Singapore increases efforts to position itself as Islamic banking hub

Singapore increases efforts to position itself as Islamic banking hub

By Rachel Kelly

SINGAPORE : Singapore is stepping up efforts to position itself as a hub for Islamic banking.

In the recent Budget, a 5 percent concessionary tax rate was announced for income derived from qualifying Shariah-compliant products. Industry watchers said this would help to draw in key global players.

The global Islamic banking sector is estimated to be worth around US$500 billion. And Singapore is making yet another push for a piece of the fast-growing pie, with a 5 percent concessionary tax on Shariah-compliant products.

Shariah refers to guidelines and principles which are followed in accordance with Islamic law, such as prohibiting the collection and payment of interest.

Industry players said it is a good time to tap into opportunities here.

Arfat Selvam, Arfat Selvam Alliance LLC, said: “The government now has set the right regulatory environment; what’s now needed is for the private sector to come in and to activate this, and to take advantage of all these tax concessions that are being offered.

“And it is hoped that these changes will now lead to… the growth of the Islamic finance industry from here. What we need is more Islamic banks here - Islamic finance houses to create the depth in the market, and to complement the wealth management industry that is already here in Singapore.

“And we need more professionals involved in the field who understand Islamic products and who can effectively market these products.”

Industry players said that Singapore’s multi-cultural society, in which Islamic holidays are celebrated, is also seen as a plus when attracting Islamic investors.

However, they stressed that there is competition from other countries which are seeking to build up their Islamic banking sector.

Raj Maiden, CEO, Five Pillars Associates, said: “What will happen is - it definitely will create some interest. Is the 5 percent attractive enough? You have to look at it in relative to the other players in the market, the other countries, in the similar space and what they are offering. So that will be crucial in getting the necessary players to jump onboard and take advantage of it.

“I think if you scour the scenario, some of them are very competitive, some are even giving tax holidays for a substantial period of time, and I think that is something Singapore needs to be wary of. I think we are taking baby steps in terms of introducing Islamic finance.”

Industry experts said Singapore could further attract key global players with grants or subsidiaries to help product innovation for Shariah-compliant products.

They added that Singapore could build on its strengths, such as in fund management, to draw in high net worth individuals. - CNA/ms
 

Source : Channel NewsAsia  - 26 Feb 2008

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S’pore’s inflation hits 25-year high of 6.6%

S’pore’s inflation hits 25-year high of 6.6%

By Margaret Perry,

SINGAPORE - Singapore’s annual inflation rate hit a 25-year high of 6.6 percent in January, according to Department of Statistics (DOS) data released on Monday.

The inflation rate, as indicated by the consumer price index (CPI), was the highest since the 7.5 percent hit in March 1982.

From a month earlier, consumer prices in January rose 1.5 percent on a seasonally adjusted basis, the DOS said.

The Ministry of Trade and Industry (MTI) issued a statement along with the DOS data, saying the year-on-year jump in inflation in January was due to one-off factors such as a housing value revision and that it was in line with the official inflation forecast of 4.5-5.5 percent for 2008.

The MTI said inflation would start to ease in the second half of the year. In December, the annual rate was 4.4 percent.

“The 6.6 percent year-on-year increase in the CPI in January 2008 was consistent with the official inflation forecast of 4.5 to 5.5 percent for 2008 as a whole,” the MTI said.

The DOS said the jump in inflation was due largely to an 11.1 percent spike in housing costs recorded after a revision to values of public housing.

Housing costs, which account for 21 percent of the consumer price index, have the third-largest weighting after food and transport/communication.

Food prices, which carry the largest weighting in the CPI, rose 5.8 percent in January from a year earlier.

Transport and communication costs rose 6.9 percent between January 2007 and January 2008, driven by soaring global fuel prices and higher taxi fares.

Higher petrol prices also contributed to a rise in transport costs for food. This, coupled with higher global food prices, means more expensive grocery bills.

However, one local supermarket chain has extended a discount scheme to help shoppers cope with rising costs. NTUC FairPrice has given customers 5 per cent off prices of 500 of its housebrand products since mid-December 2007.

The discounts, originally due to finish at the end of February, has now been extended until the end of April. The extension is costing FairPrice S$1 million and is part of the company’s “Stretch Your Dollar” programme.

In the heart of Singapore’s financial district, many were not surprised to hear the latest inflation figure. Many have already tightened their belts.

“I have a family, so I have to plan our expenses and cut out unnecessary spending and then maybe make some investment to cover the shortfall,” said a member of the public.

“Shop around a bit more, do a bit of homework (before buying anything). It’s a bit tedious, but at the end of the day it’s your pocket,” said another. - CNA/ac/ir

Source : Channel NewsAsia  - 26 Feb 2008

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Singapore MP Inderjit Singh says govt policies may have contributed to inflation

Singapore MP Inderjit Singh says govt policies may have contributed to inflation

By Asha Popatlal,

SINGAPORE: The Budget Debate kicked off in Parliament on Monday with MPs taking a long and hard look at what has been troubling many Singaporeans - growing cost increases.

