Friday, September 7, 2007

Fed Injects US$31.25b Into Markets

Source : Channel NewsAsia, 06 September 2007

WASHINGTON : The Federal Reserve added 31.25 billion dollars in temporary reserves to the US money markets Thursday in three different operations, the latest move to keep credit markets from drying up.

The New York Fed added 7.0 billion dollars in 14-day repurchase agreements, 16 billion in seven-day repurchase agreements and 8.25 billion in one-day repos.

The Fed has injected some 200 billion dollars into the financial system since August 9 in a bid to boost credit flows which have seized up due to problems linked to the distressed US mortgage market.

The US central bank typically buys billions of dollars worth of securities from major banks, pumping extra cash into the banking system, which the banks are obliged to repurchase at a later date. - AFP /ls

CapitaLand Sets Up Second Property Development Fund Focused On China

Source : Channel NewsAsia, 06 September 2007

SINGAPORE: CapitaLand has set up its second property development fund focused on China.

The size of the CapitaRetail China Development Fund II is about US$600 million or S$900 million.

CapitaLand has a 45 per cent stake in the fund, with the remaining stakes held by insurance companies, pension funds and corporations.

The fund will invest in retail mall development projects in China.

The Singapore developer has also sponsored the CapitaRetail China Incubator Fund, which has a fund size of US$425 million or S$638 million, established to warehouse retail properties.

SGX-listed CapitaRetail China Trust has a right of first refusal to the assets in CapitaRetail China I, CapitaRetail China II and CapitaRetail China Incubator. - CNA/ac

More Businesses With Rise Of Heartland Malls: Industry Players

Source : Channel NewsAsia, 06 September 2007

The 19.3-ha AMK Hub is developed by the Singapore Labour Foundation, NTUC income and the NTUC supermarket chain.

SINGAPORE: The retail landscape in the Singapore heartlands is seeing a huge transformation with new malls springing up and some existing ones getting a new look.

IKEA, Giant and Courts opened with a big bang in Tampines late last year, marking the start of a major transformation of the retail scene in the heartlands.

New malls are also springing up across the island, with the AMK Hub among the latest.

Meanwhile, existing malls like Tampines Mall and Junction 8 are being re-outfitted to attract higher traffic.

Apart from adding buzz to the suburbs, some home-grown food and beverage players welcome the mushrooming and revamping of malls in Singapore's suburbs, saying they create business opportunities.

Mok Yip Peng, Managing Director of Soup Restaurant Group, said: "Our lifestyles are now influenced. People now prefer to live near shopping malls. My restaurant's brand and concept, as well as others, have been able to survive because of this trend.

"The revamping of malls is a great opportunity for us. Before, we used to open one or two restaurants a year. Now we're able to open three, four or five. So this is a development opportunity for us."

Property consultants say suburbs with at least 250,000 residents and easy access to public transportation are primed to attract retail investments.

But higher returns will go to those with better amenities and a more regional appeal.

Daisy Loor, Retail Director of Jones Lang LaSelle, said: "Offices, government buildings like libraries, or even government offices, private residential, tertiary institutions or even schools, are additional complementary traits that will also enhance the attractiveness of the mall, as the primary market may not be sufficient to allow you to pay that premium in rent."

Despite the spurt in these malls, market watchers believe there's room in the market for more.

"Each serves the needs of their respective population and their demographics because different towns have different profiles of residents. For example, in Tiong Bahru, you have residential - be it private or public - and even offices; whereas in Clementi, the residents could be more mature, but you have the advantage of the tertiary institutions," said Ms Loor.

However, both new and old mall operators are expected to keep upgrading and inventing as consultants warn that Singaporean shoppers are increasingly on a time crunch and keen to experience new retail concepts. - CNA/vm

US Housing Woes Deepen As Delinquencies, Foreclosures Rise

Source : Channel NewsAsia, 07 September 2007

WASHINGTON : US housing woes deepened in recent months as late payments and foreclosure proceedings rose, a mortgage industry survey showed Thursday.

The Mortgage Bankers Association, which represents banks and other firms in real estate finance, said delinquencies rose in the second quarter to 5.12 percent of loans on one-to-four-unit residential properties, up from 4.84 percent in the prior quarter.

The delinquency rate does not count another 1.4 percent of loans in the foreclosure process in the April-June period, also up from the first quarter.

Moreover, an additional 0.65 percent of loans entered the foreclosure process, the highest in the history of the survey.

The problems stem from the downturn in housing after a years-long bubble in which lenders and borrowers rushed to cash in on rising home prices.

In many cases, adjustable-rate mortgages (ARMs), designed to help borrowers buy properties they might not otherwise afford, are being reset to reflect higher market rates, raising the monthly payments for home buyers.

Some analysts say the problems are not yet over and that more than two million homeowners may face foreclosure in the near future.

"The housing adjustment is still on track and we don't expect any recovery in 2008: excess supply is very large and 2008 reset wave suggests further downward adjustment in housing prices," said Nathalie Dezeure, economist at Nataxis.

"Tightening in credit conditions won't help. The housing crisis will continue to weigh on (economic) growth in 2008. - AFP /ls

Premature To Comment On TMB Stake Negotiations: DBS

Source : The Business Times, September 7, 2007

DBS Group Holdings said yesterday it was premature to comment on reports that negotiations to raise its 16 per cent stake in Thailand's TMB Bank have failed.

Reuters reported on Wednesday, quoting TMB executives, that TMB had started talks on selling a stake to Dutch financial group ING after a breakdown in discussions with the Singapore bank over a US$1 billion rights issue.

'It is too premature to comment on the matter as the matter has yet to be finalised,' DBS said in a one-paragraph statement to the Singapore Exchange.

TMB had allowed ING to start due diligence on its financial position a week ago, the executives said.

TMB chairman Somchainuk Engtrakul declined to comment on ING's possible investment, but told Reuters he expected the bank to complete its capital raising effort in December.

