One of the key focus areas for this year’s budget was to support SMEs, and considering that there are many SMEs in the Offshore & Marine sector, which has also been one of the most affected sectors so far due to macroeconomic conditions, it is perhaps not surprising that help was offered to this segment.

In view of challenging businesses conditions in the Marine and Process sectors, the levy increases for work permit holders will be deferred for one year.

To support viable SMEs that may have cash flow concerns, an SME Working Capital Loan scheme will also be introduced, for loans of up to S$300k per SME. Under this scheme, the government will co-share 50% of the default risk of such loads with participating institutions, to encourage lending to our SMEs.

This loan will be available for three years and could catalyse more than S$2b of loans over this period.

Finally, Finance Minister Heng also quoted an interesting comment from an SME boss, “There is no such thing as a sunset industry; only sunset thinking”, which is perhaps relevant to this sector, amongst others. Maintain NEUTRAL on the oil and gas sector.

Source: OCBC Research - 28 Mar 2016