Tharman says recent MAS moves not in response to inflationary pressures - Singapore

Tharman says recent MAS moves not in response to inflationary pressures - Singapore

By Dominique Loh,  

SINGAPORE: Finance Minister Tharman Shanmugaratnam on Sunday said Singapore has to be on its guard against inflation, or the country’s growth could be undermined.

Responding to questions about the recent monetary adjustments made by Singapore’s central bank, Mr Tharman said the adjustments were not made in response to short-term inflationary pressures.

“If you don’t continuously focus on the mid-term, we’ll also lose the short-term game… You regret what you did not do three years ago, and you find yourself in deeper problems in the short term,” he said.

The finance minister added that the Monetary Authority of Singapore (MAS)’s recent revisions to allow the Singapore dollar to appreciate at a faster pace have been gradual.

The Singapore dollar hit 1.36 against the greenback last week.

The MAS moves are seen as a way to curb rising inflation, which hit a high of 6.6 per cent earlier this year.

But with a stronger Singapore dollar, there are concerns that this would hurt Singapore’s exports to other countries.

Mr Tharman said there is always a trade-off between short-term and medium-term objectives.

“In the short term, the economy is performing at its potential. If it takes a severe dip, then we’ll need other policy responses. But monetary responses cannot be geared towards short term… (or) you undermine growth.”

The Singapore economy has performed better than expected in the first three months of 2008, growing 7.2 per cent on year.

For the entire year, Singapore’s economy is expected to grow between four and six per cent while its inflation rate is estimated to be between 4.5 per cent and 5.5 per cent.

Mr Tharman was speaking to reporters while visiting the Central Sikh Temple where the community was celebrating the 300th anniversary of Gurgaddi Day and the Vesakhi festival.

Tamils in Singapore also celebrated their New Year on Sunday. Special prayer sessions were conducted, and devotees offered fruits and flowers to their favourite deities.

The new almanac, which is one of the most anticipated aspects of the Tamil New Year, was also released. - CNA/ac/ir

Source : Channel NewsAsia   - 14 April 2008

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Seletar Aerospace Park tenants hazy about future - Singapore

Seletar Aerospace Park tenants hazy about future - Singapore

By VEN SREENIVASAN
(SINGAPORE) Some unhappy incumbent operators at Seletar Aerospace Park are grumbling about facilities being taken away and poor communication by authorities who are developing the 300-hectare aerospace park.
 
Better communication: Prithpal Singh, who runs EJA, says the agencies should engage tenants regularly 
Several tenants who spoke to BT said they feared their days in Seletar could be numbered, as they face the prospect of being evicted from their existing facilities - but without adequate new ones being offered.

Airmark Group, a $100-million business which operates charter cargo flights out of Seletar, claims it has been operating out of two 20-feet containers with no power or electricity since its facilities were taken back to redevelop West Camp.

‘We have been at Seletar for 30 years, and it looks like we are back to the primitive past,’ said the company’s chairman Yunos Ishak. ‘We have no hangar space, no facilities, no priority. The authorities developing this place seem to have no plans for players like us.’

It’s a similar complaint from Executive Jets Asia (EJA), whose regional business jet operations is headquartered at Seletar.

Prithpal Singh, who runs EJA, said his company had been told to vacate their premises at Seletar East Camp by the end of 2009.

‘We understand the redevelopment needs,’ he said. ‘But what alternatives are there for us? Until now, we have had no indication of where we will be relocated, what kind of facilities will be given to us or how we will be relocated. And we are barely 20 months away from having to vacate this place.’

Another criticism levelled at Jurong Town Corporation and other agencies spearheading the redevelopment of Seletar was that they were turning Seletar into another ‘Loyang aviation factory area’, with players like Rolls-Royce and Pratt & Whitney being accorded priority.

Rolls-Royce has broken ground on its $320-million Trent aero engine facility at the Seletar Aerospace Park, while P&W is building its new US$30-million, 105,000-sq-ft facility at the Park. Meanwhile, ST Aero’s latest $17.3-million, two-bay hangar will give it eight wide-body, and 13 narrow-body, bays in Singapore, while Jet Aviations’ existing facility is being extended.

But when contacted, JTC Corporation, which is spearheading the redevelopment of Seletar, denied that it was neglecting existing tenants and operators.

