Ms He Ting Ru (Sengkang): Finally, on an EXIM bank. During last year’s debate, during the Second Reading of the Carbon Pricing (Amendment Bill), my Sengkang colleague Assoc Prof Jamus Lim and I both spoke about the need for an EXIM bank and the role that such a bank can play in our efforts to assist our homegrown businesses, in particular our SMEs, internationalise. This is especially important as our domestic economy has natural limits due to our small size. The role of such a bank can be particularly helpful as we move along the great green transition, where we can seek help for our businesses in a changing world where climate concerns take front and centre.
We further noted that while former MTI Minister Lim Hng Kiang expressed reservations about financial and implementation risks that would be involved in setting up an EXIM Bank, apart from the Workers’ Party’s proposals, MTI’s own Economic Strategies Committee has also called for such a bank. Additionally, structuring an EXIM bank well could in fact give us a key competitive advantage.
To address concerns about an EXIM bank turning into something akin to an aid agency, exposures to overseas customers could also be managed by lending to a borrower and having the borrower provide vendor financing to its international customers, as a borrower would be more familiar with the market in which it operates.
Singapore has limited options when it comes to sustainable energy. Our green financing needs would quite naturally be cross-border in nature. Many EXIM banks from China to Thailand and Hungary have also rolled out green financing facilities, also because EXIM banks have proven to have played a role in preventing complete collapse during times of economic crisis. They also provide some level of security to businesses by being the lender on record rather than have naturally higher-risk private banks or financial institutions be lenders through difficult times.
An EXIM bank can also play a part in developing and exporting green standards by being a sustainable lender or a ranger for capital market instruments. This means the EXIM bank would have full direct information about sustainability-related covenants and information on lenders and issuers to which they issue their products or lend funds to. It can then use these to address data challenges that can cause gaps in regional or even global green and sustainability financial markets. This would thus be a way in which Singapore can use to punch above our weight and bringing the world along in the transition to green financing.
Ministry of Trade and Industry
28 February 2023