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Singapore M&OE remains relevant despite headwinds

New roadmap targets some S$5.8 billion in value-add for marine and offshore engineering industry

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Singapore will stay relevant in the global marine and offshore engineering (M&OE) industry despite the recent headwinds from a prolonged sectoral downturn.

Singapore

SINGAPORE will stay relevant in the global marine and offshore engineering (M&OE) industry despite the recent headwinds from a prolonged sectoral downturn.

This is a key message embedded in an industry transformation roadmap (ITM) launched on Thursday for the M&OE sector.

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.

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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 despite severe headwinds from a multi-year 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.

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.

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 nearly 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. So 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.

Citing industry research, Mr Iswaran said that global expenditure on LNG is projected to exceed US$280 million by 2021 while global offshore wind market is expected to surge past US$130 billion by 2023.

He noted that leading yard groups KOM and SembMarine have already ventured into the LNG segment, with KOM having delivered the world's first converted floating liquefaction vessel, the Hilli Episeyo, last year.

There is also a pressing need for the SMEs to build up their capabilities so that they can benefit from these trends. This is where government agencies like IE Singapore can play a bigger role by connecting companies with stakeholders and resources, as well as supporting business partnerships with companies in overseas market.

For Singapore's M&OE industry to compete effectively on the global stage however, it is necessary to develop differentiating advantages.

Mr Iswaran urged the industry to embrace digitalisation and tap the promise data analytics, and artificial intelligence may deliver in terms of improving operational efficiency and even generating new revenue streams.

One development relating to this global digital push is a trend towards additive manufacturing. Industry players have already teamed up to research the use of additive manufacturing technology or 3D printing - KOM is collaborating with key strategic partners such as Nanyang Technological University's Singapore Centre for 3D Printing and Lloyd's Register. SembMarine has roped in the National Additive Manufacturing Innovation Cluster, A*Star's Singapore Institute of Manufacturing Technology and DNV GL.

To facilitate the incubation and development of intelligent and autonomous M&OE capabilities, the government has invested S$107 million to set up the Technology Centre for Offshore and Marine Singapore (TCOMS). TCOMS will integrate pubic research and industry expertise for the purpose of developing innovative concepts and infrastructure for M&OE operations.

As the M&OE industry transforms, so must the workforce here. To guide individuals seeking opportunities in the industry, four agencies - SkillsFuture Singapore (SSG), Workforce Singapore (WSG), EDB and Spring Singapore - have launched the Skills Framework for Marine and Offshore, which charts out seven career tracks in the industry (see chart). Altogether, Skills Framework covers 29 job roles and identifies a total of 96 existing and emerging technical skills and competencies. It completes a second initiative, the SkillsFuture Series, which features a curated list of training programmes in skills such as cybersecurity and data analytics, which will be of demand in the digital age.

WSG has also rolled out three Professional Conversion Programmes to help professionals, managers, executives and technicians (PMETs) who are entering the industry or taking on different job scopes in the industry. 

With the support of ASMI as the programme manager, WSG has already helped reskilled more than 300 mid-career PMETs through PCPs for marine engineers, assistant engineers and technicians.

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