Singapore Rental firms ‘leasing’ cars from cash-strapped owners

Singapore Rental firms ‘leasing’ cars from cash-strapped owners 

They pay owners’ loan instalments and use cars as rentals - but this is illegal

By Christopher Tan, Senior Correspondent 
AGAINST THE LAW: On the surface, it looks like a good deal. But it is illegal to rent your car out in this way. Also, if something happens to the car, there may not be any insurance cover. –ST FILE PHOTO
 
COMPANIES which offer financially strapped car owners a way out - by taking over their vehicles to be used as rentals - are sprouting.
It makes good business sense for the dozen or so firms, which advertise their services online - they avoid the huge capital outlay of acquiring their own car fleet.

On the surface, it looks like a good deal for the car owners too. Many of them cannot sell their cars due to their huge loans and the fall in car prices in recent years.

The ‘rental’ firms pay them a monthly fee for their cars, often enough to cover their loan instalments.

But there is a catch - a costly one. It is illegal to rent your car out this way.

If something happens to the car while it is hired out, there may not be any insurance cover. If it is stolen, insurers may not pay up.
A check by The Straits Times found several advertisements on a website, efair.com.sg, targeting individuals who cannot quite afford the car they bought.

An ad by Xtreme Car Rental read: ‘Having problems to upkeep your current car? Wanted (sic) to sell away car but can’t sell due to huge cash top-up?I can solve all your problems and I have help (sic) a lot of car owners.’

Another promised to not only take care of monthly instalments, but also give ‘cash rebates’.All the owner needed to do was to leave the car with it, a ‘licensed car rental company in Singapore’.

One ad by a Mr Ricky Soh was more direct: ‘Are you having any difficulties in servicing your monthly instalment? No worries! Do e-mail me your car model, monthly instalment…and we can work it out for you.’

What these firms are doing is against Land Transport Authority (LTA) rules. ‘Private car owners are not allowed to rent out their cars through rental companies,’ its spokesman said.

They had to do so on their own - and only at certain times and on particular days of the week.

The LTA cracked down on six cases each in 2005 and 2006 and on 11 last year. There have already been six cases in the first four months of this year. Both car owners and rental firms face fines of up to $1,000, jail terms of up to three months or both. Car owners also risk a driving ban of up to 12 months.

Despite the penalties, trade sources say the practice is widespread.

‘There are a lot of cases which go unreported,’ said Mr Peter Chong, president of the Vehicle Rental Association, which represents over 30 rental firms controlling most of the rental fleet here.

Firms operating illegally do not need huge capital outlays to start up a fleet. They can reach out to consumers on a tight budget because they offer lower rates.

Mr Chong said that since many of these cars were not registered as rental cars, hirers may have no insurance cover in an accident.

‘I’ve come across cases where insurers refuse to pay up because the vehicle was not a rental car,’ he said. ‘That’s the danger.’

The LTA said it takes a serious view of illegal rentals, and is ‘consistently taking action against those who fail to comply with the law”.

 
The rules and penalties

Private car owners are allowed to rent their cars out only from 7pm on Friday to 7am the following Monday and from 7pm on the eve of a public holiday to 7am on the first working day following the public holiday.
For illegally renting out cars, both car owners and rental companies face fines of up to $1,000, jail terms of up to three months or both. Car owners also risk a driving ban of up to 12 months

‘Leased’ car missing - now owner faces bankruptcy
CASH-STRAPPED businessman Lau Cheun Kee ‘leased’ his 2004 Honda Odyssey seven-seater to a rental firm when his food business failed last year.
But he now faces a bigger problem: involuntary bankruptcy and possible prosecution by the Land Transport Authority.

Leasing the car out seemed like a good idea then. Mr Lau, 36, could not afford to sell it as prices had fallen sharply.

He chanced upon Eazi Car Lease, which would pay him $1,100 a month for the car. This would help him service his 10-year loan’s monthly instalment of $1,240.

