BT: Riding a maritime growth wave

              

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           Email this article Print article Feedback 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.       Leading the way: The Port of Singapore maintained its place as the top transhipment port, handling some 27.9 million TEUs last year 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. 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.     Busy shipyards 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.