Surge in Singapore's re-exports point to improving global trade

Re-exports climbed to a record high last month, signalling better global economic conditions.

SINGAPORE: Re-exports, a barometer for regional trade demand, climbed to a record high last month.

Economists said the higher trade volumes signal better global economic conditions and this means domestic exports are likely to improve going into 2014.

Re-exports refer to foreign goods that are exported from Singapore in the same state as previously imported, without going through further processing.

According to the latest trade data from IE Singapore, re-exports jumped 26.7 per cent in October and has been on the rise for the past six months.

As a result, wholesale traders like Wee Tiong said sales volume over the last few months have been 20 per cent higher than usual.

The trader ships rice, sugar and other commodities to customers in the Philippines, Vietnam and Indonesia. These overseas customers account for 90 per cent of Wee Tiong's business.

"We have more than 50 per cent of our customers from Indonesia. They will prefer to buy from us, anytime, rather than go direct to places like India and Brazil,” said Wee Tiong director Tan Wee Beng.

“Of course, there are other factors. But I think being a Singaporean, (having) the reputation of how Singaporean traders generally are, I think that definitely helps."

The growth in re-exports could also be boosted by Singapore's network of free trade agreements (FTAs).

With other parts of Asia offering a lower manufacturing cost base, Singapore has to tap on other competitive advantages such as preferential trade agreements.

And more regional firms may be attracted to set up trading posts here, to route imports and exports through Singapore.

CIMB Research regional economist Song Seng Wun said: "It's certainly quite true that we do have the growing benefit of FTAs that leads to more businesses being set up in Singapore.

"Many say they'll be using Singapore as an office for them to do their trading, employing admin staff to run an office that oversees operations here in Asia."

Besides traders, the surge in re-export growth will benefit transportation and storage companies, as well as banks.

And analysts said that going into next year, the impact of the higher regional trade flows could trickle down to the broader manufacturing economy, benefiting exporters.

Source: 29th November 2013 Channel News Asia

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Surge in Singapore's re-exports point to improving global trade

Re-exports climbed to a record high last month, signalling better global economic conditions.

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