Thailand's No. 5 lender had initially hoped to finalise its rights issue by June but delayed it because of ongoing negotiations with the Singapore bank.

The Thai lender hopes to raise new capital because of shrinking earnings and loan growth.

TMB has added about 20 billion baht (S$937.4 million) in provisions since late 2006, resulting in a 12.8 billion baht loss last year and an 18.1 billion baht loss in the first half of this year

Ratings Reviewed As Info Emerges

Source : The Business Times, September 7, 2007

Should or could downgrades for sub-prime debt have been made sooner? No, and here's why

Not just a patch-up job: Credit ratings are designed to be stable and objective, independent of sentiment, and most importantly, accurate, says Standard & Poor's

THE fallout over sub-prime mortgages has provoked a rush to judgment, and perhaps inevitably, some are now blaming the credit rating agencies for the recent market turbulence.

Not just a patch-up job: Credit ratings are designed to be stable and objective, independent of sentiment, and most importantly, accurate, says Standard & Poor's
But these charges reflect both a misunderstanding of the work carried out by rating agencies and a misrepresentation of the overall credit performance of securities backed by residential mortgages. Much of the recent commentary has missed several critical facts.

For example, our recent downgrades affected approximately 1 per cent of the US$565.3 billion in first-lien sub-prime residential mortgage-backed securities (RMBS) that Standard & Poor's rated between the fourth quarter of 2005 and the end of 2006. This represents only a small portion of the mortgage-backed securities market, which in turn represents a very small part of the world's credit markets. Additionally, our recent downgrades included no AAA-rated first lien sub-prime RMBS, and 85 per cent of the downgrades were rated BBB and below.

In other words, the overwhelming majority of our ratings actions have been directed at the weakest-quality sub-prime securities. Equally important, only 3 out of more than 14,000 sub-prime first mortgage securities rated by Standard & Poor's have defaulted since July 1.

The fundamental service provided by a rating agency such as S&P is to issue an independent opinion on the creditworthiness of securities, which speaks to the likelihood that investors will receive payments of interest and principal on time. Our ratings are based on the facts available to us at the time these opinions are made.

Ratings are designed to be stable; unlike market prices, they do not fluctuate on the basis of market sentiment. But they can and do change - either as a result of fundamental adjustments to the risk profile of a bond or the emergence of new information. Importantly, ratings are not recommendations of whether to buy, sell or hold a particular security; they simply provide a tool for investors to assess risk and differentiate credit quality.

Rating agencies often are criticised for being paid by the issuers of the bonds we rate. Investors value this approach because it enables us to make our ratings widely available for free - providing access to information that helps them make informed investment decisions. Today, investors and others can access, evaluate, and even criticise the hundreds of thousands of ratings that we make publicly available each year.

While rating agencies that use a subscription-only model do not typically make their ratings public, our approach promotes transparency of our criteria and our opinions.

Furthermore, this approach does not affect how we assign our ratings. Our ratings criteria are publicly available, non-negotiable and consistently applied to all of our ratings. In fact, we do not rate financial instruments that do not meet our criteria. As with newspapers and other media, we maintain a separation between the analytical and commercial activities associated with any given rating to ensure the independence of our opinions.

In addition, we specifically structure our analysts' compensation so that it is not dependent upon the fees related to the ratings they assign.

Most important, our reputation and integrity are our most valuable long-term assets, which would make it imprudent for S&P to provide anything other than fair, objective and independent ratings opinions. A report published by two Federal Reserve Board economists in December 2003 recognised this, saying there was 'no evidence' of rating agencies acting in the interests of issuers due to a conflict of interest. Indeed, the report concluded that 'rating agencies appear to be relatively responsive to reputation concerns and so protect the interests of investors'. Numerous other studies have come to similar conclusions.

As part of the ratings process, we do engage in open dialogue with bond issuers. This dialogue helps issuers understand our ratings criteria and helps us understand the securities they are structuring, so we can make informed opinions about creditworthiness. We strive to make sure issuers and investors are fully aware of how we determine creditworthiness and believe that all parties are better served when the process is open and transparent.

It's also important to understand the role of credit enhancement in our ratings. Credit enhancement helps offset potential losses by providing a security with excess cash flow. To achieve an investment-grade rating, therefore, we require a security with a relatively weaker pool of collateral to have a higher level of credit enhancement than a security backed by a stronger collateral pool.

These are the basics of the rigorous process that we employ whenever we issue a rating - regardless of the risk level and regardless of the type of investment vehicle.

Indeed, in the RMBS market, our process involves an analysis of individual loans, a simulation of the cash flow generated by the deal, a review of both originator and servicer operational procedures, and a surveillance process that enables us to monitor performance.

As we began to see evidence that conditions in the mortgage market were changing - including looser lending practices, the slowing housing market and the deterioration of sub-prime credit performance - and that some transactions might pose greater risk as a result, we continued to review our ratings. In April 2006, S&P informed the market that it was raising the level of credit support required for riskier sub-prime deals and tightening its surveillance standards for RMBS.

This evaluation has continued, with a focus on whether high levels of mortgage payment defaults by borrowers in some loan categories might have been isolated events or indicative of market trends. When these default levels persisted, we provided the market with additional guidance highlighting our more negative outlook, and since July 2007 we have downgraded roughly 500 first-lien sub-prime RMBS.

Should we have acted sooner? For those who would say 'yes', it is important to remember that unlike many others in the capital markets - who can take action on the basis of speculation - we base our opinions on documented facts. We are continually reviewing and refining our processes, and we make adjustments to our ratings when the facts demonstrate the need to make adjustments, and not a moment sooner.

And while we always strive to move with all deliberate speed, our highest priorities are the thoroughness of our processes and the integrity of our ratings. Our actions in the sub-prime market have been fully consistent with these priorities.

