Friday, February 15, 2008

Parkway Hldgs Puts In Top Bid For Site At Novena Terrace/Irrawaddy Rd

Source : Channel NewsAsia, 15 February 2008

Parkway Holdings has put in a top bid to buy land to develop a new hospital at the junction of Novena Terrace and Irrawaddy Road.

It has offered S$1.25 billion for the site, which is double its nearest rival and five times more than the third-placed bidder.

Parkway's bid works out at around $185,000 per square foot of gross floor area.

This is the first private hospital site made available by the government in 30 years.

The land can be developed into a 500-bed hospital with a maximum floor area of over 72,000 square metres. - CNA /ls

Straits Trading Resumes Trading On SGX

Source : Channel NewsAsia, 15 February 2008

Shares of investment holding company Straits Trading Co resumed trading on the Singapore Exchange at 2pm on Friday after a temporary suspension.

The shares were suspended from trading after the Lee family, the main shareholder of Oversea-Chinese Banking Corp, improved its offer for Straits Trading to S$6.55 a share from S$5.76, bettering the S$6.50 offered by investment firm Tecity.

Tecity had raised its bid for Straits Trading last month to S$6.50 a share from S$5.70.

Straits Trading shares were already trading above Tecity's offer as investors bet on a higher bid from the Lee family. The shares closed flat at S$6.55 on Thursday. - CNA/vm

DBS Group's Q4 Profit Down 18% On Sub-Prime Provisions

Source : Channel NewsAsia, 15 February 2008

DBS Group, Southeast Asia's biggest bank, said on Friday its fourth quarter net profit fell 18 percent from the previous year as it set aside heavy provisions to cover its exposure to risky US mortgages.

Net profit for the three months to December 2007 came in at S$491 million (US$347.15 million), down from S$596 million in the same period in 2006, the bank said in a statement.

DBS set aside an additional S$170 million in the fourth quarter to cover its exposure to US subprime assets, where massive defaults have triggered turmoil in global financial markets.

Including the S$70 million in allowances it set aside in the third quarter, provisions now total S$240 million, or 90 percent of the S$267 million of collateralised debt obligations (CDOs) with exposure to risky US assets, it said.

"With the the additional allowances we took this quarter, we are well covered for risks associated with US subprime assets," said DBS chairman Koh Boon Hwee.

"I believe that despite the turmoil in the global financial market today, banks in Asia are much less affected. At DBS, we will continue to stay vigilant and strengthen our risk management capabilities," he added.

Another S$30 million was set aside for S$944 million in CDOs backed by top-grade loans and bonds, the bank said.

Full-year net profit was S$2.28 billion, little changed from the S$2.27 billion the year before, DBS said. Revenue rose 15 percent to S$6.16 billion for the year, boosted by higher income from interest and fees.

DBS shares were trading at S$17.68 apiece, up 38 cents, before the midday break as investors approved its decision to raise provisions for its exposure to the US subprime credit market. - AFP/vm

HDB To Review Eligibility Criteria For Public Rental Scheme

Source : Channel NewsAsia, 15 February 2008

The Housing and Development Board (HDB) is reviewing the eligibility criteria for the Public Rental Scheme.

National Development Minister Mah Bow Tan said this is to ensure that the heavily subsidised rental flats are targeted at those who are genuinely poor and without other housing options.

More details on the review will be announced when ready.

Mr Mah disclosed this in a written answer to a question by Member of Parliament for Tanjong Pagar GRC Baey Yam Keng.

Mr Baey had asked for an update on the demand for the scheme and the measures to address increasing demand for rental flats.

Prior to 2003, there were 2,300 eligible applicants a year. This went up to 4,700 in 2007.

According to Mr Mah, the increase was mainly due to the raising of the income ceiling for applicants from $800 to $1,500 in 2003. - CNA /ls

New Bonus To Encourage Singaporeans To Join CPF Life

Source : Channel NewsAsia, 15 February 2008

The government is giving a special bonus to encourage Singaporeans to join the National Lifelong Income Scheme or CPF Life, which is set to begin in 2013.

The special bonus, called Life Bonus or L-Bonus, is targeted at lower and middle-income CPF members.

The one-off incentive will be given to the first five cohorts of CPF members – aged between 46 and 50 this year – who participate in the scheme. They will receive the L-Bonus when they enrol in the scheme at 55 years old.

