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Petromin marine and offshore Jan-Feb Issue

Country Feature

Country Feature Singapore Keen to Remain a Relevant Player “ The island-nation, which does not possess hydrocarbon reserves, has forged a niche in the last few decades in the energy and marine sectors. Having been hit by the downturn the last three years it is a critical shot in the arm for the industry that the country’s government considers the marine and offshore engineering industry key for future economic growth. ” In 2018, the oil and gas sector is expected to continue its recovery, as oil majors adapt to the lower oil prices environment and are better positioned to proceed with final investment decisions. This positivity has been reinforced by a recent announcement by the Singapore government, by way of its industry transformation roadmap (ITM), that Singapore will stay relevant in the global marine and offshore engineering (M&OE) industry despite the recent headwinds from a prolonged sectoral downturn. The roadmap drawn up by a multi-agency team led by the Economic Development Board (EDB) targets some S$5.8 billion in value-add and 1,500 jobs by 2025. To achieve maximum synergies in Singapore’s industry transformation over the next few years, the Government announced the S$4.5b Industry Transformation Programme at Budget 2016. The programme will integrate different restructuring efforts, taking a targeted and industry-focused approach to address issues and deepen partnerships between Government, firms, industries, trade associations and chambers. Speaking at the launch of the ITM M&OE, Minister for Trade and Industry (Industry) S Iswaran noted that Singapore is still drawing a significant economic contribution from the industry 14 January to February 2018

despite severe headwinds from a multiyear downturn. The M&OE industry accounted for S$3.6 billion, or 1 per cent of Singapore’s gross domestic product and employed more than 23,000 locals in 2016. The industry has also grown from its humble beginnings of just four domestic marine firms to an eco-system anchored by homegrown international names, notably Keppel Offshore & Marine (KOM) and Sembcorp Marine, and backed by over 1,000 small and medium enterprises. Singapore Minister for Trade and Industry (Industry) S Iswaran For sure, the industry has yet to emerge completely from its worst downcycle in history. A collapse of oil prices in 2014 triggered off drastic cutbacks in exploration and production (E&P) activities that have answered for the bulk of the industry’s order book. Mr Iswaran also acknowledged that the past three years have been “difficult” for the industry and that while recovery is in sight with oil prices stabilising above US$60 of late, oil companies are still cautious in their E&P spend. The industry has also grown from its humble beginnings of just four domestic marine firms to one anchored by homegrown giants like Keppel Offshore & Marine and Sembcorp Marine and backed by over 1,000 small and medium-sized enterprises. At the same time, the industry has to battle a liquidity crunch though the government has stepped in to lend a helping hand. Two schemes - Spring Singapore’s Bridging Loan (BL) and International Enterprise Singapore’s enhanced Internationalisation Finance Scheme (IFS) - that have catalysed near- ly S$700 million in loans to more than 100 unique borrowers, have been extended until November 2018. The issue at hand for the industry now is how to thrive, and not just survive. The president of the Association of Singapore Marine Industries (ASMI) Abu Bakar Mohd Nor pointed out that in this respect, the industry has proven with the previous downcycles, that it is capable of emerging stronger after overcoming adversity. Singapore’s M&OE industry has also developed core competencies that can be applied in segments adjacent to the E&P sector. Thus, the key to ensure the industry continues to stay ahead of the pack lies in diversification into new growth areas as traditional core businesses such as rig-building can no longer anchor its revenue stream. The M&OE ITM has identified the liquefied natural gas (LNG) and offshore renewables as two new growth areas for the industry. January to February 2018 15

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