The Rescue and Self-rescue of Singapore Offshore Engineering Industry

Reporter Shi Jingli

Critics believe that the government of Singapore might repeat the road of South Korea. So, what difficulties Singapore offshore engineering industry is facing now? And does it need rescue from the government?

Liu Jianyi and Zhang Hui who are the senior analyst from economic research center of China Shipbuilding Industry Corporation (CSIC ERC) and Zhang Qi from China Shipbuilding Economy and Market Research Center(CSSC ERC) said, at the stage of the global offshore engineering market being still in the phase of deep adjustment the oil price continuously being below $50,the offshore engineering industry is in a better situation as compared with China and South Korea, the two other major offshore engineering nations, although it has also experienced unprecedented dif ficulties.

Therefore, under the condition of low debt and low pressure of matured debt, and while there is still profit and only the space has been tightened, the time has not yet come for the government to take action.

Secondly, under the condition of depressed market, the offshore engineering builders in Singapore are seeking for transformation and upgrading, transiting from ship manufacture to repair.

The repair services of Singapore offshore engineering enterprises also include repair works of all kinds of LNG equipment, for example, LNG bunkering ship, bunkering station, shore equipment and so on. It is hoped that through transformation process business shrinking caused by the recession can be reduced and the declining trend can be offset.Thirdly, Singapore will not issue over direct policies.Looking back on the last market cycle, the government has put forward tax incentives when the engineering industry was in difficulty, such as introducing labor opening up policy, though it is just a “small policy”, it worked out subtly and had a far-reaching impact. What’s more, Singapore follows the principle of marketization,and government intervention is not permitted by the market.

Generally, compared with other countries, Singaporean enterprises are more experienced in getting through the trough and have obvious advantages in terms of sound operation and surplus pro fit ability.

In addition, from the perspective of operation, Singaporean owners are indeed facing a series of problems compared with builders. Except for owners with long-term lease contracts, many owners who used to maintain ships spare readily completely give it up due to stagnant business,facing survival test (giving up means withdrawing crews and stalling ships totally. Relatively speaking, keeping ships on call means high maintenance costs.).

The next problem is financing difficulties. Capitalists tightened their lending in view of the recession of offshore engineering industry. But the problem is not without solution. Currently many builders help owners to find customers or survive by setting up united operation companies with shipyard and owners. So, from the perspective of main participants on the marine engineering industry chain, although the current situation is dif ficult, it is still cautiously optimistic.