Don’t extend Jobs Credit Scheme, say NTU economists

Don’t extend Jobs Credit Scheme, say NTU economists

By TEH SHI NING

(SINGAPORE) The Jobs Credit Scheme should not be extended, and foreign labour policy should be tweaked in order to boost labour productivity and competitiveness, say university economists.

These recommendations were made during yesterday’s economic forecast update by Nanyang Technological University’s Economic Growth Centre (EGC), which now predicts that GDP will shrink a smaller 2.2 per cent this year, with ‘upside surprise’.

NTU economist Choy Keen Meng said: ‘Singapore’s recovery path now lies between a V and a W.’

His GDP forecast was revised up from a minus 4 per cent forecast in March because of the US economy’s rosier outlook and improved sales for the global semiconductor market as electronics demand picked up. He expects a 3.5 per cent dip in GDP in Q3, and 1.5 per cent growth in Q4.

Dr Choy thinks growth is likely to moderate after the first quarter of 2010, but whether a full-fledged ‘double-dip’ occurs will depend on global fiscal and monetary policy.

Elaborating, he said that after various countries’ stimulus packages have run their course, further pump-priming could be needed if domestic demand does not recover. And, for monetary policy, there cannot be a premature exit from a low-interest-rates regime. But he thinks that most policymakers have their eyes on the ball, so a severe second dip into a full W is not as likely.

On the labour market front, retrenchments are slowing and overall job losses have been lower than in previous downturns, NTU labour economist Randolph Tan said.

The EGC now predicts that net job losses will not exceed 30,000 this year, and forecasts an unemployment rate of 3.3 per cent for 2009.

It also expects an earlier labour market recovery, with a rise in monthly wages by the fourth quarter, and employment expansion in 2010. This is thanks to a stronger-than-expected rebound in the wider economy and the government’s timely and effective policies, Dr Tan said.

But EGC does not recommend that the Jobs Credit Scheme, which has tilted the hiring balance in favour of residents, be extended. It was launched as a one-year scheme, with the final payment due this December.

‘An extended application of the Jobs Credit would distort business decision-making and erode economic competitiveness,’ said Dr Tan.

Noting that the focus on foreign labour policy has intensified recently, the EGC also looked at how Singapore regulates the supply of work permit holders.

Dr Tan suggested replacing the current sectoral quota and levy system for work permit holders with a wage-indexed levy instead. This has the advantage of being a suitable pricing mechanism to compare individual local and foreign workers, will be less cumbersome administratively, and should have ‘positive implications for productivity’, he said.

The EGC’s preliminary suggestion is that the levy rate on each work permit holder be at least equivalent to, or a multiple of, the employer’s CPF contribution rate for comparable resident workers.

During the session, associate professor Low Chan Kee also presented his technical analysis of the stock market’s historical performance, which predicts that the current bull run could last for at least another six months to a year.

Source : Business Times - 18 September 2009

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No sell-out F1 crowd despite reduced capacity

No sell-out F1 crowd despite reduced capacity

By NISHA RAMCHANDANI

THIS year’s Formula One Singapore Grand Prix is unlikely to take place in front of a sell-out crowd despite the reduced capacity.

Revving up: In a tie-up with retailers, F&B establishments and tourist attractions, flashing your F1 ticket this year will gain you free access or promotional prices at selected locations
‘To be honest, I don’t think we will. It’s difficult to do,’ said race promoter Singapore GP’s (SGP) executive director Michael Roche at a press conference yesterday evening, adding that he hopes that ticket sales will hit at least 95 per cent.

Leftover single seats in grandstands are harder to sell when people want to buy in groups, Mr Roche explained.

Collectively, ticket sales have breached the 90 per cent mark and momentum continues to build, but total inventory for this year stands at 83,000 tickets per day which is lower than the 100,000 or so which SGP ended up selling last year. Thirty-five per cent of all tickets sold so far have been retailed to overseas fans, versus 40 per cent last year.

