(EnergyAsia, May 27 2010, Thursday) — Singapore has enhanced its nine-year-old Global Trader Programme (GTP) to increase its attractiveness to international commodities traders.

The programme’s administrator, the International Enterprise Singapore (IES) has admitted qualify structured commodity financing (SCF) activities for tax concessions, said Lim Hng Kiang, Minister for Trade and Industry.

To ensure that Singapore remains Asia’s leading global trading hub, the IES said the world’s leading trading companies must continue to anchor their trades here, and Singapore must develop a comprehensive and sophisticated offering of the trade services cluster to support trading growth.

Launched in June 2001, the GTP is an initiative that encourages global trading companies to use Singapore as their regional or global base to conduct activities along the total trade value chain from procurement to distribution.

With Asia increasingly the centre of world trade, Singapore is well positioned to become the internationalisation launch pad for traders venturing beyond their own markets or into Asia.

IES said: “Structured commodity financing (SCF) will be one area that can enable better credit and performance risk management for the commodities sector. From today, SCF activities will be added to the qualifying activities under the GTP.

“SCF is a risk mitigation tool that can transfer the burden faced by counterparties less able to bear the risk of financing, to the SCF entity that is better able to do so. Examples of SCF tools include pre-financing, warehouse financing and project financing.

“Over the years, IE Singapore has enhanced the GTP to capture other supporting services, such as hedging using over-the-counter (OTC) trades, futures commodity exchange trades, Forward Freight Agreements (FFAs) and brokering of physical trades. The SCF will be the latest value-added activity to be included.”

Another 35 companies awarded GTP status

IES said it has awarded 35 companies GTP status while another 37 renewed or extended their GTP status for another five years. These 72 international traders were recognised at the GTA ceremony last week which was held to acknowledge companies that have set up their regional or global offshore trading and marketing headquarters in Singapore under the GTP.

Sunny Verghese, chairman of IE Singapore, said: “Last year, the companies under IE Singapore’s GTP reported a total turnover of US$465 billion. Although this was a drop of 30% from 2008, the sector has nonetheless grown at a compound annual growth rate (CAGR) of 14% through the last five years.

“Offshore trade remains an important contributor to Singapore’s economy, with these companies generating some S$8.9 billion in total business spending and employment of close to 9,500 in 2009.”

This year’s recipients include new entrants Russian energy company Gazprom, South African commodities trader Grindrod, Japanese seafood trader Nippon Suisan as well as home-grown Singapore companies such as general trading companies like Tionale.

Some well-established GTP companies are expanding their operations including Borouge, a leading provider of chemical and plastics solutions, which recently established a regional distribution centre in Singapore in addition to locating strategic functions like finance and treasury management, and risk management in Singapore.

Four companies joined International Trading Institute

Conoco Phillips, Chemoil, Armajaro and WOMAR Tanker Pools have joined the International Trading Institute (ITI) as industry partners, bringing the current list to 20. ITI was launched in 2007 as a tripartite project between IES, the Singapore Management University, and industry partners. The industry partners are part of the advisory board appointed to oversee the strategic development and direction of the institute.

The International Trading Track (ITT) degree specialising in international commodity trading offered by the institute helps widen the talent pool available for the trading sector in Singapore. Since inception, the ITI has seen 120 graduates trained for the trading industry.