Public Relations Officer Yohendiran Raj Santhanam is turning 48 this year. And the government has been actively asking Singaporeans like him to make sure they have enough savings to sustain them for life.

Under the newly introduced CPF Life, those below 50 years old this year, with a Minimum Sum of S$40,000 in their CPF account, will be automatically covered. Those 50 and older are encouraged to opt into the scheme.

To get as many Singaporeans on board the scheme, the government will give out the Life Bonus to CPF members who are willing to make a reasonable contribution to their balances and accept lower monthly payouts.

This is particularly important for women who may have been housewives or who have stopped working early and do not have enough in their CPF accounts.

The L-Bonus will also help to encourage their husbands or other family members to top up their accounts so that they can join the scheme.

Mr Raj said: "It's very good news for people like us. We don't have much in the CPF, so this will enable me to work and reach the target. It will also help me in the future.

"The one-off bonus will encourage everyone to work harder and meet the target – it'll be a win-win situation for everyone. The government is helping us in this, we must also do our part and work towards that goal – the Minimum Sum goal."

So who will qualify for the L-Bonus?

Those whose annual income is S$54,000 or less when they sign on to CPF Life, and if their annual assessed property value is S$11,000 or less, which covers all HDB flats, will qualify for the L-Bonus.

These people make up about 80 percent of the cohort aged 50 today. It will also include those who do not have S$40,000 in their Minimum Sum, but want to opt into CPF Life.

The amount of the L-Bonus will vary so that older and less well-off CPF members will receive more. Those aged 50 this year can expect to receive between S$2,200 and S$4,000.

The government will set aside S$770 million over three years for the L-Bonuses, which includes S$260 million from this year's Budget. - CNA/so

More Public Projects Deferred To Ease Pressure On Construction Costs

Source : Channel NewsAsia, 15 February 2008

The pace of cost increases has been rapid and unsettling for businesses so the government is implementing key measures to address office space constraints and spike in construction costs.

Construction demand will continue to build up this year, with projected value of contracts to hit up to S$27 billion. At the same time, construction costs are climbing as well.

Finance Minister Tharman Shanmugaratnam said this is due to expensive raw materials and work on major projects like the integrated resorts and petrochemical plants.

To ease the pressure, the government had previously rescheduled S$2 billion worth of developments to 2010 and beyond.

"We have now decided to defer another close to S$1 billion of projects. This deferment will only affect projects which are less urgent. Key investments such as the expressways, the Downtown Line and the NUS University Town will not be affected," said Mr Tharman.

There will also be measures to tackle another short-term problem – the crunch in office space. This is caused by a surge in business growth, especially in the business and financial sector.

As office rental costs have risen sharply, Mr Tharman said Singapore must keep its business costs competitive relative to other major cities. On average, office space in Singapore costs 30 to 50 percent less, compared to Hong Kong and Tokyo.

The government expects the supply crunch to ease over the medium term as an extra 1.4 million square metres will be available by 2012 in the Marina Bay area.

Companies are also moving to transitional sites and new regional centres outside the city.

Soon, government agencies will follow suit and relocate - up to 20,000 sqm of office space in the city will be freed up for the private sector by the first quarter of 2009.

Mr Tharman also noted the good showing in what he called "an exceptionally buoyant property market" last year. Transaction volume rose by 60 percent, hence gains from stamp duties and other revenues were S$3.4 billion above what was expected. - CNA/so

Property Transactions With Contract Dates Between Jan 14th - 26th, 2008

Economy Grows 7.7%, Beats Expectations

Source : The Straits Times, Feb 15, 2008

Growth is somewhat dampened by surprise downward revision for fourth quarter.

SINGAPORE’S economy grew even faster than expected last year, with a robust 7.7 per cent expansion fuelled by the booming construction and services sectors.

That was a notch up from an earlier estimate of 7.5 per cent - thanks to upward revisions to growth in the first nine months.

There was, however, a sting in the tail of the latest figures, published yesterday by the Trade and Industry Ministry (MTI).

The strong full-year growth was somewhat overshadowed by fourth-quarter figures, which turned out to be weaker than previously estimated.

