The Maritime and Port Authority of Singapore (MPA) recently announced new initiatives targeted at strengthening Singapore’s maritime industry. The initiatives fall into three broad categories: maritime research and development (R&D), productivity enhancement, and manpower development.
(a) Maritime R&D
The Maritime Innovation and Technology (MINT) Fund will be extended for five years, with a top-up of an additional S$50 million. The MINT Fund was set up in 2003 with S$100 million to fund R&D and test-bedding of maritime technologies by universities, research institutes and companies in Singapore over a period of ten years.
(b) Productivity Enhancement
A new S$25 million Productivity Programme under the Maritime Cluster Fund (MCF) will be introduced. The Productivity Programme will provide co-funding for initiatives such as business process re-engineering, automation and adoption of other productivity tools or practices.
(c) Manpower development
S$2 million will be utilised from the MCF’s Manpower Development Programme for a Global Internship Award over the next five years. Potential awardees will be local graduates from the three local universities, who will undergo a fully-sponsored maritime-centred internship that will take place both locally and overseas, with a large amount of exposure to international maritime companies.
In addition, education initiatives with local universities will be introduced. The Singapore Management University will introduce a new Maritime Economics Concentration within its School of Economics in August this year. This is a structured programme which comprises maritime-related modules, internship opportunities, overseas industry study missions, site visits, and talks by industry practitioners.
The MPA, together with the American Bureau of Shipping and the Singapore University of Technology and Design (SUTD), will also jointly establish the ABS-MPA Maritime Technology Professorship Programme at SUTD to build up SUTD’s capabilities in maritime education and R&D, and fortify the local maritime education and R&D framework.
Changes to Port Dues Structure and Rates
In addition, the Minister for Transport, Mr. Lui Tuck Yew, announced on 11 April 2013 that the MPA has just completed a comprehensive review of Singapore’s port dues structure and rates, and will be taking steps to simplify the port dues structure and streamline the various incentive schemes. The intended changes will save the industry an estimated additional S$11 million a year. Furthermore, 83% of vessel calls can expect to pay lower port dues under the revised port dues structure.
Previous government initiatives include tax incentives under the Maritime Sector Incentives (MSI) Scheme, which came into effect on 1 June 2011. The MSI Scheme consolidates and streamlines the tax incentives under the existing tax regime. Under the MSI Scheme, shipping companies will be categorised into three broad categories: international shipping operations, maritime leasing arrangements and shipping support services. The incentives under the MSI Scheme include tax exemptions for vessel disposal gains derived by qualifying ship operators and ship lessors, and granting automatic withholding tax exemption for interest and related payments on foreign loans obtained to finance the acquisition of qualifying containers and intermodal equipment.
Importance of the Maritime Industry
These initiatives underscore the importance of the maritime industry to Singapore’s economy. Singapore has developed a strong reputation as a world-class international port and transport hub.
In fact, Singapore’s maritime industry contributes approximately 7% of Singapore’s GDP, and employs more than 150,000 people across 7,000 companies. In 2012, annual vessel arrival tonnage reached 2.25 billion gross tons, an increase of 6.1 per cent from the previous year. Tankers and container ships were the top contributors to total vessel arrival tonnage.
Singapore’s ship registry is ranked among the world’s top ten ship registries, with a gross tonnage of 65.0 million GT as of end December 2012.
Challenges to the Maritime and Shipping Industry, and the Way Forward
The challenges faced by the maritime industry today are not unique to Singapore. The inherently unpredictable nature of the industry and its interconnectedness with the world economy mean that the industry continues to be challenged by fluctuating economic conditions which lead to a weak demand for goods and services. The industry faces falling freight rates, rising fuel costs, excess tonnage, lessening cash flow and inadequate access to liquidity.
Some may question if these new initiatives are worth implementing, given the volatile and uncertain future the shipping industry faces. The answer, certainly, should be yes. Singapore’s maritime industry is a cornerstone of the country’s economy. There is an established tripartite relationship between the government, maritime stakeholders and maritime associations. Combined with a key geographical location, excellent resource skills and efficient, cutting-edge infrastructure, Singapore has a competitive advantage over many other countries, and should continue to capitalise on this strategically going forward. The new initiatives by the MPA, together with the existing schemes that are already in place, will be helpful in encouraging continued growth of the shipping industry to ensure that it continues to play a valuable role in the nation’s economy.