Singapore seeks to renew confidence in commodities trading after scandals

FILE PHOTO: Singapore's Trade and Industry Minister Chan Chun Sing speaks before a signing ceremony of ASEAN Agreements at the ASEAN Summit in Singapore November 12, 2018. REUTERS/Edgar Su

SINGAPORE (Reuters) - Singapore wants to improve standards in its commodities trading industry after scandals rocked banks’ confidence in lending to the sector, its trade minister said on Monday.

Several financial scandals in the industry, including allegations of fraud and suspect deals, have surfaced this year after the slump in oil prices sparked by the coronavirus crisis.

Many have involved Singapore - the world’s biggest ship refuelling station and Southeast Asia’s petroleum refining hub - including Hin Leong, once one of Asia’s largest fuel traders.

“We want to uplift standards for the commodities trading industry to increase banking confidence in the industry,” trade minister Chan Chun Sing said at a Financial Times event in Singapore.

Without naming firms, Chan said there had been “isolated cases of mismanagement and defaults” that had reduced banks’ willingness to provide financing to commodity-trading firms.

He said the city-state was partnering with the industry to develop a new code of practice for commodity financing, set to be finalised this quarter, and was also working on a digital trade finance registry.

Commodities trading is a key component 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 embarked on a study to develop carbon trading and other carbon services, which will be completed in the first quarter next year, Chan said.

Reporting by John Geddie; Additional reporting by Florence Tan. Editing by Gerry Doyle