One of the biggest dampeners on ticket sales this year has been a lacklustre economy, and the Singapore Grand Prix is not the only one that has had to work hard to fill seats. The Turkish Grand Prix for instance was reportedly hit by poor ticket sales.

In addition, the novelty of the inaugural night race in 2008 resulted in tremendous demand, which prompted the race promoter to keep adding extra seats last year.

On the corporate front, the 10,000 corporate hospitality tickets - also down from 13,000 last year - have not completely sold out, but response has been good, said Mr Roche.

Meanwhile, SGP and the Singapore Tourism Board (STB) have also been tweaking the circuit to highlight Singapore - literally. A 300 m long, 11 m high ‘Singapore’ will be lit in LED lights on the pit building rooftop.

There will also be enhanced lighting at City Hall and the Esplanade, while new areas such as the Benjamin Sheares Bridge have been identified for lighting to profile Singapore’s cityscape.

Transportation will also be ramped up during race period. SMRT will increase the number of train trips and will extend the last train timings from City Hall MRT Station to 1.15 am on race days.

In addition, SMRT announced a temporary diversion of certain affected SMRT bus services, while SMRT taxis will levy a $5 location surcharge for passengers who board in the race vicinity. Full details are available on its website.

Plus, STB has beefed up what was previously shaping up to be a rather anaemic looking Singapore GP Season (Sept 18-27).

Latest additions to the line-up include The Official Formula 1 Lounge at Pan Pacific - hosted by F1 Supremo Bernie Ecclestone’s daughter Tamara - Johnny Walker’s purpose-built Black Lounge at Clark Quay, Fast & Furious@Screening Room, Jazz@South Bridge and Asian festival KinestAsia at Timbre@Arts House.

And in a tie-up with retailers, F&B establishments and tourist attractions, flashing your F1 ticket this year will gain you free access or promotional prices at selected locations.

Source : Business Times - 18 September 2009

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HDB seeks buyer for Clementi mall

HDB seeks buyer for Clementi mall

THE Housing & Development Board is looking for a buyer for a mall in Clementi Town Centre which it is building as part of a larger 40-storey development that will also include two blocks of HDB flats and a bus interchange.

Clementi mall: The buyer will have naming rights to the mall which comprises two basement levels and five storeys above ground, with retail space of 193,750 sq ft
Jones Lang LaSalle, which is handling the tender for the mall, said the price is ‘in excess of $300 million’.

The mall comprises two basement levels and five storeys above ground, with a maximum net floor area of 18,000 sq m (or 193,750 sq ft) of retail space.

HDB is building only the core structure and facade, which it aims to hand over to the eventual buyer around August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout. The buyer will also have naming rights to the mall.

JLL estimates the buyer may spend about a further $50 million to fit out the mall. Assuming a $300 million purchase price, the total investment would work out to about $1,800 psf of retail net floor area. This does not take into account about 21,266 sq ft of gross floor area on the fifth level, set aside for a library under the development’s civic and community institution space.

Assuming gross average monthly rent of $11 psf is achieved for the mall, the net yield for the investor would work out to about 6 per cent. The buyer will get a fresh 99-year lease when HDB hands over the property.

An air-conditioned bus interchange will be on the mall’s first level, and the third level will be linked to Clementi MRT Station.

JLL’s Singapore and South-east Asia managing director Chris Fossick said: ‘This investment provides a rare opportunity to enter the tightly held and much sought-after suburban retail mall market in Singapore. The buyer will be able to add real value through its retail concept and layout,’

The tender for the mall closes on Nov 10.

HDB said yesterday this is the first development incorporating public housing, commercial facilities and a bus interchange in a single complex.

The two blocks of HDB flats will have a total of 388 units, comprising three-room to five-room flats. Most have already been taken up by HDB lessees affected by a Selective En-bloc Redevelopment Scheme (Sers) nearby.

‘There are very few unsold flats in the two blocks,’ HDB said. ‘After meeting demand for Sers, the balance of the flats will be released to the public in future sale exercises.’

