US pledges to defend its allies

US pledges to defend its allies

It will ‘not accept’ a nuclear N. Korea; calls for global community to stay ‘tough-minded’
By William Choong, Senior Writer

At a forum yesterday, (from left) Japanese Defence Minister Yasukazu Hamada, US Secretary of Defence Robert Gates and South Korean Defence Minister Lee Sang Hee ‘pledged a common response’ to the North Korean threat.

The United States yesterday delivered the harshest warning to North Korea since its nuclear test last week, saying that Washington stood ready to defend its allies in the region if North Korea crossed the line.
‘We will not stand idly by as North Korea builds the capability to wreak destruction on any target in Asia - or on us,’ US Secretary of Defence Robert Gates said yesterday.

Speaking to a group of defence ministers, military officers and academics at the Shangri-La Dialogue yesterday, Mr Gates said the US would not accept a nuclear-armed North Korea.

‘Our goal is the complete and verifiable denuclearisation of the Korean peninsula, and we will not accept North Korea as a nuclear state,’ Mr Gates said.

‘North Korea’s nuclear programme and actions constitute a threat to regional peace and security. We unequivocally reaffirm our commitment to the defence of our allies in the region,’ he added.

The challenge posed to the US and other countries in Asia is tough. Last Monday, North Korea conducted its second nuclear test since 2006. The following day, it test-launched six short-range missiles.

It has also announced it would not honour the 1953 armistice signed at the end of the Korean War.

Yesterday, Mr Gates said that the global community had to be very ‘tough-minded’, given North Korea’s well-worn tactic of using its nuclear capability to bargain for more aid and assistance.

‘They create a crisis, and then the rest of us pay a price to return to the status quo ante.

‘As the expression goes in the US, I’m tired of buying the same horse twice. This notion that we buy ourselves back to the status quo ante is an approach we ought to think very hard about,’ said Mr Gates.

Agreeing, the defence ministers of South Korea and Japan also called for tough action on North Korea. Earlier, they had met Mr Gates at a three-way forum and agreed to forge a common position going forward.

‘North Korea, perhaps to this point, may have mistakenly believed that it could be rewarded for its wrong behaviour but that is no longer the case,’ South Korean Defence Minister Lee Sang Hee said.

Mr Lee said his meeting with Mr Gates and Japanese Defence Minister Yasukazu Hamada could not have ‘come at a better time’, and that all three men had ‘pledged a common response’ to the North Korean threat.

China, a long-standing ally of North Korea, also expressed its ‘firm opposition’ to the recent nuclear tests.

‘Our stance on this issue is consistent. We are resolutely opposed to nuclear proliferation,’ said Lieutenant-General Ma Xiaotian, the Deputy Chief of the General Staff of the People’s Liberation Army.

According to a partial draft resolution obtained by the Associated Press, all countries will be called upon to immediately enforce sanctions imposed after the North’s first nuclear test in 2006.

Speaking to The Sunday Times in an interview yesterday, Mr James Steinberg, the US Deputy Secretary of State, said that the US still harbours the hope that North Korea will roll back its nuclear programme.

‘I think the jury’s still out. We should not take it for granted that it is inevitable in the case of North Korea,’ he added.

Despite the sombre mood created by the North Korea test, discussions at the high-level Shangri-La Dialogue were largely constructive.

Many countries expressed aspirations for greater multilateral cooperation in areas such as maritime security and disaster relief, and more importantly, a new security architecture for the region.

Asia’s ability to rise to pre-eminence depends on its ability to foster cooperation, said Admiral Sureesh Mehta, India Chief of Naval Staff.

‘Let me end with words of Benjamin Franklin. If we don’t hang together, we will hang separately,’ he said.

The Shangri-La Dialogue will hold its third - and last - day of proceedings today.

Source : Straits Times - 31 May 2009

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Regent Garden enbloc deal: majority owners lose appeal

Regent Garden enbloc deal: majority owners lose appeal

By ARTHUR SIM

THE Court of Appeal yesterday dismissed an appeal by the majority owners of Regent Garden who oppose a $34 million collective sale deal with Allgreen Properties.

The appeal was lodged on May 15, 2008, by 23 of 25 majority owners of the 31-unit project, who were unhappy that Allgreen made extra payments totalling $2 million to six minority owners who initially opposed the collective sale.

The appeal was lodged after Allgreen obtained an order from the High Court on April 16, 2008, compelling the majority owners to complete the sale and purchase of Regent Garden.

Four months earlier in January 2008, the Strata Titles Board rejected the sale on the grounds that the valuation was too low and the deal was not done in good faith.

In its judgement, the Court of Appeal dismissed the appeal of the majority owners, saying that there was nothing in the agreement between buyer and seller, or the law, to prohibit Allgreen making additional payments to the minority owners.

The Court of Appeal also reiterated that the Land Titles Strata Act exists to protect minority owners and not to protect majority owners from their own ‘improvident’ bargain.

