Singapore’s shipping community debates whether the city-state is pricing itself out of the market.
In compiling Splash’s annual Singapore magazine we sent out a survey to 250 of the top names in the local maritime sector to gauge the community on key local issues. The responses form quite a checklist for the local government to ponder if it genuinely wants to grow as an international shipping centre.
The words in September of Esben Poulssen, the new president of the Singapore Shipping Association (SSA), echo through much of the responses below. It is vital for the city-state not to rest on its laurels; there’s still much to do, he said.
In general, respondents said that the republic’s very high prices – whether it is for rent, salaries or more general fare – is just about worth it given the hugely vibrant maritime centre the republic has become. However, there were plenty of moans about the costs of being based here.
“Rents and salaries are becoming prohibitive,” says Pankaj Khanna, the ceo of fast emerging local dry bulk owner Pioneer Marine.
“Other locations in the region are catching up with better efficiency levels, and Singapore would be outplaced if the costs are not contained,” warns Biju Oommen, ceo of feeder line, Orient Express Lines.
While there are more economical places, there are few alternatives that are as safe and stable as Singapore and none with the same level of support infrastructure, argues Norstar Ship Management’s managing director Chris Kirton, a popular refrain that others also mention. “What you get back is worth the cost,” is the neat summary from Mary Baey, ceo of Satcom Global Singapore.
Captain Ashok Sabnis, founder of Goodwood Ship Management, points out currency fluctuations are at helping out somewhat with the strengthening of the US dollar this year and the comparative weakening of the Singapore dollar.
“When the rate was $1 to S$1.20 last year it was a strain for everyone, but that situation has eased a little now,” he says.
Yes it has, agrees Edna Lim from C&C Technologies, but other currencies, notably neighbouring Malaysia have weakened much more. “Singapore is not the most cost efficient place to base Asian operations,” she reckons.
Interestingly, Kuala Lumpur came top in our poll of where else companies would chose to base themselves in Asia if they were to move away from Singapore. However, it was a very close race, unlike a survey we carried at the same time in Hong Kong. Remarkably, 83% of those surveyed in Hong Kong – on choosing an alternate Asian location to base their operations – opted for Singapore, a telling statistic on the handing over of the baton of power in Asian shipping circles over the past decade.
In terms of where the government could improve Singapore’s maritime set up the majority of respondents focused on the human resources crunch and by extension immigration issues.
Other ideas put forward included the suggestion by Mike Meade, the founder of offshore brokerage M3 Marine, of applying similar tax breaks to shipping services that have been applied to shipowners and shipmanagers.
Meade also called for a more diverse legal framework that would attract the leading lights away from London.
Also featuring in the survey were questions on piracy, as well as how the annual haze from fires in Indonesia is affecting business.
Our final question asked if Singapore had peaked as a maritime centre. A majority – 63% – said the city had not, but many noted the trend to shift backroom staff to cheaper climes would continue. Growth for Singapore would continue but at a slower rate.
“As long as Singapore provides the business infrastructure, encourages companies to do business, recognises and adapts to the changes in the world markets, then the sky’s the limit,” commented Captain Jonathan Walker from London Offshore Consultants, adding: “As long as it is not obscured by the haze.”
This article first appeared in the recently published Singapore Market Report 2015, published by Splash. Readers can access the full magazine for free by clicking here.