Don’t write off Thailand, govt urges investors - Thailand

Don’t write off Thailand, govt urges investors - Thailand

But political analysts not hopeful of an early resolution to crisis

By GREG LOWE
IN BANGKOK

THAILAND’S political turmoil is devastating the economy, but foreign investors should exploit opportunities, not write the country off, says the government.

Spokesman Nattawut Saikuar said the standoff between the People’s Alliance for Democracy and the government, and the state of emergency declared on Tuesday have damaged the economy and tarnished the kingdom’s image globally.

Investor confidence will return with a political resolution that should not involve beleaguered Prime Minister Samak Sundaravej stepping down or dissolving parliament, he said.

‘The Thai political situation right now is not supportive of either investment or tourism. We have to admit this fact,’ the spokesman said. ‘You might want to delay an investment, but don’t forget about us. Don’t write us off. This country has great opportunities for investors.’

The country has been roiled in political turmoil for months. It took a dramatic turn for the worse last week when thousands of supporters of the opposition alliance stormed the gates of the Government House that houses Prime Minister Samak’s office. Protests have since erupted across the country, leaving the government paralysed.

While Mr Nattawut could not give concrete examples of opportunities available to foreign investors, he said that they could capitalise on local commodities whose value has been driven down by the crisis.

‘Choosing to invest now to get the advantage later might be a wise move,’ he said.

According to him, Thais first need to invest in democracy and respect the rule of law to win back confidence in the economy.

Analysts support the claim that opportunities exist. Foreign investors in the Thai market remain bearish, with year-to-date overall net sales exceeding 100 billion baht (S$4.17 billion) - more than double those in the same period last year and almost triple the 37 billion baht in the same period in 2006.

The property market has been oversold, providing bottom-fishing opportunities for risk-taking investors, according to KGI Securities (Thailand). A number of value property plays have bombed since a state of emergency was declared, and a swift resolution of the political situation would lead to a rebound in these plays, the firm said.

‘In terms of valuation, property counters have been sold off too much as most of them will deliver outstanding earnings this year,’ KGI Securities property analyst Thaninee Satirareungchai told The Business Times. ‘Market sentiment is not good because of the political situation, but for investment, right now is a good time to buy.’ Asian Property Development, Quality Houses and Preuksa Real Estate are the soundest investments and are predicted to outperform, she said.

But political analysts are not optimistic that the political deadlock will resolve itself anytime soon. Yesterday, Mr Samak again refused to step down, but offered an unconventional compromise - a referendum for the public to choose between the opposition alliance and the government.

The alliance, however, has ridiculed the plan, saying Mr Samak will manipulate the vote, and has vowed to continue the protests until he resigns.

Source : Business Times - 05 Sept 2008

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CCT inks top-rate leases at two Singapore prime office buildings

CCT inks top-rate leases at two Singapore prime office buildings

By Joyce Teo

Capital Tower (left) and one of the four skyrise gardens at One George Street. Both buildings, owned by Capitacommercial Trust, are now at near 100 per cent occupancy. — PHOTOS: CAPITALAND, ST FILE PHOTO

THE cautious mood in the property market has not prevented Capitacommercial Trust (CCT) from striking attractive lease deals at the prime Capital Tower and One George Street buildings.
JPMorgan Chase & Co and BHP Billiton both renewed their leases at Capital Tower, while South Korean bank Shinhan Bank is taking up space at One George Street.

The total space signed up - either on renewed leases or new deals - is about 77,900 sq ft. Both buildings are now at near 100 per cent occupancy.

A CCT spokesman said: ‘Given the Grade A quality of Capital Tower and One George Street, the newly committed rents are in line with rates achieved at comparable buildings of between $16 and $20 per square foot per month.’

This is despite the current weak macroeconomic sentiments.

Ms Lynette Leong, chief executive of CCT’s manager, said: ‘Singapore, a global city with affordability of lifestyle for expatriates, attracts firms looking to expand in this part of the world.’

Rents at Capital Tower in Robinson Road, near Tanjong Pagar MRT Station, are hovering at around $15 to $16 psf, according to Mr Donald Han, managing director of Cushman & Wakefield.

One George Street, a relatively new building near Raffles Place, commands rent of $18 to $19 psf, he said.