MP for Ang Mo Kio GRC, Inderjit Singh, pointed out that the “grow-at-all-costs” policy of the government might have overheated the economy and worsened the income divide.

From electronic road pricing (ERP) and public transport fares to the Skilled Foreign Worker levy to healthcare charges, MPs cited a litany of recent cost increases.

While some may have been beyond the government’s control, Mr Inderjit Singh questioned whether all the hikes were necessary and if some could have been deferred.

He said: “I feel a significant part of the inflation has been caused by factors that we could have controlled.

“In the last two years, the government has contributed to inflation by allowing multiple cost increases, both directly or through policy changes that resulted in cost increases.

“The end result is an era of very high cost increases, high inflation not supported by enough wage increases, especially for the lower and lower middle income Singaporeans and companies.”

The impact on the needy is telling. With real income shrinking as well, statistics show the lower 20 percent of Singaporeans are suffering effectively higher inflation rates than the top 20 percent.

Mr Inderjit Singh argued for a review of what he called the “boom and bust” policy of growing as fast as possible during the good years to compensate for periods of slower growth, even if some Singaporeans could not keep up.

In addition, he felt the government might have been too quick to impose the GST hike last year, a significant cost increase which triggered off other increases which were passed on to consumers.

“In light of the booming economy which should have been visible by mid-2007, the Government could have made the late decision to hold off the GST rise by a year or two,” said Mr Inderjit Singh.

He recalled how the Finance Minister had stoutly defended the 2% point GST hike, citing reduction of government income from other sources and the need to generate enough money to fund Singapore’s growth.

But now, instead of projected Budget deficit of $0.7billion, the government had a surplus of $6.4 billion, leaving the government to face a ‘pleasantly embarrassing outcome’.

This point was also highlighted by other MPs who spoke during the Budget debate on Monday.

With Singaporeans experiencing one of the highest spikes in the cost of living in the last five years, MP for Pasir Ris-Punggol GRC, Michael Palmer, said direct assistance could help.

He said the government could set aside some money for a contingency fund from the Budget surplus to provide an inflation relief package, similar to the GST Offset package and specifically targeted at the low and middle income earners.

Mr Palmer said: “We expect inflation to rise to between 4.5% and 5.5% (this year). That represents at least a 900% increase from the 2005 figure and a 450% increase from the 2006 figure. If inflation hits 4.5% this year, it will still be more than a 200% increase from last year. So when the Minister said that ‘inflation today is higher than what we have been used to in Singapore for many years’, in my humble opinion, that may be understating the matter somewhat,” he said.

His bottomline? The fear of creating an expectation of handouts should not deter the government from being caring and giving help when it has the resources to do so. - CNA/ir
Source : Channel NewsAsia  - 26 Feb 2008

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Singapore MP urges raising of income cap for subsidised HDB flats

Singapore MP urges raising of income cap for subsidised HDB flats
SINGAPORE: It is time to raise the income ceiling for first-time buyers of subsidised public housing, says MP for Holland-Bukit Timah GRC Christopher De Souza.

This, he feels, will also help ensure a more equitable distribution of the Budget surplus.

Speaking during the Budget debate, Mr De Souza pointed out that it has been 14 years since the HDB last increased the monthly income ceiling for buyers of new flats, from S$7,000 to S$8,000.

Yet in the 10 years between 1995 and 2005, he said data from the General Household Survey showed the proportion of resident households earning S$8,000 and above every month had nearly doubled from 10.85 per cent to 19.9 per cent.

And while measures have been taken to help the low-income group meet their housing needs, this was not the case for the middle-income group.

For example, Prime Minister Lee Hsien Loong stated in last year’s National Day Rally speech that the maximum Additional CPF Housing Grant (AHG) would be enhanced further from S$20,000 to S$30,000. In addition, the household income ceiling for AHG eligibility would be raised from S$3,000 to S$4,000. These changes help the low-income group.

Meanwhile, skyrocketing property prices also mean many in the middle income group could no longer afford resale flats or the cheaper leasehold private condominiums.

For example, HDB’s records show that a 4-room resale flat at Jalan Membina was sold for S$590,000 or S$609 psf; a 5-room Marine Parade flat was sold for S$750,888 or $577 psf; and an executive Mei Ling Street flat was sold for S$890,000 or S$552 psf.

Mr De Souza said: “The middle-income couple is caught in a difficult position. For example, some of my constituents and peers in my age group say, ‘I will accept the promotion in my company, but I will decline the raise so as not to breach the income ceiling’.

