“Global Trade and Trade Finance
- Competency & Expertise in the Spotlight”
Mr Samuel Tsien, Association of
Banks in Singapore Chairman,
Mr Tan Kah Chye, ICC Banking
Commission Chairman,
Mr Stefano Bertasi, ICC Policy
and Business Practices Executive Director,
Distinguished guests,
Ladies and Gentlemen,
Good morning. I am pleased to
be invited here today to attend the ICC Banking Commission’s 1st Annual Meeting
in 2015, held in collaboration with The Association of Banks in Singapore
(ABS). This Annual Meeting provides an important platform for the global trade
and trade finance community to discuss pertinent issues surrounding this
sector.
Developments in the Global
Economy and Trade Landscape
The global economy is still
facing many challenges and uncertainties. A recent IMF report in April noted
that the global economy is expected to continue its modest recovery, growing
from 3.4 per cent in 2014 to 3.5 per cent in 2015. Medium to long-term trends
such as the low oil price environment and uncertain monetary policy continue to
weigh on growth.
Across economies, growth is
likely to be uneven. The United States reported a stronger than expected growth
in 2014. They have good growth prospects this year, driven by strengthening
domestic consumption and steady job creation. In the Eurozone and Japan, growth
is likely to remain weak as legacies of the financial crisis linger,
intertwined with structural bottlenecks.
Asia, on the other hand,
continues to be a key driver of global economic growth. The Asian Development
Bank (ADB) expects the 6.3 per cent growth rate in 2014 to continue over the
next two years. As China undergoes a carefully managed slowdown, it will remain
an economic powerhouse, and is expected to achieve its growth target of 7 per
cent in 2015 and 2016. Meanwhile, India has been able to command steady growth
as recent reforms have boosted investor confidence.
Against this backdrop, trade
flows in Asia will remain strong, driven by rapid urbanisation, infrastructure
development and strengthening regional economic integration. With a combined
population of over 600 million people, ASEAN is a market with immense economic
potential. The push toward the establishment of the ASEAN Economic Community
will encourage and further boost the free flow of goods, services and
investment capital across this region. The lowering of trade barriers and
adoption of common platforms will result in increased trade flows within ASEAN,
presenting new opportunities in trade finance.
New trends
in cross-border trade
Amidst these
macroeconomic fundamentals and developments, three new trends in cross-border
trade have emerged:
First,
technological advancements have facilitated the matching of cross-border
businesses and resulted in the increased adoption of online Business-to-Business
(B2B) trading platforms. These B2B platforms help to improve business
efficiencies by providing better price and product discovery. To support these
international transactions, these platforms are increasingly looking to
collaborate with alternative financiers to establish effective trade finance
solutions.
Second,
there has been an increase in the adoption of the Renminbi (RMB) as an
alternative currency for international trade transactions. The RMB is currently
one of the top 7 currencies used in international payments. As a result of the
internationalisation of the RMB, more trading hubs are starting to develop
capabilities to manage RMB flows efficiently. This will also result in an
increased demand for financiers with deep expertise across multiple areas in
Asian banking and finance.
Third, there
has been increasing vertical integration of global commodity traders. Global
traders like Vitol, Wilmar and Trafigura have invested in both upstream and
downstream assets in the trade value chain to secure a steady supply of
commodities as well as distribution channels for their business. This provides
them with better control of their trade flows, enabling them to capture a
potentially higher profit margin. The increasing popularity of such integrated trading
models calls for a new breed of trading professionals with deep knowledge of
upstream and downstream infrastructure.
Given our
established customs and logistics infrastructure, Singapore has an important
role to play in these developments. Singapore is also a growing hub for RMB
clearance and RMB offshore transactions. Singapore is keen to play a role in
cultivating global trade talent to serve these new changes in the trading
community.
Investment
in our workforce to develop trade talent
Singapore
continues to invest in the development of trade talent to address the new
paradigms in cross-border trade. As part of our national SkillsFuture
initiative, Singapore will be investing in the development of deep
industry-relevant skillsets for our workforce. Let me share 3 examples.
First,
International Enterprise (IE) Singapore has worked with the ICC to establish
the global headquarters of the ICC Academy in Singapore. The Academy is
expected to provide rigorous, relevant and effective business education to over
5,000 professionals annually, strengthening the supply of trade talent. It will
serve as a centre of excellence and thought leadership in the area of trade
finance. This will enable further collaboration for business activities and
analytical research work that will shape the future of international finance.
Second, we
will continue to build capabilities in financial technology (fintech) by
encouraging the growth of fintech companies in Singapore. Startupbootcamp, an
established startup accelerator will launch a 3-month financial technology accelerator
programme in Singapore next month. It will provide Singapore based startups
with networking, mentoring and funding support. This will catalyse the
development of new solutions in areas that include share trading, transaction
security systems and peer-to-peer payment mechanisms.
Third, IE
Singapore and the Nanyang Technological University (NTU) have collaborated to
develop a new International Trading Programme Curriculum (ITP) for Engineering,
Business and Maritime studies students. The ITP is a cross-faculty programme
that aims to cultivate a new generation of trade professionals with diverse
knowledge beyond international trading. We believe that industry collaborations
such as these will effectively equip fresh graduates with cross-disciplinary
skills to meet future demands in trading and trade finance.
Conclusion
Singapore
remains an attractive place for companies to do business. In 2014, the World
Economic Forum ranked Singapore to be the most open economy for international
trade and investment. Our vibrant ecosystem of buyers and sellers, as well as
supporting business infrastructure enable companies to effectively manage their
risk, logistics and marketing functions out of Singapore. Our commitment
towards talent development will further enhance Singapore’s appeal as a global
trading hub.
International trade is an important pillar supporting economic growth. We value
the strengthening of our relationships with nations through trade and welcome
the ICC to continue engaging the global business community through your
activities in Singapore.
Lastly, I wish everyone a fruitful discussion at the
conference over the next two days and I hope you will enjoy your stay here in
Singapore. Thank you.