Visitor arrivals to S’pore drop 9.7% on-year in November

Visitor arrivals to S’pore drop 9.7% on-year in November

By S Ramesh,

SINGAPORE: Visitor arrivals to Singapore dropped again in November. The Singapore Tourism Board (STB) said 760,000 visitors arrived last month, a drop of 9.7 per cent, compared to November last year.

Indonesia, China, Australia, Malaysia and India were Singapore’s top five visitor-generating markets, accounting for 49 per cent of total visitor arrivals for last month.

STB said since June this year, there has been a decline in visitor arrivals to Singapore, reflecting the continued impact of the worsening global economic slowdown on consumer sentiments.

Thus, visitor arrivals are expected to fall short of the 2008 target of 10.8 million tourists.

STB added that it has focused its efforts to increase visitor spending during the year-end festive period.

Singapore hotels hope to generate S$161 million in room revenue, a drop of six per cent compared to November last year.

- CNA/yt

Source : Channel NewsAsia - 27 Dec 2008

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Thailand plans booster shot for tourism, economy

Thailand plans booster shot for tourism, economy

$650m to be set aside to revive a sector devastated by week-long airport blockade

BANGKOK: The Thai government is planning an US$8.7 billion (S$12.6 billion) stimulus package to boost an economy hit by the double whammy of a global slowdown worsened by months of political strife.
Nearly US$450 million (S$650 million) of the package will go to the vital tourism sector still reeling from the impact of a week-long closure of Bangkok’s Suvarnabhumi airport last month as it was blockaded by anti-government protesters.

‘If businesses fail, it will cause damage to the country,’ Tourism and Sports Minister Chumpol Silpa-Archa told reporters on Thursday after a meeting with private tourism operators.

‘We have already lost 100 billion baht (S$4 billion) in revenues and more than two million tourists from the airport closure,’ Mr Chumpol said.

His comments came as newly-installed Prime Minister Abhisit Vejjajiva announced the government’s stimulus package of 300 billion baht, or about 3 per cent of gross domestic product (GDP), to jump-start the economy.

It must first be approved by Parliament, where Mr Abhisit’s coalition has a slim majority.

‘The plan will be announced in January and the budget needs to be approved by the Parliament first and it is expected that the money could be injected (into the economy) from March or April,’ Mr Abhisit told reporters.

The Thai government is desperate to help the country’s ailing economy which has been projected this week to grow by only 1 per cent next year.

The double blow from the global slowdown and the airport blockade during the peak tourist season has many economists drawing comparisons to the 1997 Asian financial crisis when the Thai economy shrank 10.5 per cent.

But Mr Abhisit said yesterday that tackling Thailand’s current economic problems will be a ‘tougher job’ than dealing with the 1997 crisis because ‘this time around you have both the economic and the political dimensions’.

He has vowed to take legal action against the leaders of the protesters who staged the airport siege, including some members of his Democrat Party. ‘They have to proceed according to the law and there will be no interference,’ he said.

‘I made it very clear even before that any MPs who joined the protest would do so in their own capacity. They would not be allowed to use their MP immunity privileges.’

Mr Abhisit also expressed confidence that he could deliver a maiden speech to Parliament on Monday, despite threats by supporters of ousted premier Thaksin Shinawatra to prevent lawmakers from getting in.

Yesterday, he urged Thaksin, who is in exile overseas, not to incite unrest in the kingdom ahead of this Sunday’s mass protests planned by the opposition ‘red shirts’ group.

Mr Abhisit’s shaky multi-party coalition government, formed after the courts dissolved the former ruling party, has made reviving the economy its top priority, in particular the tourism sector. Tourism directly employs 1.8 million people in Thailand and brings in the equivalent of 6 per cent of GDP, making it a major economic driver.

The US$4 billion Suvarnabhumi airport handles more than 100,000 passengers and outbound cargo worth around US$85 million each day.

Mr Abhisit said the Thai people regretted the airport seizure which badly tarnished Thailand’s image as a tourist destination.