Source : Business Times - 18 September 2009

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Office rent decline eases as confidence returns

Office rent decline eases as confidence returns

Recovery seen next year, but market remains fragile in short-term

By UMA SHANKARI

OFFICE rents fell for the fourth consecutive quarter, but the pace of decline has eased on the back of returning business confidence, a new report from CB Richard Ellis (CBRE) showed.

Data from the firm said that prime office rents averaged $7.50 per square foot per month (psf pm) in the third quarter. This reflected a 12.8 per cent quarter-on-quarter decrease, compared with the 18.1 per cent decline in Q2 2009 and 18.6 per cent contraction in Q1 2009.

In all, prime rents have fallen 53.4 per cent since their peak in Q3 last year.

Similarly, rents of Grade A office space - which is the top range of prime office space - slipped to $8.80 psf in Q3 2009. This represents a 13.3 per cent quarter-on-quarter decline, which is an improvement over the 18 per cent contraction in Q1 and 17.5 per cent decline in Q2.

However, vacancy rates continued to climb. Grade A vacancy rose to 4.2 per cent in Q2 2009, up from 3.6 per cent in the past quarter. It was 1.2 per cent just a year ago in Q3 2008. The take-up for Grade A space for the first three quarters in 2009 amounted to negative 223,397 sq ft. Likewise, the islandwide take-up was negative 570,000 sq ft for the first half of the year.

About 575,000 sq ft were added to office stock in Q3 with the completion of 78 Shenton Way’s south tower, Mapletree Anson, The Spazio and land parcel B at Scotts/Anthony Road.

The occupancy rate for Tanjong Pagar fell from 86.2 per cent in Q1 this year to 80.1 per cent, primarily due to the recent completion of Mapletree Anson and 78 Shenton Way’s south tower.

Demand is likely to remain in negative territory for the rest of this year, CBRE said.

‘Going forward, vacancy rates can be expected to remain double-digit through the next couple of years due to the high volume of supply, although we expect the recovery in office market to kick in earlier in 2010 rather than in 2011 as estimated earlier,’ said the report. ‘Nonetheless, the office market will remain fairly fragile in the short-term - a condition that all in the industry should recognise even as other sectors such as residential are subject to scrutiny and possible measures to curb speculation after a frenetic period of sales activity.’

The office investment market was also reasonably active in Q3, dominated by local developers buying for development potential as well as owner-occupation. Most of the properties transacted were of a smaller plot size and with a price tag within the $50-65 million range.

Source : Business Times - 18 September 2009

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Singapore is Asia-Pac’s 2nd most competitive IT market

Singapore is Asia-Pac’s 2nd most competitive IT market

By WINSTON CHAI

(SINGAPORE) The Republic has inched ahead of Taiwan and South Korea to become the second most competitive information technology market in the Asia-Pacific region, a new study by the Economist Intelligence Unit (EIU) reveals.

The annual report, sponsored by anti-piracy trade group Business Software Alliance (BSA), scores 66 countries around the world on six key yardsticks which EIU uses to ascertain the competitiveness of a nation’s tech sector.

These include a country’s business environment, technology infrastructure, legal framework, as well as its research and development (R&D) landscape.

Singapore scored 68.2 out of a possible 100, placing it just behind regional frontrunner Australia, which garnered a score of 68.7. The tally moves it to second position from fourth last year.

Taiwan and South Korea, which clinched first and third position in 2008, dropped to fourth and fifth place in the latest EIU rankings. On a worldwide basis, Singapore retained its ninth ranking this time around.

According to Manoj Vohra, EIU’s director of research, Singapore was in pole position in five out of the six categories used to measure IT competitiveness. EIU ranked Singapore first in the region in terms of its R&D environment and support for the IT sector, thanks to the strong backing of the local government.

The Republic’s legal environment was deemed to be the second best in Asia behind Australia, a result of its stringent intellectual property protection regime and cybercrime laws, Mr Vohra said.

‘There’s a distinct possibility Singapore could become No 1 (in the next few years),’ he told reporters at a briefing yesterday.

In order to clinch top spot, EIU highlighted one key area for improvement: IT human capital.

