Pioneers of Singapore industrialisation

Pioneers of Singapore industrialisation

The furniture industry was established as early as the 1960s and is now a significant contributor to the economy, reports VINCENT WEE
THE furniture industry in Singapore is long-established but little publicised. It has, in fact, been part of Singapore’s economic landscape since the 1960s and was among the pioneers of the country’s industrialisation drive, says International Enterprise Singapore (IE Singapore).

Sitting pretty: Renewed interest in lifestyle and consumer spending in the US and Europe, and new demand created by China and Russia have opened up new avenues for Singapore furniture firms
And furniture continues to be a significant contributor to the economy. IE’s figures show that in 2006, the value of the industry’s trade grew 11 per cent to reach $1.1 billion. According to the Singapore Furniture Industries Council (SFIC), the bulk of the industry’s core business is divided into three primary groups - manufacturing, retail/wholesale, and contract-based work.

Based on the latest available Department of Statistics figures, Singapore has 681 furniture manufacturers employing 6,953 people, and 65 per cent of the 172 larger establishments have subsidiary manufacturing plants in regional countries like China, Indonesia, Malaysia, Thailand and Vietnam. And there are about 580 wholesalers employing 3,572 employees and 828 retailers with 3,870 workers in the domestic market.

Venturing abroad

In recent years, like many other sectors of the economy, the furniture industry has sought its fortunes abroad, with varying degrees of involvement. IE Singapore highlighted the rising affluence and boom in the property and hospitality sectors in high-growth markets such as India and the Middle East as places Singapore furniture companies would be able to extend their global reach.

Renewed interest in lifestyle and consumer spending from major regions like the US and Europe, and new demand created by developing giants like China and Russia have also opened up new avenues for Singapore furniture firms, IE Singapore says. Companies are now also exporting to non-traditional markets as varied as Djibouti, Guadeloupe, Iceland, Slovenia, Malta, Cyprus, Costa Rica, Puerto Rico, Chile, Peru, Bahrain, Israel, Oman, Lebanon, Qatar, Georgia, Morocco, Reunion Island, Guam, Kazakhstan, Mexico, and Ukraine.

Singapore-based companies have set up a commercial presence in over 16 countries including the US, as well as in major Asian markets like Japan, Taiwan, Malaysia and Australia.

Contract furniture companies have also made their mark by winning prestigious overseas projects.

For example, Design Studio secured a contract for Donald Trump’s 1,282-unit condo-hotel project, the Trump International Hotel and Tower in Las Vegas last year, while Cheng Meng is on the approved vendor list for many international five-star hotel operators and has completed several projects in the US. It also outfitted the super luxury Eastern & Oriental Express train, the Grand Shanghai Theatre, the Reethi Rah Resort in the Maldives and Ritz-Carlton Singapore among others.

The need to go overseas has had two driving factors: firstly, because the domestic market is too small; secondly, to lower production costs to better compete on the international stage.

Competitive advantage

Singapore companies have a competitive advantage in that they have earned a strong reputation for producing innovative, well-designed and high-quality furniture which is widely accepted worldwide.

The other big plus in the highly competitive global furniture market is the reliability and efficiency for which Singapore companies are renowned. Singapore-run production facilities are able to provide prompt delivery and service at competitive prices and with little risk of default.

However even with these advantages, the international competition is increasingly becoming intense. Companies are often squeezed between pressures from the top and bottom. At the top end, they compete with long-established European and American manufacturers who churn out high quality original design furniture.

In the mid to lower-end markets, they have to fight aggressive price competition from emerging markets with cheap production like China and Vietnam.

IE Singapore works with private sector organisations like SFIC and other government agencies to help Singapore companies go abroad.

Furniture however, is different from most consumer goods in that it is bulky and samples cannot be easily transported to show potential customers. Thus, international trade shows are the main medium by which furniture companies can show their products and meet buyers.

IE Singapore also provides other support by working with SFIC to identify suitable manufacturing facilities and locations within South-east Asia for them. Other avenues like SFIC’s Young Exporter’s Programme help to educate new exporters as they expand regionally.

Source : Business Times - 13 Dec 2007

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S’pore Punggol Town raises funds for community club

S’pore Punggol Town raises funds for community club

By Lynda Hong

SINGAPORE: Punggol Town is taking a step closer towards getting a community club.

It has raised at least S$90,000 at its inaugural Fund Raising Golf Tournament, which was held at the Raffles Country Club on Thursday.

The fundraising event was flagged off by Defence Minister Teo Chee Hean, who is also the MP for Pasir Ris-Punggol GRC.