A rising rate of mortgage defaults has been an unfortunate byproduct of the downturn in the housing market, and while they are painful for all involved, they do remind us of something elementary about capital markets: risk is always involved. Indeed, risk can never be entirely removed from an investment. By offering products that feature a range of risk, issuers give investors the opportunity to achieve varying levels of return.

Helping investors assess that risk is part of the value that rating agencies like Standard & Poor's bring to the market.

To ensure that market participants continue to benefit from the insights that ratings provide, we will continue our efforts to promote a broader understanding of how rating agencies work and the role ratings play in promoting investor confidence and healthy capital markets.

Vickie Tillman is executive vice-president of credit market services for Standard & Poor's

US Economic And Foreign Policies Finely Poised

Source : The Business Times, September 7, 2007

The financial turmoil could be exacerbated if the Fed does not fulfil Wall St expectations

Blowback: As far as Iraq is concerned, there is certainly no guarantee that any decision made in Washington in the coming months - to start withdrawing the US troops from Iraq, to maintain the current level of American deployment there, or even to expand the US military presence - is going to bring stability to that country

IT might sound a bit dramatic. But make no mistake: US administration officials and lawmakers, led by President George W Bush and the chairman of the Federal Reserve Ben Bernanke, could end up making fateful decisions this month that could have huge impact on America's standing in the global economy and the international financial system as the two try to manage the two crises into which the US has fallen.

Blowback: As far as Iraq is concerned, there is certainly no guarantee that any decision made in Washington in the coming months - to start withdrawing the US troops from Iraq, to maintain the current level of American deployment there, or even to expand the US military presence - is going to bring stability to that country
In the economic arena, the continuing turmoil in the financial markets is going to force Mr Bernanke and his 19 colleagues on the Federal Open Market Committee (FOMC) to decide on their Sept 18 policy meeting whether to do what Wall Street is hoping, wishing and praying that they would do - cut interest rates. That decision could determine the long-term prospects of the US as well as that of the global economy.

And on the diplomatic stage, President Bush and members of Congress will have to respond to the US military and diplomatic officials who are directing America's policy in Iraq, and decide very soon whether or not to continue maintaining a US military presence in that country. That decision could effect American position in the Middle East and around the world for many years to come.

The credit crunch on Wall Street, which has followed the series of major mortgage defaults, is clearly going to continue for quite a while and is expected to affect the spending of American consumers, many of whom are also homeowners. It will also affect the behaviour of banks and hedge funds, some of which could be wiped out.

In that context, the question being asked in Washington and on Wall Street and Main Street is the following: What does Bernanke mean when he stressed the Fed should act 'as needed' in order to take care of the economy as opposed to bailing out irresponsible money managers? Hence it's not surprising that consumers and bankers and their representatives in Washington are waiting to see what will happen in the FOMC meeting on Sept 18 and whether the Fed will cut the federal funds rate which is currently at 5.25 per cent.

That 'waiting game' itself is going to produce daily speculation in financial reports, columns and websites which could have an effect on the decisions made on Wall Street - bad news on unemployment and the 'real economy' raises the chances that the FOMC would cut rates, producing exuberance among investors while good news makes it more likely that the Fed will not cut rates, depressing the same investors.

The conventional wisdom is that Mr Bernanke and the majority in the FOMC are probably inclined to cut rates as a way of countering the risk that the economy could be devastated if the housing market collapses as a result of credit crunch.

The financial turmoil could be exacerbated if the Fed does not fulfil the expectations on Wall Street - that it will indeed cut rates.

At the same time, some members of the FOMC will be reluctant to cut rates if they conclude, based on the available information, that the 'real economy' has not been affected in a major way by the credit crunch and are concerned that a decision to cut rates this month will only produce incentives for investors to take unwise risks that could create the conditions for new financial crises in future.

And there is even no guarantee that lower interest rates that would relieve the credit crunch will have a positive impact on the problems facing the housing market.

As far as Iraq is concerned, there is certainly no guarantee that any decision made in Washington in the coming months - to start withdrawing the US troops from Iraq, to maintain the current level of American deployment there, or even to expand the US military presence - is going to bring stability to that country.

If anything, the growing consensus in Washington is that whatever the United States does or doesn't do in Mesopotamia, the erosion in the power of the central government in Baghdad and the continuing process of ethnic cleansing by both Sunni and Shiite militias, and the massacres that occur on a regular basis in Baghdad and other mixed areas such as the Diyala Province, are creating a situation in which Iraq now resembles Bosnia and parts of the former Yugoslavia at the height of the fighting in the 1990s.

Each community is fleeing - the Kurds to the north, the Shiite south, and the Sunni to their patches - where its members are a majority and are able to defend themselves.

In a way, the recent 'surprise' trip by President Bush to Iraq, the first part of a choreographed strategy aimed to convince Congress and the American people that the 'surge' and the entire US strategy in Iraq is working, demonstrated that the American effort is now aimed at increasing the power of local Sunni tribes even if that weakens the ability of the government of Prime Minister Nouri Maliki and his Shiite-controlled government to extend its control over the Sunni areas.

This seems to suggest that President Bush and his advisers have given up on their grand designs of establishing the foundations of political and economic freedom for a unified Iraq and are instead adjusting to the reality of a slow partitioning of the country. The fierce fighting since the US invasion has led to more than a million Iraqi refugees fleeing into Syria, Jordan and other countries in the region.

Hence when General David Petraeus, the commander of the US forces in Iraq, briefs the White House and Congress about the progress achieved by the American military in Iraq, the expectation is that he will claim that the Maliki government has failed to co-opt the Sunni minority and to unify the country, but that American military presence is helping to prevent a total disintegration of Iraq and bloody civil war that could draw in other governments in the region into the fighting, including Turkey, Iran and Saudi Arabia.

