New HR education and training centre launched

New HR education and training centre launched

By Gerard Lam,

SINGAPORE: A new human resource (HR) continuing education and training centre has been launched by Manpower Minister Gan Kim Yong.

The Human Capital Centre (HCC) aims to train HR managers, as well as professionals, managers, executives and technicians (PMETs) planning a career change as HR professionals.

The HCC will focus on HR Workforce Skills Qualifications (WSQ) courses. It will offer 63 modules which can be accumulated to attain certificates and diplomas.

The centre will also have several important roles.

Mr Gan said: “It will develop and deliver the full suite of courses under the HR WSQ framework. Existing HR practitioners can look forward to a range of courses and programmes to hone their skills and enhance their knowledge.”

Besides offering courses, the centre will facilitate discussion of key HR issues.

Mr Gan said: “It will organise dialogue forums such as communities of practice and priority conversations on current and emerging HR issues. These forums will serve as useful platforms for the HR community and business leaders to network.”

The HCC will also actively support research and development in HR related areas, which will further enhance the competencies of HR professionals.

President of the Singapore Human Resources Institute, Ho Geok Choo, said: “We want to be able to continue to level-up human capital practices and research in Singapore so that our people will benefit from it. And in doing that, we also hope to become the HR icon not just in Singapore but in Asia.”

The centre will also offer career counselling and job placement services.

It aims to deliver 4,500 training places over the next three years.

The institute also held a walk to mark its first HR Day, which will be celebrated on March 1 every year.

- CNA/yt

Source : Channel NewsAsia - 15 Apr 2009

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Upcoming Serangoon shopping mall gets 30% occupancy commitments

Upcoming Serangoon shopping mall gets 30% occupancy commitments

SINGAPORE : An upcoming shopping mall in Serangoon Central has obtained occupancy commitments for 30 per cent of its lettable space since breaking ground in November.

These tenants include Cineplex operator Shaw Organisation, hypermarket operator FairPrice Xtra and mainboard-listed Food Junction Holdings.

Advanced talks are also underway to secure a department store operator to take up 50,000 square feet of lettable space in the shopping centre.

The mall’s developer is Gold Ridge, which is backed by mostly European and American investors.

Gold Ridge has named the new mall “nex”.

“nex” will be a six-storey mall with over 600,000 square feet of net lettable space.

It is expected to open by the end of next year and will be the biggest mall in northeast Singapore.

Gold Ridge is investing S$1.3 billion in the project. - CNA /ls

Source : Straits Times - 15 Apr 2009

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Timing’s everything for upgraders

Timing’s everything for upgraders

HDB residents buying a condo unit have to do their sums carefully

By Jessica Cheam

IN THE midst of Singapore’s worst recession, people are still buying property.
Private condominium sales reached a recent high of 1,323 units in February - the highest since the 1,731 units sold in August 2007, which was the peak of the recent property bull run.

And though official figures are not yet available, the buying frenzy seems to have continued into March.

According to a recent report by DTZ Research, seven out of 10 buyers in the first quarter of this year are HDB upgraders.

This is a jump from the 48 per cent registered in the fourth quarter last year, and the highest number since the 86 per cent achieved in the second quarter of 2002.

HDB upgraders are home buyers with HDB addresses looking to move up the property ladder. They typically buy into mass-market condos, usually in the suburbs.

Experts say the recent brisk sales indicate a ‘pent-up demand’ in the market, especially from buyers who held back during the recent property boom, when prices skyrocketed in 2006 to 2007.

They also point to a unique phenomenon that occurs in a property boom-and -bust cycle where the gap between the price of HDB resale flats and mass market condos has narrowed to an all-time low.

Private property prices fell a quarterly record of 13.8 per cent in the first quarter of this year, compared with the marginal 0.6 per cent drop for HDB resale flats.

This means that HDB flat owners own an asset that has appreciated to more or less record value, at a time when the prices of mid-tier condos have dropped to affordable levels.

