Singapore SLA to lead shift out of CBD with move to Novena

Singapore SLA to lead shift out of CBD with move to Novena

It will rent space in IRAS building to ease office space crunch
By KALPANA RASHIWALA

(SINGAPORE) Kicking off the initiative to move some government agencies out of the CBD to ease the acute shortage of prime office space, Singapore Land Authority (SLA) yesterday said it will relocate from the former Temasek Tower in the Tanjong Pagar area to Revenue House in the Novena area in Q4 this year.
Revenue House is owned by the Inland Revenue Authority of Singapore (IRAS), which comes under the Ministry of Finance.

Along with the move, SLA is scaling down its space requirements by 24 per cent. SLA will release about 92,569 sq ft or seven floors in the former Temasek Tower (now known as 8 Shenton Way). It will take about 71,042 sq ft or five floors at Revenue House.

SLA’s spokeswoman declined to disclose the rental level that the authority will be paying IRAS at Revenue House or the saving in rental bill from moving to a city-fringe location, but said: ‘SLA will be paying market rent.’

Property market watchers reckon that office rents in the Novena area are about 20 per cent lower than in Temasek Tower. That, coupled with the smaller area SLA is leasing at the new location, could translate to a nearly 40 per cent saving in SLA’s rental expenditure, they reckon.

SLA’s spokeswoman said: ‘Besides rental, we also have to bear in mind the varied needs of the wide spectrum of customers which SLA serves at its public counters and its own staff. We’re happy to have found a suitable fit in Revenue House.’
 
The space that SLA will lease at Revenue House appears to be mostly area being given up by IRAS. The tax authority said it currently occupies 74 per cent of the building’s net lettable area (NLA) of about 635,070 sq ft but with the impending lease to SLA, IRAS will occupy 63 per cent of Revenue House’s NLA.

She added that after SLA’s lease, there is no more space available in the property for further leasing in the immediate future. Other major tenants in the building include Singapore Customs, AC Nielsen Research, Rockwell Automation Southeast Asia and Suki Sushi.

SLA has managed to trim its space requirements partly because Revenue House has a larger floor plate than Temasek Tower, allowing the authority to better optimise its space usage.

In addition, less floor space is required because the electronic digitisation and microfilming of survey plans, documents, titles and transactions have eliminated the need for space to store hard copies. ‘The pooling of shared office equipment and common facilities like meeting rooms also results in further saving on the amount of floor space required,’ IRAS’ spokeswoman said.

Besides SLA, the Infocomm Development Authority has said it will give up about a third of its space at Suntec City by relocating some divisions to the Mica building at Hill Street by year-end.

The Economic Development Board is also expected to vacate its offices at Raffles City when its lease expires next year and move into Fusionopolis at one-north in Buona Vista.

The Energy Market Authority, which is housed in Singapore Power Building on Somerset Road, and the Intellectual Property Office of Singapore, at Plaza by The Park on Bras Basah Road, have also been reported as likely candidates to move out of the CBD.

In his recent Budget statement, Finance Minister Tharman Shanmugaratnam said the government has decided to relocate several agencies out of the Central Area to free up space of 20,000 sq m or more by first quarter next year for use by the private sector. The space being released, which will help to address the office space shortage in the near term, is equivalent to 20 floors or more of an office tower block in Suntec City.
Source : Business Times  - 27 Feb 2008

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Budget’s personal tax rebate finds a sweet spot - Singapore

Budget’s personal tax rebate finds a sweet spot - Singapore

One tax consultant does the math to compare the relative merits of a rebate and a tax cut
By OOI BOON JIN

(SINGAPORE) The Budget personal tax rebate may have come as a surprise, but it turns out to be a better deal for most taxpayers than the outright cut in the tax rate which many had been hoping for.
 
While this year’s tax rebate is generous in percentage terms, capping it at $2,000 effectively skews the greatest benefit in tax savings towards lower-to-middle income tax payers.
Income tax from individuals forms only the second biggest source of revenue collected for the government by IRAS, the Inland Revenue Authority of Singapore.

In FY 2006-07, individual income taxes brought in 20.6 per cent of the total tax collections, amounting to about $4.7 billion. The government’s biggest source of tax revenue is corporate taxes, which in FY06-07 brought in $8.5 billion, making up 37 per cent of total tax collection.

The Budget announcement this year was clearly a people’s Budget, dealing largely with bread-and-butter issues. The widely hoped for cut in the personal tax rate did not materialise - individual taxpayers received a 20 per cent tax rebate capped at $2,000 instead.

Do they benefit equally?