The message from the Bush Administration to Democrats and a growing number of disaffected Republicans is that any sign that America is giving up on Iraq would not only produce a devastating explosion in Iraq and the entire Middle East, it would also bring about the collapse of America's position in this strategically critical region of the world.

Will the Democrats and the Republican lawmakers who are running for re-election next year buy into this message and agree to continue supporting a US military presence in Iraq? Will President Bush agree to take some steps to relieve the anxiety on Capitol Hill by agreeing to start withdrawing at least a small number of troops from Iraq? Is he also preparing for possible military action against Iran?

At the end of the day, the decision that the White House and Congress are going to make in Iraq will have a major effect on the US and global economies and could also worsen the anxiety in Wall Street and make it even more difficult for Mr Bernanke to make his critical decision.

Riskier Trades Suffer On Weaker US Data

Source : The Business Times, September 7, 2007

THE still-fragile state of financial market nerves was underlined once again in overnight trading, when Wall Street tumbled anew following the release of weakerthan-expected US housing and jobs numbers. Traders reported that Wall Street's key stock indices suffered a one per cent relapse - and riskier currency trades were again curbed - after news that pending US home sales for July had tumbled 12.2 per cent month on month.

This was its worst showing in six years compared with forecasts centred on a more modest 2 per cent dip. And to make the situation potentially worse, the US private-sector ADP jobs report for August released on Wednesday evening - ahead of this evening's official number from the US Bureau of Labor Statistics (BLS) - gave little to cheer about either.

The ADP's 38,000 increase compared poorly with more optimistic forecasts closer to 80,000-100,000 which we have seen - and were seen by some as a warning that forecasts for a BLS outcome of between 115,000 and 125,000 jobs later tonight might also be a little high.

The currency response was quick to follow - favouring in particular safe-refuge favourites but punishing the New Zealand dollar most painfully as far as the carry trade was concerned. Closer to home, most Asian units - with the notable exceptions of the Chinese and Indian currencies - seemed more inclined to tread water as risk aversion moves resurfaced to limit gains.

The US dollar was pressed down to a fresh post-depeg low of 7.5372 yuan yesterday before ending 0.2 per cent worse off from Wednesday at 7.5384 yuan, and also closed 0.3 per cent worse off at 40.79 rupees. At home, the greenback finished a shade worse off at S$1.5257. However, traders did report a noticeable pull-back on the currency side by the Asian close - ahead of the all-important US jobs stats for August later this evening.

Down Under, the New Zealand dollar managed to trim most of its chunky losses by the Asian close. The Australian dollar also recovered strongly over the course of the day after news that a stronger-than-expected 32,000 new jobs had been created at home for August - at least a third more than most of the forecasts we have sighted. Against morning lows of 68.37 US cents and 78.55 yen, the New Zealand dollar eventually fought its way back to end the day just a touch worse off from Wednesday - at 69.31 US cents and half a per cent weaker at 80 yen. The Australian dollar closed an even more impressive 0.7 per cent stronger at 82.71 US cents and 0.6 per cent better off at S$1.2622.

Aside from such carry-trade favourites Down Under, others which benefited most yesterday were safe-refuge European units. The unwinding of cross trades, meanwhile, pressed the US unit down to a morning low of 114.79 yen before it recovered to end the day with a net overnight loss of 0.4 per cent at 115.42 yen.

Further afield, it eventually closed the Asian session 0.4 and 0.7 per cent worse off at 115.42 yen and 1.2045 Swiss francs as well - while the euro and British pound scored gains of 0.5 and 0.8 per cent to US$1.3655 and US$2.0250 respectively.

Scheme To Expose Misconduct In Law Firms Mooted

Source : The Straits Times, Sep 7, 2007

Lawyers supportive of Law Society president's idea to help firms deal with such conduct more effectively

By K.C. Vijayan, Law Correspondent

LAW Society president Philip Jeyaretnam has called for a whistle-blowing scheme to be put in place for law firms, in the same way public-listed firms have one to nip corporate scandals in the bud.

His remarks were made in the September issue of the Law Gazette, amid his discussions on the new rules that protect lawyers from becoming party to money-laundering activities by dubious clients who park huge sums with them.

Mr Jeyaretnam said law firms too should have a policy in place 'so that associates know that there is someone to talk to if a partner engages in professional misconduct'.

He cited the hypothetical example of a lawyer who withholds a document that could have been subject to inspection by the opposing party.

This act is tantamount to misconduct and, if an associate knew about it, he may need to raise it to someone.

There are some who might baulk at the prospect of telling on others, Mr Jeyaretnam noted.

But he argued that promoting a culture of whistle-blowing could be the only way of detecting and then 'eradicating harmful conduct that takes place in secrecy'.

He said that, among other things, whistle-blowing was already a legal duty here in relation to corruption, as part of the larger fight against crime.

At public-listed firms, whistle-blowing schemes enable subordinates to report on 'erring superiors without fear of retaliation', he said.

Since the Enron scandal of 2001 which involved losses of billions, whistle-blowing has became an accepted way to expose illegal or unethical conduct.

It is understood that the Association of Banks of Singapore, for instance, has maintained a code of practice since 2005 that, among other things, provides for how whistle-blowing can be done.

Major banks here are also believed to have internal whistle-blowing policy guidelines that encourage staff to raise serious concerns rather than sweep them under the carpet or wait till someone blows the proverbial whistle outside the bank's walls.

Lawyers from major law firms welcomed Mr Jeyaretnam's suggestion, but cautioned that the mechanics had to be carefully thought through and discussed by the legal fraternity.

Describing the idea as 'timely', Mr Nish Shetty from the WongPartnership said that, given that misconduct is becoming increasingly difficult to detect nowadays, there is a need to 'incentivise' people who have information by removing the fear of reprisals against them.

Senior Counsel Jimmy Yim from Drew & Napier said he was all for the scheme but for two concerns:

'What happens if the whistle is wrongly blown?