Nearly 150 golfers took part in the event. They include corporate partners and fellow constituents.

The Punggol 21 Community Club Building Fund hopes to raise S$2 million.

Source : Channel NewsAsia - 13 Dec 2007

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28,000 healthcare staff can benefit from re-employment- Singapore

28,000 healthcare staff can benefit from re-employment- Singapore

By S Ramesh
SINGAPORE: Over 28,000 staff at the National Healthcare Group and Singapore Health Services can look forward to being re-employed in the same or a different job when they reach the age of 62, if they have a good work record and are in good health.

The two healthcare clusters say they are not waiting till 2012 – the year when the re-employment legislation kicks in – to tap on the silver workforce.

Besides re-employment, there are also plans to do more for the older workers to make their workplace more conducive.

In the case of Alexandra Hospital, it has launched a Workplace Health Promotion Programme to enhance employability through better health and lifestyle management.

Last September, SingHealth launched the Silver Connection movement to engage its mature staff.

The two healthcare groups have also held workshops on financial planning and setting of personal goals for their workers.

Source : Channel NewsAsia - 13 Dec 2007

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Bosch to build $92m regional HQ in S’pore

Bosch to build $92m regional HQ in S’pore

By Chua Hian Hou
COST SAVER: The new complex will use 25 per cent less energy than a similar-sized building without special features. — PHOTO: BOSCH

GERMAN industrial and consumer goods giant Robert Bosch is building a new, environmentally friendly $92 million regional headquarters (HQ) building in Singapore.
Bosch’s new 225,000 sq ft site, comprising seven floors of office space and two underground carpark levels, is located near Raffles Institution in Bishan. The building is expected to be ready by 2009.

The company had decided to build the new building, said its South-east Asian president Cem Peksaglam, to ‘create more space for growth and… consolidate our different sites in Singapore at one location’.

Bosch employs 500 staff in Singapore - up from 200 employees in 2005 - located in eight locations across the island.

When the new site is completed, the company will relocate all its staff to this place for ’synergy and easier administration’, said Mr Peksaglam.

In the last five years, Bosch had seen ‘double-digit’ sales growth in South-east Asia and he is confident about the company’s regional prospects in the near future.

It will be hiring but gradually, said Mr Peksaglam. Given the situation, Bosch will look at renting out some of the unused space - the new site has enough space for 1,200 workers - in the short run. It expects to use the entire building for itself eventually.

The building will also be a showcase of green technologies such as double glass windows and solar sensors, which will help Bosch to use 25 per cent less energy compared with a similar-sized building without such features.

Guests at the ground-breaking ceremony yesterday include Economic Development Board (EDB) chairman Lim Siong Guan and German Ambassador to Singapore Folkmar Stoecker.

It ‘means a lot that a company like Bosch believes in Singapore’, said Mr Lim.

He said that Bosch’s continued investment is a strong endorsement of Singapore and that the EDB is ‘always ready to help wherever we can’.

Bosch maintains a computer data centre that serves 200 locations in the region.

The Republic is also Bosch’s information technology research and development centre, as well as its regional headquarters for corporate research.

Source : Straits Times - 13 Dec 2007

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S’pore Boon Lay site draws lukewarm response

S’pore Boon Lay site draws lukewarm response

A WEAK response to a residential site tender at Lakeside has caught the industry by surprise - given that suburban centres have been touted as the next property hot zones.
The 99-year leasehold site bounded by Boon Lay Way and Lakeside Drive had attracted only two bids by the time of the tender’s close yesterday, said the Urban Redevelopment Authority (URA).

The top bid was put in by Frasers Centrepoint at $205.6 million - or $248 per sq ft per plot ratio (psf ppr) - for the 236,731 sq ft site. First Capital Holdings put in the other bid at $191 million or $230 psf ppr.

The site, with a gross floor area of 828,552 sq ft, is just five minutes from the Lakeside MRT station, with views of the Chinese Gardens and Japanese Gardens next door.

With its convenient location and future URA plans for Jurong East to become a regional hub for the west of Singapore, ‘it is surprising that there were so few bids’, said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong.

A possible reason for the lukewarm response could be rising building costs, he said. ‘For mass market homes, if construction costs escalate, the profit margin shrinks and the project becomes very unattractive.’

CBRE Research executive director Li Hiaw Ho said the new site is likely to break even at about $600 psf, and may sell for between $700 psf and $800 psf.
Source : Straits Times - 13 Dec 2007

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US real estate fund pays $205m for Apollo Centre - Singapore

US real estate fund pays $205m for Apollo Centre - Singapore

Deal reaffirms confidence in Singapore’s office market

By Fiona Chan, Property Reporter
PROMISING SITE: The Apollo Centre is not a prime Grade A building, but it offers tremendous potential in terms of increasing its lettable area. When refurbished, it could command rent of at least $10 psf.