Mr Apichart Sankary, president of the Association of Thai Travel Agents, said he expected 12 to 13 million foreign tourists next year, well below the 16 million projected by the Tourism Authority of Thailand before the airport siege.

Mr Apichart said that normally Thailand welcomed 8,000-12,000 foreign tourists a day during the peak season that started last month, but the number fell to 5,400 after the airport shut.

Analysts say the stimulus plan could help counter the slowdown in exports and inflow of foreign investment. But much will depend on how it is carried out. ‘First, we have to see how fast it can stimulate the economy,’ said Professor Sompob Manarungsan, an economics professor at Chulalongkorn University.

REUTERS, AGENCE FRANCE-PRESSE, ASSOCIATED PRESS

Source : Straits Times - 27 Dec 2008

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A bank is born, bringing cheer to General Motors-New York

A bank is born, bringing cheer to General Motors-New York
(New York)

 
MORE MILEAGE
Converting GMAC to a bank will boost its ability to fund purchases of cars made by GM
DAYS from receiving its first instalment of at least US$9.4 billion in US aid, General Motors (GM) won another victory with the Federal Reserve’s approval of lender GMAC LLC’s bid to become a bank holding company.

GMAC’s shift to a bank eases the threat of a default that threatened to dry up credit for GM dealers who used the company to finance about three-quarters of their inventory. GMAC also handled loans for about 35 per cent of GM’s retail buyers in 2007.

‘This has a positive impact on GM and also on the auto market,’ Tatsuya Mizuno, director of Fitch Ratings in Tokyo, said yesterday in a Bloomberg Television interview. ‘The problem is how they can prepare for next-generation vehicles, to restore their competitiveness.’

The Fed used emergency powers on Wednesday to grant GMAC’s bank conversion, citing turmoil in financial markets and the potential impact on GM as the biggest US carmaker taps emergency federal loans to stay in business.

That decision was the second lift for GM in less than a week, after President George W. Bush said on Dec 19 that GM and Cerberus Capital Management LP’s Chrysler LLC were eligible for US aid to help them avoid running out of cash by early next year, threatening a collapse that would cost millions of jobs. GM is due an initial US$4 billion in loans by Dec 29, and US$5.4 billion more by Jan 16.

GM, which owns 49 per cent of GMAC, and Cerberus, which leads the group holding the rest, will give up control of the Detroit-based lender to comply with federal rules on who can own banks.

Converting GMAC to a bank ‘would benefit the public by strengthening GMAC’s ability to fund the purchases of vehicles manufactured by GM’, the Fed said in its order. GMAC was shut out of credit markets this year after piling up US$7.9 billion in losses dating from the middle of 2007.

GMAC spokeswoman Gina Proia said: ‘We think this is a significant positive step in GMAC’s history.’ GM spokesman Greg Martin said the carmaker was pleased, while Cerberus spokesman Peter Duda declined to comment.

GM gained 25 cents, or 8.3 per cent, to US$3.25 on Dec 24 in New York Stock Exchange composite trading. The shares have plummeted 87 per cent this year, worst among the 30 companies on the Dow Jones Industrial Average.

GM owned all of GMAC until it sold a 51 per cent stake in 2006 to a group led by Cerberus, the New York-based private equity firm. As part of the Fed agreement, GM will reduce its ownership in GMAC to less than 10 per cent and transfer what remains to an independent trust, which will dispose of the stakes within three years.

Cerberus funds that hold GMAC stakes will distribute them to their investors, the Fed said. Cerberus’s voting control will be cut to less than 15 per cent, or 33 per cent of GMAC’s total equity. None of the recipients will have more than 5 per cent of the votes or 7.5 per cent of the total equity. The Fed also required Cerberus to sever ties between its people and GMAC.

Fed approval of GMAC as a bank ‘is a big relief for GM dealers’, said Martin NeSmith, a member of GM’s National Dealer Council, who has three outlets in Georgia selling Chevrolets, Buicks and Pontiacs.

