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Singapore GIC to invest in US$6b TPG fund: report

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Singapore GIC to invest in US$6b TPG fund: report

By CHUANG PECK MING

THE Government of Singapore Investment Corporation (GIC), which has taken significant stakes in UBS and Citigroup, is reportedly going to be the lead investor in a US$6 billion fund set up by global private equity firm TPG to invest in troubled financial companies.
A GIC spokeswoman had no comment yesterday, after a report in Britain’s Financial Times (FT) newspaper said GIC will commit US$2 billion to US$3 billion to the new financial opportunities fund. BT understands it is still not a done-deal.

TPG, formerly known as Texas Pacific Group, which has offices in cities around the world including Singapore, is no stranger to Singapore’s GIC sovereign wealth fund headed by Minister Mentor Lee Kuan Yew.

In December last year, GIC was reported to be pumping US$1.5 billion into a US$20 billion fund being raised by TPG, whose founders David Bonderman and James Coulter have a long history of successful contrarian investments.

Founded in 1992, TPG - which declined to comment yesterday - has more than US$30 billion under management.

‘We manage a family of funds including private equity, venture capital and public equity and debt investing,’ the firm says on its website.
GIC’s reported move to invest in a TPG fund to bail out distressed financial firms comes barely two weeks after GIC deputy chairman Tony Tan told BT that after pumping US$9.75 billion into UBS and US$6.88 billion into Citigroup, GIC could invest in another troubled bank if the deal is worthwhile.

According to yesterday’s FT report, filed from New York, GIC and other Asian and Middle Eastern sovereign wealth funds that have been investing directly in ailing banks are taking an indirect route through TPG to deflect growing criticism of such funds - and avoid a political backlash.

The TPG fund is being marketed exclusively to a handful of the world’s largest sovereign wealth and pension funds, FT reported, quoting sources ‘familiar with the matter’.

According to the report, the State Administration for Foreign Exchange, an arm of the Chinese government with responsibility for managing the country’s US$1.53 trillion of foreign exchange reserves, may also take part in the fund.

Funds in the Middle East and some of TPG’s long-term core investors like Calpers and Calstrs, the big Californian public sector and teachers’ pension funds, may also invest.

China Investment Corporation, which is tipped to invest US$4 billion in a similar fund being raised by US private equity group JC Flowers, originally considered putting money in the TPG fund.

But it was able to get more favourable terms from Flowers, according to the FT report.

Source : Business Times - 15 Feb 2008

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Playfair Rd site gets bullish top bid of $142 psf ppr - Singapore

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore Real Estate News.

Playfair Rd site gets bullish top bid of $142 psf ppr - Singapore

Sim Lian unit’s offer is whopping 63% above second highest bid
By KALPANA RASHIWALA

A 60-YEAR leasehold industrial site at Playfair Road has attracted a top bid of $142 per square foot per plot ratio (psf ppr) from Sim Lian Development unit Trio Link Development - a record price for such a site in the Ubi/Paya Lebar/Eunos area.

The tender attracted 12 bids, reflecting growing interest in industrial property.

The tender for the 92,870 sq ft reserve-list plot attracted 12 bids, reflecting growing interest in industrial property as it comes into play amid the breather in residential and office values, says Colliers International director (industrial) Tan Boon Leong.

Sim Lian’s top bid of $33 million, or $142.13 psf ppr, was a huge 63 per cent above the next highest bid of $20.23 million, or $87.13 psf ppr, by Orion-Three Development.

Orion group, which is linked to Indonesian interests, has also been active in state tenders for industrial sites. It clinched plots at Serangoon North Ave 4 and Changi North St 1 in 2006.

Asked about Sim Lian’s aggressive bidding in yesterday’s tender, executive director Ken Kuik said the company had been encouraged by recent demand for strata-titled flatted and ramp-up factories at its Vertex project at Ubi Ave 4/Ubi Link.

‘We’ve sold about 160 of the 200 units released since September last year, achieving an average price of about $330 psf,’ he said.

The eight-storey property has 552 strata-titled units. Sim Lian is developing it on a 60-year leasehold site it won at a state tender in 2006.

Like the Playfair Road site contested yesterday, the Ubi plot is zoned for Business 1, allowing clean and light industrial and warehouse uses.

Mr Kuik said Sim Lian plans to develop the Playfair Road plot into a 13-storey project with strata-titled units for sale.

He noted that the site is just a few minutes’ walk from Upper Paya Lebar MRT Station on the Circle Line.

Colliers’ Mr Tan estimates Sim Lian’s breakeven cost could be around $260 psf, considering the saleable area for such industrial developments can exceed the maximum permitted gross floor area by 15-20 per cent after factoring in features like terraced areas and air-con ledges.

‘This is the first time a 60-year leasehold industrial site is being sold in the area, which traditionally has freehold industrial properties. That may have added to the plot’s attraction,’ he suggested.

Property consultants say the $142 psf ppr that Sim Lian offered for the Playfair plot surpasses the last high achieved in the Ubi/Paya Lebar/Eunos area - $85.50 psf ppr for a 60-year plot at Eunos Link/Kaki Bukit Avenue 1 in 1996.

However, yesterday’s top bid is still shy of the island-wide high of $170 psf ppr achieved late last year for a 30-year leasehold site near Commonwealth MRT Station.

