F1 will see S’pore host world’s business bigwigs

F1 will see S’pore host world’s business bigwigs

By Ian De Cotta

SINGAPORE: The inaugural Formula One Grand Prix in Singapore will give the island’s economy a significant boost.

F1 supremo Bernie Ecclestone is convinced the first night race on a downtown street circuit is where multi-billion-dollar business deals will be sealed from September.

Apart from an estimated 40,000 tourists visiting the island during the race, the 77-year-old told TODAY in an exclusive interview from London that Singapore will play host to some of the world’s most influential captains of industry from team sponsors like ING, HP and Allianz.

“Everyone is excited about going there (Singapore); all the companies,” he said.

“Among the sponsors alone, whom the teams will invite, there will be 3,000 to 4,000 key sponsors and, for sure, their top people there,” he said.

“Oh, I think it will do people good. People are going somewhere they wouldn’t normally go, perhaps see things they would not normally see and become interested. It will be good for Singapore; you will get big exposure,” he added.

Mr Ecclestone also noted that with Asia and Australia set to host seven races by 2010 (once South Korea and perhaps India get on the calendar), Singapore and the region stand to benefit from the kind of F1-centric £3-billion ($8.3-billion) motorsports industry enjoyed by the United Kingdom.

“I wouldn’t be surprised to see that happen, within two or three years, for sure. You need a bit of time for that to happen,” he said.

Singapore has been on his F1 radar screen since 1990, two years after he took control of the sport that was near begging, turning it into a US$4-billion ($5.7-billion) business. That was the year he first gave his old friend, hotel and property tycoon Ong Beng Seng, the rights to host F1 in Singapore.

But the Government turned down a proposal to build a permanent racetrack, so in the late 1990s he took his idea elsewhere in Asia, adding Malaysia to the F1 calendar in 1999 and China five years later.

As more countries queued for the F1 starting grid, Singapore’s interest was aroused once again, signalling it was keen on another bite of the F1 pie.

In May last year, Mr Ecclestone obliged, giving Mr Ong the green light to host a night race here — a global first.

The reason for the change of heart? “I am very bullish about the East,” said Mr Ecclestone. “It has been so for more than 15 years (since talking to Ong), and hopefully I have been proven right because they have come on in that part of the world and now they are very strong … and Singapore is obviously in that region.”

And Mr Ecclestone is confident that Singapore will eventually become a jewel in the F1 crown.
- TODAY/so
Source : Channel NewsAsia  - 18 Feb 2008

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Singapore Property prices still stable despite uncertainty over US economy

Singapore Property prices still stable despite uncertainty over US economy

By Hoe Yeen Nie, 

SINGAPORE : The number of transactions in the property market has gone down due to uncertainty over the US economy.

National Development Minister Mah Bow Tan said this is to be expected but added that property prices have not shown any signs of correcting.

He was speaking to reporters at the sidelines of a community event on Sunday evening.

He said: “There is a slowdown in the market as reflected in the level of uncertainty. I think prices as far as the monitoring is concerned, I look at the prices of transactions and so far I don’t see the prices correcting as yet. But the level of transactions, the number of transactions, have come down. I think that reflects the uncertainty in the market.

“People are not sure what is happening, particularly in the US. And I think that’s a right attitude to take. Wait for a while, let the dust settle, then see what’s happening. As far as the government is concerned, we’ve taken the necessary measures over the last year to try and remove some of the speculative elements in the market. So I think we’ll see what happens in the next few months.”

As for those who wondered why there were no specific measures targeted at housing in this year’s Budget announcement, Mr Mah said the new key initiatives had been announced at last year’s National Day Rally.

And some of it, like the Home Improvement Programme, Neighbourhood Renewal Programme and the Remaking the Heartlands project have since been rolled out.

Mr Mah added that service and conservancy charge rebates, which were part of the GST Offset Package, continue to apply this year.

