Mr Teo Ser Luck Minister of State for Trade and Industry at World Rubber Summit 2012

Speech by Mr Teo Ser Luck Minister of State for Trade and Industry World Rubber Summit 2012 23 May 2012, 0900Hrs, Raffles City Convention Centre

“Singapore’s history, growth and beyond, as a leading Asia Rubber trade hub”

Mdm Sheela Thomas, Chairwoman of IRSG,

Dr Stephen Evans, Secretary General of IRSG,

Member Governments of IRSG,

Distinguished Guests,

Ladies and Gentlemen,

Good morning. It is an honour for Singapore to host the World Rubber Summit, organised by the International Rubber Study Group (IRSG). The event is supported by the Member Governments of the Group, and International Enterprise (IE) Singapore, the Singapore government agency that promotes international trade.

This Summit is part of the World Rubber Week, comprising a broad range of activities which include the IRSG Head of Government and Industry Advisory Panel meetings. There are also networking sessions, golf and a gala dinner organised by the Rubber Trade Association of Singapore (RTAS). I am pleased to note that the gala dinner on Friday is expecting a strong turnout of close to 1,000 participants from around the world. 

I would like to extend our sincere appreciation for the support given by RTAS and the rubber and tyre community here. I would also like to congratulate the IRSG secretariat for organising the Summit. Your active partnership and dedication in creating one of the first global rubber platforms has brought together top decision-makers from the rubber production and consumption spectrum, as well as the public and private sectors.

The World Rubber Week aims to drive issues affecting the production and consumption of natural and synthetic rubber. It is a valuable thought leadership platform that gathers and facilitates the exchange of comprehensive rubber market trends and strategic ideas to benefit your business.

The participation of global decision-makers from the world’s top tyre companies, Michelin, Goodyear, Bridgestone, as well as owners of the largest natural and synthetic rubber producing companies such as Semperit and Lanxess [pronounced as Lang-sess] is testimony to the commitment of the rubber sector to the success of the Summit and World Rubber Week. We look forward to having your continuous participation in this annual event in the years ahead. To increase its efforts in pushing key initiatives to grow the rubber industry, the IRSG will also seek to boost its membership.

Latest Trends and Development

The theme today, “How Rubber Will BOUNCE in a Volatile World”, is timely. Rubber consumption continues to face challenges closely related to the economic growth of global markets. Despite these uncertainties, world rubber consumption is expected to increase by 3.5 per cent to 26.75 million tonnes this year[1].

However, the European sovereign debt crisis, slow economic recovery in the US, climate change and the tsunami-affected Japanese economy have led many corporations in the rubber industry to turn to Asia for growth. By 2020, Asia’s total rubber consumption will grow by 60 per cent. China alone will make up 32 per cent of the world’s total vehicle production from 78 million units in 2010 to 122 million units in 2020.

Our Heritage – A tale of transformation and tenacity

Singapore is neither a natural rubber producing nor consuming country. However, we play an integral role in facilitating the growth of rubber companies. We are located near the top natural rubber producing countries - Thailand, Indonesia and Malaysia - which together account for over 70 percent of the total global rubber output.

A large part of this is historical. Established in the 19th Century, our natural rubber trading sector is the oldest commodity sector in Singapore. As a major port of call for ships plying between Europe and East Asia, Singapore emerged as the world’s main sorting and export centre for rubber after the 1870s.

Many banks in Singapore actually had their head-start in the rubber business. Dr Lee Kong Chian, founder of the Oversea-Chinese-Banking-Corporation (OCBC), started the Lee Rubber Company in 1931. Today, Dr Lee is still fondly remembered as the Rubber King, and his company is the second largest natural rubber processor in the world.

From a small seaport trading rubber and other commodities, Singapore is now the largest natural rubber trading centre in the world, and one of the most vibrant marketplaces for global producers and consumers. The compound annual growth rate (CAGR) for our trade in natural rubber grew by 98 percent between 2009 and 2011 to reach US$34.49billion[2]. As a recognition of our natural advantages in the region, the IRSG relocated here in 2007.

Singapore’s strengths as a rubber trade hub

What are these advantages? First, beyond being a hub for natural rubber producers and tyre manufacturers, Singapore is now one of the world’s largest manufacturing sites for synthetic rubber. Lanxess [pronounced as Lang-sess] recently celebrated the commissioning of the world’s largest neodymium poly-butadiene rubber plant in Jurong Island. This is the largest of its kind in the world, and serves the growing demand for “green tyres”, especially in Asia. Sumitomo Chemical is also constructing its fourth synthetic rubber plant, the Solution Styrene-Butadiene Rubber (S-SBR) plant, in Singapore, its first outside of Japan.

Second, Singapore maintains its position as the price discovery centre for natural rubber. To date, 80 per cent of global physical rubber trades are priced off the Singapore Exchange (SGX).

Third, top industry players have established a strategic presence in Singapore, creating a vibrant industry cluster. Singapore is host to the largest corporate trade finance and capital raising activities in Asia. Our neutral legal and judiciary systems also make us a key venue for international contract and arbitration for trade. Today, we are home to the top three natural rubber producers in the world – Von Bundit, Lee Rubber and Sri Trang. In the past two years, we have seen a strong entry of key Chinese companies setting up their trading and procurement offices to expand their global networks from Singapore. European and Japanese players such as Michelin and Bridgestone have also landed here.

Conclusion

Singapore has put in place favourable conditions for the rubber industry to anchor and grow further activities here. We are committed to providing a conducive operating environment for the industry, and look forward to your feedback on how we can form deeper partnerships and purposeful activities in Singapore.

Once again, I would like to thank Member Governments of the IRSG for your support and to the IRSG Secretariat for organising this event. I wish all of you a fruitful Summit and encourage you to participate in the various programmes throughout Singapore’s World Rubber Week.

Thank you.

[1] Source: IRSG’s World Rubber Industry Outlook published in March 2012

[2] Source: IE Singapore