HDB offers 683 new flats

HDB offers 683 new flats 

THE Housing Board (HDB) yesterday launched 683 flats in Punggol, Sengkang, Jurong West and other estates in its half-yearly sale of units which were not taken up in previous launches.
By 5pm, its website showed 2,626 applications for the flats, which range from three-room premium to executive units.

The biggest share of 288 flats is in Sengkang, while 153 are in Punggol, 77 are in Jurong West and the remainder are in various estates.

This year, the HDB also plans to launch another 8,400 units under the build-to-order scheme.

Prices for units launched yesterday range from $160,000 for a four-room flat in Woodlands, to $565,000 for a five-room flat in Bukit Merah.

Households with a gross monthly income of up to $8,000 are eligible to apply.
Source : Straits Times - 11 Oct 2008

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How Singapore achieved success

How Singapore achieved success 

By Kor Kian Beng 

FOUR key factors are behind the Singapore success story, said Minister Mentor Lee Kuan Yew, who led the team that laid the foundation for the country’s development after independence.
They are: a capable and incorrupt government, meritocracy, equal opportunities for all and making every Singaporean a stakeholder in the country.

He identified these factors when he replied to a participant at a dialogue with around 500 people at the Global Indian Diaspora Conference. The man had asked what lies behind Singapore’s development into one of the world’s cleanest cities with some of the best infrastructure.

Before replying, Mr Lee said he was aware of the vast difference between a small city state and a vast continent, like India. ‘But when you come to compare cities, it’s exactly the same,’ said Mr Lee, who was prime minister from 1959 to 1990.

First, Mr Lee said he was not involved in a solo effort as he had a very good team of very able ministers, whose integrity and ability were beyond doubt.

He said: ‘Yes, I captained the team and made decisive moves but I had people who understood what had to be done to get there.’

It was important to have a completely incorruptible government in place, he added. ‘Once you have a corrupt government, you’re in deep trouble…the whole system is skewed, including decision making.’

Another crucial factor was to set out a level playing field for everyone.

‘You get a job not on the basis of your connections - your father, your friends or whatever - but on the basis of your performance. We have equal opportunities for schooling, health, and I would say, life.

‘Regardless of race, language or religion…Who’s the best man? You do it.’

As for making every Singaporean a stakeholder in the country, Mr Lee noted that many Singaporeans own property.

‘So, today you can ask any taxi driver, any hawker, he owns a flat, he owns his home, the smallest of which is worth about $150,000 even in today’s depressed prices. And the biggest of them will be about $600,000, $700,000.

‘So he’s a little stakeholder.’

This means Singaporeans understand that voting-in a bad government could lead to a plunge in property values and a loss of jobs, Mr Lee added.

‘They may say this is authoritarianism, that’s how we get re-elected,’ he said. ‘They don’t know the economic rationale behind it. Everybody has a stake, everybody has to perform.’

Source : Straits Times - 11 Oct 2008

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What’s a technical recession?

What’s a technical recession? 

A TECHNICAL recession is defined as two consecutive quarters in which the economy has shrunk compared to the previous quarter.
The size of the economy is measured in terms of the total value of goods and services produced in a country, also known as its gross domestic product, or GDP.

Generally, the duration of a recession is the full period of the business cycle that economic activity is in decline.

There is no universally accepted way to measure a ‘real’ recession. Some suggest a full-year economic contraction or two consecutive quarters of the economy shrinking compared to the same period in the previous year.

Singapore’s last ‘full-scale’ recession was in 2001, when the economy shrank 2.4 per cent during the year after the bursting of the dot.com bubble.

Source : Straits Times - 11 Oct 2008

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Singapore Economy slips into technical recession

Singapore Economy slips into technical recession 

By Fiona Chan 
  
SINGAPORE is in a technical recession after the economy slipped into negative territory for the second quarter in a row, dragged down by a slump in exports and a weak property market.
But the real recession, which usually portends job losses, will probably come next year when the Republic feels the full impact of the global economic slowdown, warned economists.

Many have lowered their growth forecasts and are now tipping 0 to 3 per cent growth next year.

The economy shrank in the third quarter, declining by a worse-than-expected 0.5 per cent from a year ago, according to estimates released yesterday by the Ministry of Trade and Industry (MTI). Compared with the previous quarter, the economy declined 6.3 per cent, on top of a 5.7 per cent contraction in the second quarter, the ministry said.