The other bidders in yesterday’s tender were KNG Development, Soilbuild Group, Prosperity Realty (linked to Hotel Royal’s Lee family), HLH Development & Brothers (Holdings), Superbowl Land, See Young Investments, Lian Beng Group unit LB Property, Boustead Projects, Boon Keng Development and Lim Huay Ren, which placed the lowest bid of $12 million or $51.68 psf ppr.

Source : Business Times - 15 Feb 2008

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Singapore Manufacturing to ease in 2008: MTI

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Singapore Manufacturing to ease in 2008: MTI

By LYNETTE KHOO
(SINGAPORE) After growing at an easier pace of 5.8 per cent last year - down from 11.9 per cent in 2006 - the manufacturing sector here is expected to moderate further this year as the US economy slumps, the Ministry of Trade and Industry (MTI) said.

Electronics has already gone into a period of slow growth and there are signs of recovery. The difference is if the pessimistic scenario unfolds, the net recovery could well be aborted and you could have a sharper downturn.

‘It would definitely be lower under the pessimistic scenario but there are some industries within manufacturing that will be relatively more resilient under this scenario of a deeper slowdown,’ MTI second permanent secretary Ravi Menon said at a briefing yesterday.

In the MTI’s GDP outlook for 2008, it painted two scenarios. The first one is where the US enters a mild recession in the first half but recovers in the second half, supported by its strong fundamentals coupled with fiscal and monetary stimulus.

The second is a so-called ‘pessimistic’ scenario where the US slips into a more severe recession, affecting the region more significantly.

Industrial output, which accounts for a quarter of Singapore’s GDP, grew a marginal 0.2 per cent in the fourth quarter in 2007 from a year ago on a 28 per cent contraction in the biomedical cluster. On an annualised seasonally adjusted basis, industrial output slumped 24.9 per cent from the preceding quarter.

MTI’s director of economics and strategy division Cheang Kok Chung noted that there is good potential for a rebound in output in the first quarter as the fourth quarter slump in 2007 was largely due to the sharp contraction in the volatile biomedical cluster - which is a usual wild card.

Mr Menon noted that within the manufacturing sector, the impact of a US economic slump could vary across the clusters, with electronics and precision engineering likely to be harder hit under the pessimistic scenario given their export-oriented natures.

‘Electronics has already gone into a period of slow growth and there are signs of recovery,’ he said. ‘The difference is if the pessimistic scenario unfolds, the net recovery could well be aborted and you could have a sharper downturn.’

Other industries may not experience significantly different impacts under the two different scenarios.

Among them is transport engineering, where order books are full and there is a pipeline of jobs for the year ahead. The chemical cluster also follows its own industry-specific cycle and its growth rate is largely determined by existing capacity, Mr Menon said.

But some economists and analysts are predicting a mild contraction in the manufacturing sector this year. Citigroup expects a 0.3 per cent decline in manufacturing output in 2008, comprising a single-digit fall in the first half of the year and a bottoming out in the second quarter. Westcomb Securities is predicting a one per cent contraction for the full year.

‘The electronics slump will probably deepen even though I don’t think it will be as bad as in 2001, but the risk is definitely on the downside,’ Citigroup economist Kit Wei Zheng said.

On the other hand, DBS Group economist Irvin Seah is expecting 2 per cent growth in manufacturing output this year, with support from the transport engineering and biomedical clusters. Capacity expansion in electronics and drugs production may also translate into higher output in the second half, he said.

‘We do not expect electronics to recover within the first half of the year but the second half will really depend on how the US economy is able to weather the current deterioration in its growth outlook,’ Mr Seah said.

Source : Business Times - 15 Feb 2008

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Mindy Yong

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Why Singapore trade breaks ranks with GDP

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Why Singapore trade breaks ranks with GDP

Three researchers shed light on a conundrum
By CHEW XIANG
(SINGAPORE) Three researchers have explained in an article yesterday why Singapore’s GDP and trade growth diverged in the past year.
The two figures have tended to move in lock step for export-reliant Singapore, whose small, open economy depends significantly on external growth drivers.

But last year, while real GDP climbed 7.7 per cent, total trade growth - exports plus imports of goods - fell sharply from 13 per cent in 2006 to just 4.5 per cent.

In part, this was due to different performances across sectors, said the researchers, two of whom are from the Ministry of Trade and Industry and the third from International Enterprise Singapore.

Last year’s aces - financial services and construction, output of which grew 18 per cent - did not contribute to goods exports and, hence, headline trade growth.

On the other hand, the laggards - manufacturing and wholesale trade, which grew just 6.4 per cent - were the main drivers of the goods exporting sectors.

Another reason for the divergence, according to the article, was a measurement effect, as GDP and trade are calculated on different terms.

Real GDP measures, roughly speaking, the volume of Singapore’s output. But trade figures measure the value of exports and imports at current prices and are affected by price changes.

And last year, prices of semiconductors slumped due to increased competition and a capacity glut, dragging down the dollar value of trade.

Despite 4 per cent growth in electronics output, electronics domestic exports still fell 9.3 per cent year on year, meaning higher volume was insufficient to offset the fall in price.

The effect was significant, as electronics trade accounted for about 40 per cent of total trade.

And although oil and commodity prices climbed significantly last year, this could not compensate for falling electronics prices. Oil exports make up about 25 per cent of domestic exports.

The article shows that with prices held constant, total trade last year would have grown 7 per cent - close to real GDP growth.

