The availability of financing is imperative for the development, survival and expansion of a company. Given Singapore’s current backdrop of economic restructuring to boost productivity, many companies require adequate and sustainable financing to carry out long-term investments needed to transform their businesses. In particular, small and medium enterprises (SMEs) often face difficulties in financing their business needs. They tend to be subjected to higher levels of capital rationing due to the existence of informational asymmetries and risks associated to small businesses.
Recognising financing as an important element in the success of the economic restructuring exercise, policymakers have stepped up efforts to help SMEs. This support includes the Micro Loan Programme targeted at newer SMEs that do not have a track record; the Local Enterprise Finance Scheme to help SMEs purchase capital assets required for their business operations; the Co-Investment Programme, aimed to help promising SMEs grow and become globally competitive; and the Internationalisation Finance Scheme, aimed to help companies looking for overseas growth opportunities.
The bank financing environment has also become visibly more vibrant. Banks, both domestic and foreign, have launched new products and services targeted at SMEs. OCBC, for example, has launched a collateral-free loan for start-ups as young as six months old. Meanwhile, other finance providers like venture capitalists are also making their presence felt.
Notwithstanding all the efforts put in by the state and the encouraging developments in the financial markets, there is little result to speak of. National productivity growth for the past few years have been lacklustre, and many SMEs are still struggling to cope with high business cost. Why is there an apparent lack of progress despite having committed so much resource?
To better understand the SME financing landscape in Singapore, identify areas of financing gaps, and explore possible solutions to address those gaps, IPS is holding a CDD with representatives from the public and private sector.
Linus Goh, Head of Global Commercial Banking at OCBC, will make a presentation on the financing landscape in Singapore, and share how OCBC helps SMEs address their financing needs. The discussant, Tan Chin Hwee, Partner at Apollo Global Management, will share his views on SME financing in Singapore from the perspective of a private investor. The discussion amongst the participants of the CDD will follow.
The session will be moderated by Manu Bhaskaran, Adjunct Senior Research Fellow at IPS and Partner and Member of the Board of Centennial Group Inc, a policy advisory group based in Washington, D.C.
Please click here to view the programme.
The series of CDDs focusing on issues confronting the SME sector in Singapore includes: