Speech By Mr Tharman Shanmugaratnam, Minister for Finance At The Conference On "Connecting The Middle East - Singapore - China: Infrastructure & Logistics In Today's Oil and Gas Industry"21 Jan 2011
1. It is my pleasure to be here today at this conference organised by Rotary Engineering. The conference is a good initiative, bringing together so many of you from the process engineering [or Engineering, Procurement and Construction (EPC)] industry, as well as your partners from amongst contractors and suppliers, and leading oil and gas companies. I hope that the participants will find the event a useful platform for networking, and to catalyze new business partnerships.
2. This conference is titled "Connecting Middle East – Singapore – China: Infrastructure & Logistics in Today's O&G Industry&". Indeed, Singapore has historically played an important role in linking the Middle East to Asia. But the links are now growing in an environment that would have been unrecognizable even two decades ago. Across Asia, economies are going through major transformation - as rural populations shift into towns and cities; as industrialisation broadens its share of national economies; and as growth raises living standards up and down the income ladder. Each of these developments is happening on a scale never seen before in world history. What happened in the Japan and the NIEs (Korea, Taiwan, Singapore and Hong Kong) in the 60s to 90s is now being repeated on a vastly greater scale, led by China and India. With the US and European economies still in a weak condition, Asia is now the largest source of new demand in the world.
3. Investments in oil & gas, petrochemicals, mining and resources, power and clean energy in Asia are growing rapidly, and expected to do so for several years to come.
4. This new Asian growth story will increase the importance of the Middle East’s role as a supplier of energy and chemical feedstock. Singapore’s role will also grow, as a connector between the Middle-east and East Asia including China.
5. Singapore aspires to maintain its lead as a major energy and chemicals hub. We are committed to supporting the upgrading of our refinery industry to ensure its long term competitiveness and sustainability. We are also committed to support integration with petrochemicals and specialty chemicals, to create value for Singapore-based activities and serve the fast growing needs of the region. Examples of these developments include the recently announced refinery upgrade in ExxonMobil's diesel hydro-treater project, as well as announcements to invest in new chemical plants on Jurong Island by Asahi Kasei, Dairen Chemicals and Lanxess.
Building capabilities and raising productivity in EPC
6. These new investments will provide considerable opportunities for the EPC industry. We must however intensify efforts to build up the capabilities of the EPC industry to execute projects on time, safely and cost-competitively.
7. Competition in the EPC landscape is fast intensifying. We see new EPC companies from Korea and China already rivaling traditional leaders from Japan, Europe and the US. In order to stay competitive, Singapore companies must invest in building deeper capabilities, training up workers and raising productivity.
8. That is the supply side picture that has to accompany the demand side story. There is no lack of demand: Asia is the place to be, and the next decade will be full of opportunities for EPC companies. That is the demand side. But it is also a highly competitive landscape. The winners and losers will therefore be determined by who does best on the supply side: Who has the best quality, who delivers on time, to specifications, and who is able to make best use of their manpower?
9. The government will continue to support efforts by the EPC industry's efforts to upgrade and become leaders in quality and efficiency. I'm glad to see ASPRI moving ahead with its recently opened (30 Nov 10) Institute of Process Industry (IPI). The institute will be offering 2 new WSQ courses in "Innovation & Productivity" by Q2, 2011. One of them is geared towards process maintenance. A few of the leading companies in the industry, like Rotary, PEC and HSL have collaborated to develop these courses.
10. There is a lot more to be done. Manpower, including that from foreign sources, will not be unlimited. We must achieve a significant leap in productivity over the next decade. ASPRI, our EPC companies and plant owners must therefore work actively to identify the major steps required to achieve this leap.
11. It will be worth studying practices in other leading centres for the industry globally. For example, Netherlands in Europe and Houston in the US have implemented better workflow management systems, mechanised processes, and undertaken training and systems integration to achieve higher productivity levels. We should also have open and frank dialogues on the issue, such as in today's event.
12. I have no doubt that the industry will rise to the challenge of raising productivity. I hope you find the rest of the conference useful and productive.