Singapore Government Press Release

Media Relations Division, Ministry of Information, Communications and the Arts,

MITA Building, 140 Hill Street, 2nd Storey, Singapore 179369

Tel: 6837-9666

Distinguished Guests

Ladies and Gentlemen

I am very happy to be here today for the official opening of the Airport Logistics Park of Singapore, or ALPS for short. I remember that it was only slightly more than two years ago that I was here to launch this project. Some of you were here with me at that time. In this short period of time, JTC, CAAS, EDB, Customs and other agencies have worked hard to ensure the successful takeoff of this 26-hectare logistics park. The first tenant, Menlo, started operations in October last year. This was followed closely by the groundbreaking of Exel a month later. A multi-tenanted facility is currently being developed by the joint venture of AMB and Boustead. When completed at the end of 2003, it will offer 18,000 square metres of rental space. I commend everyone for their hard work.

The prospect of the impending war has cast much gloom on the global economy. Despite these uncertainties, the growth potential of the logistics and supply chain management (SCM) industries remain promising in the medium to long term. The global SCM market is estimated to grow at an annual compound growth rate of 10 per cent to reach US$174 billion by 2005. The forecast for Asia is even stronger at 15 per cent per annum. This compares very favourably against the 10 per cent forecasted for North America, and 7 per cent for Europe. Logistics outsourcing activities in Asia are also expected to grow fourfold to reach US$80 billion by 2012.

A survey conducted by JP Morgan Research late last year confirmed the projections. It also revealed the strong interest by Asian companies to revamp their supply chains and integrate them with their operations worldwide. There is also strong demand from leading MNCs with manufacturing bases in this region. As such, there is no doubt that the logistics and SCM industries in Asia are set to grow. Much of Asia’s growth will be intra-Asia. This will lead to increasing demands on the air transport sector to facilitate the distributed processing and assembly of manufactured goods. The question then is how Singapore can tap into this tremendous potential to maintain our position as a leading air logistics hub in Asia.

Singapore is only a 7-hour flight away from major Asian destinations. This enables us to be a key redistribution centre and strategic launch-pad for companies to reach out to their Asian markets. We also have excellent connectivity, top-notch physical and IT infrastructure, efficient customs clearance and reliable ground handling. These have led many leading third party logistics providers and global manufacturers to make Singapore their regional SCM nerve centre. From here, these companies provide key management activities like procurement and regional distribution activities for the Asia-Pacific region. Some manufacturers even use Singapore as their base to co-ordinate the supply chains between their manufacturing plants all over the world. Singapore’s strengths have not gone unrecognised. Indeed, I am pleased that Changi Airport was again named as "Best Airport – Asia" at the Asian Freight and Supply Chain Awards last evening for a record 17^th consecutive year.

However, we cannot stop or slow down. Our competitors are only too eager to tap into and grab a large share of this growing market. To stay ahead, we will have to work closely with the companies to develop new supply chain offerings and creative business models to enhance their regional businesses. In line with the recommendations of the Economic Review Committee (ERC) Working Group on Logistics, we will also work at cultivating knowledge-intensive activities that will deepen and broaden Singapore’s competencies across the entire logistics value chain. Activities that are on going include:

• Solutions development in R&D and SCM planning;
• Re-engineering and optimisation; and
• Data management in terms of data hosting, IT and e-commerce platform development.

These will enable companies to run the entire span of activities in their businesses out of Singapore easily, effectively and efficiently.

Since its launch in November 2000, ALPS has attracted investments totalling $50 million. This is good and encouraging news for us.

The competitiveness of Changi Airport is a matter of key concern to my Ministry. We will spare no effort to ensure that we keep ahead of the competition and offer good value to all our customers who do business at Changi Airport. As part of this on-going effort, CAAS is studying whether to issue additional licenses for the provision of ground handling and inflight catering services at Changi Airport. These services are of vital importance to airlines that operate out of Changi Airport. The efficiency and competitiveness of these services will have an impact on airlines here. Currently, there are two players, SATS and CIAS, serving the ground-handling needs of airlines at Changi. CAAS will review how we can provide more choices to airlines at Changi. CAAS will provide more details when it completes the study in a few months’ time.

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