Rescue fund not panacea, says Paulson

Rescue fund not panacea, says Paulson

WASHINGTON: United States Treasury Secretary Henry Paulson yesterday rejected using the government’s financial rescue programme as a ‘panacea’ for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners and carmakers.
‘The rescue package was not intended to be an economic stimulus or an economic recovery package,’ Mr Paulson said in testimony to the House Financial Services Committee.

The US$700 billion (S$1 trillion) Troubled Asset Relief Programme (Tarp) was meant to stabilise financial markets and the flow of credit and ‘is not a panacea for all our economic difficulties’.

Representative Barney Frank, who heads the House panel, took issue with Mr Paulson’s remarks.

Democrats are pursuing legislation to deploy part of Tarp to prevent General Motors, Ford Motor and Chrysler from collapsing.

Federal Reserve chairman Ben Bernanke said at the hearing that using Tarp funds to buy stakes in banks is ‘critical for restoring confidence and promoting the return of credit markets to more normal functioning’.

Focusing the Tarp on infusing billions into banks to pump up their capital and bolster lending to customers was deemed a faster and more effective approach to stabilising the financial system than buying rotten assets from financial institutions, Mr Paulson said.

And as conditions worsen, it has become clear that the first instalment - US$350 billion - for buying toxic debts ’simply isn’t enough fire-power’.

BLOOMBERG, ASSOCIATED PRESS

Source : Straits Times - 19 Nov 2008

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Sands raises $3.2b for projects

Sands raises $3.2b for projects

By Lim Wei Chean

CASINO operator Las Vegas Sands announced yesterday that it had raised the additional US$2.1 billion (S$3.2 billion) required to complete its development commitments, including Singapore’s integrated resort in Marina Bay.
Its ability to do so also prompted its auditor PricewaterhouseCoopers (PwC) to remove a warning that there was ’substantial doubt’ the company could continue operating.

The fate of the Marina Bay integrated resort came into question after PwC, in a regulatory filing last week, said Las Vegas Sands could go bust.

The news had Singapore worried that the casino operator would not be able to complete the US$4.5 billion project as promised.

However, Sands’ top executives affirmed last week that the Marina Bay Sands IR remained its ‘top priority’.

To ensure that it could complete the Singapore development, it has suspended projects in Macau and Las Vegas. It also went on a drive to raise new capital through selling of stocks and warrants. The latest amount raised will be used as collateral for Sands to draw on its loan for the local project, among others.

On Monday , Senior Minister of State for Trade and Industry

S. Iswaran assured Parliament that the project was still going ahead, and that the authorities were working with the company to complete it.

He also stressed that there was no concession from the Government in allowing the number of gaming tables to be upped from 600 to 1,000. The restriction on the casino remains at 15,000 sq m.

Source : Straits Times - 19 Nov 2008

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PayPal to allow bank top-ups

PayPal to allow bank top-ups

Instead of using credit cards, consumers can transfer funds from their local bank accounts

By Tan Weizhen

PAYPAL, the giant United States-based Internet payment service, has launched a new feature which allows Singapore users to tap their local bank accounts.
In the past, PayPal users had to have a credit card linked to their accounts. Now, the payment service has arranged with local banks to allow Internet shoppers or sellers to transfer funds directly from their bank accounts into their PayPal accounts.

The new online service was launched yesterday here, and in Malaysia, the Philippines, Indonesia, Mexico and Hong Kong, making a total of 18 countries which have the service.

It works for those who still do not feel safe leaving their credit card details with PayPal - a large outfit with 65 million active accounts worldwide.

With this new service, Singaporeans will now have peace of mind using websites which predominantly use PayPal, such as www.eBay.com

The move comes none too soon as from Jan 15 next year, sellers on the auction site will not be able to list items for sale, unless they have PayPal or certain merchant credit card accounts. Cheques or money orders will no longer be accepted.

The new PayPal service will also open up a myriad of other online, US-based stores which use only US-issued credit cards or PayPal.