Singapore ranked eighth in the region in terms of human capital, a category which encompasses factors such as the number of people in higher education and enrolment numbers for science-related courses.

‘This (human capital) is the place where most work needs to be done,’ Mr Vohra stressed.

Singapore is already disadvantaged by the small size of its IT labour pool compared to countries such as India and China.

To compound the problem, the number of students enrolling in the science discipline - the talent supply pipeline for technology companies - is also lower than many of its Asian counterparts, EIU found.

Singapore should encourage more students to take up science courses and consider introducing ‘labour mobility’ initiatives to tap into the vast pool of skilled IT workers in places such as India, Mr Vohra added.

Source : Business Times - 18 September 2009

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Disgraced F1 pair could face S’pore extradition: report

Disgraced F1 pair could face S’pore extradition: report

By MICHELLE QUAH

(SINGAPORE) This year’s Formula One race in Singapore could see more than its fair share of excitement - not all of it welcome.

There’s talk that two former Renault team principals could possibly be extradited to Singapore to be charged for their part in fixing the outcome of last year’s Grand Prix here.

If so, the resulting media attention and the possibility of a long trial would draw more attention to the disrepute that’s already currently associated with this race - an outcome which can’t bode well for this year’s race, which is already seeing less interest than last year’s, due to the dismal economic climate.

The Daily Telegraph reported yesterday that Renault F1 managing director Flavio Briatore and executive director of engineering Pat Symonds - who resigned, as the team announced that it would not contest charges of fixing the 2008 Singapore Grand Prix - could face legal repercussions in Singapore.

It said Singapore could possibly request the extradition of the pair and charge them on extradition crimes, related to their involvement in last year’s race.

When asked, Singapore’s Senior Minister of State for Trade & Industry S Iswaran said yesterday that he had not heard any indication that Singapore was seeking the extradition of the former Renault team principals. But lawyers whom BT spoke to say an extradition is a possibility.

Briatore and Symonds have been accused by former Renault driver Nelson Piquet Jr of asking him to crash in last year’s inaugural F1 race in Singapore - in order to help his team mate and double world champion Fernando Alonso win the race, which the latter eventually did.

Briatore and Symonds are due to go before the FIA’s World Motor Sport Council in Paris next Monday. The FIA (the world governing body for Formula One) could impose sanctions and other penalties on Renault, including excluding the team from the championship, if it finds the team guilty.

And, now, there’s the possibility that Briatore and Symonds could face criminal charges in Singapore too.

Lawyers whom BT spoke to say it is possible the pair could be extradited and charged here for their alleged attempts to fix the race, but that it would depend on two key points.

‘One, are they based in countries with which Singapore has an extradition treaty? And, two, is what they’ve done considered an extraditable offence?’ says lawyer Nicholas Narayanan, who runs his own practice.

Briatore is reported to be an Italian citizen, while Symonds is a British citizen. Singapore has an extradition treaty with the UK, but not with Italy.

As for whether the pair could be accused of an extraditable crime, lawyers point to the list of offences in the Extradition Act in Singapore.

Mr Narayanan says Briatore and Symonds, if they did ask Piquet Jr to intentionally crash his car, could arguably be considered guilty of the following offences cited in the Act:

Malicious or wilful damage to property;

Acts done with the intention of endangering vehicles, vessels or aircraft; or

Criminal conspiracy to commit a serious crime, where the serious crime is transnational in nature and involves an organised criminal group.

Another lawyer - who has advised on extradition issues, but asked not to be named - felt, however, that it would be ‘a stretch’ to say that Briatore and Symonds committed the aforementioned extraditable offences, even if they had instructed Piquet Jr to crash his car, and that it would be correspondingly difficult to extradite them to Singapore on such grounds.

Also, even if Briatore and Symonds could arguably be considered to have committed an extraditable offence, it would be up to Singapore to decide if it even wants to have the pair brought here and charged.

Observers have said that Singapore is unlikely to make such a move, given the negative publicity it would throw up.

Mr Iswaran also said that ‘this is a matter between the FIA and the teams’.