Aside from growth in the first quarter, the economy contracted quarter-on-quarter in three of the last four quarters. This is the first technical recession since 2002, after the dot.com bust. Lowering the official forecast for full-year growth for the third time this year, the ministry now expects the economy to grow at ‘around 3 per cent’ this year, down from 4 to 5 per cent. The original prediction was 4.5 to 6.5 per cent growth.

‘External economic conditions have deteriorated more than expected and some sectors of the economy have weakened significantly,’ it said.

With the deepening global financial crisis, demand for exports has dropped, hitting Singapore’s key manufacturing sector, which shrank by 11.5 per cent in the third quarter amid a protracted slump in pharmaceuticals and electronic output.

Construction and services held nastier surprises. Construction, which had been powering along at double-digit growth, abruptly halved to lodge single-digit expansion for the first time since 2006.

MTI said that despite ‘a strong pipeline of construction projects’, a shortage of contractors, engineers and project managers had caused building delays.

Economists also pointed to the lacklustre property market, where a standstill in home sales has prompted developers to delay launching and building projects. With no relief in sight, construction growth is likely to stay at this slower pace.

But a boost could come from the Government bringing back $2 billion worth of building projects it had put off earlier this year to ease the construction squeeze, suggested OCBC economist Selena Ling.

The services sector held no bright spots either, cooling to lower growth as financial market activities slowed while the subdued property market weighed down on the real estate services industry.

‘This suggests that the global slowdown has had a much greater knock-on effect on services than we had anticipated and marks the start of a more protracted decline in services growth,’ said DBS economist Irvin Seah.

The key worry in this, he said, is that services employs the bulk of the labour force and lower growth may lead to job losses.

But Ms Ling noted that the unemployment rate remains at very low levels, so retrenchments may not hurt so much. She said: ‘If job losses come mainly from manufacturing, most of the people hit will be foreign workers.’

To address growth concerns, the Monetary Authority of Singapore has eased monetary policy, setting a zero appreciation stance for the Singapore dollar.

But economists said more immediate measures may be needed in the form of fiscal stimuli, focusing on lower-income groups and retrenched workers.

Source : Business Times - 11 Oct 2008

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Singapore slips into recession, risks skewed on downside

Singapore slips into recession, risks skewed on downside

Official 2008 growth estimate cut to 3%, but market economists already shaving 2009 forecasts
By ANNA TEO

EVEN with the market primed for recession, the Q3 flash GDP estimates still fell below expectations. And, with no quick rebound in sight, economists are looking ahead at a lean 2009 as well.

 
The early estimates produced yesterday by the Ministry of Trade and Industry (MTI) show a broad-based sharp slowdown, with the economy contracting not only sequentially as widely expected, but in year-on-year terms too. MTI now expects the economy to grow ‘around 3 per cent’ in 2008, down from its August forecast of 4-5 per cent.

Based only on July and August data, GDP fell 6.3 per cent in Q3 from Q2 in adjusted, annualised terms. Coming straight after a 5.7 per cent decline in the preceding quarter, this spells a technical recession - Singapore’s first since the second half of 2002.

But, against expectations, GDP has also fallen from a year ago in Q3, by 0.5 per cent. The last time the economy went into the red in year-ago terms was in Q2 2003 when GDP fell 1.8 per cent during the Sars outbreak.

Both MTI and the Monetary Authority of Singapore (MAS) - which yesterday eased monetary policy by moving to a neutral stance, from the ‘modest and gradual’ currency appreciation policy it had maintained since April 2004 - yesterday described the Singapore economy’s near-term prospects in plain stark terms.

The external risks remain on the downside as the ongoing financial turmoil has presented ‘new uncertainties’ for the Singapore economy, MAS says. A more severe global downturn cannot be discounted, and Singapore’s economic growth will ‘likely remain below its potential rate over the next few quarters’, the central bank adds.

A slip into technical recession here had been widely flagged, following months of sluggish manufacturing output due to pharmaceutical peculiarities. But now the precision engineering and chemicals clusters have also slowed because of weaker external demand, MTI says.

The ministry also expects the global financial crisis to take its toll in the months ahead on Singapore’s financial services sector, particularly ’sentiment-sensitive’ activities such as stocks trading and fund management.

MAS also sees services industries such as the transport-hub and tourism being hit by the global downturn.

As for the construction sector, ‘despite a strong pipeline of projects, a shortage of contractors, a tight labour market for engineers and project managers, and longer waiting times for equipment’ have delayed the projects, MTI notes.