Now, the jump from public to private home ownership has always been a tantalising proposition.

But is this really the right time for an HDB upgrader to buy?

The answer, say property experts, depends on two things - when the condo unit the upgrader is buying will be completed, and what view he takes of the Singapore property market over the next couple of years.

Let me explain.

Unlike an investor who is buying for rental yield, the HDB upgrader typically moves out of his HDB flat and into his new condo unit. This means that he sells his flat only when the new condo unit is completed and ready for occupation.

Therefore, it makes the most sense for an upgrader today to buy a completed unit - because he can sell his flat now for a relatively high price and buy the new private condo unit on the cheap.

The problem is that there aren’t many completed suburban developments on the market. Most new condos approaching completion today are in the prime districts, which were the focus of the property boom two years ago.

And the handful of suburban developments that are close to completion aren’t that attractively priced, so the HDB upgrader isn’t getting that good a deal on them.

The fact is: The cheapest suburban condo units today are those being sold ‘off plan’, meaning that they will be completed only two or three years later.

For HDB upgraders who buy these types of condo units, the fact that they can currently can get a good price for their HDB flats is moot, because they will sell their flats only two or three years down the road.

That brings me to the second point that HDB upgraders must consider before signing on the dotted line.

What will the global economy and the Singapore property market look like in two or three years’ time, when these projects are due for completion?

Home buyers today can no longer rely on the now-defunct deferred payment scheme introduced in 1997. This allowed buyers to pay a 10 or 20 per cent downpayment, and defer taking a bank loan until the project was completed.

Developers have replaced this with the ‘interest absorption scheme’. Here, the buyer also pays an initial 20 per cent downpayment and defers the rest until the property is completed.

But the big difference now is that the minute buyers commit to a property, they have to take a loan with a bank which the developer has selected. The developer then foots the bill for the buyer in interest payments to the bank during the construction period.

This arrangement carries new risks for the home buyer.

Firstly, if a developer goes under, it will no longer be able to pay the regular interest payments and the bank will go to the buyer for these payments.

This seems quite an unlikely scenario in Singapore as developers who offer this scheme generally have the financial muscle to ride out the tough times. Still, the risk of this happening is higher with smaller developers.

Secondly, the bank reserves the right to revalue a property at any point during the construction, or when the project is completed.

So if the property market heads further south, a bank may revalue properties downwards. This means that it will likely reduce the sum it had earlier agreed to lend to the buyer, who will then have to stump up a hefty sum of cash to make up the difference.

On the one hand, experts say banks are unlikely to revalue properties as long as buyers are able to make the monthly payments. Unlike high-end properties where prices could crash in as little as three months, prices of suburban units are less volatile, say analysts.

But on the other hand, if the market really crashes, HDB upgraders could be hit by a double whammy. They will have to fork out more cash to top up their loans at a time when the values of their resale flats would most likely have crashed along with the general market. And if they back out of buying the new flat, they will lose a 20 per cent deposit.

In the worst-case scenario, they could be saddled with two mortgages for properties, both in negative equity.

Such an optimistic gamble on the future is not for the faint-hearted nor the financially prudent, especially when unemployment is hitting a record high.

But if an HDB upgrader truly has the financial strength to hold on to his properties indefinitely for the long term, it could be a gamble that will pay off when the market finally recovers.

These are sums that one must do carefully, no matter how beautiful and attractive floor plans and showflats now look.

Source : Straits Times - 15 Apr 2009

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Bangkok stand-off ends as red shirts disperse

Bangkok stand-off ends as red shirts disperse

Arrest warrants are out for Thaksin and 13 other protest leaders

By Nirmal Ghosh, Thailand Correspondent

A supporter of ousted Thai prime minister Thaksin Shinawatra raises his arms in front of soldiers before leaving the Government House area in Bangkok yesterday. A protest leader told the crowd to disperse to save lives but promised that they would take up their fight again. — PHOTO: REUTERS

BANGKOK: - The Thai capital stepped back from the brink of chaos after red-shirted anti-government demonstrators called off their three-week-old protest yesterday.
Police issued warrants for the arrest of ousted former prime minister Thaksin Shinawatra and 13 other protest leaders, who face charges of illegal assembly and inciting people to break the law and cause unrest. Those convicted could be jailed for up to seven years.