The divergence between real GDP and trade growth is unlikely to lend credence to the decoupling theory - the idea that strong domestic demand might reduce Singapore’s reliance on exports.

Separately, Citigroup economist Kit Wei Zheng said: ‘Singapore is still a very open economy. The indirect knock-on effects will still be quite important.’

HSBC economist Prakriti Sofat pointed out that while US growth slowed substantially in Q4 2007, Singapore exports to the United States actually grew about 0.6 per cent year on year, compared with a 4 per cent slump in Q3.

‘The other point is that personal consumption has been weak despite hefty wage gains, which has been quite puzzling,’ she said. ‘However, our assumption remains that households should let loose the purse strings in the period ahead.’

Source : Business Times - 15 Feb 2008

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Mindy Yong

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Singapore Govt raises inflation forecast, sees peak in H1

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Singapore Govt raises inflation forecast, sees peak in H1

Forecast upped to 4.5-5.5% as S’pore feels effect of rising food and oil prices
By LYNETTE KHOO

(SINGAPORE) Singapore’s inflation will get worse before it gets better, the Ministry of Trade and Industry (MTI) said yesterday, expecting inflation to peak in the first half of 2008 before moderating in the second half.

Rising food and oil prices globally have filtered through to domestic prices of food and oil-related items here.
The government raised its full-year forecast for the headline consumer price index (CPI) to 4.5-5.5 per cent, from 3.5-4.5 per cent previously.

Rising food and oil prices globally have filtered through to domestic prices of food and oil-related items here, MTI said.

Last year, Singapore’s CPI grew 2.1 per cent year-on-year after growing by one per cent in 2006. It hit a 25-year high in December when it grew 4.4 per cent year-on-year. It rose 4.1 per cent for the fourth quarter.

MTI second permanent secretary Ravi Menon noted that part of the increase in the headline inflation here was due to the one-off effect of the two percentage-point hike since last July and technical factors like the revision of annual values of HDB flats.

‘We expect inflation to get worse before it gets better,’ he said at a media briefing yesterday. ‘The revised forecast is premised on fairly high inflation rates in the next few months. This is only to be expected given the very low base in the first half of last year.’

While inflation is expected to taper off in the second half during which the effect of the GST hike wanes, a return to the low inflation rates enjoyed in recent years will not happen any time soon as commodity prices are still likely to rise albeit at a slower pace than in 2007, Mr Menon added.

When asked if the Monetary Authority of Singapore (MAS) would be prompted to change its monetary policy stance given the higher inflation outlook, MAS deputy managing director Ong Chong Tee said the current monetary policy stance ‘remains appropriate and the macroecnomic and inflation outlook has been broadly consistent with the planning parameters’.

This policy of a modest and gradual appreciation of the S$NEER policy band has been in place since April 2004.

Mr Menon noted that the current inflation outlook has to be viewed in the context of historically low inflation.

For the last 40 years, Singapore’s inflation rate averaged 1.5 per cent, excluding the two oil shocks in the mid 1970s and early 1980s. Average inflation for the past 10 years was half that rate at 0.7 per cent due to the weak global demand in the aftermath of the Asian financial crisis, the downswing of the technology cycle and disinflationary impact from the emergence of China and other economies.

After years of low inflation, the world is now returning to ‘a more normal inflation environment,’ Mr Menon said.

But he added that the fact that long-term bond yields remain low and reflect that despite the current spike in inflation, the long-term inflation outlook remains low. And as long as jobs are created and wages grow, the impact of inflationary pressures will be dampened.

A recent report released by the Department of Statistics shows that household income has risen faster than inflation. Average household income from work was 32.4 per cent higher than 10 years ago, while consumer prices rose by a smaller 7.6 per cent over the same period.

Ministry of Manpower divisional director (manpower planning and policy) Jeffrey Wong said he expects employment growth to be sustained into 2008, after adding a record 236,600 jobs in 2007.

Source : Business Times - 15 Feb 2008

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Slower growth, higher prices and uphill climb ahead - Singapore

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Slower growth, higher prices and uphill climb ahead - Singapore

2008 growth forecast cut to 4-6% in shadow of US uncertainty
By ANNA TEO

(SINGAPORE) The Singapore economy will see lower growth and higher inflation this year, but remains well-poised to ride the upturn when it comes, says the Ministry of Trade and Industry (MTI). Most economists agree.
In view of heightened risks in recent months, chiefly a sharp US slowdown, MTI has shaved its forecast of Singapore’s 2008 GDP growth by half a percentage point to 4-6 per cent, which would be down a few notches from 2007’s revised 7.7 per cent pace.

The previous 2008 forecast in November had already factored in a US slowdown, MTI second permanent secretary Ravi Menon explained at a media briefing yesterday on the 2007 economic results.

But downside risks have since risen. And while it is not known if the US economy is in fact in recession, ‘what we do know is that the US is already experiencing a significant slowdown in growth, and the key uncertainty now is the length and severity of this slowdown’, said Mr Menon.

The new official 4-6 per cent growth forecast captures two scenarios. The brighter outlook sees - as current conditions suggest, by MTI’s reading - the United States tackling a mild recession in the first half but recovering in the second half on the back of strong fundamentals, and fiscal and monetary stimulus.

Singapore will then likely grow in the upper half of the 4-6 per cent forecast, supported by healthy, if slower, growth in Europe and Japan, and a robust Asia.