‘We are a host. Our job is to make sure we put on a good show so that the visitors enjoy themselves, have an eventful experience. In that regard, we did a good job last year and that’s our target again this year.

‘As for the matters pending before the FIA in terms of Renault, that’s really between the FIA, the teams and FOM (Formula One Management),’ he added.

Source : Business Times - 18 September 2009

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Far East tops tender with bid 35% clear of field

Far East tops tender with bid 35% clear of field

It plans Holland V-type shophouses, 150-200 apartments

By KALPANA RASHIWALA

(SINGAPORE) The tender for a residential and commercial plot at the corner of Yio Chu Kang and Seletar roads yesterday drew 12 bids, with Far East Organization topping the list with an offer that outshone its closest competitor by a huge 35 per cent - possibly the widest margin at a state tender in recent years.

Far East’s offer of $119.08 million works out to $376 per square foot of potential gross floor area - much higher than market expectations.

The second-highest bid, by a Centurion Properties unit, was $88.19 million or $279 psf per plot ratio (psf ppr).

Sim Lian, Soilbuild Group and Frasers Centrepoint bid in the $247 to $253 psf ppr range.

Four others also bid above $200 psf ppr - Ho Bee; Roxy-Pacific unit Mequity; JBE Development, which is controlled by Hongkonger Patrick Lam who developed The Luxe in Handy Road; and Heeton. Wah Khiaw Developments bid about $200 psf ppr.

‘The strong turnout shows developers are still hungry for land. The relatively small outlay also boosted the participation rate.’

- A developer who took part in yesterday’s tender

‘The strong turnout shows developers are still hungry for land,’ said a developer who took part in yesterday’s tender. ‘Second, the relatively small outlay also boosted the participation rate.’

While National Development Minister Mah Bow Tan announced this week that the government would resume land sales under the confirmed list in the first half of next year, it makes sense for developers to clinch sites now and launch ahead of the competition, according to Credo Real Estate managing director Karamjit Singh.

Mr Singh estimates that a new low-rise condo on the Seletar/Yio Chu Kang roads site could fetch an average price of $750-780 psf in today’s market.

‘There’s very little supply of new condos in the location. The area also has a wide catchment of landed property owners whose buying power would be higher than the typical HDB upgrader’s.’

The 2.1-hectare, 99- year leasehold site can be built up to five storeys.

BT understands that Far East could manage a breakeven cost for the project’s residential component of about $600 psf, despite its bullish bid.

‘It apportioned a much higher land value for the project’s commercial component - which can form up to around 15 per cent of the project’s maximum gross floor area - than its residential component,’ an analyst said.

Chng Kiong Huat, Far East Organization executive director (planning and development), said that the group’s scheme includes 150-200 apartments, comprising two and three-bedroom units.

‘The project should be launch-ready in the second half of next year,’ he said.

For the commercial component, Far East is looking at developing a modern shophouse cluster in the style of Holland Village.

‘There will be a supermarket or neighbourhood centre type of food market, as well as restaurants, pubs and wine bars,’ Mr Chng said. ‘We’ll retain the commercial component as an investment property for rental income.’

Market watchers point out that Far East is no stranger to the location, having developed more than a dozen projects in the Yio Chu Kang/Hougang vicinity over the past 20 years. These include Bullion Park, Florida Park, Banyan Villas, Regentville, Gerald Park and Central Place.

In a Sept 16 report, UBS Investment Research said that it expects the government to provide land for 3,000-3,500 private homes, including executive condos, in the first-half 2010 confirmed list - close to the level in H2 2007.

For the whole of 2010, UBS reckons that ‘it is reasonable for the government to release 4,000-5,000 units on the confirmed list’.

‘But if prices continue to rise sharply in H1 2010, more units could be included in the confirmed list for H2 2010,’ said the report, which was written by analysts Regina Lim and Michael Lim.