APOLLO Centre on Havelock Road has been sold to a United States fund manager for $205 million.
This higher-than-expected price comes as a relief to property watchers, who say it is a strong sign that foreign investors remain confident in the Singapore office market despite the US sub-prime mortgage crisis.

Marketing agent Knight Frank launched the seven-storey office building near Chinatown for sale in September, hoping to get at least $200 million.

The final sale price, paid by US real estate fund manager AEW Capital Management, works out to $1,378 per sq ft (psf) of net lettable area.

This is a ‘fair price’, considering that ‘in today’s market, prime offices about 10 minutes’ walk from this building are going at close to $3,000 psf’, said Mr Donald Han, the managing director of property consultancy Cushman & Wakefield.

At nearby Chinatown Point, office prices are already hovering around $1,300 psf, he added.

SILVER LINING
The sale is ‘certainly very good news now, when just one or two months ago, the market was trying to find its footing after the backlash from the sub-prime crisis. It’s refreshing to know foreigners have started to buy portfolios in Singapore.’ - MR HAN, of Cushman & Wakefield

The sale of Apollo Centre is significant as it shows that foreign buyers are starting to look outside the prime Central Business District (CBD) for good deals, said Knight Frank’s executive director, Mr Foo Suan Peng.

Most high-profile office sales in recent months have been of gleaming ‘trophy’ office buildings in the heart of the CBD.

As office prices skyrocket amid the space crunch, however, older properties on the CBD fringe are starting to look more attractive, even to foreigners who might not be familiar with Singapore’s office market.

‘Local buyers usually don’t mind properties that are a bit out of the CBD, but a lot of overseas investors concentrate on prime Grade A buildings in the CBD,’ said Mr Foo.

The 99-year leasehold Apollo Centre, which has 75 years left on its lease, is not a prime Grade A office building. It returns rents of about $8 psf, compared with about $18 psf for spanking new One George Street across the road, according to Mr Han.

Apollo Centre, however, has ‘tremendous’ potential in terms of increasing its lettable area, he said. When refurbished, it could command rents of at least $10 psf, he added.

The sale is ‘certainly very good news now, when just one or two months ago, the market was trying to find its footing after the backlash from the US sub-prime crisis’, he said.

‘It’s refreshing to know that foreigners, such as AEW, YTL and even Jackie Chan, have started to buy portfolios in Singapore.’

Mr Han was referring to Malaysia’s YTL Corp, which last month bought Westwood Apartments on Orchard Boulevard for a record price, and Chan’s recent purchase of 1 Neil Road.

AEW, which set up an office in Singapore in April, is also believed to have bought a row of conservation shophouses at Murray Terrace, off Maxwell Road. It is understood that the fund manager is looking to buy properties in Bangkok, Kuala Lumpur and Hong Kong.

Most of the tenants at Apollo Centre, within walking distance of the Subordinate Courts, are law firms.
Source : Straits Times - 13 Dec 2007

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New unlimited travel pass for visitors - Singapore

New unlimited travel pass for visitors - Singapore

A one-day pass for buses and trains will cost $18 with $10 refundable; also available: two-day and three-day versions

By Maria Almenoar

TOURISTS here will get to enjoy unlimited rides on public buses and trains with a new travel pass that went on sale yesterday.
Three versions of the Singapore Tourist Pass are available at eight MRT stations, including Changi Airport, Raffles Place, Chinatown and HarbourFront.

They go for $18 for a one-day pass; $26 for a two-day pass; and $34 for a three-day pass. All allow unlimited travel on Singapore’s Mass Rapid Transit (MRT) and Light Rapid Transit (LRT) rail systems and public buses. The price of each card includes a $10 deposit, which is refunded if returned within five days from the date of issue.

The passes can be returned at the eight MRT stations where they are sold.

If they stay longer, visitors can use the card as a standard ez-link card - like all other public transport users - and top up its value at any TransitLink ticket office, or passenger service counter at MRT stations, to pay for each ride.

Together with the tourist pass, visitors can also pick up a new travel guide with information on places of interest and how to get there by bus or train.
The pass and guide are long overdue, say regular visitors to Singapore like Japanese housewife Mariko Yamanaka, 41, who is based in New Delhi. She visits Singapore every three months to see friends and uses the trains and buses to get around.