On rising construction costs, the Minister said he’s not worried that this will lead to a rise in costs or delays for upgrading programmes.

He also announced new Home Improvement Programmes at Marine Parade and Ang Mo Kio.

More details on the programmes are expected soon.

Commenting on this year’s Budget, he said: “As far as this year’s Budget is concerned, I think housing and public housing in particular has had its fair allocation, fair share of the housing budget. In the years ahead, I expect there’ll be a lot more expenditures from the Budget on public housing.” - CNA/ch
 
Source : Channel NewsAsia  - 18 Feb 2008

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interTouch in US$150m Singapore buy

interTouch in US$150m Singapore buy

Acquisition of MagiNet will help the NTT DoCoMo subsidiary become a top tech provider to hotels, writes AMIT ROY CHOUDHURY

AHEAD of the much-anticipated Formula One race later this year and the opening of the Integrated Resorts (IRs) a bit further down the road, a top infocomm services provider to the hospitality industry has made a major acquisition in Singapore. interTouch, a wholly owned subsidiary of Japanese telco giant NTT DoCoMo, has completed the purchase of Singapore-based competitor MagiNet for US$150 million.
 
Mr Reed: Says the ‘combined entity is expected to maintain a high growth trajectory’ and that majority of this growth will be in high-speed Internet access 
The company, which provides managed technology services to the global hospitality industry, has its international headquarters in Singapore. interTouch’s acquisition of MagiNet has created one of the world’s largest providers of infocomm technology to hotels.

Speaking to BizIT, interTouch CEO Charles Reed noted that the combined entity will have 1,000 hotels in 56 countries as its customers.

This translates into more than 240,000 installed high-speed Internet access points and more than 140,000 installed DVOD (digital video-on-demand) points worldwide, with more than eight million connections annually.

Parent NTT DoCoMo provided interTouch with a war chest of US$191 million for the acquisition. ‘This includes funds allocated for the acquisition and debt servicing to facilitate the integration with MagiNet,’ Mr Reed said.

The company will also invest into new technology platforms to better service its hotel partners.

Singapore-based MagiNet operated in 31 countries worldwide employing 900 people globally. The company saw rapid growth since its inception in 1991 and had expanded its suite of interactive solutions, such as high-speed Internet access solutions as well as interactive movie entertainment products, Mr Reed noted.

‘MagiNet’s success was further boosted through its acquisition of On Command Asia-Pacific, STSN Asia-Pacific, Thorn Pay Per View hotels in Australia and Net2Room in Singapore. This contributed significantly to the growth of MagiNet as a multinational corporation in a short period of time,’ Mr Reed said.

Post acquisition, interTouch has now expanded its team of employees to over 100 in Singapore and 1,200 globally, Mr Reed noted.

The annual revenue in 2007 for the combined companies is estimated to be in the region of US$150 million.

‘This makes us one of the top two to three largest companies worldwide in the hospitality technology industry,’ Mr Reed noted.

interTouch has experienced rapid growth in recent years, as has MagiNet, and the combined entity expects to maintain a high growth trajectory, he said. ‘The majority of this growth is in high speed Internet access, which has grown by 300 per cent between 2005-2007.’

According to Mr Reed, revenues for interTouch grew 36 per cent in 2007 and this strong performance will continue this year as well.

The acquisition of MagiNet is part of interTouch’s vision to expand its global presence as the premier provider of managed technology network services to the booming hospitality industry.

‘The industry has been experiencing phenomenal growth and the acquisition is timely for interTouch,’ Mr Reed noted.

The amalgamation of two complementary organisations will provide the company with the synergies, scale and product expertise to implement a broad suite of innovative integrated solutions in hotels, he added.

‘Our customers can expect nothing short of the most advanced technology solutions complemented by interTouch’s renowned network monitoring and customer support.’

interTouch is committed to developing innovative technologies to support the needs of hotels today and in the future with a one-stop, comprehensive range of solutions, he added.