To use it, consumers need to log on at www.paypal.com.sg and select the ‘Top-up’ option. Instructions will follow on how to link the user’s bank account to his PayPal account, and how to transfer the money.

Sellers with premier PayPal accounts - that is, higher-tier accounts with credit cards linked to them - will incur fees of 3.4 per cent when they accept payments directly from topped-up accounts.

On the flipside, sellers have the assurance of cash, said Mr Mark Ho, 26, who runs an online business buying clothes from suppliers in India and China, and selling them to online customers in the United States and England.

‘I use PayPal regularly for my transactions, and a direct top-up will do away with the risk of fraudulent credit card transactions,’ he said.

Source : Straits Times - 19 Nov 2008

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Market-based pricing fairest for new Singapore HDB flats: Mah

Market-based pricing fairest for new Singapore HDB flats: Mah

By Aaron Low

WHEN pricing a new HDB flat, costs are not taken into account. Its price is based on what the unit is worth at the point of purchase.
Calling it a market-based approach, National Development Minister Mah Bow Tan said it was the fairest way of pricing new flats.

‘It reflects what the flat is worth at the point of purchase, which may have no relation to what it cost to build,’ he added.

Mr Mah gave this response in Parliament yesterday to Mr Liang Eng Hwa (Holland-Bukit Timah GRC), who had asked if the Government would consider pricing flats according to costs.

The minister also said that as the HDB did not take into account costs, its building programme suffered losses of $530 million a year over the last three years.

He said a typical four-room flat in Sengkang costs more than $300,000 to build. This is above the $200,000 to $260,000 price at which HDB sells it.

He noted that there were concerns over the high prices of premium flats like those in Pinnacle@Duxton, with prices ranging from $457,000 to $645,000.

But the prices reflected the value of the flats, which are located in Tanjong Pagar. For every unit on sale, seven people wanted to buy it, said Mr Mah.

It shows people are willing to pay for flats with good value, he added.

That the market is the main driver of prices of resale HDB flats was also highlighted by Senior Minister of State for National Development Grace Fu.

Madam Ho Geok Choo (West Coast GRC) had asked why the cash that a buyer pays on top of the official valuation of a flat - known in the industry as cash- over-valuation (COV) - is proportionately so high for two- and three-room flats. Latest figures show the median COV for a two-room flat is $16,000 and for a three-room unit, $19,000.

Ms Fu said COV is based on several factors and varies in different segments of the HDB market.

COV also depends on market conditions and how much each buyer is prepared to pay, she added, noting it could drop and enter negative territory.

However, it is often positive. For instance, the median COV for two-room flats range from $4,100 in Ang Mo Kio to $23,000 in Bukit Merah.

Source : Straits Times - 19 Nov 2008

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Singapore Govt won’t let good businesses go down

Singapore Govt won’t let good businesses go down

By Robin Chan

THE Government will soon enhance schemes to help cash-strapped businesses secure bank loans, Finance Minister Tharman Shanmugaratnam said in Parliament yesterday.
This is to avoid a scenario where good businesses are forced to close down owing to a lack of access to credit, he said.

Mr Tharman said the new measures will enhance existing loan schemes, and will mostly involve the Government sharing the risk of the loans with the banks.

Prime Minister Lee Hsien Loong had said on Sunday that with a protracted economic slowdown looming, some measures to help businesses and workers would be announced this week.

Yesterday, Mr Tharman told MPs that while total bank lending to non-bank customers has continued to grow in the 12 months to September, some credit tightening is ‘inevitable’ given the current economic downturn.

‘The Monetary Authority of Singapore’s assessment is that while there is no large scale credit crisis in Singapore, some segments of borrowers may face higher borrowing costs.’

With recent feedback showing that banks had stopped lending to some businesses, MP Lee Bee Wah (Ang Mo Kio GRC) asked: ‘Is there any channel that businesses can turn to should this really happen at the ground? Because we would not want to see good businesses being killed prematurely.’

In response, Mr Tharman said: ‘I quite agree with Ms Lee that we would not want to see good, viable businesses, which are the majority, having to cease business or scale down significantly… because of a lack of access to credit.

