Parliamentary Replies
Published Date: 15 April 1999

DPM Lee's Reply to Parliamentary Question on Impact on Credit Facilities extended by banks to SMEs

Issues Raised in Parliament

ANSWER TO PARLIAMENTARY QUESTION ON:
Impact on Credit Facilities extended by banks to SMEs

For Parliament Sitting on 15 Apr 1999


Question:

To ask the Deputy Prime Minister whether the Government has assessed its impact on credit facilities which are currently extended by banks to small and medium-sized enterprises.

Answer:

1 Traditionally, MNCs in Singapore have chosen to bank with large international banks with which they have a global banking relationship, while our domestic banks have built a profitable franchise lending to the SMEs.

2 Unlike some other countries, we have not maintained a protected and inefficient sector of domestic companies, insulated from the efficient, export-oriented part of the economy. Instead we have encouraged domestic companies to upgrade and compete, because that is the only way they can offer well-paying jobs to Singaporeans.

3 Since lending by local banks has always been on a commercial basis, any merger of banks resulting from the liberalisation of the banking sector should not adversely affect credit available to SMEs. Indeed SMEs will be best served by strong local banks providing efficient and innovative services.