‘I don’t have to worry about how to operate the ticket machine at the station, figure out the fare, stand in line and get the $1 deposit every time. And for tourists who are not good in English, this card will be especially useful,’ she said.

Similar day-passes have been available for years to travellers in cities like Hong Kong, London and Paris.

Singapore’s first attempt at the travel pass was in 2003. Known as the Singapore Visitors Card, the pass cost $30 for a stored value of $10 and gave users discounts at popular tourist attractions and retail outlets.

About 5,000 of those cards were sold, but the initiative was discontinued in 2005.

The new card is backed by EZ-Link - a subsidiary of the Land Transport Authority (LTA) which sells and manages the cards - the Singapore Tourism Board (STB) and LTA. They decided to have another go at it this year, largely because of tourist feedback.

About 3,000 visitors here every month ask STB about getting around the country using public transport. And about the same number of adult ez-link cards are sold every day.

Said EZ-Link senior vice-president (business and technology) Nicholas Lee: ‘Tourists said they had to fumble for change in local currency to top up their card… that’s why the pass element is incorporated, so that they don’t have to worry about that.

‘With the projected increase in tourist arrivals to Singapore, we want to have a product to cater to the needs of tourists.’

Singapore expects 10.2 million tourists this year and the target is for 17 million visitors a year by 2015.

So far, 35,000 cards are ready for sale. Aside from getting around, the cards also offer visitors discounts at various places like the Singapore Zoo, local nightspot Zouk and restaurants.

Down the road, tourists may be able to order the cards online and pick them up when they arrive.

Hotels are also hoping to offer the cards to their guests. Orchard Hotel general manager Rene Teuscher said: ‘It will definitely make it more convenient for them and we’d be happy to sell it in our hotel.’

Source : Straits Times - 13 Dec 2007

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Singapore Apollo Centre sold for $205m

Singapore Apollo Centre sold for $205m

Buyer AEW intending to refurbish it
By UMA SHANKARI
US PROPERTY fund manager AEW Capital Management has bought Apollo Centre for $205 million, or $1,378 per sq ft (psf) of lettable floor area, the property firm that brokered the deal said yesterday.

Drawing keen interest: Apollo Centre, a seven-storey commercial building with shops on the basement, first and second storeys and offices on the upper floors, was put up for sale in September. The tender closed on Oct 16. Several parties were interested and negotiations went on for several weeks
Apollo Centre, in Havelock Road, is a seven-storey commercial building with shops on the basement, first and second storeys and offices on the upper floors.

It sits on 54,600 sq ft of land and has a gross floor area of around 217,500 sq ft. The lettable floor area is 148,700 sq ft. It is on a 99-year lease, with 75 years left.

Knight Frank, which marketed the building, said the purchase shows continued investor confidence in the Singapore commercial market since the US sub-prime crisis.

Apollo Centre was sold by Singapore Exchange-listed Apollo Enterprises. The company also owns and manages Furama City Centre Singapore and Furama RiverFront Singapore.

Knight Frank put up the property for sale in September and the tender closed on Oct 16. Several parties were interested and negotiations went on for several weeks after, said Knight Frank executive director Foo Suan Peng.

AEW and its affiliates manage more than US$41 billion of real estate assets and securities in North America, Europe and Asia. The group set up an office in Singapore in April as a base from which to expand in the region. AEW intends to refurbish Apollo Centre, BT understands.

Right now, office rents in the area are about $8.00 psf per month (psf pm) while retail rents range from $8.00-$8.50 psf pm.

Source : Business Times - 13 Dec 2007

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Singapore Sentosa Cove condo plot draws 3 bids

Singapore Sentosa Cove condo plot draws 3 bids

Tender for Boon Lay condo site attracts just 2 bids that are below expectations
By KALPANA RASHIWALA

A TENDER for the last condo plot at Sentosa Cove - named The Pinnacle Collection - is said to have attracted three bids when it closed yesterday, including a joint bid by Ho Bee Investment and Malaysia’s IOI Group. The other two bidders are said to include foreign players/funds.
Sentosa Cove Pte Ltd (SCPL) declined to reveal the names of the bidders or their bid prices ahead of an evaluation process that will be based on both design concept and price. ‘We expect the site to be awarded by early January,’ an SCPL spokeswoman said.

The plum 99-year leasehold condo site, gracing the entrance to Sentosa Cove’s marina basin, has a reserve price of $963.8 million or $1,600 psf per plot ratio, although top bids were expected to be above $2,000 psf, which would suggest an absolute amount of at least $1.2 billion. However, the deal clincher for the winning bidder may be its design concept, rather than how much it bid, market watchers observed.

