Fri, Jan 08, 2021 – 11:43 AM
CASH-STRAPPED businesses got S$17.4 billion in loans from schemes supported by government agency Enterprise Singapore (ESG), as the Covid-19 downturn hit.
More than 20,000 companies tapped these funds between March and December 2020, outstripping the S$1.3 billion infusion from ESG-supported loans in 2019, Minister for Trade and Industry Chan Chun Sing noted on Friday.
Still, credit pumps to boost cash flow are not indefinite, and must go hand in hand with broader business and industry transformation, the minister’s remarks suggested.
“Obviously, the help schemes will evolve as the economy progressively recovers, so not all the schemes will need to continue in the previous forms,” Mr Chan said, when asked by The Business Times.
“Some of the schemes will progressively wind down as the economy recovers, and we can release the resources to help the other sectors that are more in need.”
As the Covid-19 pandemic battered Singapore’s economy in 2020, the government rolled out a new Temporary Bridging Loan Programme. It also enhanced its Enterprise Financing Scheme for small and medium-sized enterprise working capital loans and trade loans. Under these schemes, the ESG takes on up to 90 per cent of the loan risk.
But Mr Chan stressed a two-pronged approach to recovery, with “defensive” support from stabilisation programmes to be paired with building up new capabilities through digitalisation, scaling up and other business expansion.
“The second part is really the ‘offence’ by which we want to capture new market opportunities,” said the minister.
He added that this tactic could show trade partners not just Singapore’s reputation for efficiency, but also its system’s resilience and reliability.
Mr Chan was speaking during a visit to fuel and lubricant distributor PS Energy’s premises in Supply Chain City, a S$200 million logistics industry facility in Jurong that was officially opened by Prime Minister Lee Hsien Loong in 2017.
Parts of the wholesale trade industry, such as companies dealing in aviation fuel, “would have been severely impacted” by Covid-19 in 2020, the minister said, adding that wholesale trade is among the top beneficiaries of the ESG loan schemes.
“Now having said that, that’s behind us in 2020,” he told reporters. “Talking to most of the players in this sector, they all expect that there will be a rebound in 2021 for most of the sub-sectors in the wholesale trade sector itself.
“So the outlook for the sector continues to be good, and we are cautiously optimistic that 2021 will see a rebound for the sector for most of the commodities traded.”
To capture future growth, Mr Chan urged the industry to adopt new digital capabilities – such as the use of artificial intelligence for pricing mechanisms – to add value on top of a conventional arbitrage role.
Wholesale trade employs some 9 per cent of Singapore’s workforce and makes up about 12 per cent of the economy, according to Ministry of Trade and Industry figures.