Singapore to Give Loans to Help Struggling Oil-Linked CompaniesBy
Economy forecast to grow 1 percent to 1.5 percent this year
More than 25,000 jobs axed in Singapore’s marine industry
Singapore will provide financing support to the country’s marine and offshore engineering companies to help ease some of the liquidity problems the industry has been facing amid weak oil prices.
Companies in that sector will have access to borrow as much as S$5 million ($3.5 million) each for as long as six years, the Ministry of Trade and Industry said in a statement Friday. The maximum amount a borrower group will have is S$15 million, it said. The loans will be available starting next month, it said.
The global center for oil-rig construction for decades, the slowdown in the industry contributed to Singapore’s economy contracting in the third quarter as companies struggle to meet debt obligations and cut jobs. Output in the marine and offshore engineering sector fell 32 percent in the 10 months through October from a year ago, the worst-performing industry in the island city, according to data from the country’s Economic Development Board.
“Some industry consolidation is inevitable as companies restructure and adapt to the challenging environment,” S. Iswaran, Singapore’s minister for trade said in the statement. “These targeted measures aim to help preserve the marine and offshore engineering industry’s core capabilities, which have been built up over the years and will be important to seize future opportunities.”
Companies will also receive as much as S$70 million for project and asset financing support, raised from the current S$30 million, according to the statement.
The city-state’s economy is expected to grow 1 percent to 1.5 percent, down from the previous estimate of as much as 2 percent growth, amid slowdown in global trade and lower energy prices that’s hurting the oil and gas services industry, the trade ministry said Thursday. The economy shrank an annualized 2 percent in the third quarter.
More than two years of tumbling oil prices have wiped about $15 billion from the market value of Keppel Corp., Sembcorp Marine Ltd. and Singapore’s other listed oil-services companies. Since then, at least 25,000 jobs have been axed.
The oil industry may cut spending for a third straight year in 2017 as lower costs kick in and companies continue to grapple with weaker finances because of crude’s slump, the International Energy Agency said in September.