But if the US falls into a severe recession brought on by a prolonged credit crunch, with knock-on effects in Europe and Asia, ’sentiment-sensitive and external-oriented’ sectors in Singapore, such as electronics, wholesale trade and financial services, will be hit hardest, said Mr Menon.

Even sectors with more of a regional exposure, such as health care and tourism, will not be totally unscathed. The Singapore economy will then likely grow nearer the 4 per cent end of the forecast range.

‘In either scenario, we’re looking at slower growth this year,’ he said.

Already, GDP growth slowed to 5.4 per cent in Q4 last year - down from Q3’s 9.5 per cent pace, and lower than early estimates of 6 per cent for Q4. On a quarter-on-quarter basis, GDP contracted by 4.8 per cent.

According to MTI, the Q4 slowdown reflected more the plunge in biomedical manufacturing - which fell nearly 30 per cent in Q4 because of cyclical pharmaceutical downtime - rather than any impact from the US.

Asked about the chances of Singapore slipping into a technical recession - if the economy sees a second consecutive negative quarter in quarter-on-quarter terms - Mr Menon said: ‘Most of the simulations we have done don’t show that outcome.’

MTI’s economics and strategy director, Cheang Kok Chung, also declared it ‘quite unlikely’, adding that there is ‘good potential’ for a biomedical rebound in Q1.

In fact, some of the more upbeat private sector economists see a quick rebound in GDP - in the current quarter.

While OCBC Bank’s treasury economist Selena Ling thinks the slowing growth momentum from Q4 2007 ‘could bleed over into Q1 2008′, others such as HSBC’s Prakriti Sofat see the Singapore economy bouncing back strongly in Q1. One reason - she is confident of a pharmaceutical turnaround ‘over the next few months’.

A recent Merrill Lynch report also voiced confidence that the Singapore economy is ‘well-positioned to cope with a US downturn this time’.

And P K Basu, the ever bullish chief economist (Asia ex-Japan) of Daiwa Institute of Research, declares: ‘I see no reason for even one iota of pessimism about the Singapore economy.’

Apart from the pharmaceutical bleed, Q4 was hardly a weak quarter at all, he says, pointing out that the rest of the economy, notably electronics, was ‘accelerating’.

But the ‘most eye-popping number’, Mr Basu said, was the Q4 manufacturing investment commitments of $8.7 billion - that spells jobs and output down the road.

Depending on the pharma sector rebound, he reckons GDP growth could hit 7-8 per cent in Q1.

‘I see no significant downside risk to my 7.4 per cent GDP growth forecast for 2008,’ he tells BT.

MTI - which yesterday also raised its 2008 inflation forecast for Singapore to 4.5-5.5 per cent - would be cheered by such confidence.

‘Growth will be lower and inflation higher, not a great combination,’ Mr Menon said. But the slowdown - after four years of above-trend growth - towards the economy’s underlying potential will help ease supply-side constraints and relieve cost pressures, he added.

Beyond 2008, the economy is well-positioned for any pick-up, he said. ‘Notwithstanding the weakened macroeconomic picture, the economy remains in fundamentally good shape structurally.’

Rising costs - and Singapore’s ever-strong fiscal balances - set the stage for the Budget today. Rebates and other goodies for lower-income households, as well as a cut in the personal income tax rate, are widely anticipated.

Source : Business Times - 15 Feb 2008

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Mindy Yong

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S’pore cuts growth forecast to 4% to 6%

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

S’pore cuts growth forecast to 4% to 6%

Concern over a US recession leads to revision; inflation estimate is raised to 4.5%-5.5%

By Bryan Lee, Economics Correspondent

SINGAPORE has lowered its economic growth forecast for the year but also tipped that consumer prices are expected to rise faster than previously thought.
Concern over a possible United States recession led the Government to trim its growth forecast from an earlier estimate of 4.5 to 6.5 per cent to between 4 and 6 per cent. Last year, the economy expanded by 7.7 per cent.

Its inflation estimate has gone the other way with prices now tipped to rise on average between 4.5 and 5.5 per cent, up from a three-month-old forecast of between 3.5 and 4.5 per cent.

The Ministry of Trade and Industry (MTI) released the revised figures yesterday and raised its concerns about the US economy.

‘Compared to three months ago, there is broad consensus now that the US economy is entering a slowdown,’ said the ministry.

‘The key uncertainty is over the length and severity of this slowdown, which will in turn influence how the rest of the world and key industries are affected.’

The MTI’s new forecast shaves 0.5 percentage point off the estimate made three months ago and reflects the recent welter of bad news from the US.

MTI Second Permanent Secretary Ravi Menon told a news conference that the earlier forecast had already factored in a US slowdown.

But ’since then, the downside risks have increased somewhat… The US is really experiencing a significant slowdown in growth.’

Economists were not surprised at the revision, given the deteriorating global outlook. Many had slashed their Singapore estimates in light of surprisingly weak data out of the US in recent weeks.

The MTI said current conditions suggest that the US will probably enter a mild recession in the first half but recover as the year goes on.

‘Strong fundamentals, coupled with fiscal and monetary stimulus, will help to support recovery in the second half,’ it said.

In this scenario, the local economy should grow in the upper half of the forecast range, said the MTI. But if the US has a more severe recession, growth here will be nearer the lower end of the range.

Electronics exporters and the trading and logistics firms that serve the industry will take the biggest hit, said the MTI, while financial services will be more vulnerable to weaker market sentiment.

