14 April 2011

Mr Mick Aw, Senior Partner, Moore Stephens LLP Singapore

Distinguished Guests,

Ladies and Gentlemen,

Good morning.

It is my pleasure to join you here today for the Singapore Shipping Conference 2011. I hope it has been an eventful week for you at the 6th Singapore Maritime Week (or SMW) particularly in the areas of business networking and the exchange of views on industry developments and opportunities at the SMW events, such as, the 5th Singapore Maritime Lecture and the Singapore International Maritime Awards.

Key Challenge for Shipping in 2011

When I delivered the opening address at the inaugural Singapore Shipping Conference last April, the industry was just emerging from a rough period and cautiously riding on the recovery of world trade led by Asia in 2010.

This year, it would appear that one of the key challenges faced by the industry is the overcapacity of shipping tonnage which will have an impact on rates and values. While the fleets in the various shipping sectors - tanker, container and dry bulk - have all been forecast to grow in 2011, the demand outlook for the tanker and dry bulk sectors has been projected to be inadequate to absorb the capacity. In the case of the container ships, extensive use of slow steaming is believed to be able to absorb the overcapacity in 2011 .

History has, however, demonstrated the industry's resilience amidst challenging times and its resourcefulness in seizing opportunities to better position itself for the future. The recent January 2011 report by the International Monetary Fund, or IMF, reported that global recovery is underway. This is very encouraging.

In the IMF report, China and India were underscored to continue to pave the way in economic recovery as they have been projected to grow the most rapidly amongst all economies in 2011 and 2012.

Asia's Rising Importance

Today, Asia's rising maritime importance and strong presence in the global market continue to lead the way in economic recovery and fuel the growth in global trade. We can see that Asia accounts for more than 40% of the world's shipping tonnage and about 90% of the global shipbuilding market in tonnage terms ; as well as houses 8 out of 10 of the world's busiest ports in terms of container throughput .

In the shipping finance sector, we also saw Asian banks, particularly Chinese banks, stepping up and responding to the call for financing as the European banks pulled back in 2009. In 2010, the market share of Asian banks in the Top 10 Bookrunners and Top 10 Mandated Lead Arrangers was each over 7%, representing a steady presence in the provision of liquidity to shipping .

These developments underline Asia's growth potential and emphasize the increasing need for maritime businesses to have an Asian presence.

Singapore - The Gateway to Asia

Being strategically located at the crossroads where east meets west, Singapore is well-placed to seize the opportunity to tap on Asia's growth. Singapore's conducive business environment and reliable infrastructure also serve to reinforce her position as a gateway for maritime businesses.

We are happy to share that last year, Maritime Singapore continued to flourish as an international maritime centre and handed in a positive report card. The container and cargo throughput recorded good growth, reaching 28.4 million TEUs and 502.5 million tonnes respectively. The Port of Singapore maintained its global leading position, in terms of vessel arrival tonnage and bunker sales. The latter crossed the 40 million tonnes mark for the first time. As at end December 2010, the total shipping tonnage under our Singapore Registry was 48.8 million gross tons, once again placing Singapore amongst the top 10 ship registries in the world.

Already, over 100 international shipping groups have established operations in Singapore. I am also happy to report that there has been positive activity in the maritime services sector last year. UK-headquartered shipbroker, Braemar Seascope, announced plans to expand its Singapore operations into tanker chartering and Sale & Purchase. Capita and Hardy started operations here, adding on to the growth in the number of Lloyd's Syndicates operating from Singapore that write marine business.

Industry-led initiatives like the Singapore Ship Sale Form have also placed Singapore firmly on the international maritime law map. The form was launched in January this year to cater to the needs of the Asian shipping community. We are pleased to note that the form has received good reception from the maritime community.

Despite Singapore's success, the Singapore Government is not resting on its laurels. Instead, the Maritime and Port Authority of Singapore (MPA), remains committed to driving Singapore's global maritime aspirations through developing a pro-business environment and building strong partnerships with the industry.

We had earlier announced some maritime initiatives at the Singapore Budget 2011 in February. To encourage the growth of international shipping operations, maritime leasing and supporting shipping services, MPA, will implement the Maritime Sector Incentive, or MSI, from 1 June 2011. The MSI will introduce enhancements such as certainty of withholding tax exemptions for interest payments on qualifying loans obtained to build or buy ships.

Besides these initiatives, MPA will continue to team up with strategic partners on various industry-wide projects. For example, MPA and the Singapore Exchange are collaborating on ways to promote Singapore as a choice venue for maritime listings. This is especially relevant today, given the increasing need for alternative means of financing. In line with fostering growth in the maritime capital markets, plans to conduct educational workshops for research analysts and seminars for investors are also underway.

To ensure that Maritime Singapore continues to flourish, the Singapore Government will continue to consult the industry, seek feedback and explore the development of new programmes and initiatives to support the industry's growth.

Ladies and Gentlemen, we are heartened by Moore Stephens' second run of the Singapore Shipping Conference at the 6th Singapore Maritime Week, as this provides yet another platform for industry practitioners and experts to come together to deliberate on and explore new ideas and seize opportunities that can elevate the industry to new heights.

On this note, I wish you a fruitful discussion and a successful conference. Thank you.