22 September 2004

Distinguished Guests

Ladies and Gentlemen

It gives me great pleasure to join you this evening for the inaugural International Maritime Awards.This is the first time since we launched our first incentive scheme for the shipping community in 1991, the Approved International Shipping Enterprise, or AIS scheme, that we are holding an awards ceremony solely dedicated to the maritime community.This ceremony is a demonstration that the maritime sector in Singapore has indeed come of age. It is now able to command enough presence to have its own awards, a mini 'Oscars' ceremony so to speak.Tonight's gala event is also a demonstration of the commitment of the Singapore Government to grow the maritime sector.

Developing Singapore as an International Maritime Centre

As you know, our vision is to develop Singapore into an international maritime centre. We will build upon the strengths of the Singapore port to develop a cluster of shore-based services.Our aim is to enhance our value to the shipping community by building a vibrant and influential maritime services cluster to complement our thriving port.In addition, we want to serve shipping companies better by developing a slew of services such as ship management, ship broking, finance and legal activities to support and complement their business needs.Singapore can then become home to a cluster of shipowners, operators and shipping companies.

Singapore IMC - Attracting Ship Owners and Operators

To advance Singapore's efforts to be an IMC, I laid down a three-pronged strategy for MPA in March this year.Let me briefly spell out the strategies and give an update of our progress in the past year.

First, we want to attract a core group of ship owners and operators to entrench their services in Singapore. This is important as they form the core of the maritime cluster and exert much influence in virtually every aspect of the maritime industry.

Growing the Singapore Registry of Ships (SRS)

One of our key thrusts to attract ship owners and operators has been to grow the Singapore Registry of Ships (SRS). We are able to achieve this by leveraging on the strong reputation of the Singapore flag as a quality and respected one.In the past year, we have introduced a series of measures to attract quality tonnage into our Registry.Since November last year, ships registered under the Block Transfer Scheme (BTS) have enjoyed automatic exemption from withholding tax on interest payable on offshore loans taken on such vessels.In addition, in response to the feedback from the shipping community, we have lowered the paid up capital requirement of the Singapore company set up for the purpose of registering ships from S$500,000 to S$50,000 with effect from March this year. The industry response to these measures has been very encouraging.

Our intense efforts have made our Registry the world's 6th largest and the largest in Asia, with a fleet of more than 3,000 vessels totaling some 27 million gross tonnes.Singapore is also one of only 14 ship registries recognised for safety and quality efforts under the US Coast Guard Quality Shipping for the 21st Century programme.

These achievements are the result of the strong collaboration between our shipping community, the local unions and the MPA to develop the SRS as a quality flag.MPA works closely with our local unions to provide strong support services for seafarers.These include, among others, the provision of conciliation services for dispute resolution between seafarers and their employers, and working with the unions to jointly promote seafaring as a career.Our efforts have been recognised by the International Transport Workers' Federation or ITF.When Mr Cockroft, General Secretary of the ITF visited Singapore in July this year, he informed me that the ITF was happy with the way Singapore had discharged our duties as a Flag State.

Enhancements to the Approved International Shipping Enterprise (AIS) Scheme

Secondly, to encourage international ship-owning and ship-operating companies to base their operations and management decisions here, we introduced the Approved International Shipping Enterprise, or AIS Scheme, in 1991. This provides approved companies tax exemption on qualifying income.As such, the pioneer AIS companies have been our partners for more than 10 years. And their numbers have grown. Today, AIS companies, together with companies under the Approved Shipping Logistics Enterprise (ASL) Scheme, form the core of the Singapore maritime cluster.They collectively employ more than 3,000 staff and contribute over S$2 billion in business spending annually.

Singapore is now home to more than 40 reputable shipping groups from around the world. They hail from various industry segments, from container to bulk shipping, and more recently, the offshore oil and gas sectors.This year alone, we have 12 new shipping groups receiving the AIS award, whilst another 5 shipping groups have successfully renewed their AIS status for another 10 years.

The AIS scheme has served Singapore well. However, the changing market conditions and business needs of shipping companies mean that we must continually adapt our policies and enhance our initiatives to ensure that we remain an attractive maritime hub.I am therefore happy to announce tonight that with effect from Year of Assessment 2005, companies under the SRS and AIS schemes will enjoy tax exemption on the proceeds from the sale of vessels.This exemption will be for an initial period of five years.It will enable shipping companies in Singapore to sell their vessels and book the sales in Singapore without worrying whether they will be taxed for the gains gained from the sales.This will help them to better plan and manage their fleet.

Approved Shipping Logistics Enterprise (ASL) Scheme

Tonight, we are also giving out the Approved Shipping Logistics Enterprise award for the first time.The ASL scheme aims to encourage ship management companies and ship agencies to undertake more activities from Singapore.Approved companies will enjoy a concessionary tax rate of not less than 10% on incremental income from qualifying activities.We are happy to welcome eight inaugural ASL recipients who have committed to grow their businesses here.We thank these eight companies for their support.

Increasing Maritime Ancillary Services in Singapore

The third part of our three-pronged strategy is to increase the breadth and depth of our maritime ancillary services. These include legal services, marine insurance, ship financing, ship management and ship broking. Growth prospects for these services in the region are very bright, driven by the growing pool of Asian ship owners and shippers. This will force international maritime service providers to increasingly look towards Asia for new business opportunities, and to locate their operations closer to their Asian clients.The MPA has been in close consultation with key maritime service providers, encouraging them to use Singapore as their Asian base, and helping to facilitate their operations here.

Public-private Sector Partnership

In promoting the expansion of such services, the Government appreciates that it cannot work alone, as we lack the knowledge expertise of the industry players.As such, we welcome and support the formation of the private sector-led Singapore Maritime Foundation (SMF). I had the pleasure of launching it just six months ago.The SMF, with representatives from a wide spectrum of the maritime community, will complement the Government's efforts in the realisation of our IMC vision.

The SMF calendar over the past six months has been a busy one. It has already embarked on two major projects.The first is the proposal to form the Singapore Chamber of Maritime Arbitration (SCMA) to promote Singapore as the location for international maritime arbitration.With the support of the Singapore Institute of Arbitrators and the Singapore Maritime Arbitrators Association, the Singapore Chamber of Maritime Arbitration will be a boost to Singapore's maritime arbitration and legal services sector.Second, the SMF has engaged the World Maritime University to establish an Asian Maritime Lecture Series to raise the profile of the Asian shipping community.I am indeed delighted that Mr David Lim, Group President and CEO of NOL, will kick off this Asian Maritime Lecture Series at the end of this month.

The Way Ahead

Tonight, we welcome the new companies who have decided to establish their Asia Pacific base in Singapore.In total, 12 shipping groups are receiving the AIS award for the first time, and 5 shipping groups are renewing their AIS status.We are also giving out the ASL scheme awards for the first time this year, with 8 shipping companies receiving this award.My congratulations to all of you.

Singapore's maritime sector has grown significantly over the years.From a small fishing village in our early years, the sector now contributes some 7% to our GDP.But we are not resting on our laurels.The Government is committed to growing Singapore as a choice location for maritime businesses in Asia.We have made much progress during the past year because of the commitment and strong support of the maritime community, many of whom are here with us tonight. Your presencehere tonight signifies our strong partnership, a partnership which the government greatly treasures.With that, let me conclude by thanking all of you for your invaluable support, and for the confidence you have shown in us all these years.I look forward to our continuing cooperation, and to your continued success. I wish you all an enjoyable evening.