Powerful partnerships and inquisitive treasurers

Siang Chee Chew has worked in treasury his whole career and, like many, fell into it by accident. When he graduated in 2003/2004, the economy wasn’t doing especially well. Like many fresh graduates at the time, his preference was to work for a bank. Since the banks were not really hiring, he ended up joining the treasury of shipping firm BW Group.

After four years there, he moved on to global conglomerate Cargill, first as an FX trader, then as a Treasury Advisor. It was there that he got a front row seat during the 2008 global financial crisis. “I saw how liquidity dried up; I saw how funding between banks dried up and how the Australian commercial paper market dried up,” he explains. “Even the FX market was extremely volatile and funding activities became generally very difficult.”

It was from observing how the senior treasurers in the firm reacted to these challenges that Chew learnt how strong liquidity management ensures survival in tumultuous periods. This understanding has carried through to his later treasury roles, as he has climbed the ranks to become Head of Treasury at JERAGM.

Climbing the corporate ladder

“The turning point in my career came when I joined Cargill. The way Cargill arranges its treasury is truly global, and I found my experience there enriching and very dynamic. I saw the value of treasury as a business unit within a company,” says Chew. He continues: “It was the extent of the operation, the complexity and the geographical coverage of treasury as a business unit, that opened my eyes to what is possible.”

In a later role – Asia Treasurer at Mercuria Energy Trading S.A. – Chew had the opportunity to actually set up an Asia Treasury. “That was fairly early in my career,” he says. “I was involved in setting up regional liquidity structures and long-term funding for the group in Asia. I managed in excess of 30-40 banking relationships and had to understand what each bank was looking for and how to work with numerous banks. This helped significantly in terms of completing my profile as a treasurer.”

In 2016, Chew took a break from the corporate world and worked as an independent consultant. He credits that with giving him the experience of doing business without a big corporate brand backing him, reinforcing the idea that relationships and alignment of interests are key to delivering results. In every role he’s had, Chew has found there to be significant on-the-job learning and plenty of good mentors. “I think I’ve been pretty lucky to have those opportunities,” he says.

Chew joined JERAGM in 2017, with the primary goal of establishing a treasury and trade finance function. “Trade finance is an integral part of commodities trading,” he says. “It is also, in my view, a toolbox within the treasury function. My responsibilities also include FX and interest rates risk management, liquidity and cash management.” He adds that he also looks after banking relationships and is responsible for the firm’s credit rating and the balance sheet management of the group.

The power of partners

For Chew, having witnessed the global financial crisis and then the oil price crash in 2014/2015, another key lesson was the importance of banking relationships. “During the oil crash, I diversified banking relationships to focus on more regional banks, which were relatively less exposed to commodity markets and understood Asia better,” he says. Chew also notes the importance of working with stakeholders that support the liquidity of the firm and refers back to the lessons he learned early on in his career about protecting liquidity.

Chew has noted a recent decrease in globalisation, and a growing trend towards protectionism and nationalism. “It adds to the complexities of doing business,” he says. “The interesting thing is that Asia is not only a big market, but it’s also very diverse in terms of its regulatory and legal environments. It makes doing business more difficult compared to ten-15 years ago.” The result of this, he explains, is that the ‘one size fits all’ banking solution doesn’t work anymore.

Indeed, large international banks are reporting poorer results and are taking a step back from the international market. Chew points out that various European banks, in particular, are cutting their presence in the international market and focusing on their home countries. At the same time more local and regional banks are stepping up to fill some of these spaces. “Are these banks definitely going to fill the shoes of the big international banks? Perhaps not,” he says. “It just means that we have to work with local and regional banks much more, as well as leveraging on the benefits that international banks can offer the business.”

Award-winning treasury

Chew still uses international banks though. JERAGM was recently named Overall Winner of the Best Liquidity Management Solution in the 2019 Adam Smith Awards Asia. For its award-winning solution, JERAGM partnered with J.P. Morgan to embark on a treasury transformation codenamed ‘Project Thunder’.

As the business expanded, JERAGM had accumulated accounts with multiple banks around the world that had incompatible platforms and formats. Key concerns included the inefficient processing of payments and expensive overdraft fees, as well as the absence of a global liquidity management solution and platform.

The solution had to be integrated with JERAGM’s Sun accounting system to drive operational efficiencies, reduce IT costs, and, more importantly, provide scalability as the business continues to expand. Chew undertook a three-phase approach to establish a fully automated global liquidity solution within 12 months from inception.

In the first phase, the company implemented a multi-entity, single-currency notional pool across its Singapore global headquarters and its US entities. The second phase saw JERAGM partnering with J.P. Morgan to establish a multi-entity, multi-currency notional pool for all its key European participation entities, with a hub in Luxembourg. And the third and final phase saw the notional pools in Asia and Europe further integrated via a cross-border follow-the-sun sweeping arrangement to enable a global automated liquidity structure.

The resulting structure provides Chew with one-stop cash visibility over all participating entities’ accounts and balances. The Asia pool fully optimises available cash for payments during Asia operating hours, before sweeping over to the European pool (located in Luxembourg) in support of European time zones, then sweeping the funds back into Asia.

The treasurers of tomorrow

Where the skills of tomorrow’s treasurers are concerned, treasury professionals must be inquisitive in order to ensure a successful career, says Chew. He notes that treasury is so diverse that it’s important to work at understanding both the business and the competition. “As treasury professionals, we need to be versatile, we need to be resourceful, and we need to have intellectual curiosity to understand what’s going on within the firm,” he says.

“Across all the roles I’ve had, I’ve found that you need to have a genuine interest in the world economy and the financial markets – and more indirectly, in the inner workings of the systems,” he says. “That means looking at the risk management systems and the accounting systems; asking how risk is being managed and how the middle office assesses those risks.” He adds that this interest is what allows treasurers to gain insight into how best to approach a range of tasks.

It’s the dynamism of treasury that Chew enjoys, along with how wide the coverage is within the business. But, he notes, this also means that a treasurer’s array of knowledge must be both dynamic and wide. With a Bachelor’s degree in Accounting, Investment Finance and Corporate Finance from the University of Western Australia, and as a member of CPA Australia, Chew has found that his professional qualifications have allowed him to improve communication with other departments, such as tax and accounting. “It allows me to think like an accountant, or a tax specialist. It’s just a much more efficient way of getting results at the end of the day.”

Additionally, when engaging with different stakeholders – both internal and external – such as banks, credit rating agencies and internal credit departments, Chew says that having professional qualifications and knowledge helps facilitate clearer communication, as everyone involved has the technical know-how of the topics in discussion.

The evolving role of the treasurer

The role of the treasurer is becoming more strategic in businesses across the globe. For Chew, this is especially important in a trading house. “How a treasurer gets funding, and then structures the cost of that funding and allocates it back to the traders, actually impacts how the traders then react to market opportunities,” he explains. Treasurers, as a result, need to understand their funding sources and costs, and do more than just react to what the market is saying. They also need to consider the balance sheet composition and how this impacts the credit story for the banks and credit rating agencies.

Chew believes that treasurers also need to think about the most effective way to fund the business to allow it to react when the opportunity comes along. “So there is the external angle when we look at the optionality, the alternatives and the avenues of funding. There is also the internal perspective, where we assess how we can then charge the cost to the business correctly, such that it is then aligned to corporate goals,” he says. “As treasurers, we look at balance sheet structure and the overall cost of capital. All these can have an implicit impact on different parts of the business as well.”

Treasurers must now think more broadly than ever, says Chew. This means adapting to new technologies being provided by fintechs, instead of focusing solely on traditional banks.

Technological treasuries

In terms of how treasury is adapting to rapid technological advancements, Chew notes that whilst these may be impressive, not all of them are applicable to treasury at the moment. “We live in an age where there is no uniform progression in how the technology is applied,” he comments. However, having the curiosity to examine how a particular technology works gives a good foundation for how it can be used in the future. “If you are not aware of the genesis of the technology, it’s very difficult to spot an opportunity to improve a certain process,” he adds.

Blockchain, for example, is looking promising for trade. However, Chew says the move away from globalisation means that the regulatory hurdles are going to be far harder to overcome than technological ones. “When you start to look at the parties involved in commodities trading, many of them are SMEs, including mines and plantation owners. In order for blockchain to work, everyone must adopt it,” he explains. “Additionally, you need some uniformity and agreement as to how the technology is to be applied.” He adds this is especially true in Asia, which is characterised by diverse and complex rules and regulations. “All the technology is there, but it’s the environment that is making it difficult.”

He does have hope that the systems and processes will get there eventually though. But Chew also believes that progress and standardisation must be driven by governments. Indeed, Singapore’s government is working with various banks and technology providers to build the open-source platform, International Chamber of Commerce (ICC) TradeFlow. The ICC and blockchain provider, Perlin, are piloting the platform, but DBS Bank, Trafigura, Infocomm Media Development Authority and Enterprise Singapore are involved as well. The initiative aims to streamline trade flows by eliminating paper-based processes and could potentially reduce end-to-end document transit time from 45 days to 20 days.

Similarly, in October 2019, ICC, Perlin and the Singapore Shipping Association launched the International e-Registry of Ships – a digital blockchain ship registration system, which aims to standardise the ship registration process to reduce costs and fraud.

Knowledge is power

In his spare time, Chew enjoys reading. “I believe that history has a way of repeating itself, and so I like to read history books,” he says, noting that in today’s challenging times he finds knowledge in understanding how particular problems were resolved in the past.

Chew particularly enjoys Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay. “It is about historical financial bubbles, such as the South Sea Bubble and the Tulip Boom,” he says. “There are parallels with how recent crises have evolved, which is very relevant to my work.”

Chew adds: “When I started my career in 2004, oil prices were about US$30. It rose all the way up to US$120 in less than a decade, and it came back down to half that value within five years. Now, it is back at the same levels. Such stories happen all the time. However as we are living through it, we sometimes forget about the lessons that we should have learned before.”

Chew also volunteers with grassroots organisations in Singapore, which he feels allows him to give back to the community whilst keeping him grounded in terms of understanding lives of Singaporeans across different backgrounds. He also has two children, aged ten and 13, and is keen to ensure they learn their Mandarin well. “I think that’s going to be very important in the world that they grow up in,” he concludes.