‘Not only does the company have a dedicated R&D (research and development) team, interTouch will leverage NTT DoCoMo’s R&D to further enhance its offerings.’

The company has plans to continue expansion into several new markets in 2008, and will continue to build on its team of professionals globally.

The combined company has expanded into India, North and South America and Africa, and plans to continue expansion into new markets in support of global partners’ expansions, Mr Reed said. It also plans to expand its suite of technologies to include managed services and multimedia products.

Mr Reed noted that interTouch recognises that wireless Internet is a convenient way for consumers to access the Internet, and wireless technologies are moving ahead at a rapid rate.

interTouch holds one of the spectrum licences for wireless broadband services in Singapore.

‘It is, therefore, an area that interTouch is exploring for future opportunities. At this stage we are unable to elaborate further on this, however we will update as soon as there are any announcements in this area.’

‘We are committed to developing innovative technologies. With 100 per cent ownership of MagiNet, interTouch will have even greater access to resources and talent to develop innovative technologies that will support the needs of hotels today and in the future, Mr Reed said.
Source : Business  Times  - 18 Feb 2008

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6-digit fees for place at international school - Singapore

6-digit fees for place at international school - Singapore

Firms can pay UWC $200,000 for guaranteed space
By CHEW XIANG

(SINGAPORE) Demand for places at international schools in Singapore is showing no sign of letting up with some top institutions asking for six-digit fees in exchange for skipping the queue.
At the popular United World College South-east Asia (UWC), there are 1,939 youngsters on the waiting list for admission this August - in a school with a capacity of 2,870. Like most of the big international schools, it has no vacancies even for admission later this year, according to its director of admissions Jonathan Carter.

UWC’s second campus at Tampines will be ready only in 2010 and its interim campus at Ang Mo Kio will only take in students at the lower grades from September.

The school meanwhile has started a programme targeted at companies: it guarantees a place for the children of their expatriate employees for $200,000 each.

Tanglin Trust School, popular with expatriates from Britain, has a similar scheme offering places for $165,000.

Both are not-for-profit organisations. At UWC, the funds generated will be used to underwrite its expansion programmes, including the building of a second campus, increase the number of scholarships, expand teacher development programmes and establish an endowment fund, according to spokeswoman Joy Stevenson.

At the Singapore American School, there are 850 children on the waiting list. The school’s enrolment is 3,822 and there are currently no places available, according to spokeswoman Beth Gribbon.

It expanded its Woodlands campus in 2004 and was previously said to be looking to expand again, although Ms Gribbon has denied this.

Instead, the school is now taking applications only for children with US passports, or those whose parents work for US-based companies.

The Australian International School has 300 children on its waiting list, mainly at the primary school level, said Kim Douglas, its director of marketing and enrolment.

The school has about 1,800 students. It is constructing a new building at its Lorong Chuan campus to take in 840 more students. The building will be completed this year.

The long queues at international schools are closely watched by companies that hire expatriates with school-going children.

Mark Ellwood, managing director of consulting firm Robert Walters Singapore, said that the supply crunch ‘can affect decisions about relocation, especially if the children are at a critical age where examinations become important and places can’t be secured at the top schools straight away’.

Higher demand amid limited supply may not always result in higher fees, given that a number of international schools here are set up as non-profit organisations or educational charities.

But consulting firm Mercer’s Asean managing director Su-Yen Wong said that if the supply crunch does lead to higher tuition fees or companies having to pay a premium to guarantee a place for their employees’ children, then it ‘will increase the cost of doing business, and companies will find themselves having to re-assess the economics, should the supply of school places not increase to meet the demand’.

She said this will affect the plans of companies seeking to expand in Asia.

Mr Ellwood said that companies are reviewing expatriate benefit packages, although these reviews tend to focus on housing allowances, which have seen even more dramatic supply and cost problems.

And benefits are less generous now, said Roland Ruiz, managing director of Hay Group’s reward information services in Asia. ‘In the past, while it was true that many companies provided full payment for education costs for expat employees, more recently there is a noticeable trend to exclude or reduce payment for such a cost with the exception of highly critical hires.’

The lack of places at international schools is testament to the rising number of foreigners in Singapore, lured by a still strongly expanding economy. The number rose from 875,500 in 2006 to just over one million last year, according to Department of Statistics estimates.

For the moment, expatriates are also looking at enrolling their children in local schools, especially if the children’s education is not paid for by their employers.

Others are opting for the smaller international schools which have shorter waiting lists, for example, just 50 for ISS International School, which has a capacity of 700. Chinese International School, which has 210 students, has a ‘very short’ waiting list, and only for certain grades.
 
Source : Business Times  - 18 Feb 2008

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Budget could have helped more with costs, Singapore firms say

Budget could have helped more with costs, Singapore firms say 

Tax rebate and cut in worker levies, fuel taxes among measures sought

By Bryan Lee, Economics Correspondent 
 
THE Government’s Budget this year may look like it is hongbaos all around, but companies are disappointed that they are getting little aid with their most pressing challenge - escalating costs.
Even as families look forward to generous Budget goodies to help them cope with rising inflation, the corporate sector says it has been left to fend off the same economic demon on its own.

Finance Minister Tharman Shanmugaratnam yesterday said, however, that corporate taxes were already cut since last year, adding that the Government should not overreact to the present situation.

‘Particularly for small and medium-sized companies, the tax regime in Singapore is already more competitive than in Hong Kong or any other country,’ he told reporters at a community event.

Still, companies, business groups and economists said with a near-record surplus of $6.45 billion, the Government could afford to dish out rebates and other measures to help with spiralling rental and wage bills.

And while they welcomed new schemes to promote innovation in the long term, they said they would have liked some immediate aid, too.

‘Our costs have gone up on all fronts, be it raw materials, labour or rentals,’ said Mr Lee Tong Soon, managing director of the Thai Village restaurant chain. ‘Our profit margins will be hurt, and we had hoped that the Government would do something to help us in the Budget.’

The latest Budget was presented to Parliament by Mr Tharman last Friday. Strong economic growth and a red-

hot property market led to the exceptional surplus, paving the way for special transfers totalling $5.4 billion. Most benefits went to ease the burden of rising living costs for households, especially those of the poor and needy.

‘For businesses, there was really little in terms of direct help to tackle rising costs,’ said CIMB-GK economist Song Seng Wun.

While a cut in the corporate tax rate would have been welcome, few expected it since the rate was reduced from 20 per cent to 18 per cent last year.

‘The tax rate is already fair. Our China branches are taxed at more than 30 per cent,’ said Mr Lee.

Still, companies and analysts were hoping for a one-off income tax rebate, like that offered to individuals.

Foreign worker levies and fuel taxes could also have been lowered, while foreign worker quotas could have been raised and rebates given to relieve rising transportation costs, they said.

Mr Phillip Overmyer, Singapore International Chamber of Commerce chief executive, applauded the move to allow renovation costs to be expensed. This will mean big savings for retailers and restaurants, which have to remodel their outlets every two to three years.

But he was disappointed that the Government did not address Singapore’s acute shortage of skilled labour.

‘In the hospitality sector, foreign worker sources are mostly exhausted already, so there’s scope to broaden the countries that hotels and restaurants can source from.’

DBS Bank economist Irvin Seah said it was unfair to look at this Budget only. The Government has been working to relieve rental and wage burdens through non-Budget initiatives, he said.

Citigroup economist Kit Wei Zheng also said the Government may be counting on cost pressures to dissipate as the global economy slows.

Others suggested that the Government may be keeping its powder dry for off-Budget measures that may be needed should the United States and world economy slow more severely than expected.
Source : Straits Times  - 18 Feb 2008

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Industry has room to grow: Singapore MM Lee

Industry has room to grow: Singapore MM Lee 
 
SINGAPORE’S aviation sector still has a long runway of growth and it will also be fuelled by the boom in air travel across Asia, said Minister Mentor Lee Kuan Yew last night.
While the airline industry creates 8 per cent of the world’s gross domestic product on average, it contributes only 5 per cent to Singapore’s.

‘So, we have a long way to go,’ he said at a dialogue to launch the Singapore Airshow Aviation Leadership Summit.

He was responding to Air Mauritius chairman Sanjay Bhuckory, who asked if aviation in Singapore had reached its saturation point.

Mr Lee does not think so. He said: ‘The saturation point will come when the skies are so crowded that we can no longer have air traffic control making sure that every plane will land safely.

‘And we’re a long way from that because we’ve got the latest technology which will make sure that everybody takes off and lands with absolute safety.’

He pointed out that with Asia’s rise, new airports were being built and more people were travelling. Singapore also had the advantage of being well- connected to both Asia and Europe.

Last year for instance, 36.7 million passengers passed through Changi Airport, an all-time high. The airport can handle 70 million passengers annually.

An employee of Singapore Airport Terminal Services then asked if a second civilian airport would spring up here.

Mr Lee said he did not want to speculate, but believed that the military airbase at Paya Lebar could be converted into a civilian airport if necessary.

He added that the country has good air traffic arrangements that can see it through the next 20 to 30 years.
Source : Straits Times  - 18 Feb 2008

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Asia won’t catch flu if US gets a cold, says Singapore MM Lee

Asia won’t catch flu if US gets a cold, says Singapore MM Lee 

With China and India propelling it, Asia won’t be ‘unduly disadvantaged’ by a recession in the US

By Karamjit Kaur, Aviation Correspondent 
AIRING HIS VIEWS: MM Lee Kuan Yew is confident that the aviation industry in Asia will continue to soar. — PHOTO: LIANHE ZAOBAO
 
ASIA - propelled by the twin engines of China and India - will not be ‘unduly disadvantaged’ if a recession hits the United States, said Minister Mentor Lee Kuan Yew last night.
‘I believe this may be the first time where the US economy catches a cold and we are not going to catch influenza - I hope,’ he said at the Singapore Airshow Aviation Leadership Summit dinner dialogue attended by about 200 aviation pundits.

The Chinese and Indian economies are unlikely to dip below 8, 9, or 10 per cent, he added, and while about 40 per cent of intra-Asian trade today is bound for the US, even if the US cuts its imports by half, Asia will not be too badly hit.

Zeroing in on the aviation industry, he was confident Asia will continue to soar high, as new airports are built and more people take to the skies.

He said: ‘I see enormous growth in Asia in the next 10, 20 years, more in Asia than in any other part of the world.’

China alone is looking at about 240 airports by 2020 and more than 500 by 2050 - and ‘that is just the beginning’ he said.

But on whether Asia, with its booming air travel sector, is well-placed to lead the aviation industry in all areas, including liberalisation going forward - an agenda that the International Air Transport Association (Iata) led by its head Giovanni Bisignani is trying to push - Mr Lee was a bit more sceptical, adding that ‘it will be very difficult’.

Countries with airlines that are not doing so well will want their flag carriers to grow stronger first before they open up. And while in his view, this is the ‘wrong approach’, it is nonetheless the reality.

Citing Singapore Airlines’ example, Mr Lee said its success shows how you become competitive when you are forced to compete internationally.

He remembers telling management and unions when Singapore Airlines (SIA) was set up as a separate entity from Malaysia’s national carrier that ‘if you can fly the flag and make a profit, I will be proud. If you cannot, let us forget it and somebody else can fly this flag’.

Everybody in SIA - from management, to pilots, to cabin crew and catering - understood that unless SIA was better than the rest, there was no reason for people to fly the airline.

Mr Lee said: ‘So I believe many of the problems that our neighbours are facing will go if they get international competition going and get international management to bring them up to speed. Then the whole region will prosper.’

Some progress has been made, he said, noting that by December, Asean will lift all restrictions on flights between capital cities of the 10 member states and by 2015, Asean national carriers will be able to criss-cross the skies over the region with no restrictions.

Turning to the other hot potato of global warming, Mr Lee was also asked during the 45-minute session for his reactions to attacks on the aviation industry by governments and organisations, primarily in Europe. Proposals have included taxes and penalties on airlines.

He replied that the industry contributes to about 2 per cent of man-made carbon emissions, but global warming has to be attacked in every way.

Still, if the problem is to be dealt with in a more cost-effective way, ‘then you must come to the conclusion that surely you can save more by rationalising air routes and have less of this prohibited flights and no-fly zones.’

Other things like more fuel-efficient jets, maybe the use of solar cells and many other options will also have to come.

According to industry average, one minute less of flight time saves 62 litres of fuel and 160kg of carbon emissions.
 
Source : Straits Times  - 18 Feb 2008

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Spruce-up time for 650 Singapore HDB flats in Tampines

Spruce-up time for 650 Singapore HDB flats in Tampines
 
Govt to pay most of the bill; work under home improvement scheme to start before year-end

By Jessica Jaganathan 
 
SEVERAL hundred Tampines residents are expected to be among the first to have their flats spruced up in a new Housing Board scheme that will see the Government foot most of the bill.
Six blocks in Tampines Street 21 will be upgraded under the Home Improvement Programme (HIP), Minister for National Development Mah Bow Tan announced yesterday.

The work, scheduled to start before the end of the year, will focus on mending weathered concrete and replacing waste pipes.

Once at least 75 per cent of flat owners vote for the upgrading, this essential work is compulsory. But this will be fully paid for by the Government, said Mr Mah, also an MP for Tampines GRC.

The HIP will give residents the choice of opting out of certain upgrades, including repairs to toilets, front doors and rubbish chutes, which will be subsidised at 90 to 95 per cent. The bill to owners would then be between $550 and $1,375 for the full package.

Residents living in the 25- year-old blocks, which house about 650 flats, welcomed the HIP.

RELIEVED
‘I have water dripping down in the toilet, and I’ve complained to the town council about it, so I’m glad something is being done.’ - MADAM MARIA MANSOOR, who lives in a five-room flat
 
‘I have water dripping down in the toilet, and I’ve complained to the town council about it, so I’m glad something is being done,’ said real estate agent Maria Mansoor, 43, who lives in a five-room flat with her family of six.

Retiree Choy Wai Han, in her 60s, who lives in a four-room flat with her husband and son, was relieved to hear the news, but wanted to know how much the non-essential upgrades would cost.

Said Madam Choy: ‘As long as I can pay in instalments, and the price is reasonable, I’m all for it.’

Currently, about 300,000 flats islandwide are eligible for HIP upgrades.
 
Source : Straits Times  - 18 Feb 2008

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Singapore HDB flat still very affordable for average S’porean

Singapore HDB flat still very affordable for average S’porean 

Some get up to $88k in subsidies, says Mah Bow Tan; also flats still cheap enough for families to use CPF for full mortgage payments

By Alvin Foo 
 
PROPERTY prices may be on the rise but HDB flats still remain very affordable for the average Singaporean, National Development Minister Mah Bow Tan emphasised yesterday.
That is because families have access to subsidies which can go as high as $88,000 for some households, he noted.

And flats are still cheap enough for families to be able to fund their mortgage instalments entirely from Central Provident Fund (CPF) contributions - without the need to stump up cash.

Mr Mah made these points at a Chinese New Year dinner at the Tampines East Community Club yesterday.

With HDB resale prices rising about 17.5 per cent last year, he said he is well aware that younger Singaporeans are becoming increasingly concerned about the affordability of HDB flats.