But last June, Eazi Car Lease reported to the police that the Honda had gone missing when a ‘customer’ rented it and drove it to Malaysia.

A police spokesman said the case has been classified as ‘cheating by impersonation’.

Meanwhile, Mr Lau is in a bind. He still owes the bank, OCBC, around $100,000 in outstanding loan. He could not obtain an insurance payout because his insurer, NTUC Income, is classifying the case as ‘cheating’ instead of ‘theft’ for now. The former is not covered by the policy.

OCBC has begun bankruptcy proceedings against Mr Lau and his wife, a sales coordinator and the loan guarantor.

So does Mr Lau, who also received summonses for $900 in parking fines, have any recourse?

Lawyer Vijai Parwani thinks so. ‘The original owner may have recourse against the rental firm as the claim would be based on the agreement he signed with the firm,’ he said.

Mr Lau engaged lawyers to demand that Eazi Car Lease pay up the amount owed to OCBC, as it had lost the car while it was in its possession.

But he got no response. ‘We can’t afford to pursue the case,’ said Mr Lau.

When contacted, Eazi Car Lease director Jeremy Chong, 37, said he was no longer in the business. His father, John Chong, 67, who runs the firm now, refused to comment.
CHRISTOPHER TAN

 
Source : Straits Times - 03 jun 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

New projects boost HK’s May home sales- HONG KONG

New projects boost HK’s May home sales- HONG KONG
(HONG KONG) Hong Kong’s existing apartment sales rose last month from a month earlier as homebuyers’ confidence was boosted by sales in new projects during the month.
Transactions for 10 of Hong Kong’s biggest private-housing projects rose to 596 last month from 454 in April, according to figures compiled by Centaline Property Agency Ltd.

‘In May, buyers’ focus has actually been on the luxury new apartments,’ Louis Chan, managing director of residential properties at Centaline, said in a phone interview yesterday. ‘This has bolstered the confidence of less-affluent buyers. You can expect the market to be dominated by the less-expensive second- hand apartments in June.’

Cheung Kong Holdings Ltd has sold more than 420 apartments at its Celestial Heights development in the city’s Ho Man Tin district since the project went on sale on May 21, the Hong Kong Economic Times reported yesterday, citing executive director Justin Chiu. The sale brought in over HK$11 billion (S$1.9 billion) for the company, the newspaper said.

Sun Hung Kai Properties Ltd, the city’s biggest developer by market value, sold a house in the Peak district for HK$285 million, according to spokeswoman Fiona Wan.

 
 
The unidentified buyer paid the equivalent of HK$57,000 a square foot, a record in Asia, for the unit at the Severn 8 project, Hong Kong’s Sing Tao newspaper reported yesterday. She declined to confirm whether the sale set a record.

Hong Kong’s economic growth unexpectedly accelerated in the first quarter as exports to China and Europe climbed. — Bloomberg

Source : Business Times - 03 jun 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Internal sabotage the biggest threat to banks: Singapore MAS

Internal sabotage the biggest threat to banks: Singapore MAS

It expects boards, senior management to be responsible and accountable
By CHOW PENN NEE
INTERNAL sabotage - that is, spying by employees, contractors and vendors - ranks among the most serious risks a bank faces, according to updated guidelines issued by the Monetary Authority of Singapore (MAS) yesterday for Internet banking and technology risk management.
The revised guidelines expand guidance for combating cyber threats and attacks.
 
The guidelines point out that people with an intimate knowledge of the inner-workings of a bank’s systems - such as current and past employees, contractors and vendors - have a significant advantage over external attackers.

MAS has recommended that no one should have concurrent access to production systems and backup systems, particularly data files and computer facilities.

It further recommends that any person who needs to access backup files or system recovery resources should be authorised for a specific reason and a specified time only.

External personnel such as vendors and consultants should be subject to close supervision, monitoring and access restrictions, MAS says.

