BUSINESSES VENTURING OVERSEAS (Provision of financing and political risk insurance facilities)

Mr Robert Chua Teck Chew asked the Minister for Finance (a) what support, in terms of low interest rate financing, substantial political risk insurance and reinsurance facilities, the Government intends to provide to local manufacturers, companies and businesses venturing overseas and (b) whether the Government is considering the setting up of an export and import bank (EXIMBANK) to provide such financing and political risk insurance facilities.

Mr Robert Chua Teck Chew (Nominated Member): Sir, let me declare that I am a non-executive director of ECICS Holdings Limited.

Dr Richard Hu Tsu Tau: At present, there are already a number of measures in place to assist our local companies to venture overseas. For example, EDB administers the Local Enterprise Finance Scheme (Overseas) which provides fixed interest rate loans to local companies for acquiring fixed assets for overseas projects. The loan repayment period could stretch up to 10 years with monthly effective interest rate ranging from 5.65% to 6.5%. The Trade Development Board also provides a Market and Investment Development Assistance Scheme which provides a grant to offset the expenses incurred in activities such as feasibility studies, overseas missions and marketing and development trips. There is also the Export Credit Insurance Corporation of Singapore which provides some form of insurance to companies exporting abroad.

The Government has also signed a number of investment Guarantee Agreements with various countries including the ASEAN countries, People's Republic of China, Vietnam and Sri Lanka. This has greatly reduced the political risk faced by local companies when venturing overseas.

The Committee on Promoting Enterprises Overseas, chaired by the Minister of State (Finance), Cdre (Res) Teo Chee Hean, is currently looking into how we can assist local companies to venture overseas. The Committee will consider further financial measures needed to help our companies venture abroad.

Mr Robert Chua Teck Chew: Sir, traders and investors are more concerned about getting insurance against political risk. Has the Ministry considered these special needs? Because, currently, from what I understand, political risk insurance is very small. What is available here is very small and cannot meet the needs of bigger projects overseas.

Will the Minister consider looking at re-insurance or insurance for political risk of a larger quantum?

Dr Richard Hu Tsu Tau: I take it that this would be in addition to the investment guarantee provisions. This is one area that we have not been actively looking at because we are not aware that it is in great demand. But we will certainly consider if there is sufficient interest.