Speech by Minister S Iswaran at The 2016 Global Trader Dialogue at Victoria Theatre and Victoria Concert Hall

Distinguished Guests,

Ladies and Gentlemen,

1.            Good evening.  I am very pleased to join you this evening at the 2016 Global Trader Dialogue (GTD).  This is one of IE Singapore’s flagship events for the commodities trading sector, and I am heartened to see so many industry leaders gathered here to share insights on trends and challenges facing the sector.

Resilience amidst the uncertain global trading landscape

2.            2015 was a challenging year for the trading community.  The price of Brent crude fell sharply from US$66 a barrel last May to less than US$30 in January this year.  Prices of metals and agricultural commodities also remained weak due to persistent over-supply in the market, and slowing demand from emerging economies.  While prices have recovered slightly in recent months, the demand and supply of these commodities face further adjustments to global imbalances, and this will result in continued uncertainty in the near term.

3.            Notwithstanding the current challenges in the global market, the trading community in Singapore remains resilient.  Today, the vast majority of the world’s largest commodity traders are located in Singapore, generating close to 1 trillion US dollars in turnover in 2015.  The past year also saw many companies grow their operations footprint in Singapore.  Let me share a few examples:

a.            Shandong Dongming, the largest independent refiner in China, has chosen Singapore as their international crude procurement center.  With China allowing more independent refineries to import their own crude, we continue to see companies like these joining our diverse community of producers, traders and buyers.

b.            Lafarge Holcim, one of the world’s largest traders of building materials, has announced the consolidation of its Asian trading base and global shipping arm in Singapore.  They were attracted by the ease of doing business and the strong nexus with global shipping companies based here.

c.            Marubeni Grains, which has been trading agricultural commodities in Singapore since 2010, has likewise taken a further step to establish its freight platform in Singapore. Beyond arranging for physical shipments, they will also look to hedge and trade freight-related derivatives here.

Importance of trading hubs

4.            Amidst the current bearish environment, trading hubs like Singapore play an even more important role for the global trading community.

a.            First, the extensive network of market participants in Singapore facilitates the timely and accurate exchange of market intelligence.  With approximately 80% of the world’s top commodity trading firms present in Singapore, traders can connect quickly with diverse counterparties to understand and respond effectively to changes in market conditions and prices.

b.            Second, our world-class commodities storage facilities, particularly in oil and metals, allow traders increased optionality for the processing, storage and delivery of commodity products.  Traders can leverage approximately 10 million cubic metres of independent oil storage and over 300,000 square metres of storage for LME metal.  This enables them to provide value-added services to their customers in order to achieve optimal margins.

c.            Third, Singapore is well positioned to enable companies to access opportunities in expanding Asian markets.  In 2015, the World Bank ranked Singapore first in Asia in its Logistics Performance Index.  Our strength as a logistics hub, combined with our business connectivity and proximity to key growth markets enable companies to tap key logistics nodes and physical flows in the most cost-efficient manner. 

Strengthening capabilities to support the trading community

5.            And, Singapore remains committed to building capabilities that will help traders capture opportunities in the next phase of growth.  Let me elaborate on two key areas: financing and talent.

Access to Additional Financing Options

6.            To strengthen Singapore’s trade finance capabilities, IE Singapore is working with the industry to grow the volume and sophistication of Structured Commodity Financing activities, or SCF, conducted here.  Compared to traditional financing from banks, SCF activities enable trading companies to access liquidity and risk management solutions that can unlock new production and trade flows.  This catalyses the demand for sophisticated financial and risk management services here, as well as supports higher volumes traded out of Singapore.

7.            Against the backdrop of tighter liquidity requirements of banks and bearish capital markets, the need for additional financing channels has more than ever taken on added significance.  To further grow the spectrum of SCF activities offered out of Singapore, we have expanded the suite of qualifying activities under the Global Trader Programme (SCF) scheme to include: (i) streaming financing, (ii) mergers and acquisitions (M&A) advisory services, as well as (iii) the consolidation, management and distribution of funds.  With these enhancements, trading companies can now take advantage of innovative financing models and M&A opportunities to secure assets and production streams that will position them favourably for market recovery.   

Development of Trade Talent

8.            Meanwhile, trading firms need access to a ready pool of talent with the requisite skills to support business needs.  To build the pipeline of talent for the trading sector, IE Singapore has collaborated with the International Chamber of Commerce Academy (ICC Academy), Singapore Management University (SMU), Nanyang Technological University (NTU) and the polytechnics to launch various talent programmes in recent years.

9.            Aside from developing entry-level talent, we recognise the need to help mid-career professionals stay relevant and prepared for the future economy.  IE Singapore has partnered with the Workforce Development Agency (WDA), the International Trading Institute at SMU, and the ICC Academy to develop a programme for mid-career professionals.  This programme will equip them with the relevant skillsets and competencies to take up good jobs in the wholesale trade sector.  We will release more details on this programme in the second half of 2016.

Conclusion

10.         In conclusion, the trading community remains an important part of our economy.  Amidst the current challenging business environment, the Singapore government remains committed to strengthening our value proposition as a trading hub and to better support industry needs.  Public-private collaboration is essential if our efforts are to bear fruit, and I am confident that together, we can continue to enhance the competitiveness of our trading sector, grow opportunities for our businesses, and create good jobs for our people.  

11.         On this note, I wish you a fruitful evening and a successful year ahead.  Thank you.