Opening Address by Mr Heng Swee Keat, Minister for Finance, at the China & Singapore Commodity and RMB Summit06 Nov 2015
STRONGER FINANCIAL COOPERATION FOR DEEPER SINGAPORE-CHINA TIES
Bank of China Chairman, Mr Tian Guoli,
IE Singapore Chairman, Mr Seah Moon Ming,
Ladies and gentlemen,
1. Good morning. I am pleased to be here at this inaugural Summit. Let me start with a few words in Mandarin.
Strong Economic and Financial Linkages
7. This year marks the 25th anniversary of the establishment of Singapore-China diplomatic relations. Bilateral economic and trade ties between China and Singapore have flourished over the years. China is now Singapore’s largest trading partner, with bilateral trade reaching US$92 billion in 2014. At the same time, Singapore was China’s largest foreign investor last year. We are confident that collaboration between our two countries will continue to deepen in economic fields and beyond.
8. President Tony Tan Keng Yam visited China in June. Today, we warmly welcome President Xi Jinping for his state visit to Singapore. These visits set an excellent tone for even closer cooperation between China and Singapore in the years ahead. A core pillar of this relationship is financial cooperation. Substantive financial cooperation initiatives were announced at the 12th Joint Council for Bilateral Cooperation meeting last month. In particular, we saw the expansion of existing cross-border RMB channels between China and Singapore. For instance, corporates in Suzhou and Tianjin are now allowed to repatriate the full amount of proceeds raised from bonds issued in Singapore. This provides a stronger incentive for corporates in both cities to raise RMB funds here.
Singapore’s Role in RMB Internationalisation
9. Singapore’s vibrant banking sector and capital markets, as well as strong asset and wealth management capabilities, have allowed us to support the internationalisation of the RMB. Today, Singapore is the largest offshore RMB hub after Hong Kong and offers an extensive range of RMB-denominated products. RMB deposits in Singapore reached RMB 322 billion in June 2015, and RMB is now one of the top five traded currencies in Singapore. We also have a liquid RMB FX futures market, which has achieved over US$19 billion (approximately RMB 120 billion) in total trading turnover since its launch in October 2014.
10. In the capital markets, we have seen strong interest by financial institutions and corporates to tap RMB funding. Outstanding offshore RMB bonds issued in Singapore (also known as “Lion-City” bonds) amounted to approximately RMB 50 billion as of Q2 2015. On the investment front, close to 60% of Singapore’s RQFII quota has been approved for usage by the China Securities Regulatory Commission, with further strong interest in the pipeline.
11. Singapore can continue to play a catalytic role to promote the use of RMB in Southeast Asia and the broader region. Our banks are well-positioned to help Chinese entities navigate their ASEAN expansion, given their deep knowledge of the region honed through an extensive network and years of operation.
12. Singapore is Asia’s key trading hub and home to a vast majority of the world’s largest commodities companies, which generate US$1.3 trillion in annual turnover. The community is well intermediated by interdealer brokers while global banks have also set up their commodity financing and trading desks in Singapore. Furthermore, Singapore’s market infrastructure supports the hedging needs for the community. For example, SGX offers a suite of commodity hedging products,including iron ore, for which it is a global leader. Supported by a strong ecosystem, Singapore provides an effective market place for Chinese companies such as PetroChina, Sinopec, COFCO and Baogang in the operationalisation of key activities, including deal structuring.
Partnership with the Bank of China
13. Bank of China has been in Singapore for almost eight decades and has made significant contributions to our RMB and commodities markets in recent years. These include issuing a Lion City bond worth RMB 3 billion, listing a RMB 5 billion bond on the SGX, as well as being a pioneer market maker for SGX’s RMB futures. On the commodities front, Singapore is Bank of China’s regional hub for commodity financing and forfaiting. Bank of China, Singapore branch was also the first bank in Singapore to complete a Commodity Repo Trade Finance transaction in June this year, and has been actively exploring with SGX the redenomination of commodity contracts into RMB, in areas such as iron ore.
14. In this regard, I am pleased to welcome the establishment of the Bank of China’s Global Commodity Repo Centre and Global Energy Commodity Business Centre in Singapore. These will be centres of excellence for the Group, which will provide knowledge and technical expertise in their respective fields. Such efforts will add to the vibrancy and depth of the commodities trading and financing landscape in Singapore, by enhancing the sophistication of financing products available to the commodity trading community in Singapore.
15. I wish the Bank of China great success in growing its international business in Singapore, and for all participants to have fruitful discussions at today’s Summit. Thank you.
 These include: Noble, Trafigura and Cargill.
 These include: ICAP, GFI Group and Tullet Prebon.
 These include: Standard Chartered Bank, Macquarie and Citibank.
 SGX’s commodities suite covers energy, metals, agriculture (rubber) and freight.
 COFCO is present in Singapore through NobleAgri, its JV with Noble International.