Clearly, the one-off tax rebate will benefit all taxpayers in all tax brackets. Do they, however, benefit equally?

Based on calculations, our simulation shows that an individual with a chargeable income of about $120,000, which is based on a gross income of about $155,000, would receive the maximum $2,000 tax rebate. Chargeable income is computed as gross income less all eligible tax reliefs.

Anyone with chargeable income of more than about $120,000 will still only enjoy $2,000 in savings.

This prompts the question of whether taxpayers would have received more with the personal tax rate cut that some people had been hoping for - 2 per cent in the top line individual tax rate and a 0.5 to 2 per cent cut in progressive rates across other tax brackets.

Yes and no. The break-even point in the debate between a 20 per cent tax rebate and a 2 percentage points cut in top tier individual tax rate occurs at a gross income of about $230,000 a year.

In our simulated scenario, someone earning more than about $230,000 a year would probably pay less in taxes with a 2 per cent cut to 18 per cent, compared to the announced 20 per cent rebate which is capped at $2,000.

Below this level, a taxpayer would derive more tax savings from the 20 per cent tax rebate based on the same scenario of a monthly salary complemented by three months of bonus annually.

In terms of chargeable income, for an annual chargeable income of $205,000 and above, a 2 per cent cut in tax rate would be more advantageous than a 20 per cent rebate capped at $2,000.

While this year’s tax rebate is generous in percentage terms, capping it at $2,000 effectively skews the greatest benefit in tax savings towards lower-to-middle income tax payers.

This is in line with the tone of this year’s people’s Budget, and may be one acknowledgement by the government to the middle-class, many of whom have to pay income tax, unlike two-thirds of all Singaporeans. Their concerns about being in the ’sandwich class’ following the 2007 Budget have been heard this time around.

The writer is executive director of tax services at KPMG in Singapore. The views and opinions expressed are those of the author and do not necessarily represent those of KPMG in Singapore.
Source : Business Times  - 27 Feb 2008

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The ’short’ answer to Ascott price jump - Singapore

The ’short’ answer to Ascott price jump - Singapore

Astonishing 5 million shares were bought in - offering important lessons for the market
By R SIVANITHY
ON MONDAY, the shares of CapitaLand’s service residence unit Ascott Group jumped 11 cents to $1.84. This may not seem remarkable, since the Straits Times Index rose 16 points that day to 3,064.
But when you consider that CapitaLand is looking to buy out all shareholders and delist Ascott at $1.73 a share, that there are no competing offers on the table, that the entire deal is for all intents and purposes uncontested and will proceed as planned, you have to wonder: why the sudden jump?

The answer lies in that most opaque of market segments, the Singapore Exchange’s (SGX’s) buying-in market. This is the part of the market in which SGX forcibly covers naked short-selling positions undertaken four trading days earlier at progressively higher prices until all positions are filled.

On Monday, an astonishing five million Ascott shares were bought in at between $1.75 and $2.01, a huge amount that clearly led to the spike in the ready market.

In other words, this was a case of the tail wagging the dog - intense upward pressure in a secondary portion of the market led to a spillover rise in the primary market.

Working backwards by four trading days from Monday, we find the five million short sale was done last Tuesday, Feb 19, when an unusually large 10.1 million Ascott shares traded at $1.73-1.74.
 
Assuming all were sold at $1.73 and the buying-in was at the average of $1.75-$2.01 or $1.88, the short-sellers would have suffered a loss of about 15 cents a share or $750,000 in total - very painful.

Sophisticated player

The obvious question to ask is: Since there was no apparent reason to expect Ascott’s shares to fall significantly below $1.73, who in their right mind would have undertaken such a large, naked short sale?

The size suggests a sophisticated player with considerable financial clout, since very few retail players would have the guts or money to take on that kind of risk. Still, why take such a gamble when the odds were heavily against winning?

The close proximity to the closure date of the offer, which was yesterday, suggests one possibility: Were the short sellers gambling on CapitaLand failing to obtain the necessary percentage it needed to accomplish the takeover- cum-delisting?

If so, the unknown parties miscalculated badly on two counts. First, any post-takeover fall would only have occurred after Tuesday and not Monday, so the naked short should have been done last Wednesday, not Tuesday.

Second, the odds were overwhelmingly in favour of CapitaLand succeeding in the first place, so the chances of the deal being scuttled were remote to say the least.

We’ll probably never know who the shorts were or why they did what they did. But the Ascott incident does highlight the importance of the buying-in market in daily proceedings, which in turn raises questions of transparency and fairness.