“The question to ask is therefore: ‘Is it worthwhile turning down the raise?’ Unfortunately, many have said ‘yes’, especially in a private property market which has seen prices skyrocket.” - CNA/ir

Source : Channel NewsAsia  - 26 Feb 2008

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SM Goh says S’pore can cope even if US goes into recession

SM Goh says S’pore can cope even if US goes into recession

By Ca-Mie De Souza,

Senior Minister Goh Chok Tong said on Sunday Singapore has got its economic basics right so even in the face of a looming US recession, the country can cope.

And it can also depend on the critical growth in China and India.

He was speaking in an interview with South Korea’s Arirang TV in Seoul.

He said Singapore with its good budget, good economy and strong fundamentals can weather a US recession, even though growth may be down by 1 to 2 percentage points.

Mr Goh added that the country has the surpluses to see the people through a very bad patch.

And it has been working with other countries like South Korea to establish more regional trade and investments, for instance through Free Trade Agreements.

On bilateral ties, Mr Goh said Singapore and South Korea can explore how they can synergise.

So for instance, Seoul can use Singapore to export not just to Southeast Asia but also beyond.

And Mr Goh, who was the proponent of the Asia-Middle East Dialogue, said the two countries can also work together with the Arabs to invest in third countries.

In a wide-ranging interview, the Senior Minister also said his personal goal as a senior statesman is to open up new economic space for Singapore.

On how he was able to maintain stability while introducing many changes during his tenure as Prime Minister, he said it was important that leaders and the government are trustworthy.

He explained: “You’ve got to say what you mean and do what you say.”

Mr Goh added that it was also important to “grow the economy” and “share the fruits” with the people, ensuring no one’s left behind.

When asked how South Korea could move to ratify its obstacle-laden FTA with the US, Mr Goh shared Singapore’s experience.

And this included winning over American Congressmen and business people who were against the bilateral FTA. - CNA/ch
Source : Channel NewsAsia  - 26 Feb 2008

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Investment flows within ASEAN not affected by sub-prime crisis - Singapore

Investment flows within ASEAN not affected by sub-prime crisis - Singapore

By Wong Siew Ying,
SINGAPORE: The sub-prime crisis in the United States has not affected investment flows within ASEAN countries.

Trade and Industry Minister Lim Hng Kiang who was responding to a question from MP for West Coast GRC, Ho Geok Choo, in Parliament on Monday, said feedback from companies show interest within the region remains strong.

As at 2006, the total foreign direct investment (FDI) from other ASEAN countries to Singapore stood at over S$10 billion with the top investors being Malaysia, Thailand and Indonesia.

Mr Lim added that ASEAN also remains as the top investment region for Singapore companies. The city-state’s key investment countries are Malaysia, Indonesia, Thailand, the Philippines and Vietnam.

Singapore companies’ investment in Malaysia and Indonesia, its top two investment destinations within ASEAN, amounted to S$16 and S$15 billion respectively.

Mr Lim said: “The stock of direct investment for Singapore companies into ASEAN stood at S$50 billion as at end-2006, accounting for nearly one quarter of Singapore’s total direct investment stock abroad.

“We will continue to encourage companies to invest in ASEAN and draw on the unique strength of each ASEAN nation. Increased intra-ASEAN investment flows are important as they will result in tighter regional integration. That will enhance the overall competitiveness of ASEAN.” - CNA/vm

Source : Channel NewsAsia  - 26 Feb 2008

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Hazy sky for S’pore as hotspots detected

Hazy sky for S’pore as hotspots detected

By Sheralyn Tay, TODAY

SINGAPORE: Don’t rub your eyes, it’s not your vision blurring. It’s just the haze which returned this weekend.

On Sunday, Singapore experienced its haziest day this year, with the 24-hour Pollutant Standards Index (PSI) reading hitting a peak of 56 at 4pm. This is the highest reading since December last year.

Sunday was also the third consecutive day that the 24-PSI reading has crept past the good range into the moderate range of 50-100. On Saturday, the 24-hour PSI reading hit 52, up from 51 on Friday.

According to the National Environment Agency’s (NEA) hot spot map, there are “numerous” hotspots over Thailand and Laos. Hot spots indicate areas with fires or hot smoke and are detected by infrared images captured by weather satellites.

While isolated hotspots have been detected over Myanmar, Cambodia, Vietnam, western Borneo and parts of Sumatra, it was Riau in Sumatra that had been enveloped in thick smoke over the weekend as land-clearing fires created a choking haze that reduced visibility in some parts to 20 metres.

But the number of hot spots in Riau appears to be dropping, as Sunday’s hot spot count was four, compared to 100 on Thursday and 50 on Friday.

According to NEA, the moderate haze is due, in part, to drier conditions. So far prevailing winds have kept most of the smoke away from Singapore, although changes in wind direction could account for hazier days ahead. - TODAY/sh

Source : Channel NewsAsia  - 26 Feb 2008

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