BY KOH HUI THENG

BUSINESSES face two big challenges - in terms of funding and finding new markets - so the proposed $1.5 billion fund that the Economic Strategies Committee (ESC) has recommended to help home-grown firms grow will give them extra firepower, said two business leaders.

Other suggestions to make Singapore's small and medium- sized enterprises (SMEs) globally competitive include developing an export-import (Exim) bank to help provide financing.

In the ESC report released yesterday, the sub-committee tasked with developing a vibrant SME landscape said an Exim bank-like institution offering risk insurance for trade-finance and overseas investments would plug the mismatch and ease financing difficulties that firms face when trying to expand abroad.

The Government can also seed a $1.5-billion fund with the private sector so SMEs can tap on the money for future growth.

Calling the fund a scholarship to nurture corporate talent, Apex-Pal chief executive Douglas Foo said the war chest would give firms added arsenal in their overseas expansion plans.

"Globalisation is a very expensive process. The fund framework is good. It can take away some of the hurdles of doing business, help firms grow in a faster manner and lift local enterprises (by helping to) make them a global brand name," he explained.

But there must be some criteria for selecting beneficiaries. Having a sustainable business model would be a useful yardstick, as would the company's reputation at home.

"If the firm has proved its mettle here with its own business model, you'll feel more assured about its chances of success abroad," said Mr Foo.

Capital aside, having a network of connections to leverage on is also vital, said Singapore Manufacturers' Federation president, Mr Renny Yeo.

The head of the 2,600-strong group, which includes companies in the metalworks, food and the electronics industries, said home-grown companies often have no export experience.

Having a fund selection panel comprising established entrepreneurs and government members to mentor the chosen companies would aid the chosen companies.

If the fund is disbursed as a loan, Mr Yeo hopes for an accompanying deferred-payment scheme, so the repayments do not hit companies so hard.

He said: "It is no guarantee of success but the chances of success are higher if all parties work together to value-add."

International Enterprise (IE) Singapore's CEO, Mr Chong Lit Cheong, said companies can consider countries in the Middle East, Brazil and Russia, while sub-Sahara Africa, Libya and Panama could offer long-term business potential.

From January to October last year, IE Singapore provided over $1.2 billion worth of financial support to 2,895 SMEs, more than 2008's $0.7 billion in total.

For more my paper stories click here.