The 4th Supply Chain Financing Summit was held in Singapore on March 9-10, 2016. It gathered 170 participants from 14 countries around the world to explore a range of topical themes, including developments in SCF on a global basis, as well as specifically in Asia, touching on the impact of FinTech and the notable recent progress around digitization of trade and trade financing. Event was hosted by the ICC Academy and supported by the ICC Banking Commission along with other notable partners. Organizers of the event are exceptionally grateful for support of IE Singapore and Singapore Business federation and Singapore at whole for a warm reception of the first local edition of the Summit. 

        

    The Summit featured the official launch of the “Standard Definitions for Techniques of Supply Chain Finance”, a global, multi-association initiative facilitated by the ICC, aimed at fostering clarity and a more common understanding of Supply Chain Finance techniques across industry groups, markets and stakeholder groups with the express intent of advocating for adoption of the Definitions. Moreover, the Summit addressed regulatory and compliance issues, and included practical “case study” observations on the implementation of Supply Chain Finance Programs and the SWIFT/ICC Bank Payment Obligation.             

    During 2 days and 10 panel discussions, guests of the Summit discussed some of the most challenging developments and promising opportunities in the international trade environment and in supply chain management and finance. The Summit was opened by Ms. Low Yen Ling, Parliamentary Secretary, Ministry of Education & Ministry of Trade and Industry; Mayor, South West CDC, who highlighted the importance of trade financing to the successful conduct of trade, noted the need and opportunity represented by the global trade finance gap, and uniquely, brought together her two portfolios to highlight the importance of training, education and professional certification to the business of trade finance.

    It was noted that Asia is expected to drive the growth of supply chain finance in the years to come and commodity trading is set to become more Asia-centric. Moreover, two thirds of all the commodities that are produced, consumed and traded globally have a direct link to the Asia Pacific Region. With the world’s major supply chains increasingly anchored in Asia, these trends have a very strong hand in shaping the development of regional supply chain finance.          

    Teo Siong Seng, Chairman of ICC Singapore, Chairman of the Singapore Business Federation and Managing Director of Pacific International Lines stressed the importance of the key themes of the Summit to all local and foreign-owned businesses in Singapore. International trading has long been recognised as an important contributor to the growth and evolution of Singapore and the significant multiplier effect back to the rest of the economy. The significance of trade to the Singaporean economy is undeniable, with the value of annual trade in goods and services reaching about 3,5 times the country’s GDP.

    Supply chain financing, it was observed, connects financial transactions to value and as it moves through the supply chain it also potentially encourages collaboration between the buyers and the sellers to optimise working capital for both parties. Supply chain finance has been growing rapidly, although without standardised definitions that can promote consistency in risk and capital treatment of the same product in different countries. Therefore release of the “Standard Definitions for Techniques of Supply Chain Finance” was of increasing importance. Definitions set out in this document build upon several excellent initiatives and documents aiming to develop terminology related to this fast-growing, high-value but still fairly nascent form of financing, which applies equally in support of domestic and international supply chains.

    Release of the document in Singapore was very symbolic due to the fact that Asia is one of the youngest supply chain finance markets and is expected to see the largest and fastest growth. The Asian market is also very likely to have unique needs, when it comes to supply chain finance. Coupled together with existing strength as a business, trade and financial hub, there is clear scope for Singapore to develop into a hub for supply chain financing activities.

    More than 50 speakers during two days discussed many challenges ahead. Fintech panel members agreed that opportunity can be seen in two ways – through collaboration or competition, however, the majority agreed that significant and transformational results can best be achieved through cooperation. It was noted that the BPO is at or close to a tipping point in terms of its potential and in terms of moving toward a critical mass of market adoption, with positive impact anticipated for SMEs, however it is still new and there’s a lack of expertise in the field.

    Guests also discussed the role of ECAs and private credit insurers in facilitating supply chain and international trade finance. The role of the private credit insurers is growing rapidly, especially in Asia, therefore speakers not only discussed the state of ECAs and private risk mitigation, but also shared their experience on risk mitigation models and evolution of market partnerships between various players.

    Among the second day’s highlights were panels and discussions on the internationalisation of the RMB, SCF innovations and the global regulatory environment along with a demonstration of the ICC Academy’s online courses and the newly deployed Learning Management System, or LMS.

    RMB internationalisation has been a sensational story since 2009 when China first allowed RMB as a settlement currency for cross-border trade. Seven years later, much has changed and evolved, therefore speakers gave their observations of the market adoption of the RMB and considered whether the growth of RMB as a trade settlement currency has been a reflection of market demand for trade settlement between offshore RMB hubs in China and other dynamics in play.

    During the last panel discussion speakers were challenged with the question of whether we regulate innovation or is innovation what we create to manage the regulatory expectations facing the banking and financial sector today. It was stressed that there is a significant geographical difference in the way supply chain finance is implemented, and that is one of the main challenges the market has, therefore regulation, and strategies for assuring uniform (or at least, consistent) application, interpretation and compliance are crucial to the evolution of SCF and the trade it enables. Nevertheless, just like with other topics discussed during the Summit, regulation also offers a lot of opportunities even as it presents significant challenges to the industry.

    Delegates and speakers explored the challenge related to next-generation staffing and the development of trade finance-related competencies, given the expected long-term growth in demand for trade and supply chain finance capacity, and the need to quickly address this reality was highlighted. As a global shortage of expertise in trade and supply chain finance expertise takes shape, the ICC Academy will be at the forefront of efforts to attract, train and retain the next generation of experts supporting global trade through traditional trade finance and SCF.

    Leveraging on strengths as Asia’s leading trade and financial hub, Singapore has the ability to shape the development of regional supply chain financing. During both days it was highlighted that having an annual Supply Chain Financing Summit is crucial to set the stage for exchange of ideas, creating new solutions that cater to the evolving needs of the Asia landscape, and ICC Academy will continue to play a central role in this area. 

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