The slower growth comes after four years of robust expansion and is still within the economy’s underlying potential growth rate, said Mr Menon.

Singapore should also escape a technical recession, defined as two straight declines in quarter-on-quarter growth. ‘Most of the simulations we have done do not show that outcome,’ said Mr Menon.

Action Economics economist David Cohen said, ‘4 to 6 per cent is realistic. It’s nothing to be embarrassed about.’

On the inflation front, prices are set to rise even faster than the record-breaking pace of recent months, due largely to surging oil and food costs.

Mr Menon said inflation will peak by the middle of the year before moderating.

The Monetary Authority of Singapore (MAS) said its policy of allowing a slightly faster appreciation of the Sing dollar remains appropriate.

Economists said the Government may announce today a more generous Budget to help low-income earners cope with escalating living costs.

This would allow the MAS to focus more on the slowing economy when it reviews its policy stance in April.
Source : Straits Times - 15 Feb 2008

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Mindy Yong

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Singapore Economy grows 7.7%, beats expectations

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Singapore Economy grows 7.7%, beats expectations

Growth is somewhat dampened by surprise downward revision for fourth quarter

By Bryan Lee, Economics Correspondent
SINGAPORE’S economy grew even faster than expected last year, with a robust 7.7 per cent expansion fuelled by the booming construction and services sectors.
That was a notch up from an earlier estimate of 7.5 per cent - thanks to upward revisions to growth in the first nine months.

There was, however, a sting in the tail of the latest figures, published yesterday by the Trade and Industry Ministry (MTI).

The strong full-year growth was somewhat overshadowed by fourth-quarter figures, which turned out to be weaker than previously estimated.

Economic growth slowed to 5.4 per cent from October to December, said the MTI, lower than the 6 per cent previously estimated and far below the 9.5 per cent recorded in the third quarter.

On a seasonally-adjusted, quarter-on-quarter basis, the economy shrank 4.8 per cent, more than the 3.2 per cent estimated earlier by the Government

The downward adjustment surprised economists, who said the final quarter would best indicate prospects for this year.

Already, the fast-deteriorating United States economy has prompted the MTI and other economists to cut their growth forecasts for this year.

‘We think the slowing growth momentum from the fourth quarter could bleed over to the first quarter of this year,’ said OCBC Bank economist Selena Ling.

Last year’s strong growth was powered by the red-hot construction and services sectors. The once-mighty manufacturing sector turned out to be the laggard.

Construction growth hit a record 19.6 per cent, the fastest pace since 1996, while services expanded 8.1 per cent, accelerating from 2006’s 7.5 per cent.

Manufacturing growth, on the other hand, slowed to 5.8 per cent from 11.9 per cent in 2006.

It was a similar picture in the fourth quarter, except that manufacturing growth was an exceptionally dismal 0.2 per cent.

The revised data came a month after advanced estimates for the fourth quarter were published at the start of the year. The early figures were based largely on the first two months of the quarter, so the latest statistics suggested that conditions worsened considerably in December, analysts said.

The adjustment was mainly due to services, which grew 7.7 per cent instead of 8.3 per cent, and manufacturing, which fared even worse than an earlier predicted 0.5 per cent expansion.

‘Financial services have peaked as we have forecast. The industry will likely moderate further. The heady days of high-teens growth are over,’ said Citigroup economist Kit Wei Zheng. He said the fall in financial services growth to 15.9 per cent in the fourth quarter suggested that the industry peaked in the third quarter, when it surged 20.1 per cent.

OCBC’s Ms Ling said manufacturing would remain lacklustre in the current quarter, if not the first half of the year. ‘With the global slowdown story, we do not expect any quick turnaround on the manufacturing front,’ she said.

Still, some economists are not ringing the alarm bells just yet.

HSBC economist Prakriti Sofat said while US growth slowed in the fourth quarter, that was not the cause for Singapore’s weak figures.

Analysts pinpointed the volatile pharmaceutical industry as the main reason for the slowdown.

‘Manufacturing output plunged, largely due to protracted production delays and technical problems at Singapore’s biggest pharmaceutical plant,’ said Barclays Capital economist Leong Wai Ho. ‘Supply bottlenecks were the main cause, not a drop-off in demand.’

Indeed, pharmaceutical’s recent sharp contraction could well set it up for a big rebound in the next few months, said analysts.

More optimistic economists are also looking to resilience in domestic and regional economies.

The construction sector is expected to continue growing robustly, given the strong pipeline of both public and private projects.

Sectors such as tourism and real estate services will be partially shielded from a US slowdown by neighbouring economies, on which they are more dependent, said the MTI.

Source : Straits Times - 15 Feb 2008

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Mindy Yong

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Asian bourses rally as world economic concerns ease - Singapore

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Asian bourses rally as world economic concerns ease - Singapore

Tokyo, Taipei, Seoul up more than 4%, S’pore up by 3.3% on better US, Japan data

By Yang Huiwen
GOOD news from the world’s two biggest economies lifted bourses across Asia yesterday - especially Tokyo, Taiwan and South Korea, which all soared by at least 4 per cent.
Singapore’s Straits Times Index (STI) was not far behind - up 96 points or 3.3 per cent, to 3,045.59.

An unexpected rise in United States retail sales, coupled with news that Japan’s fourth-quarter economic growth had more than doubled forecasts, eased nagging concerns over a global slowdown.