Yesterday’s decision to disperse was taken as army units backed by armoured cars prepared to close in on the protest site at Government House. Two days of rioting had left at least two people dead and 123 others injured in street battles across central Bangkok - and forced the cancellation of a weekend Asean summit in Pattaya, which deeply embarrassed Prime Minister Abhisit Vejjajiva.

It was a different Mr Abhisit, flanked by government ministers and the military’s top brass, who spoke to the nation in a televised address.

‘I don’t consider this a victory or defeat but it’s a victory for peace in society,’ he said.

He added that the state of emergency imposed on Sunday in Bangkok and surrounding areas would not be lifted while isolated pockets of protest were being dealt with. He also promised to prosecute all protest leaders.

While there was a sense of relief at the protest site, not all the ‘red shirts’ of the United Front for Democracy Against Dictatorship (UDD) were happy.

‘This government is not for the people,’ shouted 50-year-old Vorathep Chaiyamong, a native of Bangkok. ‘I will not go home, I will stay and fight.’

And as she left, a young woman office worker screamed: ‘Next time, we will win.’

Later in the day, some areas of the city saw sporadic clashes between troops and red shirts, and middle-class locals honking their car horns and heckling soldiers.

Around 300 UDD supporters who had discarded their red shirts gathered at the sprawling Sanam Luang grounds, made speeches denouncing the army, and distributed pictures of red shirts allegedly killed by soldiers.

Some of them claimed that up to 20 were missing after the army’s crackdown.

The government said no protesters had been killed. The two dead people were local residents at Nang Loeng market near Government House who had got into a fight with some red shirts.

Earlier yesterday morning, protesters burned two buses and set a cooking gas cylinder ablaze on Phitsanulok Avenue to prevent more than 300 troops from approaching those camped outside Government House. The tense stand-off lasted for more than two hours. Then came the protest leaders’ call to the red shirts to abandon their barricades.

UDD leader Veera Musigapong told the crowd to disperse to save lives, but promised that they would take up their fight again later.

The army, out in force in a wide grid across central Bangkok, where burnt-out hulks of buses still smouldered and the stench of burned tyres hung in the air, stayed in their positions throughout the day. Humvees mounted with light machine guns were also deployed at key intersections.

People believed to be right-wing vigilantes, armed with sticks, were seen on some streets apparently looking for red shirts.

The Thai authorities arranged buses to ferry upcountry protesters safely to major bus terminals so they could go home.

The government also extended the annual Songkran holiday by two days, giving the people the whole week off.

Long-distance train services resumed and some shops and malls, which had closed in the conflict zone, reopened for business.

Source : Straits Times - 15 Apr 2009

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Obama sees pain, then hope

Obama sees pain, then hope

US President Barack Obama gives a speech on the economy at Georgetown University in Washington, DC on Tuesday, April 14, 2009. Mr Obama said that his economic-stimulus package and plans to rescue banks and bolster housing are starting to “generate signs of economic progress,” while warning of “pitfalls” ahead.

WASHINGTON - PRESIDENT Barack Obama said in a major speech on the economy on Tuesday that the United States faced a long slog in finding its way out of the economic and financial tumult battering the country but repeated that he is seeing signs of hope.
Coming out of an intense two weeks focused on international affairs, including a hostage drama after Somali pirates briefly hijacked an American ship, the White House is shifting American and global attention back to the financial storm that has ravaged the world.

‘There is no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope,’ the president said in excerpts of prepared remarks he will deliver later on Tuesday at Georgetown University.

