Singapore fixed asset investments in 2009 to be relatively lower

Singapore fixed asset investments in 2009 to be relatively lower

By Ng Baoying,

SINGAPORE : Singapore will see a significant drop in capital investments from abroad in 2009. The Economic Development Board (EDB) said this is due to the global economic slowdown, and exceptionally high investments in the chemicals and electronics sector in 2008.

The amount of money flowing into fixed assets in the country’s manufacturing and services sectors is expected to come in at around S$10 billion, compared to 2008’s record S$18 billion.

In fact, investment commitments in 2007 and 2008 were very high due to “lumpy” or exceptional investments in the chemicals and electronics sector.

Investments into fixed assets, like buildings, in Singapore could have been 20 per cent higher this year if not for the slowdown in the world economy. But EDB said these missed investments will likely come on board in the next few years.

Lim Siong Guan, chairman, EDB, said: “All their (companies’) computations show that Singapore is still a good place for them to invest in. But in many instances, they are talking about delaying the commencement of the project. It could be a delay of six months, or a delay of 12 months.”

And while EDB is confident these will be recovered in the next few years, it is taking major steps to keep Singapore attractive as a place to invest in. It is launching an unprecedented S$100 million scheme to help firms with manpower costs.

Called PREP-UP, it will co-share labour costs with firms investing in Singapore and will complement the Workforce Development Agency’s existing Skills Programme for Upgrading and Resilience (SPUR) programme. It will also pay internship stipends for fresh graduates.

Mr Lim said: “Our work does not end with bringing in investment. It is in working with companies and seeing through their continued business success, and we see the schemes to give the companies breathing space.”

EDB will also grant companies extensions on their target deadlines to help them stay eligible for incentive schemes.

Beh Swan Gin, managing director, EDB, said: “Normally, when we have an agreement, there is a certain period they must invest. But obviously, if they are having difficulties for a good reason - and the global economic downturn is a good reason - we would be prepared to discuss with them… what we can do to still make sure the investment comes into Singapore.”

EDB is also prepared to help firms with viable projects in terms of financing capital expenditure.

Mr Lim said: “So long as we are comfortable that these are good investments to be made and we can get back our money, we do not set a ceiling for these schemes. We will bring in money according to the needs.”

The investments in 2009 are expected to create between 12,000 to 15,000 skilled jobs. This compares to 16,400 created in 2008. Of these, 6,000 will be available in the coming months - mostly in the fields of science and engineering. - CNA/yt/ms

Source : Channel NewsAsia - 20 Jan 2009

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Home prices still falling, study shows

Home prices still falling, study shows

By Joyce Teo

HOME prices here largely continued to be eroded at the end of last year, according to early indications.

A Knight Frank study of a sampling of property options signed mostly last month showed that the prices of many condominiums fell in a quiet month.

In developments which had registered more than one recent sale, prices fell by 4.6 per cent to 10.9 per cent, it said. However, prices of a few developments remained steady or even rose.

Knight Frank compared individual options of a development with median prices of caveats lodged in the previous three quarters. There may be a time lag for caveats lodged, as lodging a caveat is voluntary, it said.

The consultancy was unable to identify a general trend by locality or wider region as the number of options was limited. Also, the characteristics of a particular unit, such as which floor it is on, can influence prices.

At the 910-unit City Square Residences near Farrer Park MRT station, for instance, prices of recent options signed ranged from lower to largely flat from the third quarter at $789 to $964 per sq ft. While its prices have gradually come down from the second quarter, they were way above the April 2005 soft launch price of $560 psf on average.

Overall, home prices are expected to weaken further in the next three to six months, with a bigger plunge in prices of high-end projects than mass market ones, said Knight Frank director of research and consultancy Nicholas Mak. ‘There is a fair bit of latent demand, but these buyers are all waiting to come in at the bottom.’

Individual sellers in the resale market are likely to drop their prices at a faster rate than developers in the primary market, he said.

Home prices will likely continue to fall gradually for a few months, but there is a difference between the previous downturns and this one, said Chesterton Suntec International head of research and consultancy Colin Tan. ‘Usually, when prices go down, sales will go up. But now, prices have started to come down, but sales have not improved.’

One possible reason for the low volume is that some investors cannot afford to sell now, said Mr Tan.