Source : Business Times - 18 September 2009

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Home comfort for Temasek as portfolio bounces back

Home comfort for Temasek as portfolio bounces back

$42b rebound in 4 months claws back most losses; investment firm sharpens focus on S’pore, Asia

By CONRAD TAN

(SINGAPORE) Temasek Holdings said yesterday that it recovered most of the heavy losses it suffered last year in the four months to July-end as financial markets rallied and it rebalanced its investment portfolio.

Temasek also said it could keep most of its money in fast-growing Asia - including Singapore - and other emerging markets in future after being badly burned by recent investments in the West.

The value of its portfolio slumped $55 billion or 30 per cent to $130 billion at end-March from a year earlier. But from March 31 to July 31, it rebounded $42 billion to reach $172 billion, down just 7 per cent from $185 billion at end-March last year, Temasek said.

Its performance in August was ‘roughly in line’ with market indices, which have ’softened a bit’, chief executive Ho Ching said.

The decline in Temasek’s portfolio value since March 31, 2008 includes the losses it suffered when it sold its stakes in Bank of America (BoA) and Barclays. It is estimated to have lost £pounds;500-600 million (S$1.2-1.4 billion) on its investment in Barclays and another US$2.3-4.6 billion on BoA.

Ms Ho said Temasek is still ‘open’ to new investments in developed economies such as the US and Europe, including banks. But the bulk of Temasek’s investments now reside in Asia-Pacific, according to its latest annual report.

At end-March, 31 per cent of its portfolio exposure was in Singapore with a further 43 per cent in the rest of Asia excluding Japan. OECD economies such as the US accounted for 20 per cent of its portfolio exposure, but this was mainly in Australia. And the OECD component also includes Temasek’s exposure to Japan, which Ms Ho said is less than 5 per cent.

Indeed, a big part of Temasek’s exposure outside Singapore could be through its holdings in Singapore-based firms, since Temasek measures its investment exposure by underlying assets. Some of the Singapore-based companies in Temasek’s stable that have substantial assets in Australia are SingTel, CapitaLand, Singapore Power and CitySpring Infrastructure Trust.

‘We are comfortable to overweight Asia,’ Ms Ho told reporters yesterday. ‘We are also adding exposures to other growth regions like Latin America.’

Overall, ‘our portfolio exposure today is almost equally balanced between the more developed economies and the newer growth regions’, she added.

But she hinted that Temasek could sell some of its assets in Asia in the short term amid worrying signs of asset bubbles. Asked if Temasek was worried about bubbles forming in Asian assets such as real estate, she replied: ‘Yes, there are some signs of that.’

‘When we look at overweighting Asia, we are talking in terms of the longer term, not necessarily the short term.

‘We maintain the full flexibility to shift our stance,’ she added.

In the long run, however, Temasek believes China and India have ‘very deep potential’, she said. China is already Temasek’s second largest investment destination after Singapore, making up 20-25 per cent of its portfolio.

It has offices in Beijing and Shanghai, and may open more to expand its reach into China’s privately owned businesses, Ms Ho added.

In addition to making direct investments in China and India, Temasek is also likely to gain further exposure to both countries through the expansion of its portfolio companies such as SingTel, CapitaLand and Standard Chartered.

Asked what Temasek could have done better to prepare for the turmoil in financial markets last year, Ms Ho admitted that it had mistakenly believed that a big, advanced economy such as the US would be an unlikely source of a global financial crisis.

‘We felt that there could be a downturn, but we were looking at the triggers in the wrong places. We made the assumption that the developed economies, particularly the large economies, are well managed and that the regulatory risks are low. Hence, we did not pay that much attention.

‘Today, we pay a lot of attention to what is being said and done in the US, even when we don’t have large exposures to the US, because that can affect the rest of us. That would be one major change that has happened.’

Asked if public opinion influences Temasek’s investment decisions, Ms Ho said: ‘We are human beings. We do track some of this, but we try our level best not to let that drive our investment decisions.’

During the year to end-March, Temasek divested $16 billion worth of assets - including $11 billion from the sale of power- generating companies Tuas Power, Senoko Power and PowerSeraya. It made $9 billion in investments, including $3 billion in rights issues by its portfolio companies such as Standard Chartered, DBS Group, and CapitaLand.