Reaching into the Bible for his material, Mr Obama cited Jesus’ Sermon on the Mount, to compare the American economic system he inherited to the man who build his house on a pile of sand. The new economy that Mr bama said will emerge from America’s worst economic tailspin in seven decades must be like the strong house built by the man who used a foundation of stone.

‘It is that house upon the rock. Proud, sturdy, and unwavering in the face of the greatest storm,’ he said. ‘We will not finish it in one year or even many, but if we use this moment to lay that new foundation; if we come together and begin the hard work of rebuilding; if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time.’

Economists are divided on whether it is beginning to blow itself out or just in the midst of a lull, before striking hard again. But with some good news trickling out of various sectors in the US economy and his administration nearing the symbolic 100-day mark, Mr Obama felt the need to sum up what his administration has done so far and draw a map of where it wants to take the economic system.

The speech did not outline any new programs or initiatives.

Previewing the president’s remarks, the head of the White House Council of Economic Advisers said people should expect more job losses in the coming months.

But at the same time, Christina Romer said on Tuesday that administration officials also are detecting ’small little signs that maybe some parts of the economy are stabilising.’

‘We’ve got several more months of job loss, so we don’t really want to lead people to believe that spring is right here for the economy,’ she said on NBC television’s ‘Today’ show. — AP

Source : Straits Times - 15 Apr 2009

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More in S’pore fearful of bootleg backlash

More in S’pore fearful of bootleg backlash

By WINSTON CHAI

MORE Singaporeans may be thinking twice before downloading the latest Hollywood blockbusters or Billboard hits from dodgy Internet sites as a result of the heightened intellectual property (IP) rights protection movement.

Ms Liew: ‘This will be a challenging time for IP rights owners.’
According to the latest survey by the Intellectual Property Office of Singapore (Ipos), 53.1 per cent of respondents agreed that they are likely to be nabbed for downloading bootleg products from unauthorised sources.

This is a 14 per cent increase from two years ago, when the majority had no opinion on the issue.

Ipos started the biennial study in 2006 to gauge local understanding of and attitudes towards IP protection.

This year’s survey polled a larger sample of 1,011 Singaporeans aged 15 and above on many issues. These ranged from their support for the IP protection movement to their awareness of the consequences of illegal downloads.

After constant advertising and promotion (A&P) by agencies such as Ipos, more people are now going for the real thing.

Two out of three of those polled said A&P efforts in the past few years have swayed them towards buying original goods, an 18 per cent increase from 2006.

Respondents who bought genuine products due to heightened IP protection marketing increased 6 per cent from two years ago, Ipos said.

While past efforts have proved effective, the ongoing recession may hamper efforts by movie studios and record labels to weed out piracy further.

‘This will be a challenging time for IP rights owners,’ said Ipos director-general Liew Woon Yin.

Against the current economic backdrop, Ipos will now focus its efforts on driving home the message that buying bootleg movies or downloading music illegally could add to the casualty count. This is because more people could lose their jobs as revenue from rights owners is lost to piracy.

The legal backlash from IP rights violation will also be emphasised in future A&P initiatives, Ms Liew added.

Source : Business Times - 15 Apr 2009

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Reits not sure-win investments

Reits not sure-win investments

By UMA SHANKARI

THE Saizen Real Estate Investment Trust (Reit) saga should dispel several widely held myths about the Singapore Reit sector - that the trusts are no-brainer investments; that they are duty-bound to pay out dividends; and that the most important thing to consider when assessing whether a Reit is worth putting your money into is the possible returns from the trust’s portfolio.

Saizen Reit, which in February said that it was not going to pay a distribution for Q2 2009 in order to conserve cash and pay off its loans, has more recently said that it aims to resume payments as soon as possible. But investors may have to wait as long as June 2010, which is when the Reit said it expects to resolve its funding issues.

Prior to those announcements, the trust, which gets its income from residential rental properties in Japan, put out a proposal that would allow it to pay dividends in the form of Reit units - rather than cash - but later said it would not proceed with the plan after deliberations with the Singapore Exchange.

For unitholders, this means that they may not get any income from their holdings in the Reit for more than a year. These investors, who probably bought into the Reit to be ensured of a stable source of income, could now have no such income until mid-2010.

The most important thing for a newcomer to the sector to note is that Reits are not required by law to pay out dividends. Singapore-listed Reits have to distribute to unitholders at least 90 per cent of their distributable income, in order to enjoy tax transparency - which means exemption from paying corporate tax at the Reit/vehicle level on the portion of income they distribute.

But this tax break only applies to those Reits with assets based in Singapore. Reits such as Saizen, which have all of their properties in Japan, do not qualify for the above-mentioned tax transparency treatment. This means that they do not have the same incentive to pay out 90 per cent of their distributable income that Reits with all their assets based in Singapore do.

The Reit sector here has been drawing investors by advertising high yields (which have gotten even higher as Reit stock prices have fallen by quite a bit over the past year). But these yields - as Saizen Reit has proven - are not always guaranteed.

The other thing that this whole saga has highlighted is that when evaluating whether a Reit is worth putting your money into, it is not enough to just consider the viability of the Reit’s business. One must also look at how the trust initially financed its property portfolio.

By all accounts, Saizen Reit’s income stream seems to be stable. The trust, which has a portfolio of 166 buildings with 6,000 rental homes in Japan, said rents and occupancies across its largely mass-market properties have remained stable since the current crisis began.

Rather, the problem is with the way those properties were financed when they were acquired. When building up its portfolio in the years leading up to its 2007 listing, Saizen relied solely on commercial mortgage backed securities (CMBS) loans to finance its buying. But the CMBS market all but shut down at the beginning of 2008.

The trust had already changed some of its loans to traditional bank loans by then, but the crisis meant that bank loans dried up, leaving it with six CMBS loans worth some 20.15 billion yen (S$303.8 million) in all - which Saizen couldn’t refinance.

Now, the trust has to draw on cash reserves, proceeds from a $41 million rights issue, operating cash flow and a short-term bridging loan to pay off five of these CMBS loans worth some 12.2 billion yen in all.

For the sixth CMBS loan, worth 7.95 billion yen, Saizen is looking for refinancing through a possible syndicated loan. In the worst-case scenario, if no refinancing can be found for the sixth loan, the trust may have to forfeit properties worth 10.3 billion Japanese yen, which were used as collateral for that CMBS loan tranche.

High yields and capital gains in the initial years of the sector’s growth have spoilt Singapore Reit investors, or worse still, lulled some into thinking Reits are sure-win investments. What happened at Saizen, hopefully, will serve as a wake-up call.

Source : Business Times - 15 Apr 2009

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Washington mulls over loan-to-equity swap in GM

Washington mulls over loan-to-equity swap in GM

(NEW YORK) The US government is considering taking an equity stake in a stripped-down General Motors Corp (GM) in a swap for some of the US$13.4 billion the carmaker owes the Treasury, people familiar with the matter said.

In low gear: A govt stake would be part of an effort to cut GM’s debt and would limit payouts to bond owners
A government stake would be part of an effort to cut GM’s debt and would limit the payouts to bond owners as the carmaker approaches a June 1 deadline to come up with a plan to become viable. Bondholders, who own US$27.5 billion in GM debt, earlier were offered 90 per cent of the new entity’s equity.

‘It’s hard to have negotiating leverage when the government and the public opinion is lined up against you,’ said Richard Hahn, co-chair of the bankruptcy practice at Debevoise & Plimpton LLP, a New York law firm.

Bankers and other GM advisers are working to estimate how much a restructured company, consisting of only profitable GM assets, might be worth in a debt-for-equity swap, said the people, who declined to be named because discussions are private.

The government might favour a quick sale of its stake once the new entity began operating in a probable bankruptcy that would liquidate unprofitable assets and debt not wiped out in an equity exchange, one of the people said.

A speedy sale of the government’s GM stock would be designed to counter any criticisms that the administration had become socialist, after also taking stakes in banks and insurance companies as part of its bailout of the financial industry, the person said.