If they were to sell low now, they would have to top up their loan in cash, he said, and cash is a scarce commodity in a credit crunch.

The slower the prices come down, the longer the property market recovery will take, said Mr Tan.

Source : Straits Times - 20 Jan 2009

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Restrictions eased with changes to insurance law

Restrictions eased with changes to insurance law

By Goh Chin Lian

CHANGING the beneficiaries of an insurance policy will be a reality for new policyholders, following changes to the law that currently bars them from doing so.
Parliament’s nod yesterday to changes to the Insurance Act also means that new policyholders can opt to receive payouts themselves in the event that they fall ill or become disabled.

The amendments, which will take effect after the President gives his assent, address ‘concerns over the apparent ambiguity and inflexibility’ in the current law, said Mr Lim Hng Kiang, deputy chairman of the Monetary Authority of Singapore, which regulates the insurance industry.

Added Mr Lim, in explaining the changes: ‘This framework will give policy owners clear, simple and economical means to decide on how the proceeds from their insurance policies should be disbursed.’

One of the difficulties with the current law is that a policyholder who nominates his spouse, but then divorces, cannot change the beneficiary of his policy.

There are also situations where a policyholder who falls ill or becomes disabled is unable to access the payout from his policy, which has gone to the beneficiary he has named.

Another problem that has arisen is in situations where policyholders have named grandparents, siblings, aunts or friends as beneficiaries.

What they fail to realise is that other than their spouses or children, all these parties have no legal claim to the proceeds of the insurance policy under the existing law.

The only way in which such a payout can currently be made legally to people other than a spouse or children is if the policyholder names them in his will.

With the changes that Parliament passed yesterday, a policyholder will have two ways of nominating beneficiaries.

The first, and most flexible, option allows him to unilaterally change his beneficiary at any time. This is known as a revocable nomination.

Any payout from, say, a health insurance or accident insurance policy will also be paid to him while he is alive. It will go to the beneficiaries only when he dies.

He can also nominate any legal entity, including parents, friends and trusts, as a beneficiary.

The second way to name a beneficiary is similar to the current situation - through an irrevocable nomination.

By opting for this, the policyholder will lose all rights and control over his policy. He cannot change a beneficiary without the consent of all beneficiaries or a trustee. Payouts while he is alive will also go to his named beneficiaries - and he can name only his spouse and children as beneficiaries.

Under this option, a statutory trust will be created that will protect the payout against claims from creditors.

The new framework will not apply to insurance policies with existing nominations, Mr Lim clarified. It will cover life policies, and accident and health insurance policies that have death benefits.

Insurance policies bought under the CPF Investment Scheme and Dependants’ Protection Scheme will be eligible only for revocable nominations, he added.

Source : Straits Times - 20 Jan 2009

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Singapore MPs want more protection for investors

Singapore MPs want more protection for investors

By Robin Chan

Trade and Industry Minister Lim Hng Kiang said the current amendments, which have been two years in the making, did not take into account the MAS’ review of the structured products. — ST FILE PHOTO

TWO MPs have called for further revisions to legislation governing investment products as changes to these laws were passed in Parliament yesterday.
They want additional revisions to the Securities and Futures Act and the Financial Advisers Act to protect investors better, in the light of the lessons from the mis-selling of structured products linked to the collapsed Lehman Brothers.

Mr Inderjit Singh (Ang Mo Kio GRC) and Nominated MP Siew Kum Hong urged the Government to act quickly to prevent another Minibonds saga.

Mr Singh said tighter regulation needed to be imposed on the sale of structured products even after amending the definition of ’securities’ and ‘futures contract’ to allow the Monetary Authority of Singapore more room to prescribe or exclude certain securities or futures.

‘We need to ensure that the regulator is vigilant and takes the initiative to review the products out there as well as the institutions selling them instead of just scrutinising new products that institutions intend to place on the market.’

Mr Siew went a step further, calling for a ban on some products. ‘I do believe that some products can be so complicated that the disclosures can never be adequate for over-the-counter sales to retail investors, and that some products can be so high-risk or so unfair that they should not be sold over-the-counter to retail investors.’

Responding, Trade and Industry Minister Lim Hng Kiang, who is deputy chairman of MAS, said the amendments, which have been two years in the making, did not take into account MAS’ review of the structured products.

MAS is currently reviewing the regulatory regime and will hold a public consultation in March.