Japan’s Nikkei 225 Average gained 4.3 per cent, its biggest one-day jump since March 2002.

Taiwan’s Taiex Index was up 4.2 per cent and South Korea’s Kospi rose 4 per cent. Hong Kong’s Hang Seng Index surged 3.7 per cent, making mainland Chinese benchmarks, which gained just over 1 per cent, look lacklustre.

The local market shrugged off government figures which showed a 4.8 per cent contraction in Singapore’s fourth-quarter gross domestic product compared to the previous quarter - fresh evidence that the US economy is slowing.

It was the STI’s third straight day of gains. Volume was 1.62 billion shares worth $2.21 billion.

The market’s emergence from the recent bout of bearishness appears to be drawing investors back - at least for now - judging from the improvement in trading volume in the last few sessions.

But given recent market volatility, investors are left to second- guess how long this rally is likely to last.

‘Traders would be tempted to start cashing in soon, as it would take a lot of bullish news to push up the index past the 3,160 resistance,’ noted AmFraser Securities’ senior vice-president, Mr Najeeb Jarhom.

‘The local market needs to be supported by a friendly Wall Street to embark on a more sustainable rally, at least up to end of next week, as a bullish Budget may not be enough to overwhelm negative Street leads.’

Added a dealer: ‘It’s better to err on the side of caution. The market has this habit of tracking Wall Street, and right now the rallies don’t seem to last for more than three days.’

Analysts say another instrumental factor determining market sentiment is DBS’ announcement of its full-year earnings results this morning, which will shed light on the impact of sub-prime write-downs on local banks.

Blue-chip banking and property stocks were mainly responsible for driving up the index.

United Overseas Bank gained 66 cents to $17.86, DBS Group Holding rose 50 cents to $17.30, while OCBC climbed 21 cents to $7.33. In all, the three banks added 27.2 points to the benchmark index. The Singapore Exchange also rang up hefty gains, up 56 cents to $9.63.

South Korean shipping group STX Pan Ocean and Chinese shipbuilder Yangzijiang were thrown into the spotlight after advances in the Baltic Dry Index. STX surged 34 cents to $2.92 with 42.1 million shares traded, while Yangzijiang rose eight cents to $1.35 with 35.1 million shares done.

StarHub was also in the spotlight but for a different reason, after it reported a drop in both fourth-quarter and annual net profit. Its shares fell five cents to $3.07.

Second- and third-line indexes also moved higher.

Gains in stocks including Straits Asia Resources, up 33 cents to $3.68, and Delong Holdings, up 39 cents to $2.95, helped lift the FTSE Mid Cap Index, which rose 25 points to 788.44. The Small Cap Index gained 9.24 points to 692.93.

Source : Straits Times - 15 Feb 2008

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Making Singapore a test bed for products of the future

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Making Singapore a test bed for products of the future

EDB’s plan involves developing ideas in areas like health care, urban living

By Nicholas Fang

THE long-running programme to entice overseas businesses to locate their regional bases in Singapore is receiving a strategic boost.
A new initiative developed by the Economic Development Board (EDB) builds on the work of the past 20 years but encompasses an approach that could bring double the benefits.

Called Future.Singapore, it will focus on business themes in which Singapore is seeking solutions, allowing the country itself to be used as a working model and test bed.

This added benefit will come on top of the traditional foreign investment flows into the country, said EDB chairman Lim Siong Guan.

He identified three new business themes under the new initiative: urban solutions; wellness, ageing and health care; and lifestyle products and services.

Mr Lim said in an interview yesterday that the initiative’s tagline would be: The Future In Singapore - Singapore In The Future.

‘We will seek to produce new products and services that the world will want in the future which are first produced here, hence, The Future In Singapore.

‘We will also develop and test new ideas where we will be at the forefront in the use of technology for urban liveability, health care and quality living, which is where Singapore In The Future comes in.’

The EDB’s assistant managing director for industry development, Ms Aw Kah Peng, said the three business themes were identified after wider global trends were analysed.

‘There are certain mega trends that are affecting the world and Singapore, and we are looking at how these work and how we can benefit from them,’ she said.

Mr Lim said this contrasted with the EDB’s earlier strategy of focusing on attracting businesses that could be grouped into clusters according to industry.

‘That was more supply-driven, where we would look at what businesses companies were engaged in, and then create an attractive and conducive environment for them here in Singapore,’ he said.

‘While we will continue to do that, we are now also looking at what is being demanded by the marketplace and seeing how we can develop solutions here.’

The new industries the EDB is hoping to develop under the latest initiative range across a wide spectrum. They include clean water and energy; waste management; urban planning; wellness and health services; products for an ageing population; and business opportunities targeting the rising middle class in Singapore and in the region.

Mr Lim said foreign companies would not consider investing in Singapore in these sectors unless there were competent local companies already operating.

‘A good example is clean water. We started Newater to meet a need for supplies of clean water in Singapore, and now it has become a draw for a high level of research and development activities in that field here,’ he said.

The new sectors are also expected to appeal to young Singaporeans looking for exciting careers.

‘Many young people are passionate about issues such as clean energy, or are interested in products such as interactive games,’ said Mr Lim.

EDB assistant managing director Kenneth Tan, who heads the board’s New Business Group, said the EDB itself had received strong responses from prospective employees.

‘There have been many people applying at the EDB for jobs that deal specifically with the business sectors under the new initiative, such as urban solutions,’ he said.