‘So the Government has been studying this carefully, taking in feedback, and will be making announcements soon on the enhancement of loan schemes which involve risk sharing with the banks so as to ensure that we maintain access to credit on the part of our companies.’

In terms of the interbank market, in which banks lend to each other, he told MPs that there has been ’sufficient liquidity in the system’.

‘We have not seen the market freeze up, as happened in some other global financial centres in recent months. Banks have been able to obtain Singapore dollar funding among themselves in an orderly manner.

‘We are unlikely to see this (tightening of bank credit) happen on the scale that is occurring in many other parts of the world, where banks are tightening credit not only because of increased risks that they perceive in a downturn but because they are short of capital.’

In fact, as at Sept 30, total bank lending to non-bank customers was still growing, he said.

Loans to the building and construction sector increased by about 50 per cent in the 12 months to Sept 30, compared with the same period last year.

He said small- and medium-sized enterprises have lifted their use of existing schemes significantly, citing that the amount of loans under both the local enterprise finance scheme and the loan insurance scheme grew by more than 55 per cent in the first eight months over the same period last year.

He added that it would be inappropriate for the Government to direct banks to lend or to get involved with to whom they should lend.

‘These are commercial decisions which banks themselves have to take, based on their assessment of the risks as well as the relationships they maintain with their customers… Our banks make these assessments carefully, and take into account both the short-term risks and their long-term interests in keeping their customers. We should continue to leave these decisions to them.’

Source : Straits Times - 19 Nov 2008

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Timely update for moneylending rules

Timely update for moneylending rules

By Lim Wei Chean

EVEN as Parliament approved a new Moneylenders Act yesterday, MP Ellen Lee wondered if the timing was right, given the current credit crunch as it could prompt more people to seek loans.
But Senior Minister of State (Law and Home Affairs) Ho Peng Kee gave his assurance during the debate that regulations were being tightened.

The new law eased some existing restrictions on advertising, methods of loan disbursements and collection of payments, as well as interest rates.

It also expands powers of the Registry of Moneylenders, giving it the ability to refuse, revoke or suspend a licence.

Borrowers also get greater protection. New rules require moneylenders to make terms and conditions known upfront, have loan contracts and explain these to borrowers in a language they understand.

They must also ask borrowers about other loans they have - a requirement which ensures borrowers do not over-extend themselves by taking multiple loans.

Penalties against harassment by loansharks now also extend to cover not just those involved in the act of harassment, but to those who instigate them to act.

Associate Professor Ho said the changes to the Act, which was enacted over 50 years ago, aim to place the industry on a firm and modern setting and ensure that moneylenders conduct themselves in a fair and transparent manner.

MPs Ellen Lee (Sembawang GRC) and Fatimah Lateef (Marine Parade GRC) supported the changes but asked about the impact on the industry.

They also wanted to know how the authorities would ensure moneylenders did not take advantage of borrowers, and how illegal moneylending or loanshark activities would be dealt with.

On Ms Lee’s concern that people might let their guard down and borrow blindly because of the credit crunch, Prof Ho said that in such times, licensed moneylenders would also be more risk-averse and cautious in lending.

And while advertising rules have been relaxed, this did not mean an easing-up on the industry. Restrictions do apply.

Moneylenders cannot place advertisements or material which are false or misleading, or which induce people to borrow for ‘inappropriate purposes’.

On harassment , he said moves like extending caning to those who instigate such acts are aimed at tackling the ‘ loansharking scourge’.

Source : Straits Times - 19 Nov 2008

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Govt to keep an eye on rising credit card debts

Govt to keep an eye on rising credit card debts

Growth of credit card loans - up 19 per cent - has been ‘fairly significant”. — ST FILE PHOTO

FEARS that the growth in consumer loans was fuelling a credit bubble were dismissed by Finance Minister Tharman Shanmugaratnam yesterday, but he said the situation will be monitored.
Mr Tharman told Parliament that consumer loans rose 10 per cent in September compared with the same month last year, largely in line with economic growth and the property boom. Total consumer loans amounted to about $112 billion as at Sept 30.