GMAC cut financing for consumers by about 90 per cent and banks aren’t taking up the slack, Mr NeSmith said. He has said previously that a GMAC default might wipe out as many as 40 per cent of GM’s dealers. — Bloomberg

 
Source : Business Times - 27 Dec 2008

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Retail rents expected to fall in 2009

Retail rents expected to fall in 2009

Retailers likely to be cautious in expansion, rents may undergo corrections to reflect the gloomy outlook
By UMA SHANKARI

RENTS for prime retail space in Orchard Road could fall by as much as 13 per cent in 2009, while rentals at suburban malls are expected to ease by about 3 per cent, property analysts here said.

 
Cuts in consumer spending will be the key threat to rental rates. But rents will also come under pressure from the 3.2 million square feet of new retail space expected to come onstream next year - close to half of which will be along Orchard Road.

A poll of property analysts here showed that they expect prime retail rents to fall by anywhere between 5 and 13 per cent next year. But malls in the suburbs, where people go to buy their neccessities, are expected to fare better. Predictions for suburban rental growth range from ‘holding steady’ to a decline of up to 7 per cent. The consensus view is a fall of about 3 per cent.

By contrast, so far in 2008, prime Orchard Road rents fell 0.8 per cent year-on-year, while prime suburban rents rose one per cent, data from CB Richard Ellis (CBRE) shows.

Consumers are expected to cut back on spending on concerns of job and wage security, which will hit the sales of retailers, analysts said. Tourist arrivals are also expected to fall, which will depress sales further.

‘A prolonged depression in consumer spending could affect retailers’ ability to service their rents and we think it is possible that more retailers would renegotiate for lower rental rates, and retail mall managers may have to give in to avoid a high turnover in tenants,’ noted OCBC Investment Research analysts Foo Sze Ming and Meenal Kumar in a report.

Echoed Knight Frank: ‘Retailers will be more cautious in expanding their businesses and retail rents are likely to undergo corrections to reflect the gloomy outlook.’

In addition, more space is due to come onstream - some 5.7 million sq ft in the next two years. Of this, 20-30 per cent will be located along the Orchard Road belt. Another 21 per cent will come from the Marina Bay Sands resort. Some of the major retail supply due to be completed next year include Ion Orchard, The Marina Bay Sands Shoppes, Orchard Central, 313@Somerset and City Square Mall.

But in spite of all the new space, analysts here remain confident that the healthy take-up of retail space seen so far is likely to keep vacancy rates under control and prevent sharp rental declines caused by oversupply.

Most of the major upcoming malls - such as Ion Orchard, Orchard Central, Mandarin Gallery, 313@Somerset and Marina Bay Shoppes - have reportedly achieved pre-commitment rates of between 50 per cent and 70 per cent, said Colliers’ director for research and advisory Tay Huey Ying. And there should be interest for the remaining retail space, she said. The Orchard Road malls will ‘probably be the only new retail malls the market is likely to see on this prime stretch for a while’ and the Marina Bay Shoppes ’should also be sought after as the locality would be a new icon for Singapore’, Ms Tay said. ‘The challenge, therefore, is really in structuring a rental package that is win-win for both landlord and retailer in an increasingly trying time,’ she added.

Other analysts agreed, saying that the onus will be on landlords in 2009.

‘Prime properties will still be able to attract tenants, but developers must be more flexible with rental expectations,’ said Anna Lee, DTZ’s associate director for retail. ‘As consumers hold their purses tighter, landlords would have to spend more on advertising and promotion to entice more consumer traffic to their malls and translate that into spending.’ And to mitigate lower sales faced by their tenants, some landlords may offer rental rebates and lower turnover rents, she added.

Analysts also said that capital values are expected to remain steady in the retail sector. ‘Of note is that the retail sector remains defensive even during the Asian Crisis period, with rental rates and capital values remaining fairly stable during this period. Hence, we believe that a fair cap rate for the retail sector would remain in the 5-6 per cent range,’ said DBS Group Research analysts Mun Yee Lock and Derek Tan.

 
Source : Business Times - 26 Dec 2008

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