And internal staff such as system administrators, IT security officers and programmers should be supervised and all their activities logged, as they have the inside knowledge and the resources to circumvent systems controls and security procedures.

Some of the control and security practices it recommends are two-factor authentication (2FA) for privileged users and restricting the number of privileged users.

 
 
Another point made by MAS is that many systems fail because of bad design and inadequate testing. System defects and deficiencies should be caught at the system design stage or during testing, it says.

A steering committee made up of management, development and user stakeholders should be set up to oversee and monitor the progress of major projects.

The MAS report highlights that banks have to step up their Internet security measures to counter man-in-the-middle attacks.

These occur when a hacker intercepts information between two parties, such as a transaction between an online customer and a bank, without either party being aware.

Some of the recommendations in the report - which are already currently practised by some banks - include having specific one-time passwords (OTPs) for adding new payees.

Each new payee should be authorised by the customer based on an OTP from a second channel which shows payee details or the customer’s handwritten signature from a manual procedure which is verified by the bank.

The report also states that there should also be individual OTPs for transactions such as payments and fund transfers.

Each value transaction or an approved list of value transactions above a certain dollar threshold determined by the customer should require a new OTP, MAS recommends.

And all payment and fund transfer transactions should be encrypted at the application stage.

OCBC Bank said it has already implemented many of the recommended measures, including 2FA and the generation of OTPs for Internet banking transactions. ‘We will also assess the new requirements and implement them progressively,’ the bank added.

The revised guidelines expand guidance for combating cyber threats and attacks, including emerging cyber exploits such as middleman attacks, MAS says.

It says it expects the boards and senior management of banks to be responsible and accountable for managing and controlling technology risks in their business operations.

Banks should continually monitor the adequacy and effectiveness of their risk-management functions and security practices, as well as implement compliance and audit procedures to make sure the measures and controls are properly observed and enforced, MAS says.

 
Source : Business Times - 03 jun 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore SIA can ride out the oil storm, says CEO

Singapore SIA can ride out the oil storm, says CEO

Airline will have to work hard to keep non-fuel costs down, he says

By VEN SREENIVASAN
in Istanbul

 
Flying bravely into turbulence: Iata director-general Giovanni Bisignani is all smiles as he removes a sticker from a mock-up of the last paper ticket, but also warns that the industry faces the prospect of losing billions if the price of oil continues to stay high
SINGAPORE Airlines will face the same challenging operating environment as other airlines, but it is better positioned to weather the storm brought on by soaring fuel price and the economic impact of the US credit crisis.

The airline’s chief executive Chew Choon Seng said this on the sidelines of the International Air Transport Association’s 64 Annual General Meeting in Istanbul, Turkey.

He told BT that the industry, including SIA, faced very serious issues, but added that airlines with strong balance sheets and sound strategies would ride out the turbulence.

‘The big question always is, who will be the last man standing,’ he said. ‘We have to work hard to keep non-fuel costs down. Meanwhile, we are sitting on a very strong balance sheet with cash of over $5 billion. And we’ve already made a commitment on payouts and making this balance sheet more efficient.’

Soaring oil price and US$170 per barrel (pbl) fuel has presented the global airline industry with its most serious crisis in over seven years.

In his state-of-the-industry address to almost 1,000 aviation delegates at the meeting yesterday, Iata’s director-general Giovanni Bisignani warned that the industry was facing the prospect of losing US$2.3 billion if oil was at US$107 pbl, and an even more alarming US$6.1 billion if oil averaged US$135 pbl this year.

Oil is currently hovering at US$125 pbl. With a US$35 pbl ‘crack spread’, this pushes jet fuel to US$160 pbl.

Mr Chew said that SIA had the capacity to cope with the current high fuel cost environment. ‘Fortunately for us, fuel is priced in US dollar, which has weakened against the Singapore dollar,’ he said. ‘And although this will impact our topline, only about 15 per cent of our revenue is in US dollars.’

Analysts reckon that despite the tough operating conditions, most Asian carriers will survive thanks to still buoyant travel demand.

