"With our strong regional presence in ASEAN, UOB’s ambition is to be the number one cross border trade bank in the region."

Khong Cai Wei

HEAD OF CHEMICALS, UOB (UNITED OVERSEAS BANK)

June 21, 2024

Could you provide a brief introduction to UOB in Singapore/Southeast Asia?

As the One Bank for ASEAN, we connect businesses to new growth opportunities. With our strong regional presence in ASEAN, UOB’s ambition is to be the number one cross border trade bank in the region. To achieve this, we invested S$800 million over the past eight years to continually drive the adaptation of new digital banking capabilities in regional payments, cash management, cross-border trade, and financial supply chain management (FSCM) platforms to power businesses. 

UOB’s dedicated sectoral specialist teams not only have regional sector expertise, but also local market knowledge. Supported by our robust branch network across ASEAN, we help businesses navigate market complexities and seize growth opportunities.  

Could you provide an overview of UOB’s portfolio and importance of Chemicals within UOB’s corporate financing? 

The Energy and Chemicals (ENC) sector is one of seven prioritised industry sectors in UOB. Specifically, the chemicals portfolio contributes to a third of ENC sector revenue and continues to grow year-on-year. Across the region, we support a clientele of over 1,000 companies in the chemicals sector, and help to connect businesses across the supply chain, from production activities of large chemical manufacturers to commercial sales of chemical products by regional and local chemical distributors to end-use industries. 

Could you elaborate on UOB’s role in supply chain financing and the key trends you observe in the market? 

UOB connects the ecosystem partners of our clients, both domestically and across the region through our network, cash management, trade and FSCM capabilities. Our clients can tap on our deep understanding of the local in-market operating environment, business practices and a strong network of local SMEs, which allows us to provide independent financing to suppliers and buyers in our clients’ ecosystem. We adopt a parameter-based approach to streamline the credit assessment process, which helps expedite onboarding of both suppliers and distributors. As disruptions from geopolitical factors and climate change are expected to persist, there is an increased importance to help our clients enhance the financial robustness of their supply chain to help reduce the impact of potential disruptions through the implementation of supply chain financing solutions.

Could you comment on the demand trends in sustainable financing and UOB’s “Transition Finance Framework”?

To align with national commitments and to incite action from the private sector, UOB has developed a Transition Finance Framework to support companies from the carbon-intensive sectors, such as chemicals, in their decarbonisation efforts through a structured assessment of credentials for financing and relevant disclosures. Our transition finance solutions will support carbon-intensive companies as they pivot their business models towards more climate friendly activities including projects, technological improvement or equipment that contribute to their overall transition plans and emissions reductions. 

We partner closely with companies on their sustainability transformation journeys, to simplify their access to sustainable financing and help them reach their decarbonisation goals. Over the course of 2023, UOB provided S$19.5 billion in sustainable financing, which includes green loans, sustainability-linked loans, sustainable trade finance and transition finance. By the end of 2023, UOB’s total sustainable financing portfolio hit S$44.5 billion, with a year-on-year growth of 78%. 

How would you describe the current environment for the chemicals sector, and its outlook for 2024-2025? 

The Chemicals industry is currently experiencing a downcycle due to the overcapacity in chemicals production and a sluggish post-covid recovery from key demand centers. We expect this challenging environment to persist in the next few years, before we can see some recovery after 2026, as capacity expansion slows down and chemical demand picks up gradually. Despite these challenges, chemicals demand growth in ASEAN will still outpace the rest of the world, as driven by the region’s rapid economic development. 

What are UOB’s priorities and objectives moving forward? 

As the industry develops, UOB remains committed to support our clients. As the One Bank for ASEAN, the long-standing relationships we have with our clients across the region will give us invaluable insight into the chemicals industry. This enables us to partner them along their energy transition journey and support them to maintain healthy and resilient supply chains, by financing their ecosystem partners.   

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