Managing The Crisis

Ensure Access to Working Capital

Second, it is necessary to improve access to working capital. Government has significantly enhanced the Local Enterprise Finance Scheme (LEFS). This includes raising the overall credit line available, increasing the maximum loan quantum per company and widening the scope of the scheme to cover more local enterprises. In addition, EDB and the Productivity & Standards Board (PSB) have been active in helping participating financial institutions obtain a better understanding of the loan applicant's business case.

Feedback indicates that these changes to LEFS have met the needs of local companies. Between April to December 1998, more than $470 million of LEFS loans were approved to local enterprises. In particular, short-term LEFS loans increased by up to 600 per cent during this period, reflecting the short-term cash needs of local companies.

To strengthen the equity base of promising local enterprises (PLEs) and help them enhance their capabilities and growth, EDB will step up the pace of its co-investment in PLEs. It will take up short-term equity stakes of up to 30 per cent in these companies. After an appropriate period, EDB will exit from these investments, for example by selling its shares back to the PLEs. This enhanced co-investment programme will support companies in both the manufacturing and hub services sectors.