He reiterated the Government’s commitment to providing affordable public housing and said there were two ways to achieve this.

One was to give big housing subsidies to help newly-weds buy their first HDB flat. The other was to provide mortgages at a concessionary interest rate.

In terms of subsidies, an Additional CPF Housing Grant (AHG) introduced in March 2006, provided lower-income families with an additional grant of between $5,000 and $20,000 to buy their first HDB flat.

The income ceiling for this grant was raised from $3,000 to $4,000 to allow more families to benefit. And the grant limit was also increased by $10,000 so that the highest tier grant is now $30,000.

Mr Mah said: ‘A recent Ministry of Finance simulation estimated that the typical young low-income household could enjoy housing subsidies worth about $88,000.’

He also revealed that HDB’s records show that recent buyers of new HDB flats use only about 20 per cent of their monthly household income to service their housing loans.

‘This means that families can service their housing loan entirely from their CPF Ordinary Account contribution, without any cash outlay,’ he noted.

In any case, rising resale prices seem also to have stabilised for now so there is no need for buyers to rush in at this point, said Mr Mah.

‘The HDB Resale Price Index grew by only 1 per cent last month, and we expect prices to grow at a more moderate pace in 2008,’ he added.

Mr Mah also noted that the proportion of resale transactions with a positive cash over valuation, as well as the median cash over valuation also dipped marginally last month.

He said HDB will continue to monitor the situation closely.
 
Source : Straits Times  - 18 Feb 2008

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Don’t expect big Budget goodies every year: Singapore SM Goh

Don’t expect big Budget goodies every year: Singapore SM Goh 

By Lee Hui Chieh & Alvin Foo 

THE generous goodies given out last Friday are the result of a bumper Budget surplus that cannot be expected every year, Senior Minister Goh Chok Tong warned yesterday.
The surplus was driven by ‘exceptional’ economic growth of 7.7 per cent last year that may not be repeated, he said.

And the other conditions that led to such a big surplus - such as fast-rising property prices - may not even necessarily be desirable.

On Friday, the Government announced a huge Budget surplus of $6.4 billion, as well as $1.8 billion in benefits in the form of Growth Dividends, income tax rebates and health care and education related top-ups.

Urging people to have realistic expectations and not to keep asking for more, SM Goh said: ‘What I find missing is a little bit of reflection. That is, people asking themselves how this Budget is possible.

‘You got to understand that the surpluses came about because of the exceptional economic performance. We cannot grow by 7.7 per cent every year.’

He also noted that a key factor behind this year’s surplus was the strong growth of the property market.

It led to the Government collecting $4.1 billion in stamp duties paid on property purchases last year, a 211 per cent increase over the previous year.

But continued growth of the property sector at such a pace is neither possible nor desirable, SM Goh said, because it may lead to an oversupply of property or an overheating of the economy.

SM Goh was speaking to reporters yesterday at a Chinese New Year lunch at the Singapore Expo for about 1,000 elderly people from Marine Parade GRC.

He said that when he looked around at the silver-haired attendees, one question in his mind was how Singapore will look after them in the future.

‘So, therefore in our budgeting, we always have an eye on the future,’ he said.

For this reason, it is important for the Government not to give out too much of the surplus, Mr Goh added.

Rather, the Government must keep aside a sum to increase the size of Singapore’s reserves, which will come in handy in the future.

Singapore’s long-term well-being was also the focus of Education and Finance Minister Tharman Shanmugaratnam’s first public comments since delivering the Budget statement on Friday.

‘We have got to turn our minds away from the immediate benefits that are being handed out…Far more important is what we are doing for our children, our youth, particularly those who are going to post-secondary education.’

A slew of incentives in the area of education was announced as part of the Budget. They included subsidies for part-time degree courses, an $800 million boost for the lifelong learning fund, enhanced aid for needy university and polytechnic students, and more top-ups to student education accounts.