'Secondly, it should not promote a culture of gossip and snitching within the law firms,' he said.

Lawyer Amolat Singh is wary about its feasibility because, with the legal fraternity being relatively small, the prospect of the whistle-blower being identified is real and that person would find it difficult to remain in practice.

Law firm Harry Elias Partnership (HEP) practises an 'open-door policy'.

HEP partner Philip Fong said: 'To this extent, if an associate here is unsure about a partner's actions, they know they can discuss this with the other senior partners.'

Mail To The Wrong Place : Tiong Bahru's Block 78 Leaves Many Confused

Source : The New Paper, September 07, 2007


HE raves about the crispy kaya toast and thick coffee served at the kopitiam on the ground floor.


But he rages about mail getting lost, groceries delivered at the wrong place and visitors knocking on wrong doors.

Mr Tan Ah Bah, 72, who has lived in Tiong Bahru's Block 78 for 40years, has good reason to be angry.

His block, a U-shaped 70-year-old art-decor pre-war development, has three street names attached to it.

And depending on which side of the block your flat is located, your address will be different.

Flats in the centre of the block have the address 78 Moh Guan Terrace.

Those on the west side have the address 78 Yong Siak Street, while those on the east have the address 78Guan Chuan Street.

Worse, flat numbers are similar.

All three roads are connected to the block which was designed and built by the British in 1937.

It has four storeys, 166 units of two, three and four-room flats, and 10 shops on the ground floor.

According to company director Mr Jackie Wong, 70, who was born in the block in 1937 and is still living there, the street names have been there for as long as he can remember.



Mr Wong recalled an incident when a stranger turned up at his door, asking his 'son' to report to the army camp for 'duty'.

The 'son' turned out to be his neighbour on the other side of the block.

Mr Wong felt that a repositioning of street signs could solve the confusion.

But renaming the block as 78A and 78B would mean residents 'have to change ICs', he said.

So why cause such confusion in the first place?


Blame it on the British who are known for their quirks, said Dr Kevin Tan, president of The Singapore Heritage Society.

Dr Tan said: 'In the small streets of England, it won't be surprising to see that roads and numbers don't always correspond. The British are fairly comfortable with a bit of quirkiness.'

Also, the roads could have been meant for use as service roads without the consideration of having a block, Dr Tan added.

Thus, when the block was built, 'planners may not have conceived of an exercise for the block to have one street name, such as Moh Guan Circle'.

But housewife Madam Annie Zhao, 58, is more concerned about the rubbish than the confusing addresses.

She said: 'Nowadays a lot of owners rent their flats out to foreign workers.

'There's always cigarette butts on the staircase.'

In 2003, Block 78 was gazetted by the URA as a conservation area.

Spend Wisely, For A Happy Retirement

Source : TODAY, Friday, September 7, 2007

SINCE the Government announced initiatives to help Singaporeans retire comfortably, discussions have centred on whether these measures would encourage Singaporeans to save more.

But will increased savings guarantee a comfortable retirement, especially for lower-income Singaporeans?

The proposed changes come at a time when their salaries may not be able to keep pace with the rising cost of living. The challenge for this group lies in managing their expenditure.

The first step is to learn to differentiate between the two types of spending.

One type generates returns or allows consumers to improve the quality of their lives by increasing their future earning capacity.

One such example is spending on education. The additional skills learned may increase one’s earning capacity. Such expenditure is strongly encouraged, as long as consumers are sure that the anticipated return is worth the investment.

The other category of spending does not generate returns, but may still be ecessary, such as setting up a new home.

Consumers need to distinguish between their needs and wants, and to try to reduce expenditure on the latter.

This will be a challenge for consumers who find it hard to curb their spending as they are reluctant to forego immediate gratification for future financial security.

They may take loans for the wrong reasons and be stuck trying to finance their unsustainable spending habits. A loan can help an individual and is a positive affair when conducted responsibly.

How do we maximise the potential of spending or borrowing, to help our future finances and retirement plans?

There is a limit to what the Government can do in this area. While the Government can implement measures to make it compulsory for Singaporeans to save, it has much
less control over spending and borrowing, which are matters of personal choice and freedom.

This is where the finance industry can help by adopting lending practices to help Singaporeans borrow responsibly. The industry should increase product transparency and assess credit rigorously.

Product transparency has been a bugbear for loan applicants, especially as financial products become increasingly complex. Industry players need to realise that ensuring product transparency is in their best interests as it builds trust and helps reduce the number of loan defaults.

Customers can do their part and demand that industry players adopt fair and transparent processes, such as explaining key points in detail using plain English.

Industry players should also highlight all fees and charges applicable and help applicants consider their ability to repay the loan without incurring additional charges.

Rigorous credit checks are more important than ever in the light of recent market liberalisations.

Industry players must ensure that credit assessment standards are not compromised in their bid to gain market share.

Consumers should view these procedures not as barriers, but as objective assurances that they can repay their loans.

The procedures also help ensure individuals do not end up with bad debts which will affect their future ability to borrow to finance other important needs for different stages of life.

They need to realise that loans are an important part of life and are in place to help, not hurt. The procedures help reduce loan defaults and keep interest rates lower than might otherwise be the case.

From GE Money’s experience in providing for those with annual income levels from $20,000 to $30,000, conducting a comprehensive interview and customer-focused processes have allowed us to give appropriate loan products.

Still, while the Government and industry players can help encourage Singaporeans to save, spend and borrow prudently, the onus ultimately rests on consumers to learn to be more financially savvy and adopt disciplined financial habits so that a comfortable retirement is within their reach.

The author is the chief executive officer and president of GE Money Singapore and the chief marketing officer of GE Money Asia.

CapitaLand Has Secured $900m In Capital For Its Private Fund Focused On Chinese Real Estate.

