The rising role of emerging markets in global trade today has resulted in increased demand for trade finance among Singapore companies.
Yet, relatively lower country and credit ratings, as well as a lack of access to information for credit underwriting are some challenges that those in emerging markets face when accessing financing from banks. On a broader level, Basel III regulations are set to further impact the availability of trade finance.
What is the Trade Facilitation Scheme?
International Enterprise (IE) Singapore’s Trade Facilitation Scheme (TFS) aims to help address market gaps in trade financing for Singapore-based companies in emerging markets.
Under this scheme, IE Singapore enters into risk sharing arrangement with the Asian Development Bank (ADB) and Swiss Re Corporate Solutions, to increase the capacity for credit guarantees to Singapore-based banks for protection against the non-payment risks of overseas issuing banks1. This in turn facilitates Singapore exporters’ receipt of payments for transactions with buyers from emerging markets.
1An issuing bank acts on behalf of the importer and issues letter of credit in favor of the exporter’s bank.
What is the assistance?
This is IE Singapore’s first scheme addressing the non-payment risks by overseas issuing banks through credit guarantees issued by multilateral development banks like the ADB. Targeted at Singapore-based banks, TFS help these banks build linkages with counterparty banks in unfamiliar emerging markets, thereby supporting Singapore companies trade with buyers from emerging markets.
ADB issues credit guarantees under their Trade Finance Programme (ADB-TFP). Backed by ADB’s AAA credit ratings, ADB-TFP works with over 200 partner banks to provide companies with the financial support they need to engage in trade transactions in Asia’s markets such as Bangladesh, Pakistan, and Vietnam.
Singapore companies will benefit from the increase in availability of trade finance, allowing them to explore business opportunities and establish new buyer relationships in emerging markets with greater confidence
Find out more about the Trade Facilitation Scheme in the media release here.
Refer to ADB’s website for more information about ADB-TFP.
How to apply?
The TF Scheme is designed for Singapore-based banks to address their appetite constraints associated with taking on the counterparty risks of banks in emerging markets. No application is required for Singapore-based companies.
Singapore companies may refer to the list of participating Singapore-based banks under the ADB-TFP.
To find out more
Contact IE Singapore’s Customer Service Centre at 1800-IESPORE (1800-437 7673) or +65 6337 6628,
or visit our iAdvisory Centre located at Level 10, Bugis Junction Office Tower (Opening hours – Weekdays: 9am – 6pm).