What Companies Can Benefit from Budget 2017?

The Singapore government announced Budget 2017 yesterday.

To me, one of the most interesting new initiatives in the budget is the establishment of the International Partnership Fund (IPF), which will be managed by Temasek Holdings. The S$600 million fund is setup to co-invest with Singapore companies to help them expand overseas and scale up their business.

In addition, the government’s Internationalisation Finance Scheme (IFS) will be enhanced. The scheme is meant to help improve Singapore companies’ access to financing for overseas expansion by providing credit facilities; it helps by letting IE Singapore co-share default risks on the credit facilities with financial institutions. The enhancement of the scheme in Budget 2017 will see it bridge the current gaps in the market for infrastructure-related project financing in the region.

Both the IPF and the enhancement of the IFS would definitely help some companies in Singapore. But, what are the kinds of companies that could benefit directly?

Expanding in the digital space

Companies such as Singapore Press Holdings Limited (SGX: T39) and Singapore Post Limited (SGX: S08), which are increasing their investments in the digital space and its related-infrastructure, could stand to benefit.

In the case of Singapore Post, it needs to build up its regional presence to gain more share in the e-commerce logistics space. Together with a new major investor in Chinese e-commerce heavyweight, Alibaba Holdings, Singapore Post may be able to expand even more aggressively in the region with the help of the government’s new measures.

As for Singapore Press Holdings, the company has been trying to grow its online businesses by investing in foreign online concepts. For instance, one of its current investments is, one of the largest online marketplaces serving Malaysia. Future investments by Singapore Press Holdings in foreign markets could see the company tap on the IPF.

Duplicable businesses

Companies with proven business models in Singapore that are looking to bring their models overseas or grow their foreign presence could also benefit from the IPF and IFS.

In Singapore’s stock market, Breadtalk Group Limited (SGX: 5DA)Jumbo Group Ltd (SGX: 42R), and Q & M Dental Group (Singapore) Limited (SGX: QC7) are examples of companies with strong, profitable businesses in Singapore that have started expanding overseas, most notably into China.

Perhaps with the help of the IPF, they would be able to expand and scale up even more effectively to compete in the enormous Chinese market with greater vigour.

Foolish Summary

Singapore is a country with less than six million consumers. The government understands that Singapore’s small size places a limit on how big a local company can grow before it finds itself in a saturated market. That is why going global is something the government has been pushing local companies to do.

With the new IPF and the enhanced IFS, it becomes easier for local companies to look beyond Singapore and become bona fide multinational corporations.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.