29 October 2012

IE Singapore launches Political Risk Insurance Scheme to support overseas investments

-Scheme to support up to S$2 billion in overseas investments by Singapore companies 

Singapore - 29 October 2012 - IE Singapore today launched its Political Risk Insurance Scheme (PRIS) to help Singapore-based companies protect their projects and investments from political risk as they internationalise. With this scheme, IE Singapore will potentially support up to S$2 billion worth of overseas investments by Singapore companies over the next three years. The scheme covers up to 50% of the premium for a company's political risk insurance policy. 

The PRIS is IE Singapore's initiative to address concerns of local companies about political instability in overseas markets as they internationalise. This is part of IE Singapore's Global Company Partnership (GCP) to help Singapore companies become globally competitive through addressing their capabilities, market access, manpower and financing needs 

Political risk insurance (PRI) is a useful risk mitigation tool, especially in emerging markets where political risk is a significant challenge for foreign investors. Currently, two-thirds of overseas projects by Singapore companies that IE Singapore works with take place in emerging markets, including China, Southeast Asia and the Middle East. 

PRI will help companies safeguard their overseas investments by covering expropriation acts, currency inconvertibility and political violence. 

Said Mr Teo Eng Cheong, Chief Executive Officer of IE Singapore, "As more Singapore companies venture into emerging markets, they need to factor non-commercial risks into their growth strategies. Our scheme aims to spur more Singapore companies to take up risk mitigation measures as they internationalise, giving them a crucial competitive edge in a rapidly-evolving global risk landscape." 

The global PRI market is on the rise. Foreign investments covered by PRI have grown from 5-8% a decade ago, to 13-15% today. PRI policies issued by the Berne Union reached US$77.5 billion (S$95.3 billion) in 2011, a 46% increase from five years ago. 

Usage of PRI among Singapore companies is relatively lower by comparison. Local companies make up less than 10% of PRI users in Singapore today, mainly due to a lack of awareness among companies about how PRI can be utilised to protect the value of their overseas investments and projects. As a result, many tend to perceive PRI as a costly business expense. 

To address this, IE Singapore will conduct industry outreach to increase the awareness and understanding of PRI among Singapore companies. The scheme complements this effort by lowering the initial cost barrier of the policies, encouraging more companies to consider PRI. 

IE Singapore will be targeting companies involved in infrastructure projects in the energy, water, oil & gas and telecommunications sectors, as well as those with mid- to long-term investments into overseas markets. 

International Enterprise (IE) Singapore is the government agency driving Singapore’s external economy. It promotes international trade and spearheads the overseas growth of Singapore-based companies to grow Globally Competitive Companies. 

Source: IE Singapore