However, under one of the changes governing business conduct, the central bank will put up a public register with information on licensed bank representatives, including their qualifications and any prohibitions or black marks against them, Mr Lim said.

Amendments were made in five broad areas, which essentially give more supervisory and enforcement powers to MAS, Mr Lim said, as well as enhancing its regulatory flexibility.

With regard to market misconduct, a person not aware of an illegal trade by a trader who used his account without his permission, but who benefited from it, will also now be required to give up his gains.

Source : Straits Times - 20 Jan 2009

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Changes help debtors, young entrepreneurs

Changes help debtors, young entrepreneurs

Wage earners can repay debt monthly; youth can start businesses at 18

By Clarissa Oon

YOUNG entrepreneurs and small-time debtors drawing a regular wage both stand to gain from the amendments to the Civil Law and Bankruptcy Bills passed by Parliament yesterday.
To help wage earners repay their loans, instead of being taken to court and made bankrupt, those with debts of up to $100,000 will be given up to five years to settle the debt.

Senior Minister of State for Law Ho Peng Kee said the debt repayment scheme seeks a ‘win-win outcome’ for not just debtors - who have a shot at avoiding the stigma of bankruptcy - but also creditors.

As the debtor gets to keep his job and part of his monthly income goes into paying off his debt, this means his creditors get no less than they would have if his assets had been seized as part of insolvency.

Under the Civil Law (Amendment) Bill, one can start and run a business from the age of 18 instead of 21, the age at which he is legally considered an adult. This is to promote enterprise and risk-taking among the young. With the change, a minor above age 18 can act as a director of companies, form companies or limited liability partnerships and enter into business contracts, including land leases not exceeding three years.

The change prompted Non-Constituency MP Sylvia Lim to revisit the old debate of whether the voting age could be similarly lowered from 21 to 18.

In his reply, Associate Professor Ho said the Government’s approach is not to have ‘a single threshold age for maturity’ for all activities. This is ‘pragmatic and sensible’ as ‘each activity calls for different considerations and its significance and impact vary’.

For example, a person can be charged as an adult in a criminal court when he turns 16, but needs to be ‘at least 18 before he can drive or buy an alcoholic drink or cigarettes’. ‘On the other hand, he must be 21 before he can marry without parental approval, donate a body organ (or) make an Advance Medical Directive or a will.’

Singapore takes elections very seriously and ‘there is need for a voter to have the necessary maturity’, he added. A 21-year-old would often be working or pursuing tertiary studies, which would put him in a better position than an 18-year-old to assess election candidates and the national issues at stake.

On the Bankruptcy (Amendment) Bill, Ms Ellen Lee (Sembawang GRC) urged the law to make it easier for bankrupts to travel overseas for work, while Ms Lim asked if the debt repayment scheme could be extended to cover sole proprietors and partners of small businesses.

Prof Ho clarified that last year, more than 90 per cent of bankrupts had their travel applications approved. The rest were rejected mainly because they could not provide documentary evidence of overseas employment.

In response to Ms Lim, he said that the point of considering only wage earners for the scheme is that they would have a regular stream of income that could last five years, whereas ‘if you’re in business, it will be difficult to ensure that’. The regular income would help assure creditors that they could be repaid on a monthly basis if they proceeded with the scheme.

Source : Straits Times - 20 Jan 2009

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Govt finance package boosts SME loans by 30%

Govt finance package boosts SME loans by 30%

By Robin Chan

THE value of loans to small and medium-sized enterprises (SMEs) here jumped 30 per cent last month from a year earlier.
The surge comes a month after a $2.3 billion government-backed financing package was introduced to help cash-strapped smaller firms keep their heads above water in the credit squeeze.

Its early success was disclosed in Parliament by Minister for Trade and Industry Lim Hng Kiang yesterday.

The Government will now focus on increasing the awareness of these schemes, he said, while ruling out the possibility of it acting as a direct lender to businesses.

The value of approved loans rose from $62 million in December 2007 to $80 million last month, after a string of new schemes to make it easier for companies to secure bank loans was introduced.

Mr Lim said about 500 loan applications were submitted last month, with many still being processed by the banks.

But nonetheless, loans may decline in the next few months, as they did during the Asian financial crisis, he said, as businesses cut back investments and expansion plans amid the slowdown.

