NON-BANK PRIVATE SECTOR CREDIT EXTENDED TO REGIONAL COUNTRIES (Magnitude)

Dr Lee Tsao Yuan asked the Minister for Trade and Industry what is the magnitude of non-bank private sector credit which has been extended to countries in the region affected by the financial crisis, namely, Indonesia, Malaysia, the Philippines and Thailand.

Mr Lee Yock Suan: Mr Speaker, Sir, we do not have such figures as companies are not required to declare them.

About 60% of Singapore's exports to the region are by MNCs exporting parts and components to meet final demand outside the region. As these are largely intra-company transactions or sales to other MNCs, they do not face problems of non-payment.

Singapore companies that sell to the region for local consumption are facing some credit collection problems due to the current liquidity shortage. Company feedback gathered by TDB suggests that the companies are tackling the problem through various means. Some have extended the credit period. Some were able to convert these debts to equity; while others are exploring counter-trade options. This problem does not pose a significant risk to the Singapore economy.

Dr Lee Tsao Yuan: The Minister mentioned that Singapore companies that trade in the region probably face problems. Do we have an indication as to the extent of the problems that these Singapore companies face? Is it not possible to have some statistical magnitude of this kind of problem so that we know what is the extent of the problem?

Mr Lee Yock Suan: To give an indication, Singapore's exports to the four ASEAN countries, Indonesia, Malaysia, Thailand and the Philippines, last year amounted to S$69 billion. 40% of this is by locals. That amounts to about S$28 billion for the whole year. So for one month it would be about S$2 billion. So you can estimate. It is hard to say how much of this is going to be lost. But it is of that order of magnitude, in terms of credit extended. That is why I said this is not a significant risk to the economy. Another indicator is that Singapore loans to the four ASEAN countries (this includes loans by MNCs which are in Singapore lending to their subsidiaries in the four ASEAN countries) amounted to $3.5 billion. This is probably over a longer term period. So some of it may be due; others may be having problems. But we have no figures to show. On the whole, I think we are all right.