Speech By Prime Minister Lee Hsien Loong At The Opening Of SembCorp Marine's Integrated New Yard Phase 1 Development

Mr Goh Geok Ling 

Chairman, Sembcorp Marine

Mr Wong Weng Sun

CEO & President, Sembcorp Marine

Distinguished guests, ladies and gentlemen

I am very happy to join you this morning for the opening of Sembcorp Marine’s Integrated New Yard, Phase 1. Sembcorp Marine has come a very long way. Its two oldest shipyards – Jurong and Sembawang – have rich histories. Jurong was established in 1963, 50 years ago, as a JV between the Singapore Government and IHI (Ishikawajima Harima Heavy Industries) of Japan. Sembawang was a former British Naval Base which was converted to a commercial shipyard after the British withdrew from Singapore in the Far East. Later, these two shipyards became part of Sembcorp Marine, which is today a global leader in the marine and offshore industry. Its order books now stand at an all-time high of nearly S$14 billion. It contributes 30% of marine and offshore industry’s manufacturing output in Singapore and provides good jobs and career opportunities for Singaporeans, here and overseas.

MARINE AND OFFSHORE INDUSTRY

Our marine and offshore industry has established a leading position in the world even though Singapore does not have much land or indigenous oil and gas production. Two of the world’s top companies are from Singapore – Sembcorp Marine and Keppel Offshore & Marine. Both are thriving today, starting from humble beginnings. They started off doing simple work – ship repairs, building tugboats, barges and the like. They overcame severe slumps – 70s was a difficult time; 80s, there was a severe recession. Many doubted the industry’s long-term viability. But our companies reduced our overheads, increased productivity and pulled ahead of the competition. They took on knowledge-intensive activities such as project management, procurement and offshore engineering. They conducted R&D and innovated new processes to improve efficiency. They ventured into offshore engineering and construction, building jack-up and semi-submersible rigs and platforms.  They set up shipyards around the world to take advantage of lower costs and to service different markets - so there is Sembcorp Marine in Indonesia, China, Brazil, even the UK; and Keppel Offshore & Marine in the Philippines, Azerbaijan, Qatar and Brazil. The two of them are rivals, competitors, but the competition has spurred both to keep improving and stay on top of their games.

Therefore, our marine and offshore industry has thrived. It contributes $13b to our GDP every year - 1.6% of GDP. It produces most of the world’s high-spec jack-up oil rigs, even though we do not have any oil or major oil companies. It accounts for 70% of the global market for converting tankers into FPSOs - Floating Production Storage Offloading vessels. It employs 20,000 locals, mainly in skilled jobs like project management, design, and production engineering. These are good jobs because we get to work on some of the most complex and sophisticated technologies for offshore exploration and production, we carry challenging responsibilities leading locals and foreigners in Singapore and overseas, and there are exciting international postings, e.g. Gulf of Mexico, Brazil, Middle East, in Azerbaijan in Central Asia. And I hope many more Singaporeans will take up these careers and keep our marine and offshore industry vibrant and forward looking. We must keep upgrading ourselves to seize the opportunities and stay ahead of the competition. 

There are many opportunities in the future, because Asia is going to continue to grow, and that will increase maritime traffic in the region. Energy demand worldwide will continue to rise, and there will be demand for exploration and production activities in deeper waters and harsher environments. At the same time we face challenges too. The competition is increasing, especially from Korea and China. Our domestic constraints hold and restrict our companies as the Singapore economy matures. We are reducing the inflow of foreign workers – and that is a big issue for an industry which relies heavily on them. Land is scarce and expensive, especially waterfront land. So the challenge is for industry to stay viable while optimising land use and reducing reliance on foreign manpower.

INTEGRATED NEW YARD

Sembcorp Marine’s response is this new Integrated Yard. It is a project which has been a dream for a long time. I remember more than a decade ago, the President, Mr. KK Tan, pushed for this and lobbied me for the project. He argued for bringing all the yards together at one consolidated site, designed from scratch, to re-engineer the processes and improve productivity. He was convinced it was the right direction to go. A long way from where we were, but the direction where we needed to head. The Government supported this. We reclaimed land at Tuas for the New Yard and helped Sembcorp Marine upgrade its capabilities. Today marks the end and completion of Phase 1 of the project, and I think it is a moment of great satisfaction. 

Sembcorp Marine’s plan is to consolidate all of its yards here, into this integrated facility, by 2024. In fact, I hope they will get there sooner. The aim is to create a “Shipyard of the Future” which will significantly increase our productivity. It is a green-field development, so Sembcorp Marine can optimise the lay-out and facilities, free up the land which it is currently occupying, and then it can be used for some other purpose. We can offer here “one-stop solutions” for ship repair and conversion, shipbuilding, rig building and offshore engineering and construction. We can use modern production technologies and processes to double output with half the resources. So I would like to thank Mr KK Tan, his successors, his colleagues, his team and the Sembcorp Marine team for making this a reality. Many congratulations!

Besides building infrastructure, we will continue to work with industry to upgrade and transform itself. First, we will help shipyards and subcontractors provide better training, adopt new production processes and promote more productivity improvement in the industry. Secondly, we will enhance the research and innovation capabilities, e.g. A*STAR, EDB and Spring will work with the Singapore Maritime Institute to co-ordinate R&D across various research centres and institutions of higher learning, and promote collaboration with the industry - between the research institutes and the industry so that the research we do can be translated into results and relevant commercial outcomes for the industry. We are building an ocean-basin test facility, with funding from NRF, to support innovation-intensive activities. Thirdly, we will build a pipeline of talent and skilled manpower, establishing industry-relevant specialized training programmes, such as professorships in Naval Architecture and Marine Engineering in Nanyang Technological University. We will work with companies to elevate the quality of the jobs and raise the incomes of workers in the sector. Finally, we will develop a strong marine and offshore eco-system to bring together industry players such as classification societies, equipment makers and vessel owners.

As we are doing with the marine and offshore industry, we will do with other sectors of our economy, e.g. Construction, where there is also great potential for raising productivity. Our target is to raise productivity by 20-30% by 2020, enhance the quality of construction workforce, reduce reliance on low-skilled workers, provide financial support to encourage capability developments and new technology adoption and to require the industry to design “easier-to-construct” buildings. That is construction. But if you take precision engineering, we will also focus on it to raise the VA per worker to the levels of the best countries - America, Germany and Japan, to attract higher-VA activities here, to work with companies to improve operational efficiencies in the firms, to upgrade the workforce to take on more complex engineering work, including a new Master Craftsmen Programme at Nanyang Polytechnic. And so too with other sectors, e.g. F&B, healthcare, logistics, financial services, and so on. The way forward is to upgrade, improve our skills, catch up and be at the leading edge, and thereby offer good jobs and a good future for Singaporeans. 

CONCLUSION

This is the way for us to keep Singapore vibrant and forward-looking, at the centre of key global and economic trends. To enable our manufacturing and services to grow, to complement our marine and offshore hub, e.g. oil and gas equipment companies, offshore services providers, offshore engineering companies. To enhance our competitiveness and ability to service the world, and therefore help Sembcorp Marine and many other companies to prosper in Singapore. So I hope Sembcorp Marine continues to work with us to realise our potential and seize new opportunities. I congratulate you again on the completion of Phase 1, and I wish you every success for Phase 2, Phase 3, and many more years to come. 

Thank you very much!