Keynote address by DPM and Minister for Trade and Industry at FT Commodities Asia Summit 2024

This article was adapted from my keynote address at the fifth edition of the FT Commodities Asia Summit on 7 November 2024.

When I first spoke at the FT Commodities Asia Summit in 2020, the commodities trading industry was dealing with demand and supply disruptions arising from the COVID-19 pandemic. At that time, several countries had enforced export restrictions and other trading barriers to ensure the availability of essential goods such as food and health supplies locally.

Singapore was one of the few countries that did not impose export controls, even at the height of the pandemic when masks, respirators and vaccines were in short supply.

As the pandemic receded in 2022, the industry was hit by intensifying geopolitical contestation and conflicts.

Tensions between the US and China had already been in play since before the pandemic. They have since intensified with the imposition of subsidies, tariffs and export restrictions, and counter actions by the other party. These measures affect not just the flow of critical minerals, which are needed for strategic sectors such as semiconductors and AI, but also bulk commodities such as iron ore, copper and even soybeans.

This has in turn resulted in the fragmentation of the global trading order, and a reconfiguration of trade flows along geopolitical lines instead of economic logic.

The war between Russia and Ukraine, and conflicts in the Middle East, have also created significant upside risks on commodity prices. Agri-commodities, such as grain and fertilisers, are especially susceptible to the trajectory of the Russia-Ukraine war. Energy commodities, such as oil and gas, have also been affected by trade restrictions imposed on Russia. They are also especially susceptible to an escalation in the conflict in the Middle East.

Amidst these geopolitical tensions and conflicts, the rerouting of trade flows has created friction, but also opened up new opportunities for the region, and for Singapore. Some businesses are relocating their production and supply chains to Southeast Asia, and there is good reason to be optimistic that our region will be at the forefront of the shifting geometry of investment and trade.

According to forecasts by the Boston Consulting Group, ASEAN trade will grow by an average of 3.5% to 5% annually from now to 2031, compared to the global average of 2.5% over the same period. Trends in foreign direct investment (FDI) also show emerging opportunities. Against a 10% decline in Foreign Direct Investment (FDI) flows globally, FDI flows to ASEAN held strong in 2023, and reached a high of US$230 billion.

The International Monetary Fund forecasts that Southeast Asia’s real gross domestic product will grow at an average annual rate of 4.6% from 2025 to 2029, compared to 3.2% for the global economy. This presents opportunities for Singapore to strengthen its role as a regional and global commodity trading hub.

As a small country with no natural resources, it is no small feat that Singapore is one of the largest global commodity trading hubs today. Close to 20% of the world’s energy and metals are traded through Singapore, and we are among the largest trade hubs in agri-commodities. This is in part due to the presence of close to 400 global trading firms in energy, agri-commodities, metals and more.

Our excellent air and sea connectivity has also reinforced our position as a hub for trading and for deal-making.

Going forward, we will continue to support commodity traders to ride the wave of opportunities arising from shifting trade flows within the region.

Reinforcing our trade links

First, amidst the risk of growing fragmentation of global trade, we must continue to strengthen our network of bilateral and regional trade relationships.

Today, we have an extensive network of 27 Free Trade Agreements (FTAs), which gives companies here in Singapore access to a wide range of markets, amounting to more than 85% of global GDP. Earlier this year, we celebrated the 20th?anniversary of the US-Singapore FTA, which has paved the way for a deepening of our bilateral trade and investment ties. We look forward to expanding our cooperation in new areas such as AI, critical technologies and innovation.

Last year, we also signed the China-Singapore FTA Further Upgrade Protocol to deepen our economic cooperation with China. This will enter into force on 31 December 2024. ??

Within ASEAN, Singapore is leading the negotiations on the upgrade of ASEAN Trade in Goods Agreement (ATIGA). Besides including commitments in new areas such as supply chain connectivity, we also hope to enhance trade-in-goods commitments to bolster intra-regional trade flows. We aim to conclude negotiations in the first half of 2025.

We also welcome the substantial conclusion of the ASEAN-China Free Trade Area 3.0 negotiations, which will be finalised and signed next year. This will cover nine new areas, including digital economy, green economy, supply chain connectivity and customs facilitation, and will include the integration of digital infrastructure and electronic payment systems.

These developments will strengthen our existing network of bilateral, regional and plurilateral agreements, and reinforce Singapore as well as ASEAN’s role in regional and global trade flows.

