SPEECH BY MRS LIM HWEE HUA, MINISTER IN PRIME MINISTER'S OFFICE, SECOND MINISTER FOR FINANCE AND TRANSPORT, AT DNB NOR'S 1ST ASIAN INVESTOR CONFERENCE, 04 NOVEMBER 2009, 9:00 AM AT GOODWOOD PARK HOTEL
Mr Erik Borgen, Regional Director, Head of Asia & General Manager, DnB NOR,
Ladies and Gentlemen,
1 I am delighted to be here this morning for the inaugural DnB NOR Asian Investor Conference.
Recognising DnB NOR's Contribution to Singapore
2 At the International Maritime Awards two years ago, I witnessed DnB NOR being conferred the Maritime Service Provider award. This award was conceived by the Maritime and Port Authority of Singapore or MPA to recognise industry players who have contributed significantly to Singapore's growth as an International Maritime Centre. Today's inaugural Asian investor conference organised by DnB NOR is another example of its good work here.
3 Indeed, DnB NOR has played a significant role in the development of Singapore's maritime sector since the setting up of its office in Singapore in 1970. In 2007, DnB NOR's Singapore office opened its Asian Corporate Finance unit. This year, it set up an Asian Equity Research and Sales Team. DnB NOR's Singapore office is now its Asian regional headquarters, servicing companies in the shipping, offshore, logistics and energy sectors. We value the contributions by DnB NOR to Singapore's development as an International Maritime Centre.
4 Mr Erik Borgen has himself been an active leader in the local maritime community. He is a Board Member of the Singapore Maritime Foundation and Chairman of its Ship Finance Workgroup. Erik's Workgroup has provided useful feedback to the Government on issues pertaining to maritime finance and these have been invaluable in helping us fine-tune our policies over the years. For example, last year, the Workgroup in partnership with the Singapore Exchange, completed a joint survey on research and broking houses based here to understand the factors that would encourage them to extend their coverage of the maritime sector. This has led to the formulation of initiatives which I will touch on later.
Growing Shipping Finance in Singapore
5 Since the economic slowdown, I am aware that the availability of finance is of great concern to the maritime industry today. Indeed, funding is the very lifeblood that keeps activity flowing. Unfortunately, I am told that about half of Asia's shipping banks which had previously provided shipping finance have now closed. Banks that remain open are, in turn, taking a more conservative posture on shipping loans - made worse by a supply overhang and falling valuations. The industry now finds itself in a vicious cycle where the liquidity crunch triggers a slowdown in real economic activity, which in turn causes banks to tighten credit even further. As of 2009, the industry estimates that some US$350 billion worth of orders require financing. Even though we can expect some delays or cancellations, the demand for capital remains. Not surprisingly, shipowners are increasingly looking beyond banks to alternative sources of finance.
6 The Singapore Government remains committed to creating a vibrant financial sector capable of supporting the diverse financing needs of our expanding maritime cluster. We will continue to foster growth in both the debt and equity finance markets. One recent initiative is the signing of the Memorandum of Understanding between the Singapore Exchange and the Oslo Bourse in July 2009. This partnership will help streamline the dual listing of shipping and offshore energy companies. With a combined market capitalisation of S$185 billion from 136 shipping, offshore and energy counters on both Exchanges, we hope that the MOU will facilitate investors' access to markets and offer more options for portfolio diversification.
7 In July this year, the Singapore Exchange also introduced SGX Equity Research Insights (or SERI) to enhance coverage of shipping, offshore and energy stocks. This aims to help investors be better informed when making investment decisions. I am pleased to learn that DnB NOR was the first research house to be appointed under SERI. The increased quantity and quality of coverage of maritime-related counters out of Singapore with SERI will certainly add greater vibrancy to Singapore's development as international maritime and financial centres.
Singapore's Value Propositions
8 But fundamentally, we are clear that Singapore's success as an International Maritime Centre depends on our ability to deepen investor confidence in the Singapore brand name. We have therefore taken great pains to build our reputation for regulatory transparency, policy consistency, as well as good corporate governance and risk management.
9 Singapore ranks amongst the top in Asia for its corporate governance standards. This is reflective of the Government's stance on Corporate Governance and the Singapore Exchange's efforts to offer investors a good investment platform.
10 Beyond promoting good corporate governance, Singapore also focuses on providing a pro-business environment. We recently topped the World Bank's Annual Ease of Doing Business survey for the fourth year running. It is my hope that more service providers will use Singapore as a growth platform to strengthen their Asian presence. To date, more than 20 local and foreign banks with shipping finance portfolios, complemented by a pool of boutique shipping investment banks, private equity arrangers and research houses, have done just that. There is always room for more.
11 Looking ahead, the Singapore Government will continue to partner industry in enhancing Singapore as a shipping finance centre. One area of collaboration would be to raise the profile of alternativeshipping finance. The MPA also has plans to organise a series of workshops to familiarise analysts and research houses with the fundamentals of shipping. We hope that such educational efforts can spur greater interest in the sector and, in time, grow Singapore's pool of maritime professionals.
12 Ladies and gentlemen, in conclusion, I would like to reiterate that Singapore is committed to growing a vibrant capital market that can serve the interests of the international maritime community and its investors here. I thank DnB NOR once again for being a valued partner and for organising today's event. It is another key milestone in its 39-year history in Singapore, with the promise of much more to come.
13 Let me wish you a fruitful conference with networking opportunities aplenty. Thank you.