Allgreen, represented by Davinder Singh of Drew and Napier, also relied on an affidavit of Knight Frank managing director Tan Tiong Cheng which said: ‘It is also my experience that it is not uncommon for the developer to contribute to the payment of the premium to the minority owners to procure their consent to the collective sale.’

On whether the collective sale was done in good faith, the Court of Appeal said: ‘A purchaser does not owe any duty of care, much less duty of good faith, to a vendor of property in relation to the price of the property. The general principle is caveat emptor.’

In its concluding observations, the court said collective sales committees that do not want to find themselves in a similar predicament vis-a-vis incentive payments can easily make provision for similar contingencies by providing for them in the sale-and-purchase agreement.

Source : Business Times - 30 May 2009

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Temasek in talks on Chartered stake sale

Temasek in talks on Chartered stake sale

No definitive offer has been put on the table so far by Abu Dhabi’s ATIC, says source

By JAMIE LEE

TALKS have started between Temasek Holdings and Advanced Technology Investment Company (ATIC) on the sale of the Singapore investment company’s near-60 per cent stake in Chartered Semiconductor Manufacturing to the Abu Dhabi firm. But no definitive offer has been put on the table so far, a source familiar with the situation told BT yesterday.

A separate source told BT on Thursday that ATIC had bid to buy Chartered in a deal that values the company around $2.45 billion.

Chartered yesterday halted trading of its shares to issue a statement in which it said it has not received ’such a bid’ from ATIC.

‘From time to time, Chartered engages various parties in discussions to pursue business opportunities or concerning the strategic direction of the company, with a view to maximising value for all shareholders,’ the chipmaker said. ‘There is no assurance that any definitive or binding agreement will result from these discussions.’

But market watchers noted that any offer will directly involve Temasek, the controlling shareholder, rather than Chartered itself, since it is the target.

Temasek declined to comment on the speculation, saying it was ‘inappropriate’.

Chartered shares continued to rise after the trading halt was lifted at 11.15am. The stock rose as much as 4.13 per cent before ending at $2.20, up 0.92 per cent, with 12.5 million shares changing hands. Over the past three trading days, Chartered shares have risen 8.37 per cent on speculation of a takeover, against a one per cent gain by the benchmark Straits Times Index.

Loss-making Chartered has long been seen as a takeover target, with Taiwanese firms Taiwan Semiconductor Manufacturing Company and United Microelectronics Corp previously regarded as potential suitors. Bank of America-Merrill Lynch analyst Daniel Heyler told Reuters that ATIC is ‘building ownership’ in the global foundry industry.

ATIC’s dialogue with Temasek and Chartered is aligned with its efforts to build an ‘IBM alliance’ since IBM is a key client of Chartered and Advanced Micro Devices (AMD), he said.

ATIC agreed in March to pay US$2.1 billion for 55.6 per cent of a joint venture with AMD, according to the Reuters report.

Source : Business Times - 30 May 2009

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S’pore home prices slide down the ladder

S’pore home prices slide down the ladder

From being among world’s best performers last year, it’s among the worst in Q1

By KALPANA RASHIWALA

FROM around the top of the heap to near the bottom of the pile in just 12 months!

A year ago, Singapore was ranked as the fourth best-performing market in the world under Knight Frank’s Global House Price Index based on the first-quarter’s year-on-year price change. This week, it emerged as the third-worst in a table that listed a total of 46 markets.

The house price index for Singapore slipped 23.8 per cent in Q1 2009 over the same year-ago period. And with the index declining 16.2 per cent quarter-on-quarter in the first three months of this year, Singapore emerged as the second worst-performing market based on a quarter-on-quarter ranking, compared with its ninth position a year ago.

Knight Frank’s index for Singapore was pegged to the official Urban Redevelopment Authority’s price index of non-landed private homes in the Core Central Region.

Israel was the top performer over the 12-month period ending Q1 2009, recording price growth of 10.9 per cent, followed by the Czech Republic with a 9.9 per cent increase. The worst performers were Latvia, Dubai and Singapore with declines of 36 per cent, 32 per cent and 23.8 per cent respectively.

‘If expats are not coming into Singapore, the strength of the rental housing market will be affected and that will, in turn, affect investment demand for residential properties.’

- Nicholas Mak,
Knight Frank’s director of research and consultancy in Singapore

On a quarter-on-quarter comparison, Dubai posted the worst performance with a fall of 40 per cent, followed by Singapore.

Hong Kong, saw its Q1 ranking (based on a year-on-year comparison) slip from third spot last year to 40th position, with a price drop of 15.7 per cent. United Kingdom was ranked 42nd on an annual-change comparison (the price slide was 16.5 per cent) while the US was in 43rd position with a 16.9 per cent decrease.

India made it to the top 10 list; it was ordered fifth with a 5.1 per cent year-on-year price appreciation in Q1 2009.

The percentage changes are calculated in local currency terms and are hence not affected by fluctuations in exchange rates.

‘There is sporadic evidence of buyers snapping up relative bargains. However, of those buyers in a position to move, many are still waiting for clearer signs that markets are approaching the bottom of the cycle,’ Knight Frank said.