‘Looking ahead, we believe the worst of the global meltdown risks are behind us,’ Ms Ho said, although she warned that the global recovery is likely to be sluggish.

Source : Business Times - 18 September 2009

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Far East offers $119m for Seletar site

Far East offers $119m for Seletar site

Huge tender sets firm apart from rivals; it pays 35% more than next bid

By Joyce Teo, Property Correspondent

THE first land tender exercise since the Government announced measures to calm the property market closed yesterday with a bullish top bid well out of sync with the other leading offers.

Far East Organization lodged a bid of $119.08 million for the mainly residential site at the corner of Yio Chu Kang Road and Seletar Road.

This was 35 per cent higher than the second bid and nearly 2-1/2 times higher than the lowest offer of $48.8 million.

The site is on the reserve list, which means that it was put up for tender only after a developer triggered its sale by committing to a minimum acceptable bid.

There were 12 bidders in all - more than expected - including high-profile developers such as Frasers Centrepoint, Sim Lian Land and Ho Bee Investment.

The Far East bid, which works out at $376.29 per sq ft (psf) of gross floor area, was ’surprisingly bullish’ as the site is in a sleepy area that is not near an MRT station, said property consultant Nicholas Mak, a Ngee Ann Polytechnic lecturer.

The 99-year leasehold site also has a height restriction of five storeys.

About 85 per cent of the site’s maximum gross floor area of 29,400 sq m is slated for residential use. The remaining space is for shops.

Apart from the Far East’s knock-out bid, the other leading candidates - mostly developers aiming to top up land banks - tendered offers in a narrow band.

Their bids were within earlier expectations of $250 psf to $300 psf per plot ratio, which would fit a final selling price of completed flats at $700 psf to $750 psf.

‘The second to the fifth bids came in quite close and are more reflective of the market,’ said a property consultant who declined to be named.

‘These developers would have taken into account the Government’s measures as the confirmed list will add to the supply in the market.’

The Government announced on Monday that it will reinstate the confirmed list of sale sites and remove the interest absorption scheme, among other smaller measures, to ‘temper the exuberance in the market and pre-empt any speculative bubble from forming’.

Under the confirmed list, sites are put out for sale according to a pre-determined schedule, regardless of developers’ interest.

An industry source said that developers will understandably become more cautious, particularly as the Government has yet to disclose the number of sites that will be on the confirmed list.

But Mr Mak said Far East is clearly banking on a continued rise in private home prices.

He estimated that the site can yield 220 to 240 housing units. These units, experts predict, will likely have to sell for around $850 psf to $900 psf.

The nearest condominium in the area, Seletar Springs, is going for around $500 psf, said Mr Mak. Caveats lodged in July and last month ranged from $487 psf to $563 psf.

Source : Straits Times - 18 September 2009

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Temasek invests up to 25% in China

Temasek invests up to 25% in China
The country is its second largest investment destination after S’pore
By Gabriel Chen

Temasek will continue to focus on Asia, with its earlier push into the region over the last five to seven years having paid off, said its chief executive Ho Ching. It is also adding exposures to other growth regions like Latin America. — ST PHOTO: BRYAN VAN DER BEEK

TEMASEK Holdings announced on Thursday that it has up to 25 per cent of its portfolio invested in China, making it the second largest investment destination after Singapore.

The state investment agency has direct exposure to the country through stakes in Chinese financial institutions such as China Construction Bank and Bank of China.

It also has indirect exposure to the powerful Chinese economy via investments in the likes of Standard Chartered Bank and CapitaLand, both of which have a growing presence there.

Temasek chief executive Ho Ching said yesterday that China remains important for Temasek: ‘If you look at their state-owned enterprises today, they’re profit-generating compared to the 1990s where they were not well run… Today, you see a very vibrant economy where at the state level, they understand what the market economy means and at the private sector, the private-owned enterprises have a lot of vitality… So if you look at China over the long run, we think the potential is there and very strong.’