The 99-year leasehold site can be developed into a 20-storey condo (this will make it the tallest project in the upscale waterfront housing precinct) with up to 357 apartments.

Over in the Jurong/Boon Lay area, an Urban Redevelopment Authority tender for a condo site next to Lakeside MRT Station drew just two bids - $205.56 million or $248 psf per plot ratio from Frasers Centrepoint and $191 million or $230.44 psf ppr from GuocoLand.

Both bids are below earlier market expectations of about $300 to $375 psf ppr indicated in October. Nonetheless, market watchers expect the site to be awarded. CB Richard Ellis observed that the higher bid yesterday of $248 psf ppr is 26 per cent above the $197 psf ppr achieved for The Lakeshore condo plot back in August 2002.

A spokeswoman for Frasers Centrepoint described the group’s bid price as ‘conservative’, adding that it would reflect a breakeven cost of about $550 psf. ‘We would be looking at an average selling price of at least $700 psf,’ she added.

The group’s scheme is for an 18-storey development comprising three blocks, with a total of 600-plus apartments based on an average size of 1,300 sq ft. ‘We’re bullish about the mid-market and upgrader segment in 2008,’ she added.

CBRE said that units at The Lakeshore near the latest site are being marketed at around $800 psf by its developer. In the subsale market, Lakeshore units have changed hands in recent months at $650-750 psf, while units at The Centris, one MRT station away, have been changing hands lately at $600-650 psf.
Source : Business Times - 13 Dec 2007

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Singapore SLA rents out 3 properties for office use, offers 2 more

Singapore SLA rents out 3 properties for office use, offers 2 more

Successful bid for former police HQ in Pearl’s Hill Terrace is 40% above guide
By ARTHUR SIM

THE Singapore Land Authority (SLA) has awarded three state-owned properties for rental through a public tender. And the successful bids were 17-40 per cent above the guide rents it had set.

New life: Businessman Tan Yong Boon plans to sub-let units in the ex-police HQ to new start-up companies and those that have been forced out of their existing offices
The former Police Headquarters at 195 Pearl’s Hill Terrace, the former Haig Boy’s School in Mountbatten Road and a former office and showroom at 169 Sims Avenue went for monthly rents of $53,501, $139,003, and $7,700 respectively.

All three sites are for office use.

The top bid of $53,501 for the Pearl’s Hill Terrace property works out to almost 40 per cent more than the guide rent.

The property, which has a gross floor area (GFA) of 145,431.2 square feet cost roughly $2.70 per square foot per month (psf pm).

Businessman Tan Yong Boon, who won the tender, said: ‘We plan to sub-let units to new start-up companies and those who have been forced out of their existing offices.’

The Mountbatten Road property, which has an estimated GFA of 96,039.9 sq ft, fetched a top bid of $116,000 or 20 per cent above the guide rent. This works out to $0.70 psf pm.

Ritzland Investment, which won the tender, plans to pump in $2 million to refurbish the property.

The winning bid of $7,700 psf pm for the Sims Avenue property, with a GFA of 4,151.6 sq ft, was 17 per cent above SLA’s guide rent and works out to $0.54 psf pm.

It was awarded to businessman Koh Teck Lee who plans to sub-let the units within three months after a $300,000 refurbishment.

A fourth property, the former Queenstown Neighbourhood Police Station, with a GFA of 12,780 sq ft, drew a top bid of $55,888 - more than double the guide rent. The bids for this property are still being evaluated.

SLA also said that two more sites have been put up for public tender.

The first, the former Upper Aljunied Technical School at 102 Upper Aljunied Road, was first put up for tender in October for short-term office use. There were no takers.

The site, with GFA of 83,118.9 sq ft, has now been re-designated for office and mixed use.

The second site is the former Alexandra fire station at 55 Queensway. Also for office and mixed use, the property has a GFA of 34,548.9 sq ft.

Source : Business Times - 13 Dec 2007

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Corporate abodes with style - Singapore

Corporate abodes with style - Singapore

Big names in professional services believe an address in the Marina Bay area will boost accessibility and branding, writes CLARISSA TAN

It’s not only banks that want to be located in a financial centre. The big professional services - law, auditing, management consultancy - are all hustling to Marina Bay, the new downtown.

Prestigious: Brand new One Raffles Quay houses international lenders UBS, Credit Suisse and Societe Generale and is also home to auditor Ernst & Young and law firm Norton Rose
The suits hobnobbing there will not only be pin-striped bankers, but also legal advisers and accountants. The spanking new One Raffles Quay, for instance, which houses banks UBS, Credit Suisse and Societe Generale, is also home to auditor Ernst & Young and law firm Norton Rose.