A government stake, ‘means you essentially have a nationalised General Motors until such time as the government sells off its equity to someone else, which won’t happen for a while’, said Gerald Meyers, a professor at the University of Michigan Ross School of Business and a former chairman of American Motors Corp. ‘The problem is it’s political. On the other hand, it’s a cheap way for the good GM to keep going and probably solidify its strengths.’ Previously the US government intended to seek payment of its bailout loans once a GM restructuring, in bankruptcy court or out, got underway.

GM has been seeking to reduce its obligations to a union-run healthcare fund, owed US$20.4 billion, and bondholders, whose debt is trading at as little as eight cents on the US dollar. Talks with those constituents are held up because of uncertainty about the value of the new company and the unprofitable assets it would leave behind for creditors to fight over, the person said. — Bloomberg

Source : Business Times - 15 Apr 2009

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Obama, Bernanke upbeat but economy not out of woods yet -WASHINGTON

Obama, Bernanke upbeat but economy not out of woods yet -WASHINGTON

(WASHINGTON) US President Barack Obama, in a progress report on his steps to rescue the recession-hit economy, said there were signs of recovery but ‘by no means are we out of the woods just yet’.

Mr Bernanke: Says some programmes may one day have to be removed
Earlier, US Federal Reserve chairman Ben Bernanke also gave a more upbeat report saying that the latest economic figures on housing and consumer spending suggested that a rapid contraction in the economy could be easing.

‘Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding and consumer spending, including sales of new motor vehicles,’ he said in remarks prepared for delivery at Morehouse College in Atlanta.

The remarks, which were about the extensive actions the central bank is taking to stem the financial crisis, were posted on the Fed’s website ahead of time.

Calling the current financial crisis the worst since the Great Depression, Mr Bernanke explained the litany of emergency measures taken by the central bank and the Treasury Department with the aim of restoring battered credit markets.

The Fed, which has cut interest rates effectively to zero, has also created a broad range of lending facilities to ensure that banks can remain above water despite massive losses from mortgages and other consumer loans.

Mr Bernanke said some of the programmes might one day have to be removed in order to prevent all the stimulus from building into an outright threat of inflation.

‘We have a number of effective tools that will allow us to drain excess liquidity and begin to raise rates at the appropriate time,’ he noted.

‘That said, unwinding or scaling down some of our special lending programmes will almost certainly have to be part of our strategy for removing policy stimulus once the recovery is under way.’

That day was clearly not at hand quite yet, since Mr Bernanke said the Fed was exploring an expansion of the types of credit made available through its programme to restart securitisation markets, known as the Term Asset-Backed Securities Lending Facility or TALF.

Mr Obama, in a speech at Georgetown University here, outlined the multitude of steps his administration has taken since he was sworn into office on Jan 20 after inheriting the worst economic crisis in decades from his predecessor George W Bush.

Mr Obama said his US$787 billion economic recovery package, steps to recapitalise banks, unfreeze credit markets, stabilise the housing market and shore up the ailing US car industry were all necessary pieces of the ‘recovery puzzle’.

‘And taken together, these actions are starting to generate signs of economic progress,’ he said.

Separately, White House economic adviser Christina Romer said the US economy was ’still sick’ and she forecast continued job losses and a falling gross domestic product for several more months.

The US economy lost 663,000 jobs last month, pushing the unemployment rate to a 25-year high of 8.5 per cent. The economy shrank at an annual rate of 6.3 per cent in the last quarter of 2008, the steepest decline since the first quarter of 2008.

Mr Obama said 2009 would continue to be a difficult year for the US economy, warning that Americans would continue to see more job losses, more house home foreclosures ‘and more pain before it ends’.