With demand and occupancy still fairly strong for prime office buildings, landlords are not panicking despite the economic slowdown, said Mr Han.

But landlords with new space to let may take a little longer to find tenants as a lot of financial institutions have already gone through their expansion process, he added.

Meanwhile, CCT also announced that it has offered to lease a 1,313 sq ft ninth-floor unit in Capital Tower to CapitaLand for three years for a total rent of $449,126.

CapitaLand has an indirect interest of 31 per cent in CCT.

Source : Straits Times - 05 Sept 2008

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Singapore Orchard Central duplexes split up

Singapore Orchard Central duplexes split up

Level 1 duplexes turned into single-storey units due to slow economy and lack of demand

By Michelle Tay

GLOOMIER times appear to have taken a toll on the upcoming Orchard Central mall near Somerset MRT Station.
The mall will no longer house two-storey shops, or duplexes, on its ground floor as had previously been announced, the project’s developer Far East Organization has told The Straits Times.

These duplexes were intended to have been glitzy, eye-grabbing outlets likely to have been leased by top-notch brands.

Instead, the three duplexes planned for level 1 have been split into single-storey units and leased to retailers wanting smaller premises.

Industry watchers said demand for the higher-rent duplex stores is likely to have waned due to the economic slowdown.

Also, the area, considered by some to be the more downmarket end of Orchard Road, may lack the cache needed to pull in the large brands that are more likely to take those spaces, they said.

Orchard Central is one of three new shopping centres to go up in Orchard Road in more than a decade.

The 14-storey mall is slated to open early next year, and will boast underground shops, restaurants with outdoor balcony seating, as well as a special ‘jewel box’ - a glass-fronted shop to be suspended in mid-air outside the building.

When contacted, Far East said: ‘We had more demand for single-floor units, and we are happy to report that the key level 1 shops facing Orchard Road have been snapped up. We also decided to change the original plans as this would mean more shopping diversity and choices for our customers.’

It added that the mall has one more duplex unit, on levels 3 and 4, which has attracted interest but has yet to be leased out.

Ms Lau Chuen Wei, executive director of Singapore Retailers Association (SRA), said it is ‘not surprising if there is a lack of demand’ for the double-storey units.

‘A duplex would definitely require a higher rental commitment, which is, by and large, something that retailers find quite hard to commit to at this time.’

Property consultants The Straits Times spoke to said duplex stores have high visibility so landlords would ‘normally want a very high-end brand’ to occupy them.

‘If I were the landlord, I’d have to give it to someone who is really worthy of it,’ said one retail property specialist, who declined to be named.

‘If not, splitting a unit into two will get higher rental,’ he added.

Some observers also say the fact that several malls are springing up at about the same time has created more intense competition in the battle for the brands.

Previously, Far East had told The Straits Times that its ‘jewel box’ store, to be designed by renowned Egyptian-born industrial designer Karim Rashid, will ‘as its name suggests…be occupied by an upmarket jeweller’.

But Cupid Jewels, a home-grown firm specialising in lower-priced bling, has now confirmed its tenancy there.

It has four showrooms in decidedly less swanky locales - Clifford Centre, Harbourfront Centre, Novena Square and OG Orchard Point - but said it will rebrand itself as a more upmarket jeweller at Central.

In contrast, Ion Orchard, the other mall being built at Orchard Turn, has snagged glitzy labels like Cartier and Louis Vuitton to front its duplexes, as well as haute jewellers Harry Winston, Chaumet and Boucheron to occupy its first floor.

But industry experts also defended Orchard Central’s positioning, saying the area near the Somerset MRT Station is no less attractive than the strip nearer to the Orchard MRT Station.

Mr Danny Yeo, deputy managing director of Knight Frank, said: ‘It’s not that this part of Orchard Road does not have a draw, it’s just not a main draw for the high-end segment.’

‘The malls near Somerset are all internally connected to each other. And there are enough young people who will find that this side will provide a good alternative to the strip between Ion and Ngee Ann City. Now Orchard Road has two distinct and strongly positioned areas.’

And Ms Daisy Loo, head of leasing and consulting at Sandalwood Retail, said: ‘Mass market brands can have duplexes too. It doesn’t mean only luxury brands can afford a duplex, and it doesn’t mean a duplex is the only thing that will earn you top dollar.’

She added: ‘It’s part and parcel of business to rethink strategies and review plans when market conditions change. Decisions are always based on changes in demand and tenant requirements.’

Source : Straits Times - 05 Sept 2008

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Singapore COEs, ERP and the questions in between

Singapore COEs, ERP and the questions in between

Solving the traffic congestion problem will become trickier

By Han Fook Kwang, Editor

IT IS not often that Singaporeans hear of differences in opinion within the highest ranks of Government, but there was a hint last week.
Senior Minister Goh Chok Tong was at a dialogue with Marine Parade residents when he revealed an interesting divide over transport policy.

He said Minister Mentor Lee Kuan Yew was in favour of making car ownership very expensive so that fewer people would own cars hence leading to less congestion on the roads.

Prime Minister Lee Hsien Loong, on the other hand, wanted more people to be able to own cars and to control congestion by applying more stringent usage measures like Electronic Road Pricing (ERP).

‘The PM believes it’s fairer if you can spread car ownership. Philosophically, the PM is right. In a practical sense, the MM is right,’ he said.

‘But then the problem is, the middle class can’t own cars, only the rich can. So the PM is right philosophically, and I think it’s the fairer approach. But then, more road congestion, and so ERP.’

It has always been a tricky balance, getting the right mix of ownership and usage measures to work, to ensure not just free-flowing traffic but also meet the growing aspiration of people to have their own set of wheels.

Which is the more effective method for Singapore? Which the fairer? Is it possible to be both effective and fair?

This is not just a matter of transport policy. It is also highly political in nature, especially when questions of fairness are raised.

Or to put it more bluntly, as SM Goh did, should only the rich be able to own cars?

You cannot get more political than that.

When the certificates of entitlement (COEs) were first introduced in 1990, it seemed that the ownership school had prevailed. If ever there was an ultimate weapon to control car numbers with absolute precision, this was it.

What could be more final a solution?

Except, of course, for the tricky business of deciding how many COEs are to be released.

For as long as I can remember, a growth rate of 3 per cent per year for the car population has been prescribed since COEs were introduced.

That growth rate has resulted in the number of cars going up from about 248,000 in 1990 to nearly 540,000 today.

That means one in seven persons today owning cars compared to one in eleven 18 years ago.

In other words, the COE system has not impeded more widespread ownership.

Those COE-rich years were accompanied by - from today’s perspective - a fairly relaxed set of usage measures. ERP charges were fairly low. Parking charges paled in comparison to those in cities like Tokyo, New York and London.

Those good old days clearly could not last. By the early 2000s, it was evident that the roads were becoming congested. Traffic volumes in parts of the city reached saturation levels with increasing frequency.

It took a new Transport Minister to declare a more aggressive approach to the problem. Mr Raymond Lim announced a new target for COE growth, halving it to 1 and a half per cent a year, from next year, and a widening of the network of ERP gantries, with higher charges all round.

Taken together, these measures signalled a major shifting of the gears on both the ownership and usage fronts.

What does this new regime mean for Singaporean motorists?

Apart from the obvious effect of making the cost of owning and using cars more expensive, there are another two important implications, the significance of which might not have sunk in yet.

First, any tightening of the COE supply favours existing car owners over future ones. In fact, everything else being equal, existing owners enjoy a windfall if a reduction in the supply of COEs results in prices going up, and a corresponding increase in the value of all cars, new and existing.

That is good news for those owning cars today.

But not so for prospective car owners, especially those buying their first cars, including younger generations of Singaporeans.

In fact, they face a double whammy. Not only will COE supply shrink but Singapore’s population is expected to increase as the Government woos skilled immigrants to settle here, a significant proportion of whom might be expected to be of the car-coveting lot.

Younger Singaporeans will have to compete with new immigrants for the reduced car quota.

It is tough on them, but it is politically a more palatable solution than relying more heavily on usage measures like the ERP which would affect a far larger group of motorists.

In fact, by reducing the total number of COEs, the authorities have given themselves more breathing space to go easier on usage measures.

The second implication has to do with public transport.

The Government recognises that the key to getting people to give up owning and using their cars is to improve public transport, and it has announced a $50 billion plan to expand the MRT network over the next 12 years.

That is a good start, but I wonder if it is enough.

When thousands of would-be motorists who have been priced out of owning cars because of the reduced COE allocation join the MRT-and-bus commuting public every year, the standards they expect will invariably be higher.

As high perhaps as commuters in major cities such as Tokyo, London and Paris, with MRT stations within walking distance in almost every part of the city.

Singapore needs to ramp up its network - and make up for lost time brought up by the COE-rich years - if it wants to make public transport a viable alternative.

If not, the combined angst of a car-deprived population and a frustrated commuting public might exact quite a political price.

Source : Straits Times - 05 Sept 2008

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‘I won’t quit’ Thailand PM Samak

‘I won’t quit’ Thailand PM Samak

By Nirmal Ghosh, Thailand Correspondent

PM Samak arriving to make a radio broadcast yesterday. He was expected to resign but instead, he spoke out against protesters occupying his office. — PHOTO: AGENCE FRANCE-PRESSE

BANGKOK: Confounding speculation, Thai Prime Minister Samak Sundaravej yesterday came out talking tough and refusing to resign, slamming the anti-government People’s Alliance for Democracy (PAD) movement as a ‘doomsday cult’.
In a move obviously aimed at outflanking the PAD, he summoned his Cabinet for an emergency session in which it decided to hold a national referendum to give ordinary Thais a say in whether the government should go or stay.

‘Don’t even think I am going to quit,’ Mr Samak said in a 50-minute national radio address in the morning. ‘I cannot leave because under a democratic system no one group can force me to resign.

‘These people want the whole Samak government to quit. But how can I do that when the entire world is watching us? It would embarrass the nation to do such a thing.’

He added: ‘I will not quit. I will not dissolve Parliament. I will stay to protect democracy and the monarchy.’

The PAD - a hotchpotch of royalists, businessmen and activists - wants to roll back many of Thailand’s democratic gains by creating a new Parliament, only 30 per cent of which would be elected.

‘The PAD is like a radical doomsday cult,’ Mr Samak said. ‘The PAD is an illegal group that has seized the Government House and declared their victory. How can that be correct? The country cannot survive without law and order. Otherwise it’s a state of anarchy.’

The Premier was reported to have had an audience with King Bhumibol Adulyadej on Wednesday night, provoking speculation that he may be asked to resign by the monarch. While careful to remain above politics, the King is without question Thailand’s highest moral authority.

But it seems possible that the palace approved the idea of going back to the people with a referendum.

Minister of Culture Somsak Kiatsuranond said that the poll would focus on one question - whether voters want the government to stay in power.

If the referendum is held and the government wins the people’s support, it will amount to giving Mr Samak a new mandate and a legal and constitutional upper hand - and throw the ball back to the PAD’s court, potentially isolating it.

But initial reaction to the planned referendum was not favourable, with PAD co-leader Somsak Kosaisuk saying it would be a waste of taxpayers’ money.

The labour union leader told The Straits Times: ‘Samak is stubborn and thick-skinned and refuses to see our point of view. He is trying to buy time.’

Separately, Senate President Prasobsuk Boondej said he did not believe a vote, even a rushed one, would end the crisis. ‘The current situation needs an immediate solution to defuse it. We can’t afford to wait for the referendum law to pass,’ he was quoted as saying.

As the main protagonists in the drama continue to speak out, the real issue is emerging - Thailand is in the midst of a class struggle that pits the old feudal order against an emerging democracy unwittingly catalysed by former premier Thaksin Shinawatra’s cultivation of his grassroots power base, especially among rural poor in the north and north-east.

This was clearly evident in a Bangkok Post interview with PAD co-leader Sondhi Limthongkul published on Wednesday. He said people in the ‘ruling class’ - the backbone of his movement’s support - do not accept Mr Samak.

Mr Sondhi has also told foreign journalists that at least half of his supporters were ‘well-off people’ and proudly referred to several ‘millionaires’.

Meanwhile life in Bangkok outside the area under Government House remained normal yesterday, although schools are shut until Monday. Hat Yai airport, closed for two days by PAD protesters, also resumed operations yesterday.

In Washington, the White House said it was closely watching the situation in Thailand, urging all sides to refrain from violence, and called for the emergency decree declared on Tuesday to be limited in scope and duration.

Source : Straits Times - 05 Sept 2008

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Singapore, China reach free trade accord

Singapore, China reach free trade accord

PM expected to sign wide-ranging pact in Beijing next month

By Tracy Quek, China Correspondent

TIANJIN: Singapore has become the first Asian country to conclude a comprehensive bilateral Free Trade Agreement (FTA) with China, a move that will boost economic and trade ties between the two countries even further.
Deputy Prime Minister Wong Kan Seng and Chinese Vice-Premier Wang Qishan yesterday announced the successful end to two years of FTA negotiations during the 5th meeting of the Joint Council for Bilateral Cooperation (JCBC).

The high-powered JCBC sets the agenda for economic cooperation between the two countries.

Both sides had held eight rounds of talks to hammer out the trade deal since negotiations began in October 2006. The eighth and final round of FTA talks took place from Monday to Wednesday in Beijing, even as high-level Singapore and Chinese delegations held separate meetings in Tianjin.

The formal signing of the pact is expected to take place next month when Prime Minister Lee Hsien Loong attends the 7th Asia Europe Meeting Summit in Beijing.

The deal is a ‘major achievement’ and a ‘new milestone’ in Singapore’s long and established relationship with China which took root before diplomatic ties were officially established in 1990, said DPM Wong.

Citing two bilateral flagship projects, the Suzhou Industrial Park (SIP) and the Tianjin eco-city, Mr Wong said: ‘This long-term relationship has been concretised in many ways apart from growing markets and access…the FTA further strengthens our relations.’

The pact, he added, will result in ‘liberalisation, the lowering of tariffs for many items, goods, services, investments, and so on’.

‘With far better access to each other’s markets, lower duties and tariffs, the FTA will be beneficial to both sides. It is a win-win situation,’ he told reporters after a morning of meetings during which senior Singapore and Chinese officials discussed the FTA, the SIP and other issues.

For Singapore businesses, he added, there will be ‘far better access to the Chinese market, therefore the FTA is a big plus for our businessmen doing business in China’.

The bilateral FTA builds on the Asean-China Free Trade Agreement ( ACFTA), said a statement from the Ministry of Trade and Industry yesterday.

The Asean-China FTA process began in 2002. Now, only the investment component remains to be settled. Agreements on goods and services have been reached.

The China-Singapore pact, which is broader in scope than the Asean-China accord, ‘provides an impetus’ for the ACFTA to be concluded, said Mr Wong.

The Singapore-China FTA will cover a range of areas including trade in goods, trade in services, movement of people, investment, customs procedures, technical barriers to trade, food safety and economic cooperation, said the MTI statement.

Further details will be released after the formal signing of the deal.

Compared to a regional trade pact, a bilateral FTA could result in ‘more gains for Singapore, as the commitment would be much deeper at the bilateral level’, said DBS Bank economist Irvin Seah.

China has seen rapid growth and is a magnet for foreign investments, he said, which means ‘gaining a foothold there and having deeper and broader market access will benefit Singapore exporters tremendously’.

‘Chinese companies are also looking outwards. Having this FTA will lay a solid foundation for us to attract Chinese investments,’ he added.

Companies, both in Singapore and China, welcomed the news.

One mainland company hoping for some goodies under the new FTA is Guangdong-based Dongguan Nuoweier Technology Company, which manufactures and exports welding and incision equipment used on ships to Singapore and Asia-Pacific countries.

Mr Li Baolei, its sales manager for the Asia-Pacific region, told The Straits Times: ‘I’m sure the FTA will bring us some benefit. We hope mostly for favourable tariff policies.’

Two countries’ strong trade ties

Singapore’s trade with China hit a record S$91.6 billion last year.

China is Singapore’s third-largest trading partner, while the Republic is China’s eighth-largest trading partner.

China is Singapore’s top investment destination, and Singapore is China’s seventh largest investor.

Singapore’s cumulative actual investments in China amounted to more than US$33 billion (S$47 billion) as of the end of last year.
Source: MTI

Source : Straits Times - 05 Sept 2008

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