‘Being located in the centre of the business district puts us where we can have our finger on the pulse of business activity,’ said Ong Yew Huat, country managing partner of Ernst & Young. The firm occupies eight levels of the 50 in the North Tower of One Raffles Quay.

He pointed out that the heart of Singapore’s business district was shifting southward, towards the bay area from Raffles Place, as the Marina Bay district develops. ‘We welcome and look forward to more offices, shops and other developments being set up nearby, which will inject colour and life to the area,’ he said.

One Raffles Quay was built by the same developers now constructing another massive project called the Marina Bay Financial Centre. Together, the two projects will double the supply of premium office space in the central business district.

Many are expecting the new buildings, which will stand alongside other coming attractions such as the Sands casino and the Singapore Flyer, to further energise Singapore’s business district, which has traditionally referred only to the area around Raffles Place.

‘One of the benefits to Allen & Gledhill is the accessibility to clients located in the area,’ said the law firm, which is located at One Marina Boulevard. ‘It is also convenient for employees, as there is easy access to various modes of transportation, shops and food outlets.’

As it is, some firms in and around Marina Bay are expanding.

Legal firm Drew & Napier, for instance, said it will require more space within Ocean Towers, its current abode right next to Raffles Place MRT station.

‘We will remain in Ocean Towers till 2010. Accordingly, our priority over the next couple of years is to secure more office space, if possible, in Ocean Towers,’ it said. The firm added that it intends to remain in the city area should it relocate. Even in the age of the internet and mobile technology, the firms say that geographical location is still of the utmost importance.

‘There is no substitute for meeting face-to-face with our clients,’ said Ernst & Young’s Mr Ong.

Said Allen & Gledhill: ‘Even with the availability of various lines of communication, it is important to us to meet our clients. Accessibility and convenience for our clients are therefore important considerations.’

There’s another reason why companies are choosing the new downtown - image.

Besides the posh offices and their plush interiors, the larger Marina Bay area is also home to the historic Fullerton Hotel, the old Supreme Court and several national theatres and museums. These lend the area a certain high-mindedness and sense of the serieux. Simply put, for a top law firm, being located next to a fast-food joint on Orchard Road just wouldn’t have the same gravitas.

Norton Rose’s chief operating officer in Asia, Bob Ikin, said the legal firm’s location ‘enhances brand visibility, as One Raffles Quay is a very new and prestigious building’.

But it is not just the law and auditing firms that are gravitating to Marina Bay, but also Sophis, a software developer and service provider to the treasury, capital and commodity markets. As such, it’s natural that it would be in the financial centre. But besides the obvious need to be close to its business partners, the company also had to think about its brand, said Nigel John Ford, business development director in Asia.

‘Sophis takes particular care in choosing the right office address for its operations around the world,’ he said. ‘In New York we are on Broadway, in London we are in Gracechurch Street, and in Hong Kong we are in International Finance Centre 2. Marina Bay Financial Centre just has to be the address for our business in Singapore.’

For prospective customers, ‘it shows we have discerning standards and reveals something of our corporate culture and brand,’ he said. The company officially opened its Singapore office - on the 25th floor of One Raffles Quay’s North Tower - in February.

For Ernst & Young’s Mr Ong, ‘the choice of a top-notch building and state-of-the-art work facilities reflects our attitude towards our people’.

Besides accessibility and image, some firms said they chose the Marina Bay area precisely because they could be somewhere else, quickly.

Management consultant McKinsey & Company, which is located at Centennial Tower, wanted to be near the city’s main road arteries.

‘Being a consultant often means being on the road travelling to and from client meetings,’ said Chinta Bhagat, head of McKinsey in Singapore. ‘We also fly in experts and consultants from our other global offices. Marina Bay is an excellent location with doorstep access to top hotels, restaurants and other facilities, and particularly rapid access to Changi airport.

‘The people you see running up the boarding ramp just before they close the gate, they’re unfortunately usually us,’ he said.

Source : Business Times - 13 Dec 2007

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S’pore New CPF interest rates to kick off on Jan 1

S’pore New CPF interest rates to kick off on Jan 1
FROM Jan 1, 2008, CPF members will earn higher interest on their first $60,000 of savings - 5 per cent on their Special, Medisave and Retirement Account (SMRA) and 3.5 per cent on up to $20,000 of their Ordinary Account (OA). For the rest of their savings, the current rates will be maintained at least until April.
This is because the new, floating rate that will apply to the SMRA from Jan 1 is lower than the minimum rate of 4 per cent now paid on these accounts. In an earlier announcement, the CPF Board said that the OA rate of 2.5 per cent also remains unchanged.

