CAPITAL ASSISTANCE SCHEME (Particulars)

[Mr Speaker in the Chair]

Mr Yeo Toon Chia asked the Minister for Trade and Industry what are the criteria for grants under the Capital Assistance Scheme; and if he will outline the general activities of those companies which have been given assistance under the Scheme.

The Minister for Trade and Industry (Mr Goh Chok Tong): Mr Speaker, Sir, the Capital Assistance Scheme was established in 1975 to provide financial assistance to manufacturing companies with specialised projects that can bring economic and technological benefit to Singapore. Under the Scheme, the investor can obtain equity and/or loan capital for its project in Singapore. The Scheme does not provide cash grant.

Applications are considered on a case-by-case basis but the projects must satisfy the following general criteria:

(a) utilise and promote skills and be technologically desirable, or could play an important role in developing essential supporting industries which may be lacking in Singapore; and

(b) have experienced difficulty for one reason or another in raising equity capital or in obtaining loans from commercial sources.

Companies which have been granted assistance under the Scheme include those manufacturing:

Components for constant speed drives for jet engines

Engineering plastic components

Precision lathes

Ferrous castings

Gears for aircraft engines

Automatic lathes

Overhaul and repair of hot sections of aircraft engines

Colour television picture tubes.

Mr Yeo Toon Chia (Ang Mo Kio): Sir, could the Minister give the number of companies, local as well as foreign, which were given grants under the Capital Assistance Scheme?

Mr Goh Chok Tong: Sir, during this period, loans were granted to 16 companies, 10 of which were wholly-owned foreign companies, and the remainder were joint ventures which include Singaporean interests.

Mr Yeo Toon Chia: Sir, a lot of our manufacturers complained about the too stringent and bureaucratic procedures adopted in processing applications for loans under the Capital Assistance Scheme. Would the Minister like to comment on this, and whether he would ask the EDB to review its procedures for application for grants under the Capital Assistance Scheme?

Mr Goh Chok Tong: Mr Speaker, Sir, two criteria have been cited just now. The question is whether we should be liberal in giving out finances under the Scheme when we are fairly confident that some of the com- panies would not be able to return the loans given or to give a return on the equity capital. A certain amount of prudence would, therefore, have to be exercised by the officials in charge to ensure that public funds, whilst being given out to aid industries, are not wasted on projects which do not in their view have a chance to succeed.