The Ministry of Trade and Industry (MTI) announced yesterday (25 Nov) the enhancement to IE Singapore’s Internationalisation Finance Scheme (IFS) and the reintroduction of SPRING’s Bridging Loan (BL) for companies in the Marine and Offshore Engineering (M&OE) industry. MTI believes that these measures will help to address the intensifying financing challenges faced by the M&OE industry in recent months, as it experiences a prolonged slowdown.
MTI said that the schemes are aimed at facilitating M&OE companies’ access to working capital and financing. The BL will help Singapore-based M&OE companies finance their operations and bridge short-term cash flow gaps. Eligible companies will be able to borrow up to S$5 million each, with a loan tenure of up to six years. The maximum loan quantum for each borrower group is $15 million.
Enhancements will also be made to IE Singapore’s existing IFS, which provides project/asset financing support for companies. The maximum loan quantum will be raised to S$70 million per borrower group from the current S$30 million per borrower group for M&OE companies.
These one-off measures whicj MTI said were developed in consultation with industry players and are targeted at stabilising the M&OE sector, as it copes with the prolonged weakness in oil prices amidst the slowdown and uncertainty in the global economic environment. The Government will take on 70% of the riskshare for both BL and IFS.
Minister for Trade and Industry (Industry) Mr S Iswaran said:
“While there has been a general slowdown in economic growth, the impact has been uneven. The Marine & Offshore Engineering industry, in particular, is facing a deep and prolonged downturn due to cyclical and structural forces. Consequently, the industry’s financing challenges have intensified in recent months. Some industry consolidation is inevitable as companies restructure and adapt to the challenging environment. These targeted measures aim to help preserve the M&OE industry’s core capabilities which have been built up over the years and will be important to seize future opportunities. The Government will continue to monitor the economy closely and stands ready to act if necessary.”
The BL and IFS will be available from December 2016 and could catalyse about S$1.6 billion of loans over a period of one year. Interested companies can apply directly with the Participating Financial Institutions (PFIs).
Responding to MTI’s announcement, former Member of Parliament for Ang Mo Kio GRC, Mr Inderjit Singh said that he is not sure if it is a good idea to limit such loans to just one sector. He added that such limits by sector will divert lending by financial institutions to M&OE companies, while potentially starving other sectors.
“Many sectors are already in deep trouble. How do we select sectors in a general downturn which is affecting many industries. Should not such government assistance be more broad based?” he asked.
MTI said that it has other measures and schemes in place to provide support for our local businesses to tide over the economic slowdown. For instance, SPRING’s SME Working Capital Loan provides SMEs facing cashflow issues with unsecured term loans of up to $300,000 each.Follow us on Social Media
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