Mr Lim said it is an encouraging sign that the EDB is targeting industries that will have a wide appeal for Singaporeans looking for jobs, as this is a key objective for the board when bringing in foreign investment projects.
Source : Straits Times - 15 Feb 2008

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$500m upgrade for Singapore Changi’s Terminal 1

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

$500m upgrade for Singapore Changi’s Terminal 1

27-year-old building gets makeover from May and works will be completed by 2011

By Karamjit Kaur, Aviation Correspondent

CHANGI Airport’s grand old dame is getting a $500 million extreme makeover in a bid to secure the airport’s status as one of the best in the region.
An upgrade of Terminal 1 (T1) will start in May and, when the work is done in 2011, travellers will bask in more open spaces and facilities, the Civil Aviation Authority of Singapore (CAAS) announced yesterday.

Changi, which is in a fierce battle for the title of the region’s top airport, needs to constantly upgrade to keep the airlines and travellers it has, as well as woo new ones, experts have said.

Like Terminal 2 (T2), which underwent a recently completed $240 million upgrade, the facelift for the 27-year-old T1 will be done in phases.

An airport spokesman said there will be minimal disruptions to operations and passengers will not be inconvenienced unnecessarily.

She said: ‘All noisy works will be done during off-peak hours and also in the night. The noise levels will be constantly measured during the day and, to minimise construction noise, the hoardings will be insulated.’

Northwest Airlines - one of close to 50 airlines that operate out of T1 - is confident it will be business as usual.

Its Singapore general manager, Mr Yeoh Hock Thye, said: ‘This is not the first time major upgrading works are being done. When T2 was upgraded, it did not affect airlines operating there so we are not unduly concerned.’

T1’s facelift will be done by Takenaka Corporation, a Japanese construction and architectural firm, the CAAS said.

Apart from upgrading the building’s facade and other areas like the arrival and departure halls, there will also be improvements made to passenger flow at key areas.

T1 opened in 1981 when Changi Airport started operations. In 1995, a $147 million renovation was completed. Five years after that, 14 new gates were added.

But this is the first time the terminal has been slated for a major overhaul.

Because T1 was built 27 years ago, works will also be done to ensure that the terminal complies with the latest building codes.

The extensive works needed and the higher cost of construction add up to a significantly higher upgrading bill - $500 million compared to the $240 million for T2.

After the upgrading, T1 - which currently spans just over 280,000 sq m - will continue to handle 21 million passengers a year.

The terminal now has about 50 shops and 30 food and beverage outlets.

With the opening of T3 on Jan 9, Changi now has a total of about 230 retail stores and over 110 eateries.

Last year, the airport - which can handle 64 million passengers annually - saw a record of 36.7 million fliers.
Source : Straits Times - 15 Feb 2008

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12 sites set aside for new hotels to ease room crunch - Singapore

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

12 sites set aside for new hotels to ease room crunch - Singapore

12,000 new rooms to be added to current 37,000

By Natalie Soh
MAKING ROOM: This old Safra site in Bukit Merah may host a 540-room hotel, under the Government’s land sale programme. — ST PHOTO: CHEW SENG KIM

THE old Safra clubhouse site in Bukit Merah may get a new lease of life - as a hotel.
It is currently up for developers to indicate interest under the Government’s land sale programme, and could wind up being a 540-room hotel.

The site is one of 12 slated for hotel developments - some of which are in the unlikeliest of places.

For instance, one site, in Jellicoe Road, sits next to the Jalan Besar CC and will offer views of the Immigration and Checkpoints Authority Building in the Lavender area.

Just a few metres away will be another that will sit next to HDB blocks.

The release of the 12 sites - to be completed by the first half of the year, should developers actually take them up to develop rooms - should help ease a hotel room crunch that some players say is threatening to derail ambitious plans to attract record numbers of tourists.
The sites are located in areas as diverse as Bukit Merah - ‘minutes’ drive from Orchard Road’, according to the online prospectus - and in Outram Road, at the edge of Chinatown, a sure-fire tourism hot spot.

The release of the plots follows similar exercises in the last two years, and points to steady growth in the tourism industry.

Some 10.3 million visitors - a record high - visited Singapore last year.

They fuelled increases in the average room rates, which also broke records month after month.

The average room rate last year hit $202 - a growth of 23 per cent over 2006, and total room revenue reached $1.8 billion. Hotel occupancy also hit 87 per cent.

Even more tourists are expected here this year - 10.8 million in all - driven by events such as the Formula 1 Grand Prix in September.

This is likely to make the room crunch worse and push rates up - hotel rates here are already the sixth-highest among Asian cities - squeezing out low-end tour groups and budget travellers, which industry players say may comprise up to 30 per cent of visitors here.

Tour agents are already scrambling to put their guests up, and are having to resort to hotels in Geylang and the East Coast because rooms downtown just aren’t available.

And because of rising rates, some agents are being forced to send budget tour groups to Johor Baru or Batam instead.

The release of the 12 sites though, is aimed at averting a real squeeze down the road: in 2010, to be precise.

That is when many predict push will come to shove.

Said Mr Donald Han, managing director of property consultants Cushman & Wakefield: ‘It is estimated that in 2010, 14 million foreigners will visit Singapore.

‘Based on a conservative average length of stay of 3.4 days, Singapore will experience an acute shortage of rooms.’

He added: ‘In short, existing hotel stocks need to be doubled in the next three years to meet rampant demand.’

