S’pore Air, China Eastern Say Acquisition Deal Is Fair

S’pore Air, China Eastern Say Acquisition Deal Is Fair

China Eastern and Singapore Airlines on Wednesday rejected rival Air China’s parent’s view that the Singapore flag carrier’s USD$920 million acquisition of a China Eastern stake was unfair to investors.

China National Aviation Corporation, parent to the world’s biggest airline by stock market value and a big China Eastern shareholder, had on Tuesday urged a return to the negotiating table to work out a higher price.

Shares in China Eastern climbed 4.4 percent on Wednesday on investor hopes of a better offer, ending the morning up 2 percent.

Responding to CNAC, Singapore Air on Wednesday called its offer to buy 24 percent of China Eastern — alongside Singapore’s government investment arm Temasek — more than fairly priced in a deal that needed no tweaking.

A senior China Eastern executive said that the deal was focused on the longer term but warned that its share price would plummet should Air China’s parent succeed in getting shareholders to vote down the deal.

Stockholders, including CNAC with more than 12 percent of China Eastern’s Hong Kong shares, are due to vote on the deal on January 8.

“The price is fair and mutually agreed between all the parties. It is the maximum justified on the business fundamentals,” Singapore Airlines spokesman Stephen Forshaw said.

“Singapore Airlines is a long-term partner, not a short-term financial trader, and this transaction will be the start of an important strategic relationship, which will strengthen China Eastern’s competitive position.”

Analysts say Air China, which completed a two-way investment with Singapore Airlines rival Cathay Pacific last year, feared formidable competition from a global player that has long coveted greater access to the booming Chinese travel arena.

CNAC’s strongly worded comments came days after news emerged that Air China Chairman Li Jiaxiang had been appointed head of the country’s civil aviation regulator, which analysts say would bolster Air China’s objections to the deal.

Indeed, CNAC and Cathay had themselves pondered buying into China Eastern months ago, but then announced in September it would abandon that effort for at least three months.

“Air China’s own international business is bleeding losses. They can’t help us,” argued China Eastern accounting department general manager Wu Longxue, who had joined his company’s global investor roadshow over past months, to plug the deal.

“It’s different with Singapore Air: We’re getting their management expertise, operating experience and brand.”

(Reuters)

Source : Reuters - 02 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

http://www.hotvictory.com

Singapore Private residential prices up 6.6% in fourth quarter

Singapore Private residential prices up 6.6% in fourth quarter

SINGAPORE: Prices of private residential properties have risen by 6.6 per cent in the fourth quarter, compared to the previous three months.

This is according to a flash estimate for the fourth quarter released by the Urban Redevelopment Authority (URA) Wednesday.

Prices of non-landed private residential properties were up by about 7 per cent across the board, with prices in the core central region increasing by 7.0 per cent, the rest of the central region rising by 7.3 per cent and the outside central region gaining 7.5 per cent.

For the whole year in 2007, private residential prices rose by 31.0 per cent.

The flash estimates are compiled based on transaction prices given in caveats lodged during the first 10 weeks of the quarter, supplemented by information on the number of new units sold.

As at the end of the third quarter of 2007, there are about 65,400 private residential units in the pipeline.

Of these, about 41,600 new private housing units are expected to be completed between 2008 and 2010.

According to the URA, nearly 60 per cent of the units in the pipeline have not been sold by developers yet.

This does not take into account new sites that will be made available for development through the Government Land Sales (GLS) programme. - CNA/ac

Source : Channel NewsAsia - 02 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

http://www.hotvictory.com

S’pore GDP contracts 3.2 pct. in 4Q

S’pore GDP contracts 3.2 pct. in 4Q

Singapore’s economy contracted the first time in more than four years in the fourth quarter as weakness in manufacturing outweighed windfall growth from a construction boom, the government said Wednesday.

Singapore’s economy shrank 3.2 percent from the third quarter on a seasonally adjusted annualized basis, the Ministry of Trade and Industry’s advance estimate showed. It expanded 4.4 percent in the July-September quarter compared to the second.

A Dow Jones Newswires poll of economists had forecast a 4.2 percent rise in the final quarter of the year. The contraction marked the biggest decline since the 7.6 percent drop in the second quarter of 2003.

Singapore suffered from slower exports of drugs and electronics in the fourth quarter, and while services and construction remained healthy, manufacturers may be vulnerable to softer external demand this year.

Manufacturing output rose just 0.5 percent from a year earlier in the fourth quarter after growing 10.3 percent the previous three months. The sector expanded 5.6 percent for the full year in 2007.

Construction output rose 24.4 percent compared to the same quarter a year ago, accelerating from 19.2 percent growth in the third quarter.

Singapore’s services sector was also a key growth driver in the fourth quarter, led by financial institutions and a healthy tourism industry.

The services sector grew 8.3 percent on year in the fourth quarter, matching the pace of the previous three months. For the full year, services expanded 8.1 percent.

Gross domestic product rose 6.0 percent from a year earlier, less than the 9.0 percent rise posted in the third quarter and coming in short of a poll forecast for 7.8 percent growth.

For the full year, Singapore’s economy grew 7.5 percent in 2007, less than the 7.9 percent rise posted in 2006.

The downturn in the fourth quarter could cause a dilemma for the island’s central bank as the risk of an economic slump precludes monetary tightening even as the island faces the highest inflation since the early 1980s.

Singapore’s central bank uses foreign exchange rather than interest rates to control prices because external trade dwarfs the domestic economy.

Last October it said it would let the Singapore dollar appreciate at a faster pace to cap surging costs of imported food and energy.

The consumer price index — a non-core measure of costs for goods and services — rose 4.2 percent from a year earlier in November, the fastest pace since May 1982.

