Parliamentary Replies

Date: 20 July 2009

Question No. 70 (by Mdm Ho Geok Choo, MP for West Coast GRC):

To ask the Minister for Finance whether the measures funded by drawing on the national reserves, such as the Special Risk Sharing Initiative, have been effective in shoring up our economy.

Reply by Finance Minister Tharman Shanmugaratnam:

The two schemes that have been funded from past reserves are the Jobs Credit scheme and the Special Risk-sharing Initiative (SRI).

To date, the Government has provided more than $1.8 billion of Jobs Credits to employers in March and June this year, and will provide another two tranches of Jobs Credits in September and December.

Feedback to date from employers and the unions on the impact of the Jobs Credit scheme suggests that the scheme has helped reduce job losses among Singaporeans. While it is not possible to determine the precise impact of the scheme, the feedback indicates that the combination of the Jobs Credit Scheme and the SPUR programme has encouraged employers to keep jobs, and to redeploy them when necessary and send them for training.

The Jobs Credit scheme is also part of a significantly expansionary fiscal policy this year, which would have macroeconomic effects. In other words, besides its direct impact on jobs, the funds injected through Jobs Credits are expected to have a multiplier effect on the economy. Again, it is not possible to estimate this effect with precision.

As for the SRI, it has helped to stimulate bank lending to SMEs and ensured that a broader segment of companies have access to credit to sustain their operations. Since its introduction, we have seen a surge in loans provided to enterprises under the various SME financing schemes.

Within the first five months (from February to June 2009), Participating Financial Institutions (PFIs) have registered over 6,600 loans worth about $3.3 billion. This is about eight times the value of loans approved in the same period last year. SMEs have especially benefited from the SRI. More than 90% of the loans approved were granted to SMEs, and these loans accounted for about 70% of the total loan quantum approved. General sentiments from SMEs indicate that the enhancements have been timely, with the increased government risk-sharing playing a significant role in helping SMEs secure loans in this economic climate. The deterioration of the broader commercial lending market has also moderated alongside the stabilisation in global market conditions, with a 0.1 percent decline in business lending in May 2009 over April, compared to a 2.2 percent contraction in November.

The Government will continue to review the effectiveness of these schemes.