But who emerges in better shape will also depend on how much of their fuel costs they can pass on. And this ability to pass on costs via fuel surcharges also depends on the branding of carriers. Premium carriers like SIA have been quite successful in retaining customer loyalty despite having raised their fuel surcharges quite aggressively over the past year.

SIA gets 40 to 50 per cent of its revenue from higher yielding front seats. And demand has been so strong that it has converted its Singapore-Los Angeles and Singapore-Newark A340-500 flights to all-Business Class services.

Source : Business Times - 03 jun 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore Temasek looks to resume genco sales

Singapore Temasek looks to resume genco sales

Sub-prime crisis not expected to hurt sale as there’s flight to quality assets
By RONNIE LIM

(SINGAPORE) After a breather of almost three months, Temasek Holdings could resume its genco sales - of the remaining Senoko Power and PowerSeraya - as soon as this month, sources suggest.
But there is no real rush, as the Singapore investment company still has an ample 12 months to complete its divestment of the three largest generation companies here, going by its stated mid-2009 deadline.

‘Temasek is reviewing the divestment process for the two remaining gencos, and has been meeting its bankers advising on the genco sale (Credit Suisse and Morgan Stanley) on this,’ one source said. This includes issues like which of the two gencos should go next.

There has been a wall of silence since Temasek successfully completed the sale of the smallest, but newest, of the three gencos, the 2,670-megawatt Tuas Power (TP) to China Huaneng Group for a whopping S$4.235 billion in mid- March.

The TP sale took five months in all to complete, since Temasek first launched its genco divestment exercise last October.

BT earlier reported in March that with that first sale completed on schedule, Temasek wanted to digest the implications of that transaction before embarking on the next sale, especially given the global credit crunch.

It had earlier indicated that it wanted to learn from the TP sale before offloading the remaining two gencos.

While there were some earlier concerns about how the credit crunch would affect the potential genco buyers, some industry players like Senoko Power’s CEO Roy Adair felt that the sub-prime crisis would not stymie the sale of the two remaining gencos as there is a flight to quality assets.

The feeling on Wall Street recently is that the worst of the financial crisis is also over.

A source yesterday said that ‘given Temasek’s experience with the initial TP sale, which was highly successful, and that the genco sales process, that is sale by open tender, hasn’t changed, it’s possible that Temasek can call for the sale of the next genco as soon as this month’.

This suggests that it will stick with its two-stage sales process used for TP.

This comprises a first-stage shortlist of half a dozen bidders based on their indicative proposals, followed by a second stage where bidders make their final binding offers, after a comprehensive ‘road show’ and inside look at the genco, including at its books.

‘While the TP sale took five months to complete, the sale time for the remaining two gencos need not be that long, given the experience gained from the first sale,’ one observer noted.

Besides, some of the potential investors who were unsuccessful in their bid for TP are staying in the race for the other gencos, and will also be familiar with the process. They would already have lined up their bankers for their potential purchase.

Sembcorp Industries is one such party, with its president and CEO Tang Kin Fei telling BT in April that it will now try again for one of the remaining gencos - the 3,300 MW Senoko Power, the largest genco here, or the 3,100 MW PowerSeraya.

Among those reportedly shortlisted for the final round of the latest TP sale were Japan’s Marubeni, Li Ka-shing’s Hongkong Electric, India’s Reliance Energy, a joint venture between Macquarie and India’s GMR Infrastructure; Malaysia’s Tanjong plc, the One Energy joint venture of Hong Kong’s CLP Holdings and Japan’s Mitsubishi Corp, Bahrain-based investment bank Arcapita and Spain’s Union Fenosa.

Source : Business Times - 03 jun 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Airlines hit panic button as huge losses loom

Airlines hit panic button as huge losses loom

Just as industry had started to recover, it finds itself in another crisis
By VEN SREENIVASAN
in Istanbul

 
WOUNDED by massive fuel bills and slowing passenger growth, the airline industry faces its biggest challenge in years - with a worldwide loss of US$6.1 billion forecast for 2008.