Fourteen of the 46 markets covered by the index had not reported Q1 data at the time of the writing of the report.

‘The latest data suggest some easing in the plight of markets. On a quarterly basis, 48 per cent of the countries from whom we received Q1 data reported a drop in prices, compared to 88 per cent in our Q4 2008 index.

‘On an annualised basis, 48 per cent of countries also showed a fall in values compared to 77 per cent in Q4. Given the high proportion of ‘absentees’ for Q1, however, it would be potentially misleading to jump to too many hasty conclusions, although over half had shown annual and/or quarterly price falls at the last time of reporting. Nonetheless, the shorter-term future direction of most underlying economies suggests that the world’s residential markets are likely to continue to suffer for some while,’ Knight Frank’s report said.

The consultancy’s director of research and consultancy in Singapore, Nicholas Mak, said that while there has been a pick-up in private home sales lately (with developers managing to inch up prices for better-selling projects), a sustained price recovery will hinge on an improvement in the jobs market. ‘If expats are not coming into Singapore, the strength of the rental housing market will be affected and that will, in turn, affect investment demand for residential properties,’ he added.

A developer said: ‘While we are seeing price stability in the mass-market segment, I think the high-end sector will not stabilise until the perception of DPS-buyers defaulting clears away’.

The government scrapped the Deferred Payment Scheme (DPS) in October 2007.

The 30 to 40 per cent slide in high-end residential prices, coupled with more cautious bank lending to property investors, could mean that some DPS-buyers may not complete payments for units bought during the 2007 peak. A surfeit of such properties making their way back to the market could depress prices. While developers could take legal action against local buyers, they may have a harder time pursuing foreign buyers, especially companies registered in the world’s tax havens.

Source : Business Times - 30 May 2009

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Rents for industrial properties could drop by as much as 30%

Rents for industrial properties could drop by as much as 30%

By Ng Baoying,

SINGAPORE: The rental cost for industrial properties in Singapore could come down by as much as 30 per cent this year. Property consultants said this is due to a drop in demand as companies scale back their space as well as increased supply.

A slump in demand for Singapore’s exports has led to factories running at excess capacity and this has prompted companies to either put expansion plans on hold, or even scale down plant sizes.

Tay Huey Ying, director, Research & Advisory, Colliers International, said: “I guess it’s really a combination of both. On one hand, the global downturn has really affected the demand for exports for the regional countries and that includes Singapore.

“And with that, we have seen lots of manufacturing concerns operating at excess capacity and this has encouraged or prompted a lot of these firms to either scale back their expansion plans, or to even put their expansion plans on hold, or even scale down their manufacturing plants altogether.

“A combination of these would really have affected demand. And for the first quarter of this year, demand for industrial properties had softened by 50 over per cent as compared to the demand for last quarter of last year.

“And if we do a year-on-year comparison, demand for industrial space have really declined by around 70 per cent compared to the same period last year.”

On top of falling demand, a strong supply pipeline is compounding the situation. Colliers is expecting about 11.5 million square feet of space coming on board this year compared to about 10.6 million square feet last year.

However, a steep rental decrease is unlikely.

Ms Tay said: “I would also like to highlight that perhaps about 40 per cent of this upcoming supply is attributed to single user industrial space, which most of the time is purpose-built.

“So I think this scenario would really help to cushion rental decline for this year and then the other scenario would be that increasingly, Singapore’s industrial properties are being ‘REITed’ and a lot of these are being leased back for long periods at incremental rental contract being fixed into the contracts.

“And again, these are some of the factors that will help to cushion rental decline for this year.”

Average rents for manufacturing plants have come down by about 12.8 per cent in the past six months, compared to an increase of 6.4 per cent previously. On the other hand, rents for warehouse space have declined by about 13 per cent.

Still, while rents are trending down, some companies renewing their leases may see higher rates. This is especially so for firms who signed their current leases in 2006.

Ms Tay continued: “For a tenant or a company which has committed to a two-year lease, they would probably have committed to their rental contracts sometime in 2007.

“And for this group of tenants, there is a high likelihood that they could look at lower renewal rate when they are negotiating their lease renewal during this period. But for those companies which have committed to a three-year lease, that would mean that they have committed their lease sometime in 2006.

“That would be the period when industrial rent started to pick up. And this group of tenants may still have to contend with about 10 to 30 per cent … rental increase upon renewal. It very much depends on when the rental contract was entered into in the earlier phase and at what kind of rates it was entered into.”

PestBusters, which has an office at A-Z Building in Paya Lebar, saw rents go up by five per cent.

Thomas Fernandez, chairman & CEO, PestBusters, said: “Times are bad and they actually increased the rent by five per cent. In fact, they wanted to increase more but we had to negotiate and beg them to look at the fact that we are long-term tenants and the entire situation of the financial crisis.

The landlord Ascendas said the lease was renewed at a time when rents were still relatively positive, hence the rate. However, it said that it plans to give rebates to its tenants.

