COS 2012 Debates: MOF – Project Finance Company (PFC)

by MP for Aljunied GRC, Chen Show Mao


Sir,

Based on the recommendations of the Economic Strategies Committee (ESC) in 2010, Budget 2012 announced that Temasek has put together a consortium of reputable financial institutions to establish a specialised project finance company (PFC). I would like to understand more specifically how the PFC will benefit our companies.

First, the PFC will aim to have about 80% of its portfolio comprising cross-border projects with significant Singapore-based corporate participation. What does the government mean by “significant Singapore-based corporate participation”? Does “significant participation” mean majority ownership? And how does the government define a “Singapore-based company”? Does it have to be headquartered in Singapore, listed on the SGX or majority-owned by Singaporeans? Is a Singapore subsidiary of a foreign multinational corporation considered a “Singapore-based company”?

I hope that the government will have clear guidelines on this. The ESC had made it very clear what the gap is, and that is to facilitate cross-border financing for our companies that are investing in large-scale projects overseas, because project financing is significantly less developed in Singapore than elsewhere and capabilities of local banks in this area are relatively limited. These concerns do not exist in the case of companies that can access project financing outside Singapore’s financial system, such as the Singapore subsidiary of a foreign multinational corporation.

Second, the ESC highlighted that as foreign export-import banks, or EXIMs, remain largely nationalistic, Singapore companies are currently disadvantaged in this space. In order to help our companies compete on an equal footing, will the PFC adpot a similar approach to the foreign EXIMs? The Singapore government will provide backing to the PFC by guaranteeing its debt. Will the PFC require some form of participation by Singapore companies in every project that it finances?