This is the stark reality confronting almost 1,000 industry chiefs from 240 airlines, gathered in Istanbul this week for the 64th annual general meeting of the International Air Transport Association (Iata).

Sounding the alarm over a ‘perfect storm’ brought about by a confluence of negative factors, Iata director-general Giovanni Bisignani yesterday compared the industry to Sisyphus - the mythical Greek character fated to constantly roll a marble block up a hill, only to watch it plunge back down from the crest.

‘The US$5.6 billion the industry made last year was our first profit since 2000,’ Mr Bisignani said in his state-of-the-industry address to delegates meeting at the Conrad Istanbul.

 
‘After enormous efficiency gains since 2001, there is no fat left - and skyrocketing oil prices are changing everything.’
 
- Iata director-general Giovanni Bisignani 
 
 
 
 
‘Just as we started to recover, we face another crisis of potentially even greater dimension,’ he said. ‘After enormous efficiency gains since 2001, there is no fat left - and skyrocketing oil prices are changing everything.

‘If the consensus of experts is correct and oil averages US$107 a barrel, the fuel bill will be US$176 billion - US$40 billion more than in 2007. This will push us back into the red with a loss of US$2.3 billion in 2008.’

But Mr Bisignani suggested that even this could be a ‘best-case’ scenario. ‘If oil stays at US$135 a barrel for the rest of the year, losses will be much worse at US$6.1 billion,’ he said. ‘The situation is desperate and potentially more destructive than our recent battles with all the Horsemen of the Apocalypse combined.’

As well as huge oil prices, the spreading impact of the US credit crunch is slowing passenger traffic. ‘At best, we expect a 3.9 per cent increase (in traffic) this year,’ said Mr Bisignani.

All this comes as the industry was poised to chalk up a second straight year of profit, following losses totalling US$45 billion between 2001 and 2006, thanks to the September 2001 terrorist attacks in the US, sluggish economic conditions, wars in the Middle East, and Sars. The industry lost US$13 billion in 2001 alone.

Things finally turned around last year, when the industry made a US$5.6 billion profit. And as recently as April, Iata was forecasting a 2008 profit of US$4.5 billion. But even this was pared, first from a US$7.6 billion forecast last September, then US$5 billion in December.

‘With oil averaging US$73 per barrel, delivering even a 1.6 per cent margin (last year) was an amazing achievement,’ Mr Bisignani told Iata delegates yesterday. ‘Since 2001, your hard work improved fuel efficiency 19 per cent and reduced non-fuel costs 18 per cent.

‘Sept 11 brought about enormous change, making us tougher, leaner and more efficient. Now, even more massive changes are needed,’ he added.

For every US$1 rise in oil price, the airline industry’s costs go up by US$1.6 billion - grim news for an industry that has made just US$32 billion of profit from US$11.5 trillion of revenue over the past 60 years, translating to a minuscule margin. And despite the recovery of 2006 and 2007, the industry remains in debt to the tune of US$190 billion.

Mr Bisignani called for more airline-friendly policies and practices by regulators and ‘monopoly partners’ like airports.

‘Security is an uncoordinated mess for which airlines and their customers have paid over US$30 billion since 2001,’ he said. ‘And while Iata achieved a record US$3.7 billion in cost savings for its airlines, the unregulated mess with monopoly suppliers has increased our airport costs by US$1.5 billion.’

He also reiterated his call for aviation liberalisation. The industry needs to look beyond national borders, try new ideas, access global capital, and merge and consolidate, he said. But ‘our hands are tied because flags - not brands - define our business’.

Faced with a scenario of rising costs and falling demand, the industry - which flew 2.3 billion passengers last year and employs 32 million employees - is bracing for more airline failures and a possible slew of nationalisation of carriers.

Source : Business Times - 03 jun 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com