Published February 27, 2008
ASIA PACIFIC MARITIME 2008
Riding a maritime growth wave
Singapore has the reputation, infrastructure and the right policies to tap the Asian shipping boom, reports VINCENT WEE
WITH the Asia-Pacific region accounting for almost 40 per cent of the global maritime market, according to a recent survey by business intelligence consultancy Fusion Consulting, Asia, there is little doubt that the region plays a prominent part in the industry, and this is set to grow in the years ahead. Fusion also forecasts the market will grow at an annual rate of 7 per cent till 2010.
The boom in Asian shipping has also drawn attention to the Asia-Pacific. Fusion estimates that merchant shipping in the region accounted for 39 per cent of the global total in 2006 and is set to grow at 8 per cent a year till 2010.
The maritime engineering, ports and terminals and offshore businesses are also huge, making up 63 per cent, 42 per cent and 23 per cent of the global market respectively. The offshore market especially is set to grow at 8 per cent annually.
Countries like China are starting to see more investments and business in industries like shipbuilding and repair as ship owners seek to take advantage of still available building slots and labour costs 10 to 20 times lower than traditional powerhouses Japan and South Korea.
China plans to boost its shipbuilding capacity to 40 million tonnes by 2010, a three-fold increase over 2005, the Fusion report said.
Overall, the Asia-Pacific's US$43 billion shipbuilding industry enjoys a 66 per cent global market share, the consultancy's estimates show. The key beneficiary of the current boom has been South Korea (with over 40 per cent of global market share), which has orders worth over US$12 billion placed in the first quarter of last year alone and has yards full till 2010.
However China (15 per cent) is fast catching up with Korea and has secured 56.6 per cent of the total contracts in the same period for bulk carriers and smaller tankers to be delivered by 2009.
Growth for port operations and services is expected to be widespread in the region as well with a 6 per cent annual growth rate expected to take its share of the global pie up to 44 per cent or US$54 billion by 2010, Fusion said. The main areas of growth in ports and terminals are expected in China, India and Korea. By 2011, Asia is expected to handle 206 million twenty-foot units (TEU) including 64 million TEUs in transhipment.
Singapore, in particular, has benefited from the growth in the industry. The Republic is home to more than 4,400 shipping and maritime-related companies employing some 100,000 people, offering a full range of services.
The Port of Singapore maintained its place as top transhipment port, handling some 27.9 million TEUs last year. Singapore was also the leading bunker port, with bunker sales passing the 30 million tonnes mark to hit 31.5 million tonnes.
Announcing the 2007 port figures at a Singapore Maritime Foundation function earlier this year, Transport Minister Raymond Lim said: '2007 was also a good year of growth for the rest of Singapore's maritime cluster, bolstering Singapore's reputation as an International Maritime Centre.'
The Singapore Registry of Ships grew by 13.8 per cent to hit 39.6 million gross tonnes while the Approved International Shipping Enterprise (AIS) scheme attracted 18 new international shipping companies during the year, bringing the total number operating here to nearly 100, he said.
Mr Lim added that the year also saw new listings of foreign shipping companies as well as two new shipping trusts on the stock exchange. Companies like North of England P&I Club, Scorpio Ship Management and HypoVereinsbank are either establishing new offices or substantially expanding their operations here.
Asia's rising prominence has also led to an increasing realisation among shipping companies outside Asia that they need to have a presence here and a separate strategy for the region as well.
Singapore is well positioned to take advantage of this with its established status as a global port along with all the other supporting infrastructure in the maritime cluster.
The government is also supportive of the industry with several measures introduced to support the maritime cluster. A favourable tax regime is in place to provide incentives for companies to locate here - the AIS and Approved Shipping Logistics Enterprise Scheme and double tax, bilateral shipping and free trade agreements all help reduce costs for companies.
Looking into the future, further support has been offered in the current Budget. The Maritime Finance Incentive will be enhanced from April 1 to include container leasing activity and to allow partnerships also to enjoy the incentive.
Container investment enterprises will enjoy a concessionary tax rate of either 5 per cent or 10 per cent on all onshore and offshore container leasing income, depending on their commitments. A container investment manager will enjoy a 10 per cent concessionary tax rate on its management fee income.
The Maritime Finance Incentive (MFI) scheme was introduced in February 2006 to promote alternative ship finance structures, such as ship leasing companies and shipping trusts, by providing tax exemption for ship investment vehicles and a concessionary tax rate.
Tax certainty was also extended for another five years to shipping companies on gains from the disposal of their vessels and with the inclusion of forex and hedging gains as qualifying income under the Singapore flag or AIS schemes.