The Government’s move to enhance the existing loan schemes was pre-emptive, he said.

The schemes, announced in November and which took effect on Dec 1, include raising the Government’s share of the risk on loans from 50 to 80 per cent, raising loan amount limits, a Bridging Loan Programme to support working capital needs, and reducing interest rates on some loans by 1.25 percentage points.

But feedback from industry bodies and SME bosses reported in The Straits Times has suggested that loans have still been hard to come by.

‘These enhancements have been in place for less than two months. It is too early to assess their effectiveness but preliminary indications are promising,’ Mr Lim said.

The onus is still on the companies to provide the relevant data for their applications and ‘to show that their businesses are viable and bankable’, he added.

‘It is only natural, in any recession, that companies seeking loans are questioned in more detail and their applications are scrutinised.’

In response to a question from Mr Zaqy Mohamad (Hong Kah GRC), Mr Lim made it clear the Government would not step in as a lender.

‘The Government is…not in a good position to lend to enterprises directly. We do not have the expertise and are not well placed to do so. Credit risk assessment is best done by the professionals in our financial institutions.’

Government loans, he said, are not intended to replace commercial lending. ‘Our primary objective remains to assist viable but riskier companies access credit which they would otherwise be unable to get at reasonable rates,’ he said.

Source : Straits Times - 20 Jan 2009

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Iraq pullout, economic rescue first on agenda

Iraq pullout, economic rescue first on agenda

Obama is expected to act quickly on key issues in his first week

By Chua Chin Hon, US Bureau Chief

WASHINGTON: - As hundreds of thousands of people gathered in the US capital to witness his historic inauguration, President-elect Barack Obama and his aides began sketching out their first and potentially defining week at work.
On Wednesday, his first day in office as the 44th US President, Mr Obama would order the country’s military leaders to plan an ‘orderly and responsible’ withdrawal of combat troops from Iraq.

He would also instruct his economic team to do what they can to prevent the country from sliding into a prolonged downturn and severe unemployment, according to top Obama advisers and his incoming press secretary, who spoke on various talk shows on Sunday.

Later in the week, the new leader might also issue orders to close the Guantanamo Bay detention centre and address the ongoing violence in the Middle East.

‘I think that the events around the world demand that he act quickly, and I think you’ll see him act quickly,’ Mr David Axelrod, the President-elect’s senior adviser, said on broadcaster ABC’s This Week talk show.

Mr Obama did not touch on specific details when he addressed a massive crowd of several hundred thousand people, who braved near sub-zero temperatures on Sunday (early yesterday morning, Singapore time) to watch a pre-inauguration concert in the heart of Washington, DC.

Instead, he called on his countrymen to be ready for struggle and sacrifice - the likely key themes of his inaugural address early tomorrow morning (Singapore time).

‘Never forget that the true character of our nation is revealed not during times of comfort and ease, but by the right we do when the moment is hard. I ask you to help reveal that character once more,’ said Mr Obama on the steps of the Lincoln Memorial on Sunday.

The white-columned, neo-classical temple, which honours the 16th US President who ended slavery in the United States, was the picturesque backdrop for a pre-inauguration concert by a galaxy of music and Hollywood stars.

Held a day after a symbolic train ride by Mr Obama from Philadelphia to Washington, the concert was part of an elaborate programme to whip up public enthusiasm for the presidential inauguration.

Music legends Bruce Springsteen and Stevie Wonder, and soul divas Beyonce and Mary J. Blige energised the crowd with contemporary and classic tunes, with Mr Obama seen nodding and singing along to the evergreen hit American Pie.

The steps of the Lincoln Memorial are also the spot where civil rights leader Martin Luther King Jr made his famous ‘I Have A Dream’ speech, which expressed his hope that one day his children would ‘live in a nation where they will not be judged by the colour of their skin but by the content of their character’.

Mr Obama’s election triumph is seen by many Americans as the fulfilment of this ‘dream’, though the President-elect himself made only a brief tribute to Dr King.

Feeling less of a need for political restraint, Bono, lead singer of rock band U2, called Mr Obama’s victory as not just the realisation of an American dream, but also ‘the Irish dream, the European dream, the African dream, the Israeli dream and also the Palestinian dream’.

Irish rockers U2 sang Pride (In The Name Of Love), a song dedicated to the memory of Dr King.

