Why Is It Necessary or Vital for a Country Like Singapore to be a Maritime Hub - Essay Example

Topic:  Why is it necessary or vital for a country like Singapore to be a Maritime Hub? This paper describes about the relevance of maritimehub in Singapore. While explaining the necessity of maritime hubs, it also covers the role played by importers and exporters, shipping lines, logistics and transport providers, port terminal services as well as government service agencies in promoting maritime hubs in Singapore. This study focuses on the advantages and success that Singapore gains through maritime hubs. Hubs are considered as main engines of economic growth and development of a country. Singapore as well as the people involved in such activities has found it an added advantage to the country and their main confront is to preserve a foundation that will maintain the hub throughout various economic cycles. The paper concludes with the point that Singapore’s continuous success as a hub has contributed a lot for the development of the country, which has helped them to face different changes evolved in the maritime industry. Table of Contents: Introduction Singapore is categorized as a connector hub within the East Asian or Southeast Asian area, with a prominent number of relations to metropolis in other regions. “Singapore’s position as an International Maritime Centre (IMC) is built upon its status as a global maritime hub” (Leading International Maritime Centre 2009). It is the plan of the “Maritime and Port Authority of Singapore (MPA)” (Leading International Maritime Centre 2009) to make a central group of operators and maritime services suppliers in order to put up business in Singapore. The country’s reward as a global hub to financier and the business community has been accepted by government and various other higher authorities. So as to carry varied business desires of activities within the broad series of maritime sectors, the government has formed a pro-business environment, which would encourage in incorporating and growing businesses. The country is continuously re-inventing itself as a hub. In Singapore, a maritime hub provides the chance to develop strengths in new areas that operate outside the realm of the conventional role a port plays. It contains ship insurance, ship financing and a variety of auxiliary events that the shipping industry depends on. This diversification will grant the country with better flexibility to accept uncertainties and fast variations in the maritime industry. The role of the following parties is considered in explaining the importance of maritime hubs in Singapore: a) Importers and exporters Singapores hub infrastructure and skilled workforce also prove to be essential, as they give easier approach to markets for both importing and exporting and also offer the expertise needed to improve imports into exports. In order to manage marine transport, there is a necessity to make use of importers and exporters and connect them to the ship carriers that carry goods. Food items are one of the main things that are imported, and also exported to different countries. Singapore can control its neighboring countries exports by serving to create the region as a group of food import or export. Singapore works better with closer industries in countries such as Malaysia, Indonesia, Vietnam, Thailand and the Philippines to import various food products into the country and re-export them after repackaging. A 5 percent Goods and Services Tax (GST) is fixed on all goods imported into Singapore, but it is recoverable for the GST-registered importers. As an element of the dealings, to improve and encourage Singapore as a logistics hub, the government has over the years set up various systems to rearrange the GST payable on goods imported into the country. This will help the importers to establish their logistics hub in Singapore without incurring extra GST costs. Importers with a sound inventory control system do not need to pay GST for their imports and for selling those goods in the local market. b) Shipping lines The hub’s position at the intersection of the main shipping way has assisted its growth into a main centre for shipping activities in Singapore. It is a central position for some 200 shipping lines connecting Singapore to more than 600 ports in above 120 countries globally. There are about 1,000 ships in the hub at any one time. Singapore stays as the supreme hub location for the shipping industry in the Asian region. According to the company, no other hub provides the diversity of services to shipping lines and also the intensity of effectiveness required to create the largest ships is cost effective. While container ships get bigger and the hub and beam structure develops even more, the maritime hub should be able to provide the biggest ships most competently. As long as big shipping lines persist to appear in Singapore, feeder lines depending on them will also pursue. The hub offers regular shipping lines with better flexibility along with a concern to the association of their networks. “Shipping lines chalked up a combined profit of about US$17 billion compared to the loss of some US$20 billion in 2009”(News Details 2011). In addition, more shipping companies such as PPT will provide advanced features and the creation of hub equipment and technology will further accelerate the development of a competitive edge to the shipping lines, thus, assisting customers in the process. c) Ports and Terminals The mission of The Maritime and Port Authority of Singapore (MPA) is to build up Singapore as a leader universal hub port and the international maritime centre (IMC), and to progress and protect strategic maritime interests of the country. MPA is the motivating force behind maritime development and Singapores port, taking on the responsibilities of Port Authority, Port Planner, Port Regulator, National Maritime Representative and IMC Champion. MPA associates the industry and other agencies to increase safety, security and environmental protection in the port waters, assists in port operations and expansion, develops the cluster of maritime subsidiary services, and endorses in maritime research & development and manpower growth.