Source : TODAY, Friday, September 7, 2007

CapitaLand has subscribed for $405 million of the units in CapitaRetail China Development Fund II, while the remainder was taken up by insurance companies, pension funds and corporations, it said.

The unlisted fund will invest in retail mall development projects in China.— AGENCIES

Guocoland Purchase Sophia Court Condominium

Source : TODAY, Friday, September 7, 2007

Guocoland has completed the purchase of Sophia Court condominium through a $230 million collective sale.

The site, near the Orchard Road shopping belt, will be developed into Sophia Residence, which will have a gross floor area of 32,413 sq m.

The firm did not specify when the new project would be completed.

The purchase will be financed with internal resources, bank funding and part of the proceeds from Guocoland’s recent rights issue.

DBS Return License To Indonesia As "Part Of Business Realignment"

Source : TODAY, Friday, September 7, 2007

DBS Group said its Indonesian securities arm, PT DBS Vickers Securities Indonesia, has returned its asset management license to the Indonesian authorities as “part of its business realignment”.

It said: “PT DBS Vickers Securities Indonesia will focus on providing a comprehensive blend of retail and institutional broking services in Indonesia”. This follows DBS’ announcement on Monday that the Ministry of Finance of Indonesia had withdrawn its Indonesian subsidiary’s primary dealership license, citing the bank’s inability to fulfil licensing requirements in spite of three reminder letters in the past year.

DBS had said then that it would “undertake rectification as necessary” and that it believed it would be reinstated as a primary dealer “over time”.

A Burden On The Poor

Source : TODAY, Friday, September 7, 2007

Annuities: The Rich Should Contribute More Premium

Letter from CHONG LEE MING

IN THE commentary, “Annuities: It’s risk sharing among all” (Aug 31) and the letter, “A lifeline for the less fortunate” (Sept 4), Mr Christopher Tan and Mr Teo Cheng Peow noted that the proposed annuity scheme could benefit the less fortunate. But I wonder if the scheme can achieve what they had hoped for.

I believe that the well-to-do are likely to live longer as they can afford better healthcare, are likely to be better educated. Thus, they are more likely to benefit from the scheme. If every Singaporean is required to contribute the same amount to the scheme, the burden would be much greater on the poor.

If the amount required to be set aside is $5,000, those with half a million dollars in their Central Provident Fund (CPF) balance would probably be sacrificing the cost of a new plasma TV. But to a person with only $50,000 in his CPF balance at retirement, that $5,000 could be equivalent to one or two years’ worth of meals in his retirement years.

I suggest that the contribution amount for the scheme be a fixed percentage of one’s CPF balance at retirement (including those used for housing and other investments), subject to a minimum and maximum amount.

For the rich who contribute more, they will get a higher payout in due course. But if they do not live long enough to fully benefit from the scheme, it is a way for them to contribute to society. For those whose CPF balance is lower than the amount needed to contribute to the minimum amount, the Government might consider topping up the difference.

In this regard, the scheme would better achieve its objective of helping those who need help the most.

JTC Launches Tuas Industrial Site For Sale After $5.9m Bid

Source : The Business Times, 07 September 2007

ON the back of good demand for industrial space, JTC Corporation yesterday launched a 235,400 sq ft land parcel at Pioneer Road/Tuas Avenue 11 for sale, and market watchers estimate that the site could fetch as much as $7.6 million - or $23 per square foot per plot ratio (psf ppr).

JTC launched the site after it received a bid of $5.9 million on July 18. Observers, however, said that the site could fetch more than the initial bid.

Savills Singapore's director of industrial business space Dominic Peters pointed out that in February, an industrial site at Tuas Bay Drive/Tuas South Avenue 3 was awarded for $23 psf ppr. That site had a 60-year lease.

While the lease for the site launched yesterday is for 30 years, Mr Peters expects the site to fetch $20-23 psf ppr due to good demand. The price translates to between $6.6 million and $7.6 million.

'We anticipate very strong demand from end-users,' he said. Companies in certain sectors - such as oil & gas and construction - are doing well at the moment and could be interested in the site, he said.

The site has a 1.4 plot ratio, giving it a gross floor area of 329,600 sq ft. It is zoned for 'Business 2' use, which means it can be used for clean, light and general industrial purposes, and warehousing.

The land parcel was on the Reserve List before its sale was triggered by the $5.9 million bid. Now, it is being launched under the Confirmed List.

The government had previously announced that it will launch two industrial sites under the Confirmed List and seven industrial sites under the Reserve List in the second half of 2007 under its Government Land Sales programme.

The tender for the site will close at 11 am on Oct 18.

Asian Firms Not Facing Credit Crunch: Moody's

Source : The Business Times, Thu, Sep 06, 2007

ASIAN companies do not face liquidity issues even as the freeze in the international credit markets continues because, traditionally, they rely more heavily on bank loans, said Moody's Investors Service yesterday.

'Crucially, Asia's banks are generally showing no reluctance to lend to corporates in the current environment,' said Brian Cahill, Moody's managing director for corporate finance in the Asia-Pacific.

If Asian corporates cannot go to the bond markets, they go to the banks, whereas in the West, for corporates, the bond market is one of their main funding routes along with the issuing of commercial papers, added Clara Lau, Moody's chief credit officer.

It also means that Asian banks have been quick to use the opportunity to charge more for their loans, said Ms Lau.

She said that banks had been lending very cheaply for the last two years because they had been flush with cash.

'Certainly, banks (now) have become more cautious in terms of lending and taken this opportunity to reprice loans for lower grade companies,' said Ms Lau.

A report co-authored by the two found no evidence so far of a reduction in the ability or willingness of Asian banks to lend to companies.

'As the sub-prime exposures of Asian banks are low relative to earnings and capital, their capacity to lend has not been really affected.

'Furthermore - except in Australia - Asia's banks are amply deposit-funded rather than capital market-funded, and so are less exposed to the wholesale funding turmoil,' the report said.