Under changes to the scheme announced earlier this year, an additional one percentage point in interest will be paid on the first $60,000 of CPF savings, including up to $20,000 in the OA. At current CPF interest rates, this means that the first $20,000 of Ordinary Account savings will earn interest at 3.5 per cent instead of the usual 2.5 per cent, when the New Year starts.

But the SMRA rate for the first three months of next year, which is calculated by adding one percentage point to the average yield on 10-year Singapore government bonds over the 12 months to end-November, was 3.9 per cent, less than the 4 per cent currently paid on these CPF accounts.

Earlier this year, the government said that the current minimum rate of 4 per cent for these accounts will be kept for two years from Jan 1, even if the SMRA rate falls below this, to help people adjust to the floating rate. After that, a minimum rate of 2.5 per cent will apply for all CPF accounts.
CPF interest rates are reviewed every three months.

Also from Jan 1, unit trusts and investment-linked insurance products with high charges will be barred from sale to investors using their CPF funds. To qualify for investment using CPF funds, the products’ expense ratios - which measure their running expenses - must not exceed a cap ranging from 0.65 per cent to 1.95 per cent, depending on how risky the fund is.
Source : Business Times - 13 Dec 2007

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New York Citigroup’s new CEO to fight storm with cost cuts

New York Citigroup’s new CEO to fight storm with cost cuts

India-born banker Pandit gets the hot seat but real battle lies ahead

(NEW YORK) Citigroup, the United States’ largest bank and one of the biggest casualties of the turmoil in the credit markets, appointed Vikram S Pandit as its chief executive on Tuesday.

Mr Pandit: Will scrutinise ‘objectively’ all parts of the bank as part of a review of expenses and productivity
The bank also named Winfried F W Bischoff, the acting chief executive, as chairman, succeeding Robert E Rubin, the former Treasury secretary who stepped into the role when Charles Prince III resigned on Nov 4. The decisions were reached at a board meeting earlier on Tuesday afternoon.

Mr Pandit joined Citigroup six months ago to oversee one part of the giant bank. Now, he confronts a more daunting task: shoring up the entire company, which has been brought to its knees by the mortgage crisis.

The decision places Mr Pandit, a native of Nagpur, India, atop the iconic financial conglomerate in its most turbulent period since it was forged by a merger a decade ago. Mr Prince abruptly resigned five weeks ago after announcing nearly US$18 billion in write-downs.

Fixing Citigroup will not be easy. Mr Pandit has never run a public company, let alone one as big and complex as Citigroup. The company could face billions of dollars in additional losses on troubled home loans. Its stock price has fallen 40 per cent this year, and its balance sheet is overstretched.

Mr Pandit must determine whether the business should be broken up, as investors have prodded for years, or take one last stab at making the company easier to manage.

Mr Pandit may cut costs and sell assets to shore up capital in the face of growing mortgage losses.

‘Nothing is off the table,’ Mr Pandit said in an interview. Each of Citigroup’s businesses will be scrutinised ‘objectively and dispassionately’ as part of a ‘front-to-back review’ of expenses and productivity, he said.

‘The most important priority to focus on is productivity,’ Mr Pandit said in a conference call with analysts. He said that he will ‘make sure we’re looking at our cost structure’.

The selection of Mr Bischoff as chairman was somewhat of a surprise.

He had been with Citigroup since it acquired the British bank Schroders in 2000, and has the respect and trust of bank managers.

Mr Bischoff, 66, the head of Citigroup Europe, had been seen as a stabiliser when he was appointed to the interim role, and had not been considered a candidate for the job.

Mr Pandit’s ascension to the top job at Citigroup caps a remarkable Wall Street run. He moved to New York from India at age 16 to attend Columbia University. He eventually collected a doctorate in finance at Columbia and then took a job teaching at Indiana University in Bloomington.

‘We assigned him problems we couldn’t solve,’ said Rajnish Mehra, now a finance professor at the University of California, Santa Barbara, who had served on Mr Pandit’s dissertation committee.

From Indiana University, Mr Pandit joined Morgan Stanley as an investment banker and went on to head its institutional client division and was considered a potential heir to Phillip J Purcell.

But two years ago, he left that firm after being passed over for a promotion that would have put him in line to become chief executive.

