NURTURING homegrown global traders and getting more foreign traders to base themselves here – even if their goods never pass through the port – are among Singapore’s strategies to achieve its Trade 2030 goals: increasing exports to at least S$1trillion, up from S$805 billion now, and doubling offshore trade to US$2 trillion.
Announced earlier this year as part of the Singapore Economy 2030 plan, Trade 2030seeks to grow trading volumes, widen the types of trading activities, and expand trade with other parts of the world. Lee Pak Sing, assistant chief executive officer of trade, connectivity and business services at Enterprise Singapore (EnterpriseSG), spoke to The Business Times about what this might involve.
Growing Singapore global traders
Plant-based cheese, biofuels, customised steel solutions, refurbished mobile phones – these are just some of the new products that Singapore companies are trading to stay ahead of the curve.
For instance, agricommodities firm Agrocorp International, which trades wheat, sugar, beans and pulses, oilseeds, cotton and rice, has developed its own retail brand of “cheese” and “milk” made from pulses such as lentils and beans.
Capitalising on global demand for renewable diesel, bio-energy trader Apeiron Bioenergy has transformed from a trader of renewable feedstock to a vertically-integrated bioenergy supplier: building and acquiring facilities in which used cooking oil is turned into biofuel.
Growing home-grown global traders such as Agrocorp and Apeiron is a key pillar of the Trade 2030 strategy, said Lee. Through programmes such as Scale-up SG and the Enterprise Leadership for Transformation Programme, EnterpriseSG supports such high-growth potential companies to enter new markets, develop and trade higher-value products, and train talent.
Trade 2030 aims to do this in a “more targeted way”, said Lee. Previously, EnterpriseSG may not have actively identified these players. The target: companies that trade high volumes and have ventured into upstream and downstream activities such as product development.
As the global sustainability drive ramps up, Singapore traders can also capture opportunities by trading or developing related products such as plant-based protein, carbon credits and electric-vehicle metals, as well as “greening” their trading operations, Lee said.
“For instance, people traditionally did not use biofuel on its own. But with technology and increasing general acceptance, what we are doing now is to set (our companies) up to grow in tandem with the demand for newer products, so that they don’t lose out in global trade.”
Another player that has moved up the value chain is local steel-solutions provider Mlion Corporation, which supplies steel to waterfront and underground infrastructure projects. Besides distribution, Mlion provides customised steel solutions for its clients, setting it apart from other steel distributors which compete on price.
Under EnterpriseSG’s Scale-up SG programme, the firm developed an online business-to-business marketplace for pre-owned steel, where construction companies can dispose of materials after project completion and thus reduce their carbon footprint.
Boosting offshore trade
In much of Singapore’s trading activity, the relevant goods and services never actually pass through the Republic. This is offshore trade, which occurs when foreign trading companies base themselves in or move key business functions to Singapore. As their deals are transacted here, they often tap local companies for services ranging from logistics to legal and finance.
EnterpriseSG has been making a greater effort to bring in trading companies from emerging regions such as Latin America and the Middle East, beyond the “traditional markets” of the United States, China and Japan, said Lee.
In the past year, Colombia oil producer Ecopetrol established 2 subsidiaries in Singapore; the United Arab Emirates’ Abu Dhabi National Oil Company set up 2 trading offices here.
Lee’s vision is to have “every trading company in the world” in Singapore, in order to increase the diversity of its trading network.
Today, there are over 400 global traders in the Republic, including the respective top 10traders in the energy, agri-commodities and metals sectors. Singapore is also the world’s largest natural rubber trading hub, managing about 80 per cent of global trade in natural- rubber.
But while Singapore’s financing, strong legal framework and international talent pool continue to make it an attractive location in which to be based, Lee does not take this for granted: “The worst-case scenario would be if companies don’t want to base themselves out of Singapore to trade. If that happens, we will lose our competitiveness as a trading hub.”
Diversification — whether in offshore trade or exports – is important to maintain resilience in the face of potential threats such as geopolitical risks or increasing nationalistic sentiments, Lee said. “If people decide not to buy from certain companies one day, at least I still have other companies doing trade in Singapore.”
The trading community itself has responded to supply-chain disruptions, the Russia-Ukraine War and volatile oil prices by diverting trade flows, he noted. With a sufficiently diverse network, Singapore can retain trading activity even if destinations change.
“For SMEs (small and medium-sized enterprises), if you’re buying from only one country and selling to one country, you have over-concentration risks. You need to diversify, and we will help you find partners from new markets for you to source from and sell to.”
Exports, re-exports, and transshipment flows
Firms themselves, of course, can increase their exports – and EnterpriseSG wants to help them do so, said Lee. Another aim is for Singapore to capture more re-exports and transhipment flows, embedding itself more deeply into global supply chains.
“There is now a new level of ambition, new clarity on what we need to do,” he said. This includes getting more SMEs onto e-commerce platforms so they can export their goods, connecting them to companies with overseas distribution channels that they can tap, and helping them leverage the Republic’s network of 27 free-trade agreements.
For example, with support from EnterpriseSG, clothes manufacturers Ghim Li Global and Teo Garments were able to export to Europe via German trading company Lidl’s distribution network.
To boost re-exports, Singapore aims to have more regional distribution centres, where companies store and package goods for onward delivery to end-markets.
During the pandemic, companies realised the importance of having a regional distribution centre here: when ports across the world closed, the Port of Singapore remained open, allowing companies to still fulfil orders, said Lee.
“That makes us important, because we are now part of their supply chains. And that’s how we retain our value to the rest of the world.”
Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.