Singapore has made plans to provide financial support for the country’s marine and offshore engineering companies amid weak oil prices.
Singapore’s Ministry of Trade and Industry announced on Friday the enhancement to IE Singapore’s Internationalisation Finance Scheme (IFS) and the re-introduction of SPRING’s Bridging Loan (BL) for companies in the Marine and Offshore Engineering (M&OE) industry.
According to the ministry, these measures will help address the intensifying financing challenges faced by the M&OE industry in recent months, as it experiences a unique and prolonged slowdown. The schemes aim to facilitate M&OE companies’ access to working capital and financing by helping them finance their operations and bridge short-term cash flow gaps.
Eligible companies will be able to borrow up to S$5 million ($3.5M) each, with a loan tenure of up to six years. The maximum loan quantum for each borrower group is $15 million.
The ministry explained that these one-off measures, developed in consultation with industry players, are targeted at stabilizing the M&OE sector, as it copes with the prolonged weakness in oil prices amidst the slowdown and uncertainty in the global economic environment.
Minister for Trade and Industry (Industry) 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 catalyze about S$1.6 billion of loans over a period of one year.