Mr Tharman also encouraged local businesses to pursue innovation in order to compete against those from China, India and Western countries.

He said: ‘They must invest in some R&D, some innovation…try to improve, do something special, different. This is most important for us in the future.’

Commenting on concerns about rising inflation, Mr Tharman said Singapore is well poised to cope with this short-term problem.

He said: ‘Inflation is not a problem for us in Singapore because we can help those who are directly affected, make sure that their families can continue to get by, continue to afford their food, and also encourage everyone to get a job. This is a Budget principally about preparing for the future.’
Source : Straits Times  - 18 Feb 2008

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Aviva’s Big e savings plan hit by plunge in interest rates - Singapore

Aviva’s Big e savings plan hit by plunge in interest rates - Singapore
 
Insurance group announces early redemption of popular CPF scheme
 
By Grace Ng 

PLUMMETING interest rates have forced insurance group Aviva to announce an early redemption for its popular Big e savings plan.
This means that all Central Provident Fund (CPF) monies deposited with the plan will be returned to CPF members, and no new money can be put into the plan.

The single premium endowment plan, which is targeted at CPF members, guaranteed bigger returns than the prevailing CPF Ordinary Account rate of 2.5 per cent.

The year-old plan attracted thousands of investors keen on its initial rate of 3.5 per cent and features such as capital protection and no lock-in period.

CPF members preferred Big e’s stable and attractive interest rates and flexibility of withdrawal over the fixed deposits offered by banks.

The plan raised more than $50 million in just two months, and continued to attract significant sums in the following months.

But as interest rates began falling in the middle of last year, it became increasingly difficult for Aviva to generate enough returns to sustain the 3.5 per cent rate for Big e.

At the end of last year, Aviva lowered the Big e rate to 2.75 per cent, citing the ‘downward trend of interest rates’. This triggered withdrawals of between 15 per cent to 20 per cent of the total investment in Big e, Aviva Singapore managing director Chris Crowe said last week.

However, there were also customers who topped up their investments in Big e, reflecting their view at the time that the scheme was still attractive compared to some fixed deposits with comparable rates which imposed a lock-in period, he said.

But last month, Aviva found it tough to sustain even a 2.75 per cent rate following the drastic interest rate cuts by the US Federal Reserve to 3 per cent currently.

This, in turn, dragged down Singapore interbank rates (Sibor), which have plummeted from 3.375 per cent a year ago to 1.5 per cent currently.

Banks responded by slashing their fixed deposit rates. Returns on some banks’ 12-month deposits of $50,000 to $100,000, for instance, were cut by some 40 per cent in the past year to an average of 1.5 per cent.

Aviva also succumbed to the rate pressure and decided this month on an early redemption of Big e.

Mr Crowe told The Straits Times that the early redemption was ‘disappointing’, but pointed out that many of its customers had enjoyed good profits from keeping their CPF monies in the plan.

He said Aviva will not close Big e for good, and may revive the product later if the interest rate environment turns benign.

Aviva has started informing Big e investors that the fund will be cashed out on March 1.

The policy contract states that if early redemption occurs before the Big e policy expires, customers will be paid the full accumulated value of their investment plus all interest earned up to Feb 29.

The cash will be returned to each Big e customer via their CPF Investment Account or Supplementary Retirement Scheme (SRS) account on Feb 26.

Mr Crowe declined to disclose how many customers still have Big e investments or how much money is involved in the early redemption.

Banks have acknowledged that market volatility has led customers to abandon fixed deposits for alternative investments that protect their capital but offer higher yields.

As Sibor declines and inflation climbs, customers are earning less on their savings, said Mr Dennis Khoo, Standard Chartered Singapore’s general manager of wealth management.

This is why ‘there has been a large interest in high-yield guaranteed products in the past few months’ from conservative investors looking for better yields, he said.
Source : Straits Times  - 18 Feb 2008

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