Singapore has said it wants to get 17 million visitors by 2015.

The 12 sites should contribute about 5,000 rooms to the mix within the next few years.

Another big contribution will come from the Marina Bay Sands and Resorts World at Sentosa integrated resorts, which will add another 4,400 rooms to the inventory.

All told, including other upcoming hotels, 12,000 rooms are expected to be added to the 37,000 now available.

It may not be quite enough, but Mr Robert Khoo, CEO of the National Association of Travel Agents Singapore, will take it.

‘If you tell me that the rooms would be here tomorrow, I’d be happier. Hopefully, they’ll help bring down the room rates as well.

‘Some of my agents have told me about how they have lost tours because they can’t secure rooms.’

Source : Straits Times - 15 Feb 2008

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Mindy Yong

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MTI revises Singapore economic growth forecast for 2008 to 4-6%

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

MTI revises Singapore economic growth forecast for 2008 to 4-6%

By Jennifer Alejandro, Lukman Khairuddin & Yvonne Cheong,

SINGAPORE: Singapore’s economy is expected to grow by 4 to 6 percent this year, down from the previous forecast of 4.5 to 6.5 percent.

The downward revision is the result of deteriorating external economic conditions and greater downside risks, said the Trade and Industry Ministry, in a report on Thursday morning.

According to the report, current conditions suggest that the US will likely enter a mild recession in the first half of 2008, but strong fundamentals, coupled with fiscal and monetary stimulus, will help support recovery in the second half.

If this happens, Singapore’s economy will likely grow by close to 6 percent.

However, the government said a protracted slowdown in the US will hit external demand-oriented industries here, like wholesale electronics, and this may push growth to the lower end of the forecast range - at 4 percent.

Reacting to the downward revision of Singapore’s economic growth, CEO and Chief Economist at CIMB-GK Research, Mr Song Seng Wun, said the data is within his expectations.

He said: “At this juncture, I still think that the high end of the forecast is achievable. Looking at the data in the fourth quarter, especially for the composite leading index, the fourth quarter managed to climb – I think 0.7 percent on a quarter-on-quarter basis. So that suggests that for the first quarter and probably the second quarter, we may see fairly decent growth.”

Ravi Menon, Permanent Secretary, MTI, said: “What’s important to remember is that in either scenarios, we’re looking at slower growth this year, and slower growth should be viewed in the context of the trend growth that we’ve seen in the last four years. It represents a moderation to the economy’s underlying potential rate of growth.”

Singapore’s economy in 2007 grew by 7.7 percent, a slower pace compared to 2006 when the economy grew 8.2 percent.

In the fourth quarter last year, the economy grew by 5.4 percent after a 9.5 percent growth in the previous quarter.

The star performer in Q4 was the construction sector which expanded by 24 percent. Another strong performer was the financial services sector, which grew by 16 percent.

The manufacturing sector, however, saw a slowdown. It posted growth of 5.8 percent in 2007, slower than the 12 percent growth seen in the previous year.

The weakened growth was due to a 28 percent contraction in the biomedical manufacturing cluster as a result of plant maintenance shutdowns and changes in product mix.

Nonetheless, the government is not expecting Singapore to dip into recession.

Selena Ling, Treasury Economist, OCBC, said: “The key question really is – is the pharmaceutical (sector) going to see a quick rebound in the first quarter of this year and for the rest of this year?

“I think our take on that is that with the global slowdown, external demand for manufacturing will be affected adversely. We do not expect a very quick turnaround in manufacturing in the first quarter of this year.”

However, economists do expect consumers to tighten their purse strings because of higher inflation.

This year’s government Budget is widely expected to contain measures to cushion the effects of inflation and the higher costs of living on the lower income group.

Halimah Yacob, Assistant Secretary-General, NTUC, said: “We cannot expect wage increases to be as good this year compared to last year, so the impact will be greater on them - the lower income group. Therefore, whatever proposals are being made in the Budget to help lower income workers will be greatly useful.”

Despite slower growth and higher inflation, the government believes the moderation in economic growth will help ease some of the cost pressures on the supply side and in turn dampen inflation.
- CNA/so

Source : Channel NewsAsia - 15 Feb 2008

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Mindy Yong

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Sembawang E&C wins S$400m deal for Singapore Marina Bay Sands north podium

Posted on February 15th, 2008 by Mindy Yong.
Categories: Singapore News.

Sembawang E&C wins S$400m deal for Singapore Marina Bay Sands north podium
SINGAPORE : Sembawang Engineers and Constructors has won a S$400 million contract to build the North Podium of the Marina Bay Sands integrated resort.

The podium, which will have four upper levels and four basements, will house the casino, theatres and a retail arcade.

Construction work will start this month and expected to be completed by April 2009.

The company is also building the new Downtown Line Bayfront MRT station in Marina Bay, which will connect directly to the resort’s Meetings, Incentives, Conventions and Exhibitions (MICE) centre.

The S$5 billion Marina Bay Sands integrated resort is due to open late next year.

It will also feature hotel rooms housed in three towers with a sky park connecting the towers.

Sembawang E&C is no stranger to integrated resort products. It is also undertaking the entire foundation work and building a basement for the Resorts World at Sentosa integrated resort. That contract was worth S$250 million. - CNA /ls

Source : Channel NewsAsia - 15 Feb 2008

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Mindy Yong

(+65)91002985