Market economists share the official concerns - just more bearishly. Most had pared their forecasts of Singapore’s 2008 GDP growth well before the latest official revision, and some now cite the risks of the growth falling below 3 per cent - probably between 2.5 and 3.0 per cent, they reckon.

Indeed, OCBC Bank’s economists have belatedly cut their 2008 forecast to 2 per cent, and see the economic weakness extending into the first half of 2009.

UBS Investment Bank strategist Nizam Idris said the latest data show the economy to be in ‘deep recession’, with all the key figures ‘well below expectations’.

The Q3 flash figures - which will eventually be updated with the September data - imply that industrial production probably grew modestly by 1-2.5 per cent last month, economists estimate. Any lower and the final Q3 GDP figure could well be worse than the already weak flash figures, United Overseas Bank’s economists note. And, short of a strong pharma rebound soon, the manufacturing slump could extend into Q1 2009, they add.

Nanyang Technological University economist Choy Keen Meng notes wryly that his ‘worse-case scenario’ forecasts issued in March - of US recession and Singapore growing 3 per cent in 2008 - are coming true.

But he expects some recovery in year-on-year GDP growth to 3-4 per cent in Q4, partly on account of a low base in Q4 2007.

‘Sluggish growth of 2-3 per cent is expected in the first half of next year. If the financial turmoil can be brought under control by then, we might be lucky to see a gradual recovery beginning in the second half. All in all, the economic outlook for 2009 is not looking good. GDP growth is likely to come in at about 4 per cent or even lower, barring a protracted global economic slump.’

Others such as Standard Chartered Bank economist Alvin Liew recently halved his 2009 growth forecast for Singapore to 2 per cent.

One silver lining, perhaps, amid the gloom and doom: Inflationary pressures will ease. MAS sees Singapore’s headline inflation rate falling to 2.5-3.5 per cent in 2009, from 6-7 per cent this year. Not fast enough, says Stanchart’s Mr Liew, pointing out that Singapore’s ‘historical comfort zone’ for inflation is just 1-2 per cent.

Source : Business Times - 11 Oct 2008

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Prepare for a rough ride: Singapore PM Lee

Prepare for a rough ride: Singapore PM Lee

There is no escaping global impact of crisis
By CHUANG PECK MING

IN his first public comment on the global financial crisis, Prime Minister Lee Hsien Loong yesterday told Singaporeans to ‘prepare for a rough ride at least over the next year, and quite possibly longer’.
While Asian banks have been spared the woes of their US and European peers, stock markets everywhere have been battered in the fallout. Singapore shares tumbled 7 per cent yesterday.

The crisis will curb consumption and investment in the developed countries and affect economic growth beyond their shores, Mr Lee said. ‘Asian countries cannot avoid the impact of weakening US, European and Japanese economies.’

He was speaking on the first day of the two-day Global Indian Diaspora Conference, where Mauritian Prime Minister Navinchandran Ramgoolam and India’s Minister for Overseas Indian Affairs Vayalar Ravi were also present.

Mr Lee’s comments came after Finance Minister Tharman Shanmugaratnam on Sunday projected ’several quarters’ of slowdown for Singapore’s economy. And National Trades Union Congress (NTUC) chief Lim Swee Say warned on Thursday of possible wage and job cuts.

Expressing a similar view at the conference, Senior Minister Goh Chok Tong said: ‘This time, Asia is not as adversely affected as US and Europe because we are less sophisticated in derivatives.’

 
Banks have also recapitalised since the Asian financial crisis, he said. But there is no escaping the global impact of what is happening. ‘The worrying part is how it affects the real economy,’ Mr Goh said. ‘That will affect us. The US is one of the biggest exports markets for Asia. Asia and Singapore will be impacted. The worry for next year is how long will slow growth be dragged out for all of us.’

Mr Lee said that the problems facing financial institutions in the US and Europe are complex and grave, and will not be solved overnight or even ‘within a few months’.

‘The fear and panic gripping financial markets everywhere will take time to subside,’ he said. ‘The trust and confidence between banks, which lie at the heart of finance intermediation, will take time to restore.’ But the momentum from projects Singapore has secured, including the F1 race, will help see it through the financial storm, he said. Unemployment here remains low and ‘we are still on a steady course’. Singapore’s strategy of growing with Asia remains valid, ‘because we are confident that Asia’s dynamism will endure’, Mr Lee said. ‘Both India and China are continuing to transform their economies, and their emergence in a stable and peaceful region will benefit many other Asian countries.’

Singapore’s links through the Indian disapora - the second largest, with 25 million people of Indian origin scattered around the world - has helped Singapore and India boost ties, he said.

