Mr Chen Show Mao: To ask the Minister for Trade and Industry (a) whether the Government will revisit its decision not to adopt the recommendation made by the Economic Strategies Committee in 2010 to establish an EXIM Bank for Singapore to plug gaps that Singapore SMEs face in cross-border trade finance and internationalisation finance; and (b) if not, whether the Government has any evidence or indicators to the effect that the structural impediments to Singapore SMEs' access to cross-border trade finance and internationalisation finance have been overcome by existing schemes such as the Internationalisation Finance Scheme.
Written reply by Mr Lim Hng Kiang, Minister for Trade and Industry
The Government had studied various options to meet the gaps in trade and project financing identified by the Economic Strategies Committee (ESC). One of the options studied was the establishment of an EXIM bank. The study had concluded that the gaps in trade financing could be addressed by expanding the suite of trade and internationalisation finance schemes under International Enterprise (IE) Singapore, without the attendant financial and implementation risks that setting up an EXIM bank would entail.
In October 2012, IE launched the Political Risk Insurance Scheme (PRIS) to enable companies to take up Political Risk Insurance for their overseas investments and projects. With this cover, banks are more willing to extend financing to companies undertaking projects in emerging markets.
In addition, as announced at Budget 2013, IE Singapore is working with the Asian Development Bank (ADB) and private insurers to expand the ADB’s Trade Finance Programme for Singapore-based companies. Many companies already benefit from the programme, which currently supports over US$1 billion of trade capacity. This credit enhancement tool will further encourage financial institutions to support Singapore companies that trade in less familiar markets. We expect to launch this by the end of 2013.
These new schemes go above and beyond IE’s existing schemes such as the Loan Insurance Scheme (LIS/LIS+), the Internationalisation Finance (IF) Scheme and the Trade Credit Insurance Scheme (TCIS). Under these schemes, the Government takes on the major share of the risk of up to 75%, with the banks taking up the remainder. This ensures that companies at the margins are more effectively supported.
These schemes have benefitted many SMEs. In 2012, we supported over 1,800 companies covering S$670 million in loans and about $1.2billion in insured turnover. Government will continue to monitor and review the effectiveness of these schemes in addressing the trade and internationalisation needs of our companies.