opening ADDRESS BY MR lim hng kiang,
MINISTER FOR
TRADE AND INDUSTRY, AT THE global trader NETWORKING COCKTAIL 2008 ON
tUESDAY 20 May 2008, 7.55 PM AT JOHN JACOB BALLROOM, sT REGIS
HOTEL
D
istinguished
Guests,
Ladies and
Gentlemen,
Good
evening.
It is my pleasure to join you this evening
at the Global Trader Networking
Cocktail.
Overview of international trading landscape – volatility in global
commodities market.
The
commodity trading sector has been in the spotlight more frequently
recently. Oil prices shot past the US$125 mark earlier in May, while gold and tin
prices rose to record highs in recent months. We have also
witnessed spikes in food prices, with shortages of
key staples such as rice, wheat, corn and
soybean.
The
reasons for escalating prices are multi-fold, attributed largely to
under-investments in production facilities and unpredictable
weather patterns, coupled with growing demands from a larger and
more affluent global consumer base. Commodities traders are challenged to manage increasingly
complex risks and anticipate the potential
opportunities.
Asia’s
growing importance
In
particular, we believe Asia will prove to be the most rewarding,
albeit challenging, playing ground for traders. Asia as a region
has grown rapidly, spurred on by the power houses of India and
China. Aggregate GDP in Asia grew at 8.7% in
2007[1].
Despite fears of a global slowdown, Asia
is still expected to be able to weather the storm
well.Asia will become an even more important
node in the international trading
arena.
A Vibrant International Trading
Sector in Singapore
e
is
in a unique position to leverage on Asia’s trade growth.
With our
historical roots in being a free “port of call”, trade continues to
be the lifeblood of Singapore. Our external trade is more than 3
times our GDP, reflecting the continued importance of trade to
Singapore’s economy.
Offshore trade is a vital component of overall trade and
economic growth. In 2007, offshore trade by companies under IE
Singapore’s Global Trader Programme, GTP, grew more than 30% to
reach over US$465 billion. These companies employed over 7,000
staff and contributed S$7.8 billion worth of total business
spending, an increase of 20% from 2006. Much of the spending was in
shipping, freight management and storage services, lending further
testimony to Singapore’s strengths as a logistics and auxiliary
services hub.
This upward trend is expected to continue. From a modest
start of 25 companies in 1989, there are currently more than 230
companies under the GTP. Today, we recognise the 30 new companies
that have been granted GTP status, as well as the 37 companies that
have successfully renewed or upgraded their incentive status under
the Programme. We continue to review and enhance the Programme to
meet industry needs.
Last year, at the Global Trader Summit, I announced two
enhancements to the GTP. First, emissions trading was included to
the list of qualifying GTP trades. Second, a special tax rate of 5%
was allowed for LNG trading income. I am glad to share that a year
on, we are seeing positive response from companies. CNOOC, a
subsidiary of China’s leading offshore exploration and production
company, has set up a LNG desk in Singapore. PetroSeraya has
included carbon credits as one of their qualifying products under
the GTP.We look forward to seeing more companies capitalising on
these enhancements and adding to the vibrancy of our trading
scene.
Continuing
efforts to reinforce Singapore’s position as a premier trading
hub
While Singapore
has been successful thus far, we
must continue to strengthen existing infrastructure and build up
our capabilities. Let me talk about two newer areas which we have
been working on.
Strengthening our risk management
capabilities
First, we seek to strengthen our risk management
capabilities and infrastructure. Underpinned
by strong physical trading, Over-the-Counter (OTC) commodity
derivative trades in Singapore have reached US$600 billion annually
in the last two years. Our vision is to build
an Asian commodity derivatives centre here.
The
recent acquisition of the Singapore Commodity Exchange (SICOM) by
the Singapore Exchange (SGX) boosts the infrastructure for exchange
traded derivatives. With Asia's increasing exposure to global
commodity activities, it is timely that products and exchanges
tailored to the Asian time-zone and specifications are launched in
Asia.
Building our human
capabilities
Second, we are
building the infrastructure to develop sectoral knowledge, capabilities and talent pool.
The
International Trading Institute (ITI) was set up last year, as a
tripartite partnership among IE Singapore, Singapore Management
University (SMU) and 16 industry
players.
A core component of the ITI is the International Trading
Track offered under SMU’s Bachelor of Business Management degree. I
am pleased to share that two-thirds of the first batch of
graduating students are now working for or have been recruited by
trading companies such as Vitol, BP, Shell, Noble, and Louis
Dreyfus. One has even taken up the challenge of an overseas posting
to Rotterdam to work for Concordia. The ITI will continue to groom
fresh talent for the industry; there are more than 90 SMU students
who are now enrolled on the trading
track.
Besides targeting undergraduates, the ITI also plans to
launch executive education courses in the second half of 2008. This
will help address the gap in structured training courses, helping
new hires and supporting functions quickly gain an understanding of
the trading industry.
Conclusion
We are committed to growing Singapore as a premier
international commodities trading hub amidst a rapidly evolving
global trading landscape. We will continue to enhance the
environment for the international trading industry to
thrive.
Once again, may I congratulate all Award recipients of
the Global Trader Programme. I wish you a pleasant evening of
networking, exchange of ideas and forging of business
partnerships.
[1]http://www.adb.org/Documents/Books/ADO/2008/