It also found that while significant volatility has occurred in credit markets recently, no indications have emerged of rated corporates in the Asia-Pacific, excluding Japan, experiencing systemic problems in getting funding in the wake of the US sub-prime crisis.

'Furthermore, Moody's has reviewed its rated portfolio for the region and concluded that, broadly, it faces no imminent challenges if the cross-border bond market remains, as it is now, essentially shut,' said the report.

The reason they gave was that, traditionally, corporates in this region relied more heavily on the banking system for loans than their counterparts did in other parts of the world.

As the same time, some large domestic bond markets, such as those in South Korea, continue to function normally as a funding source for domestic companies.

Another factor is that high-yield issuers - which are most exposed to any flight-to-quality risk in Asia - only recently became active again in the region and many had taken advantage of, until recently, easy lending conditions to pre-fund their capital expenditure and financing needs.

'As such, many do not face any refinancing risk in coming months,' the report said.

Ms Lau said that in the last two years, because of the liquidity situation, high yield issuers or lower quality corporates have been tapping the bond markets.

Last year and in 2005, some 60 per cent of the corporates rated by Moody's were high yield or non-investment grade.

However, these corporates are considered very bankable credits in their home countries, and, as a result, have committed bank facilities, which they can access, if needed.

Still, Moody's does see some risk for a small number of companies - 10 - with low ratings, weak liquidity and operating performances, as well as imminent refinancing needs.

Ms Lau declined to name the 10 companies. But crucially, some of these 10 are expected to have ready access to banks.

Don't Stand Guarantor Unless You Are Prepared To Repay Entire Loan If Borrower Defaults

Source : The Straits Times, Forum, Sep 7, 2007

MS ANG KAIHUI's letter to The Straits Times Forum page, 'How can I withdraw as a guarantor?' (Sept 5), again raises the issue of the duties of a guarantor and the extent of his liability.
A guarantor is a person who pledges that a loan or other type of debt will be paid.

Usually, if the borrower has taken a loan from a bank or finance company, his guarantor does this by agreeing to pay the debt himself if the borrow defaults.

A parent who co-signs a student loan for a child could be considered a guarantor - should the child default on his loan, the parent would be held liable for the remainder of what is owed.

Supplying a guarantor does not necessarily mean that a loan application will go through, because the guarantor is considered part of the loan application and his credit will be evaluated along with the main applicant's.

If the lending institution feels that the guarantor cannot make good on the debt, it will not approve the loan.

Before agreeing to serve as a guarantor, it is vital to assess the primary borrower's credit, job history, income and expenses to determine whether or not he is capable of repaying the loan.

Be prepared to repay the entire loan if the primary borrower defaults. Do not agree to offer a guarantee if you are unable to do so.

Find out if the amount being borrowed is fixed and, if so, at what amount.

Make certain that you have a copy of the loan contract and that you have read and fully understood it before signing, because there is no way to back out of a guarantee.

A guarantee agreement can be made not only during a monetary loan, but also in a real estate transaction. This tends to involve a third party who will step in and make the necessary payments if the main mortgagee or tenant cannot keep up. The third party is called the guarantor or the co-signer.

A person with a poor credit rating may need to provide a guarantee agreement to buy a car, fridge or house. Often they use another person with a good credit rating, usually a parent, friend or sibling, as co-signer.

If the borrower cannot meet his financial obligation, it transfers to the guarantor. So if the person does not make the monthly repayments, the parent, friend or sibling must make them.

Thus, it is unwise to enter into a guarantee agreement if the person you are guaranteeing will be unlikely to meet his financial obligations.

The term guarantee agreement may also be used in the context of people being offered a guarantee of satisfaction upon the purchase of goods or services.

Such a guarantee can be very difficult for the consumer. For example, products on TV 'infomercials' that offer a money-back guarantee may have a guarantee agreement that is not easy to enforce.

This is because production company may be very small, or because the guarantee is valid for a limited time only.

Having said that, most big companies that offer a money-back guarantee for things purchased from TV channels will honour their obligations.

However, a guarantee agreement of this type is usually not a signed agreement.

Therefore it may be harder to enforce, or it may prove costly to return purchases that do not fulfil their promises.

Heng Cho Choon

Integrated Approach To Land Use And Transport

Source : The Straits Times, Forum, Sep 7, 2007

I REFER to the letter, 'Mini-CBDs in satellite towns to ease traffic jams' (ST, Sept 3), by Mr Tan Thiam Soon, who suggested creating satellite business districts to alleviate traffic congestion in the city area.

The idea of providing a network of commercial centres outside the Central Business District (CBD) was first outlined in the 1991 Concept Plan. The development of such a network of regional, sub-regional and fringe centres helps to reduce congestion in the city centre by bringing jobs closer to homes and provides alternative locations for businesses that do not require a city centre location for their operations.

Nevertheless, we also need to provide office space within the CBD to support the growth of the financial and business services sectors that require a city centre location. This will further strengthen our position as an international financial centre.

Since the 1991 Concept Plan, we have begun developing other commercial centres outside the CBD. The Tampines Regional Centre is a vibrant office and retail-cum-entertainment hub, where many financial institutions have located their backroom and support operations.

Fringe Centres, such as the one at Novena, are bustling with a variety of commercial and residential developments. One-North at Buona Vista, one of the planned sub-regional centres, is also shaping up well as a 'commercial, and R&D hub' integrated with social and recreational amenities.

We plan to open up another Regional Centre in Jurong East and a Sub-Regional Centre in Paya Lebar to serve the western and eastern parts of Singapore. There is also potential for further growth at Woodlands Regional Centre.

Bringing more jobs and activities through a network of commercial centres outside the CBD will ensure easy access to goods and services and also minimise the need to travel. These commercial centres are often integrated with MRT stations and bus interchanges wherever possible.

We also plan for the distribution of other employment centres such as industrial estates and business parks throughout the island.