But he said the ‘fairly significant growth’ of credit card loans - up 19 per cent in September over last year - ’should be watched carefully’.

Credit card debts increased in absolute amount by $840 million from September last year to this September, which may be in line with economic growth and greater card use, but the Government believes a closer watch is warranted.

‘The Monetary Authority of Singapore (MAS) is monitoring this, but as of now there is no serious cause for concern and we will stay in touch with the banks,’ said Mr Tharman.

MP Seah Kian Peng (Marine Parade GRC) had earlier asked whether the growth of personal debt over the past 12 months warranted a review of the eligibility criteria for personal credit lines.

Mr Tharman responded by saying that the rules laid down by the MAS were stricter than in most other countries.

Credit card applicants must have an annual income of $30,000 and the maximum credit limit is capped at twice the user’s monthly income. Other unsecured credit loans are capped at twice a borrower’s monthly income.

Mr Tharman said: ‘We would be concerned if financial institutions are lending without regard for credit standards and risk assessment, and borrowers are taking credit without considering if they can afford it.’

But he added that the MAS rules and criteria used by financial institutions meant sound lending standards were in place in Singapore. Most of the growth of consumer loans was due to mortgages - no surprise ‘given the buoyant property market in 2006 and 2007′, he said.

Other forms of secured credit like car loans increased ‘marginally’ while share financing had fallen, he said. The total amount outstanding on credit and charge cards rose over the past year, but this was consistent with growth in previous years, he added. The rise also reflected the increased use of credit and charge cards.

ROBIN CHAN

Source : Straits Times - 19 Nov 2008

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Budget deficit: Triple the $800m estimated

Budget deficit: Triple the $800m estimated

Higher infrastructure costs, lower revenues among causes: Tharman

By Goh Chin Lian

THIS year’s Budget deficit is set to balloon to over $2.4 billion, triple the $800 million estimated by the Government in February.
Higher infrastructure costs, additional spending on measures to encourage more babies, and lower revenues collected were among the reasons Finance Minister Tharman Shanmugaratnam cited for the larger deficit.

He was replying to a question from Nominated MP Gautam Banerjee, who wanted to know whether estimates in the Budget presented to Parliament in February need to be revised in light of the global financial crisis.

The official forecast then: gross domestic product growth at 4 to 6 per cent, and inflation at 4 to 5 per cent.

These have since been revised to 3 per cent growth and above 6 per cent inflation.

Mr Tharman, however, gave the assurance that the larger-than-expected deficit would be no cause for worry.

‘We are not seeking to reduce this deficit, either by trimming government expenditures or raising additional revenues,’ he said, adding that such a deficit was appropriate ‘in the context of an economy that has entered a slowdown’.

The Government will be able to fund the deficit from the $6.45 billion Budget surplus in the last financial year ending March 31, ‘when we had unexpectedly higher revenues’, he said.

Economists interviewed by The Straits Times were unanimous that the deficit would not be a problem for Singapore.

Associate Professor Choy Keen Meng of Nanyang Technological University (NTU) noted that what was more important was keeping national budgets balanced over an entire business cycle, rather than in individual phases.

NTU economist Tan Khee Giap expected an even larger deficit next year as Singapore faces a slowdown in at least four major export markets: the United States, Europe, Japan and China.

As unemployment rises, he expected the Government to introduce measures to ease people’s pain.

Noting that the Government’s ability to finance the deficit this year and likely next year is a reminder not to take for granted the years of surplus, Dr Tan said:

‘After Singapore recovers in 2011, the Government must go back to its old prudent budgetary approach so as to prepare all of us for the next crisis or emergency.’

Source : Straits Times - 19 Nov 2008

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Petrol and diesel prices drop again

Petrol and diesel prices drop again

Latest cut is 14th since July; prices at their lowest in nearly 20 months

By Christopher Tan, Senior Correspondent

PRICE cuts at the pump have become a weekly affair.
Petrol stations, led by Caltex and Shell, yesterday slashed petrol and diesel rates by five and six cents a litre respectively, just a week after the last reduction.