As at March 31, Temasek has about 31 per cent of its portfolio in Singapore and about 27 per cent in North Asia, which includes China. Other investments include 22 per cent in nations within the Organisation for Economic Cooperation and Development (OECD), 9 per cent within Asean, 7 per cent in South Asia, and 4 per cent in Latin America and others.

Temasek is also bullish on India. Its investments there include stakes in ICICI Bank and telecom giant Bharti Airtel.

Ms Ho called Bharti Group founder Sunil Bharti Mittal a first-generation founder who has done very well to grow the business within India and expand overseas. ‘You see many of these types of entrepreneurs in India at every level in different states… India has passed the inflexion point - the Indians are very comfortable to be connected to the world, they’re no longer afraid… and they’re out to grow very strong companies.’

Temasek has been looking at Africa and Middle East for the last four years but has never found worthwhile opportunities as valuations were very high. Meanwhile, it will continue to focus on Asia, with its earlier push into the region over the last five to seven years having paid off, said Ms Ho.

Out of the $130 billion portfolio as of March 31, $50 billion represents investments made after March 2002 while $80 billion was made prior to that date.

But the later investments have given annualised returns of 19 per cent as of March 31 this year, compared with the 9 per cent from the earlier investments.

She is upbeat about Asia’s long-term future despite the flood of money in the region that threatens to create asset bubbles. ‘In the short term, there might be some risks… short-term bubbles, asset bubbles, and stuff like that, but if you look at the longer term and if we invest based on fundamental views, rather than just try to catch the momentum of the market, I think we would do well to focus on these two economies (India and China).’

But she acknowledged the possibility that Temasek could still trim some of its Asian assets due to recent market frothiness. ‘When we say we’re overweighting Asia, we’re talking about longer term, not necessarily about short term.’

Industry watchers say Temasek has got it right by devoting a growing part of its investing resources in Asia. ‘The fundamentals in Asia are far superior than any other regions,’ said CIMB-GK regional economist Song Seng Wun. ‘You don’t know whether the recovery in the United States and OECD is sustainable, as they could see subpar growth.’

But do not ignore Africa, said Mr Peter Douglas, council member for Asia Pacific for the Alternative Investment Management Association. ‘Africa is far more interesting as they’re desperately in need of capital and there are opportunities for the taking,’ he said.

Mr Hugh Young, chief executive of the Asia-Pacific arm of Aberdeen Asset Management, said his firm has more exposure to the likes of India than China as it prefers to invest in companies that are tried and tested. ‘Generally speaking, Chinese companies tend to be new in structures.’

Ms Ho said that while Temasek has increased its exposure to Asia since 2002, it is also adding exposures to other growth regions like Latin America.

Staff bonuses to take a big hit

ALL Temasek Holdings employees, including senior staff, will take a big hit to their annual bonuses in the wake of the investment firm’s falling portfolio value.

Their bonuses are linked to a process called wealth added - a way of measuring the increase in value of Temasek’s portfolio while taking into account the cost of capital.

Temasek said most of the incentives for senior management, which include bonuses, are deferred for three to 12 years, while its junior staff will take home relatively more in shorter-term compensation.

If wealth added is positive, employees get a wealth added bonus.

Key staff such as executive directors, senior managing directors and managing directors have half or more of their wealth added bonus deferred to future years. If Temasek’s wealth added turns negative in the future, then these deferred bonuses will be ‘clawed back’.

At yesterday’s briefing, Temasek chief executive Ho Ching said the wealth added for the last financial year ended March 31 was a negative $68 billion. The previous financial year that ended March 31 last year also had a negative wealth added of $6 billion. These negative numbers mean deductions from the employees’ bonus pool.

In January, Temasek announced a pay cut of up to 25 per cent across the board, with its senior staff taking the brunt. Even though Temasek’s portfolio recovered significantly as of end-July, there was no sign the pay would be reinstated.

Ms Ho added that ‘we’ve not talked about that yet’, while also addressing the problem of retaining talented staff amid tighter purse strings.

GABRIEL CHEN

Source : Straits Times - 18 September 2009

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