Source : The Associated Press - 02 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

http://www.hotvictory.com

Ruling on Singapore rental income cheers serviced apartment operators

Ruling on Singapore rental income cheers serviced apartment operators

But IRAS files appeal with High Court against tax review board’s ruling.
In a landmark decision, the Income Tax Board of Review has ruled that a serviced apartment operator’s rental income should be treated as normal recurrent business income, and not as income from property investments.

This means that serviced apartment operators can claim deductions on expenses and capital allowances beyond the actual income for the year.

The Dec 14 ruling came after the company, believed to be part of the Frasers Centrepoint group, appealed against an earlier ruling of the Inland Revenue Authority of Singapore (IRAS). The latest ruling will have significant implications for not just serviced apartment operators, but also for the operators of the future integrated resorts.

Earlier, IRAS had contended that serviced apartment owners and operators were merely in a business of letting property, and in a ‘business of making investment’ under Section 10E of the Income Tax Act.

Section 10E says that a business which makes investments, including the ‘letting of immovable property’, cannot claim deductions on expenses and capital allowances beyond the actual income for the year.

The tax implication is that any losses sustained for one year will not be allowed to be carried into the following year, as is the case for an ordinary trade or business where losses are generally allowed to be carried forward.

The Board rejected IRAS’ contention that the serviced apartments and the retail mall businesses are businesses of making investments under Section 10E.

Unlike serviced apartment, hotels in Singapore are allowed to carry forward losses.
Industry insiders say the ‘Section 10E’ treatment has troubled the industry for a long time.
As the range and sophistication of services have increased over the years with top-end serviced apartments offering a myriad of products and services, this unequal treatment has become increasingly untenable, they say.

Not surprisingly, many see this as a test case for the industry.
The Board of Review’s decision will also no doubt be welcomed by serviced apartment operators, who argue that it is the correct approach in looking at serviced apartments as a ‘multi-factorial’ one.

The appellants’ counsel, tax lawyer Ong Sim Ho, successfully argued that whether a business was one of making investment had to be determined in the light of all the surrounding facts, including evidence of the intention of the enterprise in embarking on the venture.

He said that where the letting of property was a mere but necessary platform from which business operations are carried out, Section 10E should not be applicable if those business operations constituted the real business of the taxpayer. He urged the Board to consider the wide range of hospitality services provided to the apartment guests.

The Board agreed that the serviced apartment- cum-shopping mall business should be looked at as an integrated whole.

The decision is likely to cause a re-examination of the approach to taxation of serviced apartments generally.

The IRAS has filed an appeal against the decision to the High Court.

Source : Business Times   - 02 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

http://www.hotvictory.com

Upgrading jobs - the security sector way

Upgrading jobs - the security sector way

It has boosted low-paying jobs, drawing more to workforce

By Lynn Lee

THE labour movement yesterday held up the changes in the security sector as an example of how low paying jobs in other parts of the economy can be revamped and upgraded.
Security jobs now offer better career prospects and pay - of between $1,300 and $1,600 a month, up from $800 to $900 previously.

And it is drawing more Singaporeans, including officers like Ms Norfaizah Said, 32, into its fold.

‘The private security sector gives us hope that it can be done, because what we’ve achieved over the last three years, it’s been quite amazing,’ labour chief Lim Swee Say said yesterday.

From a sector previously seen as offering low-paying jobs, it had been transformed into one where better skills and professionalism are required.

As former police officer Ms Norfaizah herself noted, her job is ‘challenging’.

‘It’s not just about enforcing the law… We have to meet the needs of our clients, who may want a range of security services, from patrolling to using technology to keep the premises safe,’ she said.

Mr Lim hopes similar revamps in other sectors will draw more Singaporeans, especially older workers and women, back into the workforce and create wider opportunities including for contract and lower-skilled employees.

‘What we are hoping to see this year and in the coming years is more job sectors going through this process of job re-creation,’ he said at the opening of the Union of Security Employees’ new Waterloo Street premises.

He described creating jobs, keeping unemployment low, and ensuring strong economic growth as key targets for the labour movement this year.

After all, sufficient jobs, coupled with a growing economy is Singapore’s way of coping with the global challenge of high living costs, said Mr Lim, who is Minister in the Prime Minister’s Office.

Pointing to the more competitive international environment and higher cost of food and fuel prices, he said these were realities that Singaporeans would have to learn to live with.

‘Different countries respond differently,’ he said. But Singapore’s approach was clear: Focus on economic development.

‘The day we lose our economic competitiveness, then the problem is no longer about inflation. The problem is much worse than that because there will be no jobs. There will be a softening of the labour market and there will be lower pay,’ he said.

The aim is to be able to maintain sparkling growth - the economy grew 7.5 per cent last year and the unemployment rate was at an all-time low of 1.7 per cent.

At yesterday’s event, Union of Security Employees president N.Silva said the sector’s growth meant that it was no longer seen as a ‘lazy man’s job’ or one that people turned to only when they could not find employment elsewhere.

The union has some 4,200 members today, up from 900 four years ago. One in four are 35 years old and below.

The security sector has been part of the labour movement’s job recreation programme (JRP), which was launched three years ago.

Some 12,000 jobs, in cleaning and gardening for instance, were redesigned in 2006.

This year, the NTUC will also aim to get more needy workers on the Workfare Income Supplement scheme for older people earning $1,500 at most, said Mr Lim.

This includes security officers. Union leaders had pointed out that many of them work overtime to boost their salaries. But in doing so, they exceed the scheme’s $1,500 salary cap.

Said Mr Lim: ‘As a labour movement we feel quite strongly, that something ought to be done to take into consideration the working duration.’

Source : Straits Times   - 02 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

http://ww.hotvictory.com