Some question how long this infectious air of optimism will last or if the goodwill towards Mr Obama will translate into tangible policy results. But one group of people at least is reaping tremendous success thanks to him - souvenir vendors.

The 47-year-old leader’s personal popularity has single-handedly lifted the souvenir industry as Americans and tourists alike snapped up Obama T-shirts, mugs, caps and posters.

Mr Perris Gillis said daily sales at his Union Station souvenir shop peaked at US$6,000 (S$9,000) recently, with Obama merchandise outselling those of former presidents by at least 5:1.

He added that daily sales could hit a historic high of US$10,000 when Mr Obama is sworn-in - another reason why this week would be well remembered.

Source : Straits Times - 20 Jan 2009

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30,000 jobs to be created this year

30,000 jobs to be created this year

Enough to cater to new job-seekers but gains could be offset by layoffs

By Sue-Ann Chia, Senior Political Correspondent

MORE than 30,000 jobs will be created this year - enough to absorb the pool of fresh graduates and new job-seekers, Trade and Industry Minister Lim Hng Kiang said yesterday.
But it is going to be tough to give an exact figure on job creation and job losses as economic conditions are continually changing, he told Parliament.

There will be ‘a significant number of jobs, sufficient to cater for new school-leavers. Definitely more than 30,000 jobs all in’, he said.

‘What we are not sure about are the retrenchments likely to take place, and re-training requirements in the existing economy, as companies restructure and some companies have to cut back.’

On average, some 30,000 newcomers enter the workforce every year.

Mr Lim was responding to labour MP Halimah Yacob (Jurong GRC), who asked about the employment forecast this year.

He acknowledged that the job outlook today is much bleaker than in the boom years of 2007 and last year, when annual job creation exceeded 200,000.

But there are still jobs, he said.

The Economic Development Board envisages that 6,000 new jobs will become available from new investments that come onstream this year.

A number of sectors are continuing to hire, he added, citing construction, health care, public service and the upcoming integrated resorts.

According to earlier reports, the Education Ministry is recruiting more than 7,000 teachers and support staff this year, the Home Affairs Ministry is aiming to fill more than 1,000 vacancies, and the Health Ministry is looking to fill 4,500 positions over the next two years.

The Defence Ministry announced yesterday that it has more than 2,000 openings this year.

Still, this year’s job gains could be hit by job losses - which could outstrip the high of 30,000 in 1998 during the Asian financial crisis.

Said Acting Manpower Minister Gan Kim Yong, in a separate response to queries: ‘If our economy were to contract sharply this year, it is possible that retrenchments could reach these levels seen in previous recessions.’

The signs are already there. Retrenchments rose significantly in the fourth quarter of last year.

Based on early notifications by companies which have cut jobs, about 4,800 workers were laid off between October and December last year, he said. Another 3,300 could face the axe over the next few months.

This means total retrenchments last year will be at least 11,218 - higher than the annual average of 10,000.

The final tally will be known when the Manpower Ministry releases figures at the end of this month.

Mr Gan also said last year’s unemployment rate will be higher than the 2.1 per cent in 2007, which was a 10-year low.

He was responding to Mr Ong Ah Heng (Nee Soon Central), who asked about retrenchment projections, and Non-Constituency MP Sylvia Lim, who wanted a breakdown between local and foreign workers affected by layoffs.

Mr Gan explained that a more complete picture of the impact of job losses on locals and foreigners would be the total number of redundancies - which includes retrenchment and early termination of contracts.

Locals made up two-thirds of the 7,478 redundancies in the first nine months of last year. The rest were foreigners. The proportion mirrors the ratio of the local-to-foreign worker population here.

More redundancies can be expected over the next few quarters, he warned.

But he added that foreigners were still needed especially for jobs that Singaporeans shun.

‘If companies are required to retrench only foreign workers, they may be forced to close down or move to countries…This will result in more job losses.’

Source : Business Times - 20 Jan 2009

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Healthy leasing at SEB’s Ubi property

Healthy leasing at SEB’s Ubi property

By ARTHUR SIM

A HI-TECH development at 67 Ubi Avenue 1 has been 63 per cent leased less than two months after receiving its temporary occupation permit (TOP).

