S$600m fund to help local firms hit the world stage

SINGAPORE — To help companies innovate and break into the international market, the Government will invest S$600 million into a new International Partnership Fund, which will co-invest with Singapore-based firms to encourage them to compete overseas.

Finance Minister Heng Swee Keat stressed in his Budget statement that local enterprises have to “scale up globally”, in order to compete internationally.

“An important opportunity for our companies is the growing market for infrastructure development in emerging economies, particularly in Asia. However, there remain gaps in financial markets for project finance in the region.

“The Government will enhance its schemes to bridge these gaps, by catalysing private finance and sharing risks with financial institutions,” the Minister said.

Mr Heng mentioned Clifford Capital, a project finance company backed by Temasek and set up in 2012 to finance overseas projects by Singapore companies. To date, over S$2.4 billion has been committed, he said.

The Government will enhance trade agency International Enterprise (IE) Singapore’s internationalisation finance scheme to support further growth.

This will be done by co-sharing the default risk of lower quantum non-recourse loans of private cross-border project financing to smaller Singapore-based infrastructure developers.

The Government will also provide support to 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 added.

“Overall these enhancements will enable more companies to take on more overseas projects,” said Mr Heng. Details will be shared at the upcoming Committee of Supply debates by the Ministry for Trade and Industry, he added.

In 2016, IE Singapore supported companies in over 37,000 cases, a 9 per cent increase from 2015.

In a recent Internationalisation Survey by the agency, it noted that more than half of Singapore companies surveyed have made forays into China and Malaysia, generating revenue from these top overseas markets.

Amid the Government’s push for companies to spread their wings abroad, the respondents’ overseas revenue grew 4.2 per cent last year compared with 2015, at a pace faster than total revenue growth (1.3 per cent).

Singapore’s direct investments abroad (DIA) grew 2.5 per cent year-on-year (S$636.8 billion as of end-2015), with Asia accounting for the largest share at 54 per cent. DIA growth in 2015 was driven by Asia, in particular emerging markets such as India, Vietnam and Myanmar. China, Hong Kong, Indonesia and Malaysia remain the top investment destinations within Asia in 2015, according to IE Singapore.