SINGAPORE (Reuters) – Singapore is keen to improve standards in its commodities trading industry after scandals rocked banks’ confidence in lending to the sector, its commerce minister said on Monday.
Several financial scandals in the industry, including allegations of fraud and suspicious transactions, have surfaced this year after the fall in oil prices caused by the coronavirus crisis.
Many have implicated Singapore – the world’s largest ship refueling station and Southeast Asia’s oil refining hub – including Hin Leong, once one of Asia’s biggest fuel traders.
“We want to raise the standards for the commodity trading industry to increase banks’ confidence in the industry,” Trade Minister Chan Chun Sing said at a Financial Times event in Singapore.
Without naming the companies, Chan said there have been “isolated instances of mismanagement and defaults” that have reduced banks’ willingness to provide funding to commodity trading firms.
He said the city-state was partnering with industry to develop a new code of practice for commodity finance, which is expected to be finalized this quarter, and was also working on a digital trade finance registry.
Commodity trading is a key part of Singapore’s wholesale trade sector, which contributed 17% of the city-state’s gross domestic product in 2019, he added.
Separately, Singapore has also launched a study to develop carbon trading and other carbon-related services, which will be completed in the first quarter of next year, Chan said.
Reporting by John Geddie; Additional reporting by Florence Tan. Editing by Gerry Doyle