In a statement, Ascendas said: “Upon renewal of every tenancy agreement, it is Ascendas’ practice to engage each tenant in dialogue to negotiate rental rates. All the leases in AZ building were due and renewed last year when the Singapore property market was still relatively positive.

“We always ensure that our rental rates are pegged to the market and priced appropriately as other similar buildings in the same location.”

Analysts said an uptick in industrial rents will only occur in 2012 after bottoming out in 2011. - CNA/vm

Source : Channel NewsAsia - 30 May 2009

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15 out of 40 units at Martin Place Residences sold

15 out of 40 units at Martin Place Residences sold

By Wong Siew Ying

SINGAPORE: High-end private homes have seen renewed interest among buyers recently and the trend looks set to continue.

Developer Frasers Centrepoint said 15 out of 40 units launched on Friday at its Martin Place Residences have been sold.

Frasers said it has lowered prices by about 20 per cent to between S$1,350 and S$1,600 per square foot.

It said the homes sold were a mix of studios, two- to four-room units and penthouses.

Half of the buyers are Singaporeans.

The latest batch of apartments put up for sale are from the second tower of its 302-unit freehold development.

Frasers said to date, 95 per cent of the first tower has been fully sold. - CNA/vm

Source : Channel NewsAsia - 30 May 2009

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Singapore confirms three more H1N1 flu cases

Singapore confirms three more H1N1 flu cases

SINGAPORE: Singapore on Thursday confirmed three more cases of Influenza A (H1N1), bringing the number of infected persons in the country to four.

A day earlier, Singapore confirmed its first case of A(H1N1) flu, in a 22-year-old female Singapore Management University (SMU) student who recently returned to the city-state from New York.

The second confirmed case is a 43-year-old Singapore Permanent Resident who returned to Singapore from San Francisco via Manila on Tuesday (May 26) at 1750 hours.

She was on Singapore Airlines flight SQ 917 and was seated at 33H. She became unwell while on board.

The third confirmed case is a 28-year-old American woman working in Singapore. She returned to Singapore from Honolulu via Tokyo on Tuesday (May 26) at 2353 hours, on United Airlines flight UA 803. She was seated at 33C and became unwell on May 26.

The fourth confirmed case is a 28-year-old Singaporean man who returned to Singapore from Chicago via Hong Kong on May 25 at 0036 hours. He was on United Airlines flight UA 895 and was seated at 55H. He became unwell on May 25.

The patients are currently being treated at the Communicable Disease Centre at Tan Tock Seng Hospital (TTSH).

In a statement, the Health Ministry said their symptoms are relatively mild and all the patients are in stable condition.

Contact tracing of their close contacts, including passengers on the same flights, is ongoing. They will be quarantined and provided with antiviral prophylaxis.

The Ministry of Health (MOH) said that passengers within three rows in front and behind the cases who have not been contacted by the ministry yet should call the MOH hotline at 1800-333-9999.

The affected rows for SQ 917 are 30-36; for UA 803 are rows 30-36 and for UA 895 are rows 52-58.

The Health Ministry has reminded those who have travelled in the preceding 7 days to affected countries to seek immediate medical attention once they develop influenza-like symptoms, and call 993 for an ambulance. This, it said, will help minimise the risk of infecting those around them.

Meanwhile, the MOH has also reminded all medical practitioners and healthcare institutions to continue to be vigilant for suspect cases.

- CNA/ir

Source : Channel Newsasia - 29 May 2009

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Transforming the S’pore economy

Transforming the S’pore economy

Prime Minister Lee Hsien Loong outlined the economic challenges facing Singapore in a speech in Parliament on Wednesday. This is Part 2 of an edited excerpt from his speech.

THE immediate measures to tackle the crisis have been taken, announced, debated, settled.
We have Spur, the training programme for workers. We have the Resilience Package, which contained the Jobs Credit and the Special Risk Sharing Initiative as key measures. We have the President’s approval to draw on past reserves.

Despite these measures, there’s no getting away from the fact that this is going to be a very difficult year.

Our latest growth projections are between -6 and -9 per cent. It’s not just Singapore, but all countries have been hit. Even large economies with big domestic markets - Germany, Japan - are expected to decline significantly this year. The most vibrant economies - China, India - too have seen a sharp slowdown in growth.

It’s obvious now, if it wasn’t already obvious in January, that we were right to mount a decisive response in the Budget with all the resources at our disposal then, rather than to wait to see how the battle unfolded and gradually dribble in our resources bit by bit.

We haven’t won the war yet, but we’ve succeeded in moderating the rise in unemployment. In the first quarter, our GDP shrank sharply, 10 per cent. But our unemployment rose only moderately, from 2.5 per cent in the fourth quarter of last year to 3.2 per cent in the first quarter of this year. Much less than other countries, but at the same time much less than the shrinkage in our GDP.

It’s something to feel relieved about, but it’s also something to give pause to thought and to worry about, because our output has gone down 10 per cent. It’s still down. Our unemployment hasn’t gone down.

That means each worker is doing 10 per cent less work. That means employers are still holding on to the workers for now because of Spur, Jobs Credit, flexi-work and flexi-wage arrangements, because they hope that if they grit their teeth and see through this sharp downturn, the business will come back and there will be work for workers, and the workers will be there.

We hope that our firms will receive new orders soon. If so, the decision to hold on these workers through the downturn will pay off. So far there are orders, but most of the orders coming in will only see the companies through to the middle of the year. And no company can tell what the third and the fourth quarter this year is going to be like.

I asked the EDB. They’re not sure. I asked MTI. They can’t predict. I asked the unions, which usually have their ears close to the ground, and they’re equally anxious.

If the orders don’t come, then the companies have to let more workers go because they can’t sustain short-time work and job sharing indefinitely.

Eventually, if this situation persists, the companies have to rightsize, and the workers have to be redeployed into new businesses which have orders, which have better prospects, and where they can become fully productive again. That’s from the company point of view.

From the economy point of view, from the Government point of view, if we’re in that situation, we’ve to let the companies restructure. We have to let the resources shift from the businesses which are shrinking to the businesses which are growing and gear up for the changed new world rather than wait in vain for the old businesses to come back.

We can’t prevent this from happening. We have to see how it unfolds. But what we can do and what we have done is to have measures to save jobs in the time being, to buy time for us to make this transition so that we can massage the problem away and the workers do not have to endure too much dislocation, unemployment and pain in the process.

We’re watching the situation very closely. All the economic agencies are alert and engaged and, if we need to, we have the resources and the will to do more.

CRISIS MANAGEMENT

TO OVERCOME crises, it’s not good enough to excel at crisis management. We also have to be able to strengthen ourselves during normal times so that when problems come, we meet the problems in a strong position.

Otherwise, we would be champion crisis managers, but we will be chasing our tails without end. We must have a sound long-term strategy for growth and development.

We have regularly reviewed and updated our longer-term policies to meet changing circumstances. Each time we’ve had a major downturn, we’ve had a major review.

We did it in 1985 when there was a very severe recession after more than a decade of sharp growth. We did it again in 1997 during the Asian financial crisis and, after 9/11 in 2001, we formed the Economic Review Committee, which made wide-ranging recommendations, most of which have been implemented.

And since the Economic Review Committee, we have continued to make major policy changes over the last few years.

We restructured government revenues. We cut the corporate tax progressively from 25 per cent to 17 per cent. We raised the GST to 7 per cent. We amended the Constitution to put in place a new framework for spending from investment returns so that we can achieve a better balance between saving for a rainy day and investing now for our future.

We invested heavily in education. We recruited and trained more teachers. We strengthened and reorganised our ITE into three new colleges. We built a fifth polytechnic. We are setting up two new institutions - the Institute for Applied Science and Technology, to open up more direct routes for polytechnic graduates to acquire degrees; and a new publicly funded university teaming up with MIT in America and with a leading university in China.

We are developing new industries. In high-tech, we have biomedical sciences, interactive and digital media, clean technologies, R&D beginning to take off. We’re developing services industries: financial services - now hit but still with considerable potential - high-end tourism, the IRs coming up, and what EDB calls HQ and control tower activities.

We are getting companies from new geographies, not just Americans or Europeans or Japanese, but companies from China, India setting up in Singapore.

We’re also strengthening our social safety nets. We’ve created ComCare, which has been a lifesaver for many families and a very valuable tool for many grassroots advisers. We have the Workfare Income Supplement to help boost the incomes of those at the lowest end of the totem pole. We’ve improved our CPF system, raised the interest on CPF accounts, particularly for those with less than $60,000, and introduced CPF Life to make sure you’re seen and looked after into your old age.

We have avoided Western-style welfare, but still ensured that every Singaporean who makes the effort to look after himself will get help and will be looked after. He will not be alone. These measures have seen us through good times and bad.

In good times they’ve enabled our GDP to grow strongly - 7 or 8 per cent per year - created many skilled jobs for skilled workers as well as for PMETs, raised incomes for households so that the median resident household income has gone up from $3,600 in 2003 after the previous crisis to almost $5,000 last year.

In bad times, the policies have stood us in good stead. We’ve got a restructured economy which is efficient and competitive. We’ve got accumulated resources to help fund counter-recessionary measures without borrowing.

MORE UNCERTAIN WORLD

AFTER this crisis, the world is not going to be the same again. This not just another cyclical downturn and recovery. The world economy is undergoing a structural shift. We don’t know what will come out, but we can see some of the outlines to come.

The developed countries will have slower growth for quite some time to come. The financial sector is likely to have much more stringent regulations. Businesses will have industries which have excess capacity, which will now be consolidating. They will have access to less credit. Their customers will have access to less credit, that means there will be less demand, less need for new capacity, less new investments.

Governments all over the world will play a larger role in their economies. The governments will be more interventionist, more redistributive. I think the result will be less vibrancy, less dynamism, slower growth, but hopefully less likelihood of a repeat disaster.

In Asia, we expect the Asian economies to develop faster than the OECD. China is shifting to boost its domestic demand to drive growth. India just had a general election, a decisive victory by the Congress Party. We hope this will help it to push faster towards further economic reforms, but we shall see.

With rising affluence and rapid urbanisation, Asia will offer new opportunities for growth. But taken as a whole, Asia doesn’t have the weight, the heft, the size to make up for the slowdown in the OECD countries and so overall I think we are in for a slower period. But it isn’t just faster or slower, I think it’s also a change in attitudes worldwide.

In the West, many voters have turned against globalisation and become negative on international trade and investments. In America, for example, which has been one of the most open of the developed economies, the mood has become nationalistic and anti-trade.

The American government has announced a proposal to make American companies pay tax on their offshore income. President (Barack) Obama vowed to make the US tax code ‘more fair’. He said, they’ll be ‘finally ending tax breaks for corporations to ship our jobs overseas’. It’s emotional, rousing political language, completely understandable in their situation but the effect will be less support for trade, for globalisation, less opportunities to grow and prosper together.

On May Day, we had a rally. We celebrated at NTUC Downtown East. I went back and looked at the TV pictures. Everybody else had demonstrations and riots, in Asia as well as in Europe. These are real sentiments which will have real implications. The protectionist moves will affect us because our economy depends so much on the free flow of goods and services, on capital and talent.

There will be political impact. There is deep anger against those who are perceived to have caused this problem, to have led the countries into this mess, against those who prospered and got rich during the good times.

As countries come under political pressure, relations between countries are also likely to be affected. Trade disputes will widen into broader frictions in their relationships.

The Chinese are very worried. Their leaders are writing op-eds in Western newspapers extolling the virtues of free trade, encouraging countries to work together, to keep their doors open. They are especially worried that their relations with America will turn sour, and sour up not just the trade relationship, but also the whole global strategic situation.

So far, the major economies are emphasising the need for cooperation. They’re saying the right things, but what they are being forced to do is another matter. So we will have to watch what they do and not just listen to what they say.

OUR STRATEGY

IN THIS more difficult and uncertain outlook, there are opportunities for Singapore.

The Asian growth story is intact and it’s the main plot for us going forward. We are small, which makes us vulnerable to external changes, but at the same time, it enables us to focus on doing well in niche areas. We don’t have to be good across the board.

We are not doing badly in some of these areas. We have 70 per cent market share manufacturing oil rigs, thanks to Keppel and SembCorp. Every time you drink Milo, it contains malt extract. One third of Nestle’s malt extract for the whole world is made in Singapore. Foreign law firms servicing South-east Asia, nine out of 10 situate themselves in Singapore.

At the broadest level, our approach to economic development and to growth remains valid. We have to stay open to trade and global competition. We have to be present all over Asia, link up with the world. We have to upgrade our skills, build new capabilities and keep our lead and we have to encourage our people to be self-reliant and enterprising, rather than dependent on state support and welfare.

But while the broad strategy is valid - which MPs have acknowledged, even Mr Low Thia Khiang when he spoke on Monday, which I thank him for - we need to review our specific strategies to develop the different sectors of our economy, find new ways to attract investments, implement policies to keep growing faster than developed countries can and to give Singaporeans good jobs.

I think we should study five specific strategies.

First, how to seize growth opportunities because without growth, there is nothing to distribute; there is no prosperity to share. But if we are creative and spry, there are still ways to prosper.

We should pursue more niche opportunities, for example, manufacturing aerospace components where it is very high technology, precision, needs absolute reliability, quality assurance and cost is less of a consideration.

We can develop new markets in emerging economies, which are still expanding and growing new business. We have many projects in the Gulf, which is still investing in infrastructure. We can look for and win more projects there with the capabilities, reach and track record which we are progressively building up.

We can make the most of Singapore’s unique strengths and experience. We use our urban planning and development capabilities to help fast-growing cities in Asia. You’ve seen Suzhou Industrial Park. It’s celebrating its 15th anniversary.We signed two additional agreements for the Suzhou Industrial Park to develop new projects in Nanjing, in Jiangsu, Nantong, there’s one, and another mixed township development in Nanjing City on an island. It’s our reputation, our ability to deliver, our reliability, which is creating these new opportunities overseas.

We maximise our win-win cooperation with neighbours. Closest of course is just across the Causeway, the Iskandar Malaysia project. I had a good discussion with Prime Minister Najib Razak last week and he is keen to develop our relationship and take it forward and have a forward-looking constructive relationship between Malaysia and Singapore. I told him I fully agree with this approach and we will try to work together. We must try to work together in these difficult times.

Second, how do we strengthen our corporate capabilities, make our companies stronger?

We need not just MNCs, but also local companies, not just big companies but also small ones, start-ups as well as mid- sized companies, so that we will have a diversified and resilient corporate landscape.

We’ve got many of the big global companies in Singapore - Exxon, Shell, Motorola, Hewlett-Packard, Sumitomo, Thomson. We need to attract the next tier of global companies, after the Fortune 500, slightly smaller, but by Singapore’s standards, still large. And they are not quite so familiar with Asia. They can invest here because they’re comfortable with our business environment and they see this as a good base to expand in Asia.

The Germans have a powerful small and medium enterprise sector. We’ve been courting them for many years. And some of them are here. We’ve a German centre where they can start up, begin to get their feet on the ground before they have their own premises.

We’ve got other European companies which are in this cast, which are setting up here, like Berg Propulsion, a Swedish manufacturer of marine propellers and thrusters. We should look for not quite so large, but still valuable global companies.

We should look for Asian companies. Chinese and Indian multinationals are going worldwide. Can we be the global HQ for such companies?

Focus Media, which is China’s leading provider of advertising platforms, is here and I think more can come because many of them are going into the world and Singapore is at once familiar with them and at the same time operates by Western and international business norms, so they can learn how to work in this international environment.

We also want to nurture our own companies and make them globally competitive in time. The Government wants to help these companies to grow and we’re trying many ways to do this and we’re willing to do more. We will study this further. But I’d like to say that there’s no simple answer to this question. I do not believe this can be done simply by the Government pouring money in, or one of the favourite quick proposals - setting up Temasek II.

The critical factor is not the availability of money or capital. The critical thing is that you need to build up the entire enterprise ecosystem, the whole environment where you can attract talent, and develop entrepreneurship, which means people with bright ideas, passion, the drive and the organisational ability to take a spark to brainwave, to a start-up, to a company, to an IPO.

Third, we have to develop the capabilities of our people, grow our human and our knowledge capital. Our future lies in being a leading global city for talent, our own talent as well as top talent from around the world. How do we make Singapore an exceptional place in Asia? It’s a chicken-and-egg problem. If you can get talent, you can shine. But you must be a first-class place for talent to want to come.

We have to encourage talent to come here, to work here, to take root here. We have to encourage Singaporeans to welcome them and help them integrate into our society. I think it will happen.

If we say foreigners out, Singaporeans first and only, we’ve a problem. We’ve to say foreigners come, Singaporeans first, but we are going to make this place prosper with all the help we can get, and then we will have a bright future.

We also are making a big investment in our R&D programme. It’s five years since we started this programme. It’s time for a review. It’s starting to yield results. We’ve made good progress. The question now is how do we take it to the next level and expand the economic payoff from R&D?

The fourth question is how to create good and high-value jobs for Singaporeans.

Growth is important, but growth is for the purpose of improving the life of Singaporeans. Not just a few at the top, but many across the board, improving their lives through good jobs, through rising incomes.

We have to attract industries that will require skilled workers and technicians, as well as professionals and managers, so that our polytechnic graduates, our ITE graduates, our skilled workers, our technicians, our diploma holders will have their skills in demand and can find jobs which will pay them well.

We must have companies upgrading their workforce, raising productivity and creating high-value jobs. We must have Singaporeans acquiring skills that are in demand through good education, through upgrading opportunities, like the new university and the new Institute of Applied Technology. We need continuing education and training - all the good work which e2i, NTUC, the WDA are doing.

CREATIVE SOLUTIONS

FIFTH, how can we deploy our resources to maximum effect? Singapore is small. Population, finite. Land is finite. Our resources are finite.

Land, for example. Seven hundred square kilometres. Every plot planned and ‘choped’ for something significant on our masterplan. If you fly over Singapore on a sunny day without clouds, it looks like a beautiful tapestry. Go to Google Earth, zoom in and you can see every building, every road, almost every ERP gantry, but nothing is left to chance, nothing is left over.

What do we do if we need to expand? We are reclaiming land, but reclaiming land doesn’t stretch our international boundaries and the more land you reclaim, the less ocean space you will have and PSA reminds us we need sea space for port, for anchorages, for navigation lanes. So there’s a limit to how far you can reclaim.

We have to make judicious trade-offs: recover land from less productive, declining industries; make space for new industries which are bringing in better jobs. We also have to make difficult decisions. The port is 30-plus million TEUs per year. If you’re going to make a 60-million TEU port, you need twice as much land. Can we afford that? It means fewer factories, less housing. It may mean less training areas for the SAF. Nothing is for free. There’s always a trade-off. But I think that we should try to relax this trade-off as much as possible.

Think of creative ways to expand the supply of space, if not of land. Can we go down, underground space? We have underground ammunition storage. We are thinking about underground malls. We’ve talked about ideas to have a whole underground space under the Padang. It’s expensive, but some of it can make economic sense.

Can we go upwards? There are limits, partly because of air traffic constraints. But with better air navigation and air traffic control, I think the limits for the aeroplanes can be tightened, the height constraints can be relaxed and we can build higher with high-rise development in such areas. These are real issues which we are studying. I think that there is potential. We have not reached the absolute limit yet.

Another area where we have to consider limits is foreign workers. One-third of our workforce are foreign workers, about one million. Majority are lower skilled Work Pass holders. They’ve helped us to grow our economy, building our infrastructure, bolstering our workforce, filling critical gaps. I think in this downturn, the number of foreign workers will fall, particularly in manufacturing and services.

