Marina development is a risky financial undertaking. This is especially so in developing markets where the market is facility driven. In other words, a developer builds in the absence of local demand but anticipates that once the facility is completed, demand will be stimulated through proper management, marketing and promotion.
ONE ̊15 Marina Sentosa Cove hosts the annual Singapore Yacht Show
Many countries including those in the Middle East, East Asia (including China) and Southeast Asia have been going through this phase of market development. Such a business strategy can only work where the regulatory climate is conducive to and supportive of recreational boating.
Many communities worldwide have made recreational boating their economic lifeblood. These include many municipalities bordering the Mediterranean, Caribbean countries, the Bahamas and Florida, USA.
Southeast Asia’s rainforests are home to the world’s most biologically diverse ecosystems and the centrepiece of a successful, growing ecotourism market. What’s less well known is that the region’s coral reefs are the underwater equivalent of their terrestrial counterparts and a biological reservoir of extremely diverse habitats.
With over 25,000 islands, Southeast Asia has all the geographic prerequisites and natural attributes for the development of nautical tourism, with the potential to eventually match the stature of the established cruising regions of the Mediterranean and the Caribbean.
With collaboration among the governments in Southeast Asia and the right policies in place, Aseanarean – a name coined to thematically brand the region from a nautical perspective – can become a global cruising destination where boating businesses flourish.
Many other jurisdictions have found that fiscal and other measures that stimulate recreational boating eventually bring more to the community and government, compared with measures that stifle boating.
Boats, ultimately, are movable assets and owners are free to berth their yachts outside of an unfriendly regulatory or tax regime. This is particularly true in Southeast Asia where countries are densely packed and within easy navigable distances from each other.
Marinas are boating gateways that provide access to the water. Marinas and yachting businesses work in partnership as part of the recreational boating industry that creates employment, anchors real-estate values and generates taxation in various forms from which governments benefit.
YP Loke is Chairman of the Singapore Boating Industry Association, a Vice-President of ICOMIA and part of the Global Marine Business Advisors alliance
Studies in developed boating markets have shown that for every dollar spent at the marina, $6.50 to $10 is generated in the community. There is no reason why this should be different in new markets.
Other studies have estimated that a typical owner of a large yacht will annually spend about 10 per cent of its value on maintenance and upkeep. This annual expenditure includes payments to marinas, crew, boatyards, contractors, chandleries, victuallers, and bunkering and insurance companies.
The ripple effect trickles downstream to hotels, shops, restaurants, bars, visitor attractions and travel agents, to name a few. These effects continue to multiply further downstream in the economy. As these businesses pay taxes and create employment, governments eventually benefit more than they would from direct boat taxation.
A weakness of recreational boating is that it’s often perceived as elitist or expensive. Large boats tend to dominate the headlines whereas the reality is that over half of leisure boats are under 8m. The perception has made boating an easy target for politicians pandering to the popular vote.
Contrary to this popular misconception, boating is not confined to the wealthy but extends across a broad economic spectrum. It’s a healthy outdoor activity that bonds communities.
Countries that do well in competitive sailing have kept the cost of boating affordable. This enlarges the pool of young sailors from which sailing coaches can talent pick and ensures that older sailors can continue to pursue their sport as a hobby in their post-competition years.
Boating in developing markets is at a stage where, in order to grow, national policies have to be adopted that will nurture the industry to bring it to a more mature level where it is self- sustaining. Many specialised marine businesses operate in niche sectors that cannot survive without a reasonably sized boat population.
Finally, the positive benefits of marinas transcend economics. Marinas provide a quality-of-life enhancement for both active and passive recreation. A modern marina anchors the aesthetics of the waterfront and immediate hinterland. It enhances the enjoyment of customers, tourists and the public at large.
Very often, there’s an educational element where people learn to sail, are taught about the marine environment, the maritimeheritage of their country and the need for their preservation. But ultimately, marinas only thrive where the regulatory and tax regime supports boat ownership, whether the boat population is home-based, transient or tourism based.
YP Loke is the Chairman of the Singapore Boating Industry Association, and a Vice-President of ICOMIA (International Council of Marine Industry Associations). A naval architect by training, he is part of the Global Marine Business Advisors alliance and heads up Spinnaker International, which consults on boating and marina matters. Loke also serves as Vice-President on the Raffles Marina General Committee. ypl@spinnaker.com.sg
- The original article appears in Yacht Style Issue 53 (click image below)
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YACHT STYLE Issue 53: Catamarans Shine in ‘Multihulls Issue’ 2020
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