Transport planning is thus an integral part of land use planning and it is essential to ensure convenient access to goods and services and to minimise the need for travel.

Much focus has also been given to providing good public transport. Extensive rail networks have been planned to serve high-population areas. We have also planned for higher-density developments around rail transit stations to give convenient access without creating excessive congestion.

Lim Eng Hwee
Director (Physical Planning)
Urban Redevelopment Authority

Fengshui Defence Helps Couple Avoid Property Deal Tax

Source : The Business Times, Sep 7, 2007

A COUPLE who were taxed on the profits they made on a property deal appealed - and have won their case against the taxman.

Their argument in this unusual case: they sold the apartment because of its bad fengshui.

Although Singapore does not have capital gains tax, which is charged on profits from the sale of assets, many people may not know that the Inland Revenue Authority of Singapore (Iras) can tax individuals it deems to have traded in property.

The couple found themselves in that situation.

But they appealed to the High Court, and Justice Judith Prakash accepted their contention that the 1993 sale of the Waterside condo was not a trade - they had been compelled to sell it.

It is believed to be the first time Singapore courts have accepted bad fengshui as a legitimate reason for a property sale in a tax case.

But Justice Prakash did not accept the couple's reason for the sale of another property - a bungalow in Watten Close - which they said they sold after five months to avoid a lawsuit.

Under the Income Tax Act, profits made from property trades are taxable. The Act does not, however, define 'trade', but the courts consider a list of factors when assessing whether a transaction was a trade.

The criteria include the motive of the taxpayer, the length of ownership, reasons for the sale and whether the taxpayer has had many such transactions to his name.

In this current case, the couple bought eight properties and sold seven between June 1988 and March 1996.

In 1999 and 2000, Iras charged the couple tax on the Waterside apartment, the Watten Close house and two houses in Jalan Sejarah and Chatsworth Avenue.

They had made profits of over $1 million; the tax on that was about $250,000.

The couple asked Iras to review the case but this was rejected in July 2004. They next appealed to the Income Tax Board of Review on all except the Chatsworth Avenue purchase.

In December 2006, the board allowed their appeal on the Jalan Sejarah house but dismissed those on the Waterside unit and Watten Close house.

The couple then took the case to the High Court, which heard the case in May.

Their lawyer, Mr Nicholas Lazarus argued the couple had bought the properties as homes and sold them for non-commercial reasons.

A fengshui master had told them that the Waterside unit was bad for their careers and for the health of their unborn child.

As for the Watten Close house, the couple said they had a dispute with their renovation contractor, who threatened to sue them for breach of contract, so they hurriedly sold the house.

In her written judgment published yesterday, Justice Prakash said it was clear the couple were believers in fengshui, and noted that their case was supported by the fact that the money from the Waterside flat had gone into buying the Watten Close house.

But she rejected their explanation for the sale of that house as improbable.

Mr Lazarus, who has not decided whether his clients will appeal, said that this case was a timely reminder in the heat of the current property market:

'The law has always been there, but newcomers in the market may be happily buying and selling without being aware of it.'

HPL: Horizon Towers Sales Committee Tried To Scupper Deal

Source : The Business Times, September 7, 2007

(SINGAPORE) Several members of the Horizon Towers sales committee tried to scupper the en bloc sale by rallying the rest of the majority sellers into going back on their collective agreement, according to an affidavit filed in the High Court yesterday by the buyers.

The claim is one of several in the late-night filing made yesterday by Hotel Properties Ltd (HPL), Morgan Stanley Real Estate-managed funds and Qatar Investment Authority.

HPL and its partners had in February signed a deal with 84 per cent of the owners of Horizon Towers to buy the Leonie Hill property en bloc for $500 million. The sale fell through last month when the Strata Titles Board (STB) refused to grant a collective sale order, saying that Horizon Towers had filed a defective application.

HPL and its partners, through their lawyers Allen & Gledhill, are suing the majority sellers for failing to file a proper application.

In its affidavit - a copy of which was obtained by BT - HPL and its partners alleged that some members of the Horizon Towers sales committee tried to defeat the collective sale by encouraging the other majority sellers to go back on the agreement.

The affidavit said an anonymous circular was sent to all residents of Horizon Towers in late April. The circular said: 'If enough like-minded owners rescind the agreement and the majority falls below 80 per cent, the application to the STB can be repealed . . . With cohesive cooperation, this movement can be successful.'

The circular included a blank 'Letter to rescind participation in the collective sale agreement of Horizon Towers' and urged owners to send their replies to two mailboxes - which the affidavit claims belong to two current members of the sales committee.

The affidavit also quoted from other anonymous flyers sent to the residents of Horizon Towers, which said the sellers were being paid a 'paltry sum' for their development.

HPL and its partners charge that some of the sellers want to back out of the deal because they were unhappy with the price offered for the development.

There had been several media reports that some sellers regretted their decision to sell Horizon Towers to HPL and its partners for $500 million, when neighbouring developments - such as The Grangeford - subsequently sold for double the per-square-foot amount.

The buyers' case is that the majority sellers of Horizon Towers did not do their utmost to submit a proper application for a collective sale order to the STB.

They said the sellers filed the application only in April - two months after the deal was signed, and just four months ahead of the deadline for the completion of the sale. The buyers said this was a 'breach of (the sellers') express obligation to apply expeditiously for the collective sale order'.

They also claim the sellers were ambivalent about the dates for the STB hearing and were slow in releasing documents which the objectors - the minority sellers who objected to the en bloc sale - had requested.

This affidavit comes just ahead of a meeting today of all the majority sellers of Horizon Towers. They are meeting to decide how they should respond to HPL's suit.

The sellers need to decide if they should accede to HPL's demand that the sellers extend the deadline of the sale by four months, appeal against the STB's decision and file a fresh application to the STB, if necessary. Alternatively, they can contest the suit.