But when the economy recovers, demand for foreign workers will grow again. We cannot do without them, but I think we should find ways to reduce our dependence on them. Try as we may, we run up against limits. We have to study how we can grow our economy without indefinitely growing our foreign worker numbers and making the best use of the foreign workers to complement our workers.

There’s a third area of limits, and that’s energy. It’s an important utility like water. I expect in the long term, the trend for energy prices will be up because as China grows, as India grows, their demand will grow and that will put pressure on the energy markets worldwide. So the question is how do we encourage energy conservation to grow more sustainably and to be less affected when energy prices go up from time to time or in the long term?

We have to diversify our sources of energy for security. We need to become less dependent on piped natural gas, which is from nearby sources, and look for alternatives to piped natural gas. We are building an LNG terminal. That is an alternative because once it is LNG, you can buy from around the world - Australia, the Middle East, Trinidad & Tobago, Russia, many possibilities. What do we need to do beyond that? Do we need to develop other sources of energy?

We also have to consider climate change. There’s a global deal currently being negotiated under the UN Framework Convention for Climate Change. Singapore must do its part in any global deal because it will be expected of us. There will have to be improvements in our energy efficiency. It will mean costs for our economy and we have to prepare for a carbon-constrained world.

These are important enough issues for us to have a major strategic review. We will form an Economic Strategies Committee to look into these issues, and Minister Tharman Shanmugaratnam will chair the committee. We will involve both the public sector as well as the private sector so as to tap the strengths of both.

Source : Straits Times - 29 May 2009

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Mindy Yong

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mindy@mindyyong.com

Invest Fair 2009 offers financial tips

Invest Fair 2009 offers financial tips

PLENTY of people have investment queries these days, so the upcoming Invest Fair 2009 will be worth a visit.
The fair, which will be held on Aug 22 and 23 at Suntec Convention Centre, will feature several seminars, with industry experts dealing with a variety of topics such as equities trading.

Keynote speakers include author Robert Miles, a friend and protege of famed investment guru Warren Buffett. Panel discussions on the outlook for the economy will also be held.

Sponsors ranging from big-name financial institutions to listed companies will set up exhibition booths.

Invest Fair, now in its third year, is the largest annual investment event in Singapore and drew crowds of more than 20,000 last year.

It is being organised by the online trading platform Shareinvestor, which is a wholly owned subsidiary of Singapore Press Holdings, in collaboration with The Business Times.

‘The success of Invest Fair last year demonstrated the enthusiasm of investors, both professionals and amateurs, in continuously seeking knowledge,’ said Shareinvestor chief executive Christopher Lee.

Source : Straits Times - 29 May 2009

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Mindy Yong

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mindy@mindyyong.com

Developers readying for launches as activity rises

Developers readying for launches as activity rises

By Joyce Teo, Property Correspondent

MORE developers are preparing to launch new properties in response to a marked improvement in sentiment in Singapore’s property market, experts say.
Activity has picked up in the past two to four weeks, they observe.

Some developers are now rushing to prepare projects for launch, but they face some inevitable delays. They may lack promotional materials, for instance.

Starting today, Frasers Centrepoint Homes will be releasing more units at its 302-unit freehold Martin Place Residences in the River Valley area. It recently sold more than 100 units of the project after it cut prices. The units were released at $1,260 per sq ft (psf) to $1,700 psf, compared with $1,700 psf to $2,000 psf last year.

Chief operating officer Cheang Kok Kheong said prices ranged from $1.5 million for a two-bedder to about $2 million for a three-bedder. He said Frasers was aiming to sell the remaining units at $1,350 psf to $1,700 psf.

Other weekend launches include Balcon East in Upper East Coast Road. Tong Eng Group started sales at its 37-unit development on Thursday last week and managed to sell 28 units. Prices ranged from just below $500,000 to $1.39 million, with the one- to two-bedders costing about $850 psf, and three-bedders at $780 psf, said Savills Residential director Phylicia Ang.

Next month, new re-launches could include the 91-unit Nathan Residences in Nathan Road and Frasers’ 330-unit leasehold project near the Woodleigh MRT station. The former’s preview last September at an average of $2,000 psf met with no success.

Frasers has reconfigured the layout in the Woodleigh project, which previously had 300 units, to accommodate the more affordable one-bedders of 400 sq ft. The rest will be two-, three- and four-bedders. Prices will be ‘at the upper end of $750 psf to $780 psf’, said Mr Cheang.

There are still many projects waiting to be launched and certainly not all will be on the market soon.

‘Those developers who are ready will see this as a good window period to launch, but the really high-end projects won’t come out soon,’ said Ms Ang.

Developers will launch if they can accept today’s pricing, as the recent re-launches are easily 25 per cent to 30 per cent below the peak, said Knight Frank executive director Peter Ow.

Source : Straits Times - 29 May 2009

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Mindy Yong

(+65)91002985

mindy@mindyyong.com