SINGAPORE - The Ministry of Trade and Industry has announced measures to address intensifying financial challenges by the Marine and Offshore Engineering industry (M&OE).
The measures include enhancement to International Enterprise (IE) Singapore's finance scheme and the reintroduction of Spring's bridging loan for companies in the sector which is experiencing a prolonged slowdown, a release jointly issued by the MTI, IE Singapore and Spring Singapore stated. Both schemes aim to facilitate the companies access to working capital and financing, the release added.
The bridging loan (BL) scheme will help Singapore-based companies borrow S$5 million each for a tenure of up to six years to finance their operations and bridge short-term cash flow gaps. In addition, IE's existing Internationalisation Finance Scheme (IFS), which provides project/asset financing support for companies, will be enhanced, the release stated.
For BL, the maximum loan quantum for each borrower group will be S$15 million, while for IFS it will be raised to S$70 million per borrower group from the current S$30 million. The government will take on 70 per cent of the riskshare for both BL and IFS.
These one-off measures, developed in consultation with industry players, 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 release added.
Shipyards, contractors, offshore services providers, exploration & production companies, oil & gas equipment and services companies and its suppliers, can apply for these schemes, the release stated.
Minister for Trade and Industry (Industry) Mr S Iswaran had said last month that the governmentis considering steps to help the M&OE sector, which has been hit by the almost two-year rout in oil prices and a slowing economy. Several companies in Singapore, a hub for shipbuilding and offshore support firms, have been affected as a result. Among those, oil services firm Swiber Holdings went into judicial management this month.
"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 release quoted Mr Iswaran as saying. "The government will continue to monitor the economy closely and stands ready to act if necessary," he added.
The measures were welcomed by industry experts.
The Singapore Business Federation said the measures were timely considering the turbulent times for the sector. "It is uncommon for the government to target financial support for a specific sector. That it is doing so now for the M&OE sector reflects the gravity of the situation," said SBF chief executive Mr Ho Meng Kit. But he advised the industry to not view this welcome relief as a silver bullets which would solve the industry's woes.
Mr Eric Ong, head of emerging businesses at OCBC Bank said they were fully supportive of the move. "With this latest Bridging Loan, we hope to once again partner the Government to provide some much-needed relief to businesses in the Marine and Offshore Engineering industries by addressing their immediate financial concerns and helping them ride out the economic downturn."
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.