With trade globalization, supply chains have become increasingly international and interdependent. To facilitate trade and provide necessary trade finance with ease and speed, many government agencies nowadays have dedicated functions and schemes to promote it.
These government-run programs can help businesses access liquidity, no matter whether it’s a large corporate or MSME. Government helps connect the businesses with financial institutions specialized in trade finance. These institutions are knowledgeable about cross-border trade rules and regulations, the credit assessment, and risk framework, as well as techniques to structure trade deals. With operations across the globe, they can also support multi-jurisdiction deals and advise clients on how to better manage the working capital across the markets.
Governments often provide support, incentives, and schemes to encourage financial institutions to provide greater liquidity to businesses, thus meeting businesses’ working capital requirements. Especially for MSMEs and start-ups, government schemes are critical to funding their growth. For example, Enterprise Singapore runs an Enterprise Financing Scheme (EFS) which covers a range of enterprises’ financing needs via programs like Working Capital Loan, Trade Finance Loan, Green project loan, etc.
Besides, international trade finance is a vast field with numerous options and regulations, which may be overwhelming to some. Hence education and training are also crucial to promoting trade and supply chain finance. Governments usually have advisors and seminars available to raise the awareness of different techniques and options in the market to gain access to the working capital, along with the industry standards and regulations.
While major firms often have specialized personnel and treasury to manage this, Government agencies are primarily focused on supporting small to medium-sized businesses that are inexperienced in these fields.
Lastly, to further grow international trade, governments are also focusing on digitalization and sustainable trade, which is the future of trade.