The latest cut was the 14th consecutive drop since July, and has brought fuel prices to their lowest levels in nearly 20 months.

A litre of 92 octane petrol now costs $1.603 before discount, 95 octane is $1.636 and 98 octane is $1.71. The prices are nearly 30 per cent lower than July’s highs.

Shell V-Power and Caltex Platinum, so-called ultra-premium grades, are now $1.839 and $1.836 a litre respectively, before discount. A litre of diesel costs $1.373, also before discount.

Pump prices have been sliding on the back of sharp drops in crude oil prices. Oil is now hovering at merely a third of its record US$147 a barrel in July.

Demand for oil is down as the financial crisis has forced factories to curtail production, motorists to drive less or switch to smaller cars, and most significantly, it has crippled speculative trading in oil.

The fuel dipped below US$55 a barrel on Monday as news of Japan sliding into recession rattled business and consumer confidence further. But the raw material has since risen to US$58 a barrel.

Efforts by the Organisation of the Petroleum Exporting Countries (Opec) to cut output further are expected to prop up prices.

Oil industry consultant Ong Eng Tong however feels production cuts ‘are not so easy in practice to implement and police’.

But Mr Ng Weng Hoong, editor of energy news portal EnergyAsia.com, is sticking to his forecast that oil will hit US$200 a barrel by 2013, saying the current situation is a ’short-term weakness’.

Source : Straits Times - 19 Nov 2008

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Guidelines today on options before wielding the axe

Guidelines today on options before wielding the axe

MOM list will include flexible work plans and shorter work week

By Jermyn Chow

EMPLOYERS in Singapore must be socially responsible as the economic downturn bites harder, and resort to retrenchment only after all other options have been exhausted.
There are many other alternatives available before the dreaded axe is wielded, Acting Manpower Minister Gan Kim Yong said yesterday.

To this end, the Ministry of Manpower (MOM) will release a set of guidelines today that will list cost-cutting options available to companies that have excess staff in a time of slowing business.

The guidelines - which are not mandatory - include having flexible work arrangements, a shorter work week and sending employees for upgrading, Mr Gan said.

Though they have been in the works for some time, the move to publish the guidelines comes just days after labour chief Lim Swee Say took DBS Bank to task for failing to consult its staff union and for not exploring other cost-cutting measures before laying off 900 workers.

Speaking on the sidelines of a workplace safety and health event held at The Regent Hotel, Mr Gan said MOM wants to send a ‘very important message’ to employers that they ‘need to take a socially responsible approach’.

He said: ‘We want to help these companies and guide them through the process, so that they look at the whole challenge holistically, and so that they also understand that there are many other options available other than retrenchment.’

He added that in some cases, a company may have to lay off workers to survive, but if this happens, the ministry will work with unions and employers to give the affected people the opportunity to upgrade themselves and find new jobs as soon as possible.

‘We are not just waiting for workers to come to us…but will go down to the companies, design packages and programmes that are suitable for the companies to help their workers.’

Though the electronics and manufacturing sectors have been hit hard, others, like the services industry and the education and childcare sectors, are still hiring.

Mr Gan added: ‘The key is how we can help the retrenched workers transit to these new industries.’

He also gave this assurance to companies which approach the Government, unions or Singapore National Employers Federation for help: ‘We would be very happy to guide them and hold their hand through this process.’

When asked, Mr Gan said the ministry did not have a projection of how many workers would be retrenched during the current downturn, but said that whether it tops the record of 30,000 - in 1998, at the peak of the Asian financial crisis - depends on companies taking ‘responsible actions’.

On who will be hardest hit, he said that the impact will be felt most keenly at middle-management levels and in PMET (professional, managerial, executive and technical) occupations.

This, he explained, is partly a factor of success: The quality of jobs here over the last few years has improved, and many Singaporeans are now in PMET or middle-level management jobs today.

The Good
THIRTY-THREE heads of Singapore’s top construction firms, property developers and construction-related associations have pledged to cut the injuries in their worksites to zero.
To do this, they must establish safety management plans, disclose the number of workplace accidents and injuries on their websites or in publications, and spread the safety message from top management down to the last man on the line, among other measures.