Economic growth slowed to 5.4 per cent from October to December, said the MTI, lower than the 6 per cent previously estimated and far below the 9.5 per cent recorded in the third quarter.

On a seasonally-adjusted, quarter-on-quarter basis, the economy shrank 4.8 per cent, more than the 3.2 per cent estimated earlier by the Government

The downward adjustment surprised economists, who said the final quarter would best indicate prospects for this year.

Already, the fast-deteriorating United States economy has prompted the MTI and other economists to cut their growth forecasts for this year.

‘We think the slowing growth momentum from the fourth quarter could bleed over to the first quarter of this year,’ said OCBC Bank economist Selena Ling.

Last year’s strong growth was powered by the red-hot construction and services sectors. The once-mighty manufacturing sector turned out to be the laggard.

Construction growth hit a record 19.6 per cent, the fastest pace since 1996, while services expanded 8.1 per cent, accelerating from 2006’s 7.5 per cent.

Manufacturing growth, on the other hand, slowed to 5.8 per cent from 11.9 per cent in 2006.

It was a similar picture in the fourth quarter, except that manufacturing growth was an exceptionally dismal 0.2 per cent.

The revised data came a month after advanced estimates for the fourth quarter were published at the start of the year. The early figures were based largely on the first two months of the quarter, so the latest statistics suggested that conditions worsened considerably in December, analysts said.

The adjustment was mainly due to services, which grew 7.7 per cent instead of 8.3 per cent, and manufacturing, which fared even worse than an earlier predicted 0.5 per cent expansion.

‘Financial services have peaked as we have forecast. The industry will likely moderate further. The heady days of high-teens growth are over,’ said Citigroup economist Kit Wei Zheng. He said the fall in financial services growth to 15.9 per cent in the fourth quarter suggested that the industry peaked in the third quarter, when it surged 20.1 per cent.

OCBC’s Ms Ling said manufacturing would remain lacklustre in the current quarter, if not the first half of the year. ‘With the global slowdown story, we do not expect any quick turnaround on the manufacturing front,’ she said.

Still, some economists are not ringing the alarm bells just yet.

HSBC economist Prakriti Sofat said while US growth slowed in the fourth quarter, that was not the cause for Singapore’s weak figures.

Analysts pinpointed the volatile pharmaceutical industry as the main reason for the slowdown.

‘Manufacturing output plunged, largely due to protracted production delays and technical problems at Singapore’s biggest pharmaceutical plant,’ said Barclays Capital economist Leong Wai Ho. ‘Supply bottlenecks were the main cause, not a drop-off in demand.’

Indeed, pharmaceutical’s recent sharp contraction could well set it up for a big rebound in the next few months, said analysts.

More optimistic economists are also looking to resilience in domestic and regional economies.

The construction sector is expected to continue growing robustly, given the strong pipeline of both public and private projects.

Sectors such as tourism and real estate services will be partially shielded from a US slowdown by neighbouring economies, on which they are more dependent, said the MTI.

Estate Duty To Be Removed

Source : The Straits Times, Feb 15, 2008

SINGAPORE will abolish estate duty, or taxes collected on wealth left behind after an individual's death, Finance Minister Tharman Shanmugaratnam announced on Friday.

'If we make Singapore an attractive place for wealth to be invested and built up, whether by Singaporeans or foreigners who bring their assets here, it will benefit our whole economy and society,' he said in his budget speech in Parliament.

It will cost the government $75 million a year, he said.

Singapore inherited estate duty from the British. The rates originally were high - and until 1984, the top rate was 60 per cent.

The current rates are much lower - five per cent for the first $12 million of dutiable assets and 10 per cent thereafter.

On the removal of the estate duty from the tax regime, with immediate effect, Mr Shanmugaratnam said: 'Estate duty is a means to rebalance opportunities with each new generation and prevent wealth from being concentrated in fewer and fewer hands over time.'

'It was especially relevant at the time when the bulk of wealth comprised land that was passed down through the family. Today, however, wealth is being created in many more ways and by a wider group of entrepreneurs, many of whom start off with little.'

'Wealth is also being managed today on a global basis. Proponents of removing estate duty have therefore argued that removing it would encourage wealthy individuals from all over Asia to bring their assets into Singapore, thus supporting the growth of the wealth management industry.'

