Budget 2017: Businesses to get help in financing when scaling up globally

Budget 2017: Businesses to get help in financing when scaling up globally

A new International Partnership Fund is among the initiatives announced in Budget 2017 that will provide support for local firms to flex their muscles on the global stage, says Finance Minister Heng Swee Keat on Monday (Feb 20).

SINGAPORE: With internationalisation a key engine of growth for local businesses, the Government will continue to dish out support in this area with the roll-out of a new fund and efforts to bridge funding gaps in the world of project finance.

This comes as the Committee on the Future Economy highlighted the need for Singapore to deepen and diversify its international connections, strengthen links with overseas partners and seek opportunities in new markets, as part of its seven strategies to get the economy future-ready.

Speaking in Parliament on Monday (Feb 20), Finance Minister Heng Swee Keat noted that many Singapore-based firms already have a presence in other markets, often with support from International Enterprise (IE) Singapore. In 2016, for instance, IE Singapore supported companies in more than 37,000 cases, a 9 per cent increase from 2015.

To further support local businesses to grow, the Government will continue efforts to develop a smart financing ecosystem, he added.

As such, the Government will commit up to S$600 million in Government capital for a new International Partnership Fund, which will co-invest with Singapore-based firms to help them scale-up and internationalise, Mr Heng said.

Singapore will also enhance schemes to bridge existing gaps in financial markets for project finance, he added. By catalysing private finance and sharing risks with financial institutions, this will help local companies to better tap into the growing market for infrastructure development in emerging economies, particularly in Asia.

Mr Heng raised the example of Clifford Capital, which was founded in 2012 and is 40.5 per cent owned by Temasek Holdings. “We set up Clifford Capital in 2012 to finance overseas projects by Singapore companies. To date, over S$2.4 billion has been committed.”

Moving forward, IE Singapore’s Internationalisation Finance Scheme will be enhanced to help homegrown firms flex their muscles on the global infrastructure scene.

“We will catalyse private cross-border project financing to smaller Singapore-based infrastructure developers, by co-sharing the default risk of lower quantum non-recourse loans. We will also catalyse financing for projects undertaken by larger firms in higher-risk developing markets, by providing a share of the needed sovereign risk insurance coverage,” Mr Heng explained.

Overall, these enhancements will ramp up the ability of local companies to take on more overseas projects, he added.

Source: CNA/sk