Good for IT sector: The building comprises one 6-storey block and one 7-storey block with units ranging from about 2,000 sq ft to 140,000 sq ft
The property, owned by SEB Asset Management and marketed by Colliers International and CB Richard Ellis, has a net lettable area of about 400,000 square feet.

An anchor tenant, understood to be in the infocomm industry, has taken up 55 per cent of the net lettable area. Also, Boustead is taking up about 30,000 sq ft under a sale-and-leaseback arrangement with the park’s German owner SEB.

Boustead, through associate company GBI Realty, developed and later sold the property to SEB in June 2008 for $200 million.

The development comprises one six-storey block and one seven-storey block with units ranging from about 2,000 sq ft to 140,000 sq ft.

Tan Boon Leong, director of industrial at Colliers, said: ‘Zoned for Business 1 use, the units are suited for businesses in the IT and electronics sectors, backroom operations, and display and service centres among others.’

The asking rent is $3.80 per sq ft per month. Existing rents in hi-tech buildings are understood to be $4 to $4.50 psf per month.

Moray Armstrong, executive director of office services at CB Richard Ellis, said: ‘We have seen many leases in hi-tech and business park buildings, as occupiers get quality space at competitive rents. Notably, 46 per cent of the next three years’ total supply at business parks is pre-let.’

The Ubi Ave park is SEB’s first industrial property acquisition in Singapore. It has made several office acquisitions: a 55 per cent stake in the freehold 79 Anson Rd, 12 floors of Springleaf Tower in Anson Rd, and SIA Building in Robinson Rd.

Source : Business Times - 20 Jan 2009

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Govt projects seen lifting listed builders

Govt projects seen lifting listed builders

Analysts issue fresh buy or neutral calls on construction stocks

By UMA SHANKARI

SEVERAL contractors listed on the Singapore Exchange are expected to benefit from the government’s plan to step up construction of smaller public sector projects, analysts said.

Analysts also issued fresh ‘buy’ or ‘neutral’ calls on several construction stocks late last week.

On Jan 14, National Development Minister Mah Bow Tan said that the government would be rolling out public sector projects of up to $50 million each to help the industry weather the economic downturn. The projects will come onstream from 2009 and will be targeted at small and medium-sized construction firms. They will also include some of the $4.7 billion worth of projects deferred earlier.

The government will also introduce several credit assistance measures to help construction firms facing a credit squeeze and cash-flow problems.

For instance, public-sector agencies will make frequent, prompt and full progress payments for completed and certified building jobs.

‘Earnings visibility is exceedingly poor beyond 12 months, even for the larger firms. However, with the government pump-priming, much uncertainty is removed.’

- CIMB analyst Lawrence Lye

The amount of security deposits for government construction jobs will also be lowered from 5 per cent to 2.5 per cent or less. Details will be announced on Budget Day on Jan 22.

Analysts said that the measures would ease some of the problems now faced by smaller contractors.

‘Earnings visibility is exceedingly poor beyond 12 months, even for the larger firms. However, with the government pump-priming, much uncertainty is removed,’ said CIMB analyst Lawrence Lye.

‘We continue to like the sector on the back of continued infrastructure spending, in particular the following companies which are leaders in their areas of expertise.’

He issued ‘outperform’ calls on four construction stocks on Jan 15 - CSC Holdings, Tat Hong Holdings, Tiong Woon Corporation and Yongnam Holdings.

DMG & Partners Securities analyst Selena Leong, likewise, said that the measures announced by the government may be a safety net for the smaller construction firms that are ‘likely to be experiencing significantly higher cost of borrowings or even having difficulties obtaining funding for their working capital and asset enhancement needs’.

In particular, BBR Holdings is expected to benefit as its exposure to the public sector is around 76 per cent based on its order book as at November 2008, she said.

She issued a fresh ‘neutral’ call on BBR on Jan 15, and also has a ‘buy’ call on Tiong Woon.

Credit Suisse on Jan 16 issued an ‘outperform’ call on Tat Hong, and ‘neutral’ calls on Hong Leong Asia, Tiong Woon and Yongnam.

‘We maintain that the construction sector will remain a pillar of strength in 2009. Tat Hong is our top pick, given the company’s operational scale, clear growth strategy, balance sheet strength, undemanding valuations and liquidity,’ said analyst Su Tye Chua.

Source : Business Times - 20 Jan 2009

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