanwhile, public sector research institutions such as the Singapore Institute of Manufacturing Technology (SIMTech) under the Agency for Science Technology and Research (A*Star) are helping manufacturers here adopt new technologies to improve their productivity.

Speaking at the Manufacturing Solutions Expo in October 2014, Second Minister for Trade and Industry S Iswaran noted that since its launch in 2013, A*Star’s Technology Adoption Programme (TAP) has helped to commercialise 12 technology solutions that have benefited a total of about 650 companies. One such solution is an analogue dial gauge webcam-based smart reader. This device allows companies to automatically capture data and generate reports, thus eliminating the need for manual processing and improving productivity.

Faster Pace of Growth

The automation technology and software industry is set to grow at a faster pace in the years ahead. Besides riding on the global economic recovery, there are also many potential factors that can help to accelerate the sector’s growth, including technological breakthroughs such as the IoT.

The electronics industry has been an integral part of Singapore’s economic success story right from the start. From modest beginnings in the 1960s, the industry has grown in size, scope and sophistication to become the bedrock of Singapore’s manufacturing sector, contributing a significant 5.2 per cent to the country’s GDP in 2012.

World-Class Electronics Hub

Besides being a critical part of the domestic economy, Singapore’s electronics industry also forms an important node within the global electronics market. Despite its small geographical size, the Republic is home to many of the world’s top semiconductor firms, electronics manufacturing services (EMS) providers, hard disk manufacturers and much more.

With its stated ambition of becoming a world-class innovation-driven electronics hub, Singapore also boasts a full suite of activities to meet business requirements – encompassing research and development (R&D), manufacturing, supply chain management, logistics and regional and global headquarters functions.

Bright Prospects

In its World Economic Outlook (WEO) report, the International Monetary Fund (IMF) forecasted the global economy to grow at 3.3 per cent in 2014 and 3.8 per cent in 2015. This growth is expected to be uneven across countries with the US in the midst of an economic renaissance, while each of the remaining key economies grapple with their own set of issues.

The stronger global economic conditions and resurgence in the US economy is expected to translate into stronger performance for the IT industry ahead. Following a seasonally adjusted 1.5 per cent quarter-on-quarter growth in the first quarter of 2014, global chip sales further accelerated in Q2 with a 1.9 per cent growth. The upturn largely reflected a turnaround in the US market, as business confidence and IT spending rebounded.

The continued improvement in global demand will provide critical support to Singapore’s electronics manufacturing sector. In its Macroeconomic Review, the Monetary Authority of Singapore (MAS) forecasted Singapore to grow between 2.5 to 3.5 per cent in 2014, while maintaining a similar pace in 2015.

One aspect that manufacturers in Singapore will need to contend with is higher operating costs, brought about by factors such as the tightening of foreign manpower supply and other resource constraints. However, the Singapore government is committed to help firms in their transition to a higher productivity-led growth, with a wide range of assistance schemes, such as the Productivity and Innovation Credit (PIC).

Growing R&D Capabilities

In any case, Singapore’s electronics sector has been shifting upwards on the manufacturing value chain across the years. With its strategy of developing new technologies, products and services to seize new opportunities in an increasingly mobile, connected and sensory world, the Republic has been steadily ramping up its R&D capabilities accordingly.

One of the ways Singapore has grown its strengths in this area is through attracting important R&D investments from major electronics players to complement HQ and manufacturing functions here. In fact, the semiconductor sector is the single largest contributor to private sector R&D in Singapore, accounting for 26 per cent of private sector R&D expenditure in 2012.

Recognising R&D to be an important enabler in Singapore’s economic ecosystem, the government has committed billions towards growing the country’s own R&D capabilities from as early as 1991. This sustained investment has seen the establishment of leading research institutions under the Government’s Agency for Science and Technology Research (A*STAR) and institutes of higher learning, such as the national universities.

Creating Economic Value

One R&D institution that has added tremendous economic value over the years is the Institute of Microelectronics (IME) under A*STAR. Since its establishment in 1991, IME has played an important role in the growth of the semiconductor sector, developing a broad spectrum of capabilities that has seen it embark on successful public-private partnerships with industry leaders such as Applied Materials, Qualcomm and Honeywell.

Such public-private partnerships have contributed tremendously to the shift in companies here towards higher value-added activities. In the semiconductor industry alone, value-add per semiconductor worker in the past five years has grown at a Compound Annual Growth Rate (CAGR) of 7.3 per cent, double that of the manufacturing industry average, to reach $270,000 per worker.

The presence of leading electronics players in Singapore is also benefitting Singaporean companies. In 2010, the Economic Development Board (EDB) launched the Partnerships for Capability Transformation (PACT) initiative, encouraging partnerships between global companies and their local suppliers. Such collaborations benefit these SMEs by upgrading their technological capabilities, encouraging transfer of valuable industry know-how, and promoting co-innovation opportunities with commercial potential.

Made in Singapore

Moving from electronics to electrical products, we turn our attention from foreign multinationals to homegrown small and medium enterprises (SMEs), particularly those in the consumer electronics segment. These companies range from established electronics manufacturers to technology startups.

Singapore’s existing strengths in product design, R&D and manufacturing, along with the government’s strong support for businesses to go international, provide ideal conditions for electronics startups and companies to take the plunge and venture into overseas markets.

The Republic’s status as an international trading port, with multiple free-trade agreements in place to facilitate ready access to markets, places it in good position to serve as a leading electronics export hub. And while the US, Europe and Japan are all highly competitive markets for electronics, there is considerably more room in emerging economies such as China, India and Southeast Asia, where the Singapore brand name is also held in high regard.

Smart Nation Rising

Capping off the other end of the IT spectrum, Singapore is also a key player in infocomm products and services. Across the years, many major infocomm product companies had chosen to make Singapore their regional and global base, establishing the full value chain of activities such as product development, R&D, manufacturing, logistics, marketing and intellectual property (IP) management.

These companies range from manufacturers of computer hardware and peripherals to network equipment providers to leaders in consumer electronics. All these companies benefit from Singapore’s business and investment-friendly climate, and key advantages such as its international trade hub status, strong IP protection and highly educated workforce.

These very same qualities have also made Singapore an attractive destination for leading infocomm services companies from around the world. In fact, of the top 100 software and services companies in the world, Singapore is home to more than 80 of them. Many, including the top 15 software companies, have regional or Asia Pacific headquarters here.

At the same time, Singapore is also home to a thriving technology startup ecosystem. Nowhere is this more evident than at the JTC LaunchPad @ one-north development, which initially comprised of a single building block but added on two more in January 2015. This addition will enable the cluster to house an estimated 500 startups and 35 incubators. And beyond just the number of startups, there is also the increased amount of investor money awash in the system, with more than 20 Singapore-based startups having been acquired in the last three years, in corporate buyouts totaling more than US$500 million.

Benefiting from IT growth

Singapore has steadily built up its strengths in electronics, infocomm products and services across the years, riding on its advantages in trade connectivity, R&D and access to talent. Ultimately, this puts it in good stead to benefit from the growth and resurgence of the global IT markets, as well as revolutionary new technologies such as the nascent Internet of Things (IoT) sector.