I fully endorse Mr Michael Teng's recommendations (Distressed SMEs need corporate rescue centres; June 14).

Singapore is undergoing major structural reforms to the way local companies are operating. It is not surprising that these structural reforms are creating additional hardship for our local enterprises.

Many government-initiated reforms and changes require new investments and funding which small and medium-sized enterprises have very limited access to.

Our local banks still practise "pawn shop" lending, where hard collateral and guarantees are required as the basis to make credit decisions.

Furthermore, banks also contract or cancel credit facilities when their corporate clients show signs of business struggles or distress.

In the absence of a development bank to assist aspiring local companies to develop, many businesses are forced to shut when they face temporary industry problems or financial problems.

More than 90,000 companies closed in the last two years and unemployment continues to remain high, with most of the unemployed being professionals, managers, executives and technicians.

Some of the larger SMEs employ thousands of workers. If they should fail, many Singaporean families will suffer, and this will lead to undesirable social problems.

To pre-empt this, it makes sense to set up government-initiated corporate rescue centres for SMEs.

The centres can also be independent risk assessors or advisers for the SMEs, and facilitate mediation between them and our local banks to help overcome their temporary financial ailments.

If we continue to make SMEs succeed under their own steam and without help, how can we hope to nurture them and see them grow to become large international companies?

Raymond Koh Bock Swi