‘There is no doubt that times are still tough. By no means are we out of the woods yet,’ he said. — Reuters, AP

Source : Business Times - 15 Apr 2009

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Government flags 6-9% contraction

Government flags 6-9% contraction

But economists hopeful the worst is over, even if GDP shrinks for next two quarters

By ANNA TEO

(SINGAPORE) Far from rebounding, the economy sank deeper in the first quarter and is now expected to contract by between 6 and 9 per cent this year. But private sector economists - who roundly expected an easing in the rate of decline in Q1 - remain hopeful that the worst is now past, even if the GDP figures stay in the red for another quarter or two.

Releasing flash estimates of Q1 growth yesterday, based only on two months’ data, the Ministry of Trade and Industry zeroed in on the on-quarter (q-o-q) figures rather than the headline year-on-year (y-o-y) pace, though in this case, the slump is stark enough on both measures.

In its fourth consecutive fall, GDP shrank 19.7 per cent q-o-q in seasonalised, annualised terms in Q1. After a negative 16.4 per cent pace in the preceding quarter, economists had expected the momentum of contraction to ease, if not turn around altogether, in Q1.

Compared with a year ago, the Q1 contraction amounted to another record 11.5 per cent, though the decline may have been accentuated by base effects - Q1 2008 having been a relatively ’strong’ quarter.

But the sectoral manufacturing and services figures, and the weak outlook ahead, prompted MTI to slash the full-year forecast, from a January estimate of 2 to 5 per cent contraction.

‘The advance estimates indicate that actual (2009) GDP growth will under-shoot earlier expectations by a significant margin,’ the ministry said.

The official forecast for Singapore’s 2009 non-oil domestic exports (NODX) was also lowered yesterday - to between minus-13 and minus-10 per cent - and the Singapore dollar effectively weakened about 1.5 per cent, in the Monetary Authority of Singapore’s latest policy review.

But economists - several of whom immediately cut their forecasts of Singapore’s 2009 GDP pace to within the new official range - also saw in the March trade figures unveiled yesterday, as well as MAS’s latest monetary policy statement, some hints that the economy could be bottoming out.

OCBC Bank economist Selena Ling said: ‘Q1 GDP flash estimates were way below market expectations but may mark the trough for this current downturn. Essentially, the GDP and NODX growth downgrades were attributed to the larger-than-expected Q1 contraction.’

The 17 per cent y-o-y fall in March NODX actually beat market expectations, and against the preceding month, it rebounded for a second month, and strongly too, by 11 per cent.

DBS Bank economist Irvin Seah said: ‘If NODX continues to post positive growth on a month-on- month (m-o-m) basis, we should start to see the economy bottoming out around the middle of this year before a gradual recovery towards the end of the year and going into 2010.’

Particularly as an economy approaches a turning point, changes in sequential terms - q-o-q or m-o-m - show up the underlying trend faster and better than the headline y-o-y numbers, which usually do not reveal a turn until long after the fact.

The flash Q1 sectoral figures show, ironically perhaps, construction to be the sole engine of growth: it expanded by a faster 25.6 per cent, supported by a strong pipeline of housing and infrastructure projects. The manufacturing sector, on the other hand, slumped 29 per cent as all key industries fell sharply. The decline in the services was also broad based.

In its monetary policy statement yesterday, MAS said considerable downside risks to growth remain, but also pointed to recent signs of pick-up in a number of leading indicators.

Citigroup economist Kit Wei Zheng, who yesterday cut his forecast of Singapore’s 2009 GDP growth by 1.5 points to minus-6.4 per cent, said: ‘We maintain our view that the most intense quarter of GDP contraction is probably behind us, even if the pace of sustainability of recovery remains in question, and a return to positive y-o-y GDP growth is expected in Q409.’ But ‘a relapse and a W-shaped scenario, though not incorporated in our base case forecasts, remains a risk’, he added.

Noting that the economy has shrunk close to 10 per cent in the space of two quarters, HSBC economist Robert Prior-Wandesforde said: ‘Ironically, it is actually looking more likely that Singapore GDP will register positive q-o-q growth in Q2 2009.’

Source : Business Times - 15 Apr 2009

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