The growth of the maritime industry in the region is undeniable and Singapore, with its established reputation as a maritime centre and its modern infrastructure, is taking full advantage of it.
This time last year a video featuring Hillary Clinton rapidly ascended to the top spot in YouTube's daily rankings. The slickly produced video was a parody of an Apple advertisement based on George Orwell's "Big Brother" from 1984 . It was Mrs Clinton who was depicted as Big Brother. Again and again it replayed a clip culled from her own campaign website in which she said: "Let the conversation begin".
Peter Leyden, a former -editor of Wired and now director of the New Politics Institute, which examines how technology affects US campaigns, says the Big Brother video perfectly encapsulated the difference between Barack Obama's campaign and that of Mrs Clinton.
Mr Obama, he says, has run the model new technology campaign, in which staff and volunteers have the autonomy to make their own decisions and in which potential supporters who visit his website are offered multiple online materials.
The Obama website offers almost instant video replays of his speeches, which are also packaged by Obama officials for YouTube. A few mouse clicks from each webcast provides a simple procedure to make online donations. Users can set up blogs, join the Obama Facebook group and even download ring tones featuring recordings of his speeches.
The contrast with Mrs Clinton's relatively conventional website is instructive. In one of her first webcasts Mrs Clinton offered to "have a conversation with America". But the questions she received were obviously screened. The fact these "conversations" took place online could not disguise the fact they were controlled.
"Even businesses find it hard to change their organisational structure to fit the demands of new technology," says Mr Leyden. "But for political campaigns, which are classic command-and-control operations, it is particularly difficult. Mrs Clinton maintains a competent and solid website but Mr Obama has made it the central organising tool of his campaign."
As Mrs Clinton wages an uphill battle towards the must-win primaries of Ohio and Texas on March 4 following her tenth straight defeat to Mr Obama on Tuesday, criticisms about her organisational structure are becoming increasingly noisy.
Some blame the recent failures on her campaign's original launch premise, which billed her as the inevitable candidate and as the candidate of experience at a stage in US history when there is an overwhelming desire for "change". Others blame it on last month's irascible interventions by Bill Clinton, who reminded US voters of how a "copresidency" might function were Mrs Clinton to take the White House.
But it is hard to avoid the conclusion that Mrs Clinton has maintained a much less flexible campaign than her surging opponent, in which technology has been treated as an add-on rather than a central tool. She has also relied on a small coterie of family loyalists rather than recruiting far and wide like Mr Obama. Early on, Mr Obama hired Chris Hughes, co-founder of Facebook, the social networking site, to advise his campaign.
"Candidates get the campaigns they deserve," says Bill Galston, a veteran of Democratic contests. "The media needs a narrative and Mrs Clinton did not provide one. It is too late now to come up with one. All she can hope to do is to sharpen her message and hope something unexpected happens to Mr Obama."
Clinton insiders privately concede that her campaign has proved inflexible in the face of Mr Obama's early successes. Instead of recalibrating their strategy following Mr Obama's emphatic win in Iowa on January 3, the Clinton campaign continued to operate on the assumption the race would conclude with her victory in the "Super Tuesday" primaries on February 5.
That is why the Clinton campaign ran out of money after "Super Tuesday" and why she had to lend herself $5m to keep it going. It is also why the Clinton camp was hopelessly out-organised in the post-Super Tuesday states, such as Virginia, Nebraska, Maryland and now Wisconsin - all of which Mr Obama won.
And it explains why it is only now that the Clinton campaign is getting to grips with the hybrid caucusprimary structure of the Texas nominating vote in less than two weeks, in spite of the fact that the Lone Star state's high Latino population ought to have made it a comfortable win for her.
Mr Obama's better use of technology has enabled him to raise funds at more than twice the rate of Mrs Clinton in the past six weeks from an expanding universe of online donors. She, in contrast, has had to divert valuable time to attend traditional "offline" fundraising events.
"Once you have your online fundraising network in place it operates at virtually zero cost - in time and overheads," says Mr Leyden. "Mr Obama has built a kind of online ATM. Mrs Clinton doesn't have that."
*John McCain yesterday accused Mr Obama of "Washington double-speak" for fudging over whether he would accept public campaign financing in November's presidential election, writes Andrew Ward .
The presumptive Republican nominee has pledged to accept public funding - a move that would place a cap on campaign spending - if his Democratic opponent agreed to do likewise.
Mr Obama made the same pledge at the start of his campaign last year but has since hedged on the issue.
"I committed to public financing; he committed to public financing. It is not any more complicated than that," said Mr McCain. "I hope he keeps his commitment to the . . . people."