Making fast bucks

Some 3.7 million Ascott shares were done on Monday in the ready market at prices up to $1.84. The buyers were most likely shareholders who first sold into the buying-in market and were looking to immediately replenish their shares in the ready market at presumably lower prices and therefore make very fast bucks in the process.

The point to note is this: If there was good money to be made as in the case of Ascott’s buying-in, then perhaps there should have been full disclosure of the amounts to be bought at a time early enough to give brokers the chance to alert clients who may be holding Ascott shares.

The same applies to all buying-in exercises - dealers have long complained that when buying-in starts at 11.30am every day, there is a scramble to contact clients because nobody knows what needs to be bought-in beforehand. Not only are buying-in names not released in advance, neither are quantities.

Buying-in names appear on the dot at 11.30am with some - but not all - quantities, and according to anecdotal evidence from dealers, all hell breaks loose thereafter as everyone tries to beat everyone else to sell in the buying-in market.

Perhaps if SGX adopts the Malaysian practice of releasing the names and amounts of stocks to be bought-in a half-hour before the market opens, trading in this segment can be more transparent and orderly.

Source : Business Times  - 27 Feb 2008

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Synthetic rubber plant gives Singapore more bounce

Synthetic rubber plant gives Singapore more bounce

Lanxess’s $834m facility will supply to tyre makers in Asia
By RONNIE LIM
(SINGAPORE) Singapore has landed the world’s first entirely-new butyl or synthetic rubber plant investment since 2000.
 
Search over: Mr Heitmann says that the output from Lanxess’s other plants is not enough to meet rapidly growing demand in Asia. Construction of the Singapore plant will start in the first quarter of next year
‘It’s the right time to have a plant here,’ Lanxess chairman Axel Heitmann said, after the German chemicals group - formerly Bayer - announced yesterday a massive 400 million euro (S$834 million) investment in a state-of-the-art Singapore facility.

The move, marking Lanxess’s largest-ever investment, culminates its three-year-long global search for an appropriate site. Singapore won out over Map Ta Phut in Thailand and Kuantan in Malaysia, its two closest contenders.

‘All the products from Singapore will go to Asia,’ said Mr Heitmann. The big customers will include tyre makers in Asia, which accounts for over half of global demand for synthetic rubber.

The German chemicals group said that the overriding factor in Singapore’s favour was the ready supply of higher olefins needed by its speciality chemical plant.

These will become available from 2010 or 2011, thanks to the upcoming new Shell and ExxonMobil petrochemical complexes here which will help create the critical mass needed to produce sufficient quantities of these C4 and higher fractions.

Ron Commander, head of Lanxess’s butyl rubber unit, said that the Singapore plant has already finalised a long-term agreement with Shell Chemicals which will provide it with isobutene and Raffinate 1 feedstocks from its Bukom petrochemical complex.

Other factors which favoured Singapore include its political stability, its free market economy, excellent IT and shipping connections, and the high level of research and development activity, Mr Heitmann told an international media conference here.

Lanxess’s choice of the site for its butyl rubber plant was earlier expected to be announced last December, but there had been complete silence until now. It finally came down to an ‘official site competition’ among the three short-listed countries, he said.

Lanxess’s 100,000tonnes per annum (tpa) Singapore plant, producing two key products - halobutyl and regular butyl rubber - will help it meet the rapidly-growing Asian demand from tyre manufacturers including Michelin, Goodyear and Bridgestone, which use the products to make inner liners and inner tubes for high-performance tyres.

Halobutyl, the ‘next generation’ butyl rubber, helps to make tyres safer - by preventing them from deflating regardless of speed - and last longer.

Mr Heitmann said that with the China market growing at 6 per cent and India at over 8 per cent a year, production from its 135,000-tpa Canadian plant and 130,000-tpa Belgian plant would be insufficient for Asia.

Construction of the new plant, on a 20,000-square metre site at Tembusu sector on Jurong Island, will involve over 1,500 workers and 150 engineers.

Detailed engineering has begun and construction proper will start in the first quarter of next year. It is scheduled to be completed by end-2010. When operational, the plant will create an initial 200 jobs.

Singapore wants more speciality chemical makers to set up here.

Aw Kah Peng, Economic Development Board assistant managing director, said that Singapore’s strategic intent is ‘to further extend the higher olefins chemistry chains on Jurong Island’.

Upcoming new petrochemical crackers, which will double Singapore’s ethylene output to 4 million tpa by 2011, will allow the chemical industry here to move a big step forward in value-add, she added.

‘This is possible because new chemistry chains are being introduced downstream, resulting in the production of more speciality and higher-value chemicals and polymers,’ she said, adding that the Lanxess project was an example of this.
Source : Business Times  - 27 Feb 2008

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