The Impacts of Interest Rates and Taxations on Boosting Maritime Industry in Singapore - Cointegration & Causal Nexuses –

Abstract

The international maritime and offshore fields are visible and really fascinating environments to all maritime researchers, shipping financiers, bankers, financial institutions, chief executive officers (CEOs), chief of finance officers (CFOs), insurance companies, shipping companies, Oil & Gas companies as well. As Stopford (2009) reckons the epic voyages of Columbus, Diaz and Magellan opened the maritime highways of the world, and the same pioneering spirit brought supertankers, container-ships, and the complex fleet of specialized ships which each year transport a ton of cargo for every person in the world, no business is more exciting. The transportation by sea is getting more important than last 20th century, for instant, in 2004 the merchant shipping was with turnover about US$ 426 billion and in 2005, shipping industry transported 7.0 billion tons of cargoes between 160 countries. It is seen the world wild shipping companies which businesses are based in the West, East or Asian regions and employ about 1.23 million seafarers, work closely with port organizations and also impact to the development of building new modernization port facilities.

Ship finances (SF), global seaborne trade (WST), world gross domestic product (WGDP), the London Interbank Offered Rate (LIBOR), corporate taxes (TAX) and other related financial elements (FE) such as domestic credit to private sector (CRE_X1), the real interest rates (RRATE_X2), the listed-stock companies (STOCK_CO) are really the fascinating issues to the ship-owners, financial institutes, bankers, banking risk managers and maritime researchers. The remarkable developments of global ship building and sea transportation are important and significantly created more productivities and businesses to the world economy today compared to last 20th century, special in the containerization, oil tankers, liquefied petroleum gas (LPG), liquefied natural gas (LNG), dry bulk carriers and others. The ship investors normally require the large amount of capital and always seek for the suitable financial sources.

The research is firstly aimed at empirical analysis the global distinguished and prominent impacts of Libor’s interest rates on the WST, WGDP, LIBOR and the world merchant fleets (WMF) during the 1980-2015 period to see how the activities of long run and short run equilibrium relationships of those separate variables are in one synchronous models. Libor is chosen as representative symbol for other financial organizations because it is generally considered by most of loan transactions and world financial institutes when dealing with bank’s interest rates.

The research then continually analyzes to Singapore case study, a specific symbol of Singapore’s prominent impacts of TAX, CRE_X1, RRATE_X2 and STOCK_CO during the 1980-2015 period to see how the government significantly applies the roles of tax rates and other financial elements to create the attractively environmental activities to increase its EG to boost maritime industry and becomes one of the busiest world class sea-port hub as seen today.