Also, the Comprehensive Economic Agreement signed between Singapore and India in 2005 has helped increase two-way trade to $24 billion in 2007. Singapore was India’s second-biggest investor last year. And Singapore was the choice investment location for Indian companies venturing overseas.

Mr Lee said that just as Singapore has built ties with India itself, it wants also to network with Indian overseas communities throughout the Asia-Pacific.

The conference is hosted by the Singapore Indian Chamber of Commerce, the Ministry of Overseas Indian Affairs and the Confederation of Indian Industry.

Source : Business Times - 11 Oct 2008

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Facing up to recession - Singapore

Facing up to recession - Singapore

Government should intervene to keep credit flowing to corporate sector
By VIKRAM KHANNA
THIS time last year, with the stock market near its all-time high, the property market booming and the Singapore economy cantering towards a growth rate of 7.5 per cent for 2007, who would have thought we were, in fact, on the cusp of a recession?

 
A PASSING PHASE

Storms don’t last forever and Singapore’s recession, like so many before it, will pass
But here we are, entering our first technical recession - two consecutive quarters of negative growth - since 2001; the flash estimate for Q3 growth was a worse-than-expected minus 6.3 per cent. We’re also in the first quarterly contraction on a year-on- year basis (minus 0.5 per cent) since the time of Sars, in the second quarter of 2003.

It’s a sobering reminder of how vulnerable even a fundamentally sound and well-run economy like Singapore can be to global economic headwinds; except that what we’re facing now is no mere headwind, but a gale-force storm.

There is nothing Singapore could have done to prevent this. There is not much that any Asian country could have done. And the financial market turbulence we are seeing is only the beginning of a long spell - at least a couple of years - of pain for any economy that depends heavily on doing business with the United States and Europe.

After the current phase of the financial storm subsides - which depends on what the G-7 finance ministers decide to do at their meetings in Washington - the theatre of action will shift to the real economy. The US, Europe and Japan will experience a marked slowdown, if not outright recession, and rising unemployment. The great American consumption machine, in particular, which accounts for more than two-thirds of US GDP, will be reduced to a shadow of its former self.

While the International Monetary Fund still resists calling a global recession - it forecasts 3 per cent global growth next year - that view could change.

But global recession or not, few Asian countries - certainly not those with export-oriented economies - will be spared from the backwash of slowing growth in the major economies. Not even China; while its growth rate will probably still be respectable at around 7-8 per cent, the economy of the coastal provinces, where hundreds of thousands of factories have to depend for their livelihoods on the American consumer, will be devastated. Thousands of SMEs in China have gone bust already this year.

India, for its part, has seen its financial markets ravaged as a result of selloffs by foreign institutional investors; but the real economy - which is still overwhelmingly domestically focused - will be relatively resilient.

But even if China and India boom, they cannot come close to compensating for a US slowdown: a mere 20 per cent reduction in consumption in the US wipes out the equivalent of all of the consumption of China and India combined. Add in a European slowdown as well and the problem is multiplied.

So in the circumstances, what are the policy options for a small open economy like Singapore? The focus would have to be on, first, ensuring that banking functions as normally as possible and businesses keep running.

Right now, banking is not functioning normally; the credit crunch and fear of counterparty risk has spread here too. Despite liquidity injections by the Monetary Authority of Singapore, interbank rates remain elevated. Banks have pulled in their credit lines to even well-run companies. If this continues, layoffs will inevitably rise.

There could well be more financial accidents, or at least strains, in the US and Europe in the months ahead, which suggests local banks will remain unusually risk averse. There is a strong case here for temporary government intervention to keep credit flowing to the corporate sector - whether through direct loans by government agencies such as SPRING (via their several loan schemes, which can be enhanced) or through credit guarantees.

There is a case, too, for an off-budget package of fiscal measures - particularly increases in public spending, as well as help to businesses and vulnerable groups - to cushion the impact of the slowdown. The last budget did not, and could not, see it coming, but it is here. And help can’t wait till the next budget. A philosophy of prudent economic management practised over decades has yielded a legacy of fiscal surpluses. It’s now time to put them to work.

This crisis is also an opportunity - for example, to ramp up infrastructure, to develop new capabilities through higher outlays on training and retraining, and promote new technologies.

Storms don’t last forever and Singapore’s recession, like so many before it, will pass. What matters now is how productively and creatively we handle it, and what shape we will be in when the global economy comes back.

Source : Business Times - 11 Oct 2008

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