Enhancing trade in green products and services

Second, we will strengthen our ecosystem of sustainable products and services to better tap new opportunities in the green economy.

We will leverage our position as one of the world’s leading energy and chemicals hub to increase our output of sustainable products at Jurong Island, including biofuels, as demand grows. This will in turn reinforce our efforts to grow the trade of biofuel and the base of traders in Singapore.

At the same time, as companies seek to decarbonise their existing operations, there will also be greater demand for carbon credits. We want to leverage our ecosystem and proximity to mature compliance markets to develop carbon credits trading.

Singapore has taken significant steps to develop a robust carbon market and promote the trade of carbon credits.

Our International Carbon Credit Framework, published last year, has become an essential reference point for investors and project developers in Singapore. As a key regional hub for professional services, trading, and financial services, Singapore will be well-positioned to offer services in the origination, financing, and trading of carbon credits, and be an attractive base for high-quality carbon projects. Today, we have 120 carbon services and trading firms, double the number from 2021. This includes the International Emissions Trading Association, which established its regional headquarters here last year.

To grow our carbon markets, we must also develop our expertise in carbon services and trading. To this end, Singapore is setting up the Carbon Markets Academy of Singapore (CMAS), housed within 新加坡南洋理工大学 (NTU), and supported by Enterprise Singapore and the Singapore Economic Development Board (EDB) . Over the next three years, the CMAS will offer executive and postgraduate courses to train 300 professionals to take on new carbon-related job roles in the growing sector. The CMAS will also provide valuable Asia-focused insights and case studies to support the carbon strategies of businesses and policymakers in the region.

Building new digital capabilities

In recent years, the commodity trading sector has been transformed by technologies such as blockchain, artificial intelligence and data analytics.

For example, the use of blockchain allows for the detailed tracking of commodities from source to end-user, ensuring a high level of traceability. This is particularly important and useful for certain commodities such as food, precious metals and energy. The adoption of AI-driven predictive models has enabled the use of vast amounts of historical data and real-time information to forecast commodity prices and demand. This in turn helps traders make informed decisions, optimise supply chains, and manage inventory.

These technologies have transformed commodity trading into a more agile, transparent and efficient industry, enhancing decision-making, reducing risks and allowing traders to respond faster to market changes.

Here in Singapore, we will help our trading companies build up new digital capabilities, including in AI.

For instance, we have launched two AI Centres of Excellence – Barry Callebaut’s first global AI Centre of Excellence and Louis Dreyfus Company’s (LDC) first regional AI hub.

In addition to building a team of AI engineers in Singapore, Barry Callebaut will collaborate with partners such as AI Singapore (AI SG) to pioneer core AI systems and tools to deliver best-in-class products and services for its customers.

LDC, a leading merchant and processor of agricultural goods, will launch its first regional AI hub in Singapore as part of its global commitment to drive value through digital innovation. By integrating AI into its core operations, LDC aims to make faster and smarter decisions, streamline workflows, and unlock new insights to support sustainable and profitable growth across its global commodity supply chains.

We welcome more companies to partner us in their digitalisation journeys and tap our robust AI ecosystem to enhance their operations in Singapore.

Enabling the successful digital transformation of our trading sector will require the right talent. Under our National AI Strategy 2.0, we plan to triple our national pool of AI practitioners to 15,000 in the next three to five years.

I am glad to announce that NTU and Enterprise Singapore are enhancing NTU’s undergraduate International Trading Programme (ITP) to incorporate data analytics modules into the curriculum. Anglo American, Barry Callebaut, JERA Global Markets and Vortexa will be contributing to the development of the new content. I thank these firms for their support.

Conclusion

Even amidst disruptions in trade flows arising from geopolitical tensions and conflicts, Southeast Asia stands to play a key role in the shifting geometry of global trade. In turn, Singapore is well-positioned to facilitate increased trade flows within the ASEAN region and beyond. To reinforce our position as a global commodity trading hub, we must continue to strengthen our network of bilateral and regional trade partnerships and help our companies to tap on new opportunities in the green and digital economy.

Trade has been and will continue to be a key driver of Singapore’s small and open economy. We welcome partners to join us in this exciting new phase of our evolution and growth as a trading hub. Together, we can strengthen Singapore’s role as a vibrant, resilient, and sustainable node in the global trading landscape.