Mr Pandit, like many Wall Street stars, opened a hedge fund. Then in April, Citigroup bought Mr Pandit’s firm, Old Lane Partners, for an estimated US$800 million, and put him in charge of its alternative investments unit. By mid-October, Mr Pandit was overseeing the investment bank.

Mr Rubin lobbied on behalf of Mr Pandit, arguing that his analytical skill and deep knowledge of emerging markets made him the best candidate, according to a person briefed on the situation. — NYT, Bloomberg
Source : Business Times - 13 Dec 2007

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The interest rate statement in full

The interest rate statement in full
‘THE Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/4 per cent.
Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks.

Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time.

Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation.

The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 4-3/4 per cent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St Louis.’

Source : Business Times - 13 Dec 2007

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Wall Street turns upbeat as Fed unveils liquidity plan

Wall Street turns upbeat as Fed unveils liquidity plan

Fed to join forces with other Western central banks in fresh funds injection
By ANDREW MARKS
NEW YORK CORRESPONDENT

CAUTIOUS. Aggressive. Torn. Decisive. Unclear. Forceful. Take your pick. These widely contradictory words were being invoked by the very same Wall Street economists and traders over the course of 18 hours, to describe both the Fed’s decision to both cut the federal funds target rate and the discount rate by just 25 basis points, and its big liquidity injection plan, which in sum seemed to make clear only the lack of clarity being shown by the US central bank.
‘Just when you thought the Fed ‘gets it’, today’s tepid move and mixed tone in the press statement suggest otherwise,’ said David Rosenberg, Merrill Lynch’s chief economist, echoing the sentiment voiced by many Wall Street economists and investment strategists following the central bank’s move on Tuesday.

But hold on: those negative sentiments, which led to a huge sell-off in stocks following the Fed’s announcement on Tuesday afternoon, were swiftly giving way to a more celebratory feeling on Wall Street on Wednesday, as traders were cheering and stocks were bouncing at the opening bell following the early morning announcement of a Federal Reserve plan to inject more liquidity into the market.

Within the first five minutes of trading on Wednesday, the Dow Jones Industrial Average had nearly wiped out all of its 294.26-point, or 2.1 per cent, loss on Tuesday, jumping 266 points to 13,698. The S&P 500 was up 34 points and the Nasdaq was soaring 60 points to 2,713.

The major indices were jump-started, after being crushed by the Fed on Tuesday, by the Fed’s plan to join forces with other Western central banks to get fresh cash circulating around the world in a bid to lift the credit markets out of their funk.
To start, the Fed is planning to lend out at least US$40 billion in four auctions that will begin this week. The interest rate on the loans will be under what’s charged on discount window borrowings - which banks generally don’t like to do - directly from the Fed.

‘Talk about a turnabout,’ said Grace Financial investment strategist Joe Kalinowski. ‘If you look at the two statements back to back, it’s almost as though there are two different central banks right now,’ he said, referring to the official statements issued by the Fed that accompanied its rate cut on Tuesday and the cash injection on Wednesday.

‘Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time,’ read the key paragraph of the FOMC’s statement explaining its decision to lower its target for the federal funds rate by 25 basis points to 4.25 per cent.

Investors seized on the Fed’s seemingly blase confidence that it has done enough to enable the economy to overcome its myriad problems and return to ‘moderate growth’ as proof that Fed chairman Ben Bernanke and the other voting members of the central bank’s interest rate policy-setting board are misreading, confused, or simply at odds over the health of the economy and the need to reduce interest rates to prevent the liquidity crisis and housing market slump from spilling over into the economy and causing a recession.

But the tone of Wednesday’s statement was far different. ‘By allowing the Fed to inject term funds…this facility could help promote the efficient dissemination of liquidity when the unsecured interbank markets are under stress,’ the Fed said.

‘Just when you think they really blew it, they turn around and throw the markets a huge lifeline,’ said Jim Herrick, head trader at Robert W Baird, expressing the swing from extreme levels of disappointment to those of glee that have registered on Wall Street between Tuesday afternoon and Wednesday morning.

While applauding Wednesday’s move, Wall Street economists expressed the desire for more clarity from the central bank, along with the concern that the back-and- forth signals will only add to the high levels of uncertainty and volatility in the stock market.

‘If the Fed is trying to keep investors on their toes, it’s certainly doing a good job of it,’ said Joel Naroff, president of Naroff Economic Advisors. He, like many other Fed watchers, believes that the Fed’s ambivalent approach to the turmoil in the economy and financial markets reflects a deep rift in the FOMC, between inflation doves like chairman Bernanke, and hawkish regional Fed bank presidents.

Source : Business Times - 13 Dec 2007

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