OPENING ADDRESS BY MR CHAN SOO SEN, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT THE LAUNCH OF THE “TRADE CREDIT INSURANCE PROGRAMME”, STRAITS ROOM, FULLERTON HOTEL, 24 OCTOBER 2005, MONDAY, 2.30PM

1. The small size of our domestic market has made it imperative for our companies to explore overseas markets for continued and sustainable business opportunities. Over the years, we have forged and maintained close business linkages with traditional markets such as the US, Europe, China, Japan and Malaysia. Our exports to these markets have grown by 55% over the last decade.

2. While these markets continue to be the mainstay of our exports, more companies are now also recognising the potential of untapped markets. For instance, Singapore’s trade with Middle East and Latin America grew by 33% in the last year. In the coming years, we can expect more companies to venture into less familiar markets in order to seek new opportunities for growth.

3. There will always be elements of uncertainty as companies venture into new markets. One example is the risk of non-payment by buyers. As more companies move towards trading on open account terms to become more competitive, they become vulnerable to payment default.

4. As a good practice, companies should adopt the necessary risk management measures to protect themselves against such uncertainty. Trade credit insurance is one way through which companies can protect themselves against the risk of payment default.

5. So what is trade credit insurance? It is a financial tool that is gaining popularity worldwide. In Europe, it is estimated that more than 40% of European companies are already using trade credit insurance. In the US, while just under 10% of companies use trade credit insurance, increasing numbers of US companies are turning to trade credit insurance to protect themselves from payment default in a volatile global business climate.

6. In Asia, trade credit insurance is rapidly gaining popularity especially with growing export demand. Korea’s export credit agency, the Korean Export Insurance Corporation, saw a 32% increase in its trade credit insurance business last year. Closer to home, in Thailand, the usage of trade credit insurance grew by 7.2% over the last year.

7. The use of trade credit insurance in Singapore is still relatively low. Of our total trade last year, less than 2% of that was credit insured. In order to increase Singapore companies’ access to this useful risk management tool, I am pleased to announce that IE Singapore is launching the new Trade Credit Insurance, or TCI Programme.

8. The TCI Programme helps all Singapore-based companies better manage their risks and thereby enhance their competitiveness in overseas markets. It does this by pooling the demand for trade credit insurance, thereby creating sufficient volume for the participating underwriters to be able to offer attractive premium rates.

9. The TCI Programme is made possible through private-public sector partnership. On this note, I would like to commend the partnership between IE Singapore and the 2 underwriters – ECICS (pronounced as “air-kicks”) and QBE, the 2 banks – DBS Bank and Standard Chartered Bank, as well as the Programme Manager – Marsh Singapore. This private-public sector partnership has jointly developed a product that will help to instil the importance of a risk management mindset among Singapore-based companies. I would therefore like to encourage you to leverage on this product as well as other risk management tools available in the market when you venture overseas. I look forward to a community of more competitive international enterprises in Singapore.