No date was given on when worksites should be injury-free, though a target will be set in 2011, when they review how much they have achieved.

They signed the pledge at the inaugural Construction CEO Summit yesterday, witnessed by Acting Manpower Minister Gan Kim Yong and Workplace Safety and Health (WSH) Council deputy chairman Heng Chiang Gnee.

‘By signing the charter, these CEOs acknowledge that the management’s priorities go beyond traditional business concerns to include safety performance,’ said Mr Gan.

He said that while the Government continues to enforce workplace safety and health regulations, employers and companies had to take ownership.

The pledge comes as a growing number of workers die on the job.

Fifty-two people perished in workplaces in the first nine months of this year, up from 42 during the same period last year.

Construction sites and shipyards accounted for more than half of the deaths.

Construction company Bovis Lend Lease chairman John Spanswick lauded the move, saying that the journey to an injury-free workplace always starts with the man at the top.

‘CEOs need to behave differently before they can expect to make a positive change in their workplaces…they must intervene and take charge,’ said Mr Spanswick, who is also Britain’s health and safety commissioner.

A new set of guidelines on removing risks at every stage of the construction process - modelled after a similar law in Britain - was also unveiled at yesterday’s summit at The Regent Hotel.

But the Design for Safety advisory is not mandatory for companies.

Mr Gan said the 41-page dossier will help contractors ‘eliminate risks at the source’ by ‘factoring in risks and safety considerations at the planning stage’.

For instance, a designer should specify the use of less hazardous materials like water-based paints during construction or design safe access to rooftops to reduce the use of scaffolds and ladders.

On whether the new guidelines will push up the construction costs, property developer City Developments group general manager Chia Ngiang Hong said: ‘Even if there is any cost increase, it should be manageable and marginal.’

The Bad
A SHIPYARD worker drowned yesterday after falling off the scaffold of a vessel docked near the mouth of Sungei Pandan in the West Coast.
The body of Mr Suresh Ramakrishnan was recovered around 4.15pm, almost seven hours after he plummeted from a recently-christened barge.

His body was found without a life jacket and it is not clear if he had been wearing one.

Mr Ramakrishnan is the 10th reported death in the beleaguered shipyard and ship repair industry since June 8 this year. At least 20 other workers have been injured since then.

Mr Ramakrishnan, a Malaysian national in his late 30s, was working on scaffolding at the bow of a crane barge, the Jascon 25. The vessel was berthed in a shipyard near West Coast Park.

It is believed a guard rail on the scaffolding gave way around 9.30am, causing him to plummet into the water.

A safety harness was found on his body, though it is not clear if it had been attached to any form of support.

Workers at Kim Heng shipyard said two co-workers shouted for help after discovering Mr Ramakrishnan had plunged into the water. He is believed to have fallen from a height of about 8m.

Two other workers jumped into the river to search for him, but to no avail.

The police said they were notified at 10.10am - about 40 minutes after Mr Ramakrishnan fell into the water. The Singapore Civil Defence Force deployed divers from its Disaster Assistance and Rescue Team.

Two divers combed an area 20m in radius and 6m-deep before handing over the task to naval divers who later recovered the body.

Mr Ramakrishnan was found not far from where he fell, and without a life jacket.

According to the Workplace Safety and Health Regulations, employers are supposed to ensure that workers at risk of falling into the water are provided with ’suitable life jackets or other equipment’ to keep them afloat.

The Manpower Ministry has asked the shipyard to stop all work on the vessel pending investigations.

Last year, falls accounted for nearly one in every three worker deaths.

Last November, a 38-year-old man working on a container ship fell into the water off Tanjong Pagar after losing his balance. He was not wearing the mandatory safety harness. The coroner ruled the death an accident on Monday.

A ministry spokesman said yesterday that enforcement officers will carry out an islandwide safety blitz on shipyards and construction sites from January.

Additional reporting by Jermyn Chow

Source : Straits Times - 19 Nov 2008

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