Speech by Minister Chan Chun Sing at the press conference for the sectoral company visit to PS Energy

1. Good morning to all of you. Let me thank PS Energy for hosting us. This is the first visit of the new year, so a Happy New Year to all of you. We certainly hope that 2021 will be a much better year for the country and for our people. We continue the series that we started last year, where every week we will visit one particular sector to introduce you to the kind of challenges and opportunities businesses and also for the workers in that particular sector face. 

2. Today’s visit is to PS Energy, an example of a medium-sized company within the wholesale trade sector. The wholesale trade sector is actually a very big sector, roughly taking up about 9% of the Singapore workforce and it contributes toabout 12% of our GDP. From that basis, you can understand that the value-add in this sector can be pretty high. 

3. We know that in the last 12 months with the COVID-19 situation, the wholesale trade sector has been severely affected. The performance across the sector is uneven – some parts of the sector have continued to do relatively well, while some parts of the sector have done badly. For example, those that deal with aviation fuel would have been severely impacted. 

4. Having said that, that is behind us in 2020. Now, what are the prospects for 2021? I think talking to most of the players in this sector, they all expect that there will be a rebound for 2021 for most of the sub-sectors in the wholesale trade sector. The outlook for the sector continues to be good, and we are cautiously optimistic that 2021 will see a rebound for most of the commodities traded within the overall sector. 

5. Looking at the longer term beyond COVID-19, there are some significant changes that the sector is undergoing. And today, I would just like to point out three factors that will shape the wholesale trade sector in the coming years. 

6. The first factor that I have always talked about is the shifting global supply chains and the regional supply chains. And because of that, the trade flows will shift, which means that the wholesale trade sector will be affected by the volume and where the trade will be going. There are both opportunities and challenges in this trend. 

7. The second thing is that technology, especially digital technology, will change the sector quite a lot. In the past, people might think of the wholesale trade sector as essentially one of arbitrage – I buy low, I try to sell high and I make the spread or the margin from that. 

8. But this has changed, and it has changed in two ways. One is that even within the conventional arbitrage as we call it, it has changed because now people are using data and digital tools to see how they can better do the arbitrage. If you talk to companies like PS Energy, you will understand that actually, the way they do trading has changed. The other part of the change is that they are now able to apply technology to provide a much more transparent and traceable way of doing business. Some of the industry players will say that this industry, especially the energy trading industry, suffers from a lot of difficulties in giving assurance in terms of transparency and traceability in the past. But with the use of technology – some of which is actually being used in PS Energy – you will be able to see that they have been able to use a new technology to strengthen the traceability and the transparency of their processes. 

9. The third change that we will see in this sector, particularly after COVID-19, is the search for resilience, reliability and the conventional efficiency of operations. This also presents opportunities for the wholesale trade sector companies because in Singapore, we have built a reputation of being efficient, reliable, dependable, and this adds to the resilience of their supply chains. This is an added service that we can provide for the rest of the world.

10. I have touched on three main trends that will shape the wholesale trade sector in the coming years. First, the shift in the supply chains and the trade flows; second, the increasing use of digital technology in both conventional arbitrage and the provision of greater transparency and traceability of the supply chain; and third, the search for greater resilience, reliability and efficiency in a more competitive environment. In all these, there are opportunities for the wholesale trade sector to strengthen our position in Singapore, in service of the world. 

11. Now, having talked about the longer-term trends, let us look at how we have helped and worked with our companies to overcome the challenges in the last one year - not only to overcome the challenges but also to build up new capabilities.

12. Last year, one of the biggest issues for many of the wholesale trade companies was with cash and credit flows. Over the last 10 months from March to December 2020, more than 20,000 enterprises have taken up about S$17.4 billion in terms of loans under the ESG supported schemes, which were introduced and enhanced to tackle the challenges posed by COVID-19.

13. This is more than 13 times the credit extended to ESG supported companies compared to 2019. In 2019, we were at about S$1.3 billion. So, 13 times the credit was made available in order to sustain the capabilities of our wholesale trade companies. This is to make sure that our companies can continue to function, and to make sure that they retain their capabilities and capacities. But having said that, we have also strengthened the capabilities of these companies, preparing them to seize new opportunities going forward.

14. And how do we do that? There are at least two examples of how we have done this to help the companies in the sector to build up new capabilities. One has to do with the adoption of digital technologies. As I mentioned, in terms of capability building, one has to do with digital technologies and the first point about this is that the adoption of digital technologies for traceability and transparency. The second aspect of that is how to use the data and artificial intelligence to help our companies to strengthen their pricing mechanisms so that they can be much more competitive. Then how do we use the data and technologies to enable them to strengthen their analysis of the credits which is an important part of the wholesale trade.

15. So, all these technological tools are things which we have done to help various wholesale trade companies to strengthen their capabilities. The second aspect of the capability build up will be something that we have done for companies like PS Energy, where they participated in the Scale-Up SG programme – which is how we fundamentally transform the model of wholesale trade, where it goes beyond just trying to earn a margin from the arbitrage activities. How do they value-add to the kind of services that they provide to the customer? I strongly encourage you to talk to some of the leaders inside PS Energy, so that you can get a sense of the kind of value that Singaporean companies can provide to our customers over and beyond a conventional arbitrage role. 

16. This is how we have helped our companies over the last one year. First, by providing them with the additional credit in order to stabilise the operations over the last year. In the meantime, we help them to build up new capabilities to seize new opportunities. This includes digital capabilities, value-added services, and the building of the ecosystem to support wholesale trade. So overall, with these two prongs in place, both in terms of stabilising operations and developing capabilities, we are quietly optimistic that the wholesale trade sector will continue to grow in Singapore. We will diversify into many other new products within wholesale trade. At the same time, we will create many more good jobs for Singaporeans in this particular sector.