By Ananya Roy

GETTING credit these days is tough - even tougher for firms with overseas investments where possible political instability or other risks leave lenders even more nervous about granting loans.

That is where a body linked to the World Bank can play a vital role for Singapore companies, local business figures heard at a seminar yesterday.

The bank's political risk insurance arm, the Multilateral Investment Guarantee Agency (Miga), offers insurance to mitigate these risks and encourage banks to lend vital funds to firms with projects in emerging markets. Private sector insurers are unwilling to offer coverage for some countries.

The seminar was held at trade agency IE Singapore's Bugis Junction headquarters in conjunction with Miga.

The 60 Singapore business figures, from industries such as urban infrastructure, education services and agri-commodities trading, were briefed on how the latter could help.

'Singapore is an important source of finance and investments into developing countries throughout the world,' said Mr Nabil Fawaz, Miga's global head for agribusiness, manufacturing, and services. 'That is why Miga is collaborating with IE Singapore to provide potential investors with more information on the current market environment and explain how Miga can work with investors to reduce risk - an issue that is particularly important for potential lenders.'

IE Singapore's deputy director for the international organisations division G. Jayakrishnan said the agency aims to spread the word about political risk insurance (PRI) among Singapore companies.

A 2006 survey found only a handful had used PRI, and half of them faced difficulties since insurers were unwilling to cover risks in some developing countries, he said.

'My view is that by having PRI in this climate, it's going to reduce the cost of borrowing and lend an additional level of comfort to lenders,' Mr Jayakrishnan added.

Mr Fawaz said: 'Now, more than ever, the world needs investors from countries such as Singapore.'

'Developing countries are facing a financing shortfall of US$270 billion (S$415 billion) to US$700 billion this year, and recent gains made in reducing poverty are beginning to erode.'

Miga's insurance coverage includes areas like currency transfer restrictions, sudden changes in taxes or other government policies in host countries, war and civil disturbances with political objectives, and breaches of contract between the investor and host country authorities.

This article was first published in The Straits Times.