‘Seletar is for everyone in the industry,’ said a JTC spokesperson. ‘Currently, we are redeveloping the plots which are not fronting the runway, but in the years to come, we will be in a better position to evaluate the availablity and allocation of runway-fronting land.’

She said that JTC, together with the Economic Development Board would allocate land based on need, availability and business plans presented by individual corporations.

‘We are still at the early phase of development, and this is a complex project which still has 10 years to completion in 2018,’ the JTC spokesperson added. ‘We will be offering more land and facilities to players - big, small, local and foreign - as we move forward into our second and third phases in mid-2009 and after 2011, respectively.’

She added that plans were already being studied to build a commercial complex to house smaller aviation players, including business aviation.

‘We will look into what they need,’ she added. ‘But as this is not a greenfield project, we will have to work around existing land constraints.’

Meanwhile, the existing tenants want more clear timelines in order to plan their businesses and investment needs.

‘We need better communication,’ Mr Singh said. ‘They (the agencies) need to engage us on a regular basis.’

Seletar Aerospace Park is a 300-ha development cluster for aerospace MRO, design and manufacturing, training and business/ general aviation, all aimed at making Seletar Airport the region’s premier business aviation hub. The existing runway - built by the British Air Force over half a century ago - is being extended to cater to bigger business jets.

Source : Business Times   - 14 April 2008

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Decision to let Sing$ strengthen ‘not a response to spike in inflation’ - Singapore

Decision to let Sing$ strengthen ‘not a response to spike in inflation’  - Singapore

Policy change not a knee-jerk reaction, but aimed at medium term, says Tharman

By Shobana Kesava & Bryan Lee 

THE decision to let the Singapore dollar rise further was not a knee-jerk response to a recent spike in inflation, but a decision with longer-term considerations in mind, said Finance Minister Tharman Shanmugaratnam yesterday.
‘Short term, we’re not in a crisis and if we do face a very severe downturn in growth, you can’t rely on monetary policy to solve that; you’ve got to have other policy responses,’ he told reporters yesterday on the sidelines of a community event.

The Monetary Authority of Singapore (MAS) caught many by surprise last Thursday when it said it would allow for an immediate one-off jump in the Sing dollar’s value in response to a backdrop of ‘continuing cost pressures’.

Singapore manages the value of the local currency as its chief weapon against inflation. A stronger Sing dollar helps make imports, such as oil and food, cheaper. But it also makes local exports less competitive in the global marketplace.

The policy change, which was widely regarded as an aggressive move, caught most analysts by surprise.

Many expected that economic growth concerns would deter the central bank from tweaking its monetary policy so soon after it had moved to allow for a faster Sing dollar appreciation at the last scheduled review in October.

Some analysts said the move suggested that the Government may have underestimated the inflation threat and is playing catch-up.

However, Mr Tharman said yesterday that the central bank looked at price trends over the next one to three years when it decided on the policy change.

‘It’s got to keep its focus on the medium term. That’s the way the MAS does its job.’

As such, Mr Tharman said he expected little impact on inflation in the short term. MAS has projected Singapore’s inflation rate this year to come in at the upper half of the 4.5-5.5 per cent forecast range.

Mr Tharman said that the MAS’ last two policy changes were not large jumps, but discreet moves that allow a gradual appreciation of the Sing dollar.

They came as the MAS assessed that in the next few years, inflation will be a risk around the world.

‘And if it’s a risk all round the world, we have to be on guard as well,’ said Mr Tharman.

Still, he acknowledged that there are short-term risks, which the Government is watching carefully.

‘The exchange rate remains supportive of sustainable growth in the medium term, so it’s always a fine balance between paying heed to inflation and paying heed to wanting to ensure that the economy keeps growing.’

The Government last week released a better-than-expected advance estimate of 7.2 per cent gross domestic product growth in the first quarter of the year.

At this point, he said, if Singapore did not focus enough on inflation over the next one to three years, growth would ultimately be undermined.

Asked if a stronger Sing dollar would hurt export competitiveness, he said there will be some compromise in the short to medium term, but it would be mitigated by the economy’s performance in the short term, which he said was at its potential.

‘It does not make a significant dent on competitiveness over the medium to longer term,’ added Mr Tharman. The exchange rate is now about S$1.36 to the US dollar.

Source : Straits Times   - 14 April 2008

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