The Ministry of Trade and Industry said that it would enhance its Internationalisation Finance Scheme (IFS) and reintroduce a bridging loan system for the industry, to address "intensifying financing challenges faced by the M&OE industry in recent months as it experiences a unique and prolonged slowdown".
The maximum loan available under the IFS will be raised from S$30 million (£17 million) to S$70 million per borrower group, while the reintroduced bridging loan will help M&OE companies with short term cash flow through loans of up to S$5 million over up to six years, the Ministry said. The maximum bridging loan per borrower group will be $15 million, it said.
"These one off measures, developed in consultation with industry players, are targeted at stabilising the M&OE sector, as it copes with the prolonged weakness in oil prices amidst the slowdown and uncertainty in the global economic environment. The government will take on 70% of the risk share for both the bridging loans and IFS," it said.
Minister for trade and industry S Iswaran said: "While there has been a general slowdown in economic growth, the impact has been uneven. The M&OE industry, in particular, is facing a deep and prolonged downturn due to cyclical and structural forces. Consequently, the industry’s financing challenges have intensified in recent months. Some industry consolidation is inevitable as companies restructure and adapt to the challenging environment."
"These targeted measures aim to help preserve the M&OE industry’s core capabilities which have been built up over the years and will be important to seize future opportunities. The government will continue to monitor the economy closely and stands ready to act if necessary," he said.
The finance will be available from December and could involve about S$1.6 billion of loans over a period of one year, the Ministry said.
Singapore-based oil and gas expert Ashley Wright of Pinsent Masons, the law firm behind Out-Law.com said: "Queries have been raised on which companies can apply for the loans. However, this is a considered response from the government to a very difficult time for the industry, and one hopes that these measures are enough to help companies keep on course."
Energy expert Steve Potter, also of Pinsent Masons, said: "These targeted measures will be welcomed by hard pressed industry participants, particularly as Singaporean banks are over exposed to local oil and gas service companies and reluctant to lend at the moment. It also sends a strong signal that Singapore is still very supportive of the industry and may make others think twice before considering moving their regional head quarters to lower cost centres such as Malaysia."