“Ports as locations where maritime and land traffic converges are crucial facilities in the global economy” (Rodrigue n.d). Poor access to maritime may harm port operations and development. Yet, maritime access is the feature that may be alleviated the least. Activities like dredging and building of amenities such as docks are very costly. This emphasizes the lasting significance of a superior port site. Singapore remains as the busiest port in the globe in terms of shipping tonnage. Yearly, port obtains an average of about 140,000 vessel calls at the Singapore port. “Singapore has been recognized as the ‘Best Seaport in Asia’ by the Asian Freight and Supply Chain Awards (AFSCA) many times over” (The World’s Busiest Port n.d) The Singapore Port consists of several terminals. They are situated at Tanjong Pagar, Jurong, Brani, Sembawang, Pasir Panjang and Keppel and can hold all kinds of vessels like container ships, cargo freighters, bulk carriers, lighters and coasters. The terminals are supervised by two profitable port operators, namely Jurong Port and PSA Singapore. d) Logistic and Transport providers: Logistics concern all the actions necessary for merchandise to be made available in marketplaces, together with procurement, order dealing, supply management and transportation among the most significant. Logistics has accordingly taken gradually a more significant role in the international economy, sustaining a wide range of product chains. The involvement of developing countries in maritime transport is rising. Developing countries are one of the major sources of labor in maritime transport. Singapore has every essential infrastructure support like seaports, airports, a well-organized telecommunication network, a pro-business background, concentrated use of information technology, widespread logistics ability as well as a skilled and professional workforce. The combination of these factors has facilitated the country to develop into a modern hub of global trade and a foundation of operations for a wide number of regional and multinational companies. The logistics service providers in Singapore, which amount to an excess of 6000, offer broad services to the MNCs, with transport, warehousing, distribution and forwarding. Most of them are situated in distri-parks. e) Government Service agencies: The Government of Singapore embarked on a dynamic campaign to build up the city-state into a transshipment hub for merchandise originating in Singapore and Malaysia. They also began to dynamically encourage MNCs and numerous international logistics service providers to locate in Singapore, and to build their domestic or global distribution centers in the country through various stimulating schemes like lead status, tax exemptions etc. Some government agencies in Singapore are charged with constructing the nation as a logistics hub. The Port of Singapore Authority has also played an active role by functioning strongly with these government agencies in endorsing the growth of logistics hub in Singapore. The private segment led by Singapore Maritime Foundation (SMF) operates in a partnership with marine sector and different government agencies to endorse and widen Singapore’s marine capabilities. The Association of Singapore Marine Industries operates intimately with government agencies to manage the trade tests and the skills certification programs, for instance, the National Skills Recognition System and Skills Evaluation Tests for industry participants. Training and certification programs help to polish the skills of workers, improve their position within the industry, and provide them owing acknowledgment for their accomplishments within their trade. “The need to upgrade and train the marine industrys workforce is crucial, especially as the industry has embarked on more challenging contracts and projects over the years, which require more knowledge-intensive skills and a higher engineering content”(A Closer Look at the Marine Industry 2011). Conclusion: Singapore is held up well by its strategic geographic location and integrated marine infrastructure services. Shipping industry has contributed to the development of the country’s economy for the last several years. It plays a vital role in the national economy, considering Singapores drive to develop into a foremost global maritime hub. Singapore ports’ status as a maritime hub gave the chance to build up strengths in new areas beyond their conventional role as a port, including ship insurance, ship financing and different supplementary activities. This diversification may also provide greater flexibility in the face of uncertainties and fast transformations in maritime industry. Reference List A Closer Look at the Marine Industry (2011). ASMI. [Online] Available at [Accessed on 28 May 2012] Leading International Maritime Centre (2009). MPA Singapore. [Online] Available at [Accessed on 28 May 2012] News Details (2011). Singapore Maritime Institute. [Online] Available at [Accessed on 28 May 2012] Rodrigue, JP& Browne M. (n.d). Chapter 10 International Maritime Freight Transport and Logistics. Blackwell Publishing. [Online] Available at [Accessed on 28 May 2012] The World’s Busiest Port (n.d). MPA Singapore. [Online] Available at [Accessed on 28 May 2012] Read More