With the winds of recession turning into a hurricane, Singapore is facing the problem of money flowing overseas. The main reason for this is the fact that for years, Singapore’s economy was based on attracting foreign investments from multi-national companies (MNC). Now that there are problems in their home countries, these MNCs are rushing money back to shore up their finances back home.
This is not surprising. When there is a fire, its natural instinct to save your house first before worrying about other people’s house. This is why this finance crisis is so crippling for an export-driven economy like Singapore’s. All the years of work trying to attract foreign investments seems to have gone down the drain as credit is drying up and companies no longer has money to expand overseas. One of the ways Singapore is fighting this is to pump more money into our own SMEs. If you can’t attract money from others, then you must invest in your own companies, make goods to sell to people overseas.
The idea is sound and correct; but I’m afraid it’s too little, too late. Singapore’s SMEs has been neglected for years Singapore has been busy chasing money from overseas. For years Singapore has been trying to be an education hub, a finance hub, even a regional convention hub. Notice that all 3 are in the services sector. The main problem is that Singapore does not actually make things nowadays. There’s not really a manufacturing sector in Singapore anymore outside the shipping and oil refinery sector.
The recent move of $2.3 billion in loans to help local firms gain access to credit is a move in the right direction, but it will take a lot more than that for the long-neglected SME sector to come back to life. If the Singapore government want the SMEs to save the Singapore economy, they will need to send more help to them.