'Ordinary Singaporeans have also argued that having worked, paid taxes on their income and property, and built up their savings, they want to be able to pass it on to their families. Some are in fact liable for Estate Duty when their estates receive large life insurance payouts.'

The Minister said the current low exemption limit for non-residential assets, set at $600,000, compared to the higher limit of $9 million for residential properties in fact tends to affect the middle and upper-middle-income estates disproportionately compared to wealthier ones.

'We have considered raising the $600,000 limit for non-residential assets so as to correct for this. However, this would further shrink what is already a narrow tax base and render the tax less effective,' he said.

'I have therefore decided to remove Estate Duty from our tax regime, with effect from today. It is not just a practical or expedient measure, but one that on balance will be in our collective interest.'

'If we make Singapore an attractive place for wealth to be invested and built up, whether by Singaporeans or foreigners who bring their assets here, it will benefit our whole economy and society, not just the individuals who build up their wealth. It is not a zero sum game.'

He encouraged individuals who have accumulated wealth to think of how they can use it to make a contribution to society, and make full use of the enhanced incentives introduced last year to promote philanthropy.

This will benefit schools, universities and hospitals, and the growing range of charitable causes in Singapore.

With the removal of Estate Duty, he said the remaining tax on wealth would be property tax.

On why this should be retained, the minister said: 'It is an efficient tax, set at a low rate in relation to the full value of the property, especially for owner-occupied homes. You cannot tax-plan it away. It also does not affect our middle and upper-middle-income estates disproportionately compared to wealthier ones.'

'This is why most countries have some form of tax on property - including even Hong Kong, which like us does not have capital gains tax and has already done away with Estate Duty. Only Ireland does not have a tax on residential property, but the Irish have capital gains tax, inheritance tax and gift tax.'

Sembawang E&C Bags $400m IR Contract

Source : The Business Times, 15 February 2008

SEMBAWANG Engineers and Constructors (SEC) has been awarded a $400 million contract by Marina Bay Sands Pte Ltd to build the Marina Bay Sands integrated resort's (IR) North Podium comprising the casino, theatres and retail arcade.

But with a construction period of just 15 months, pressure will already be on Singapore's biggest construction company to start work soonest possible.

Saying that the timeframe is 'pretty tight', SEC president and CEO Alwyn Bowden added: 'The Marina Bay Sands (MBS) North Podium is a fast-track project which will require our dedicated attention.'

In November 2007, SEC was also awarded a $463 million contract for architectural, civil and structural works at the Bayfront MRT station in Marina Bay.

Mr Bowden added: 'We are especially well placed to handle (the MBS) project as we are also constructing the new Downtown Line Bayfront MRT station in Marina Bay, which will connect directly to the resort's MICE (Meetings, Incentives, Conventions and Exhibitions) centre.'

The MBS project involves building the substructure and superstructure of the North Podium, and will have four upper levels and a four-storey basement.

Work is expected to start this month and is set for completion in April 2009.

Apart from maintaining a 24-hour construction site, fast-tracking construction will also require coordination with various parties involved who will invariably have inputs. Mr Bowden explained that they have to 'make sure changes do not impact on construction process'.

On the complexity of the project, and the possibility of delays, he said: 'We have tried to cover whatever eventuality that may arise.'

As far as equipment and building materials are concerned, Mr Bowden is confident that its supply chain management has sources and prices under control. 'We have not found materials to be a problem,' he added.

Mr Bowden could not say how many other construction companies had been in the running for the coveted contract, but he did say that there was 'an emphasis on price', when it came to bidding.

However, with construction company services in high demand at the moment, the days of 'razor- thin margins' are over.

Mr Bowden added: 'For construction companies, the volume (of work) means that one can look around and be a bit more choosy.'

Battle For Straits Trading Hots Up As Lees Raise Offer

Source : The Business Times, 15 February 2008

Family pitches revised bid at $6.55 a share.

The tussle for The Straits Trading Company looks set to intensify as the Lee family yesterday raised its offer price to $6.55 per share.

The revised offer, made by Lee Latex’s wholly-owned subsidiary Knowledge Two Investment Pte Ltd, is marginally higher than the last offer of $6.50 made by The Cairns, a subsidiary of the Tan family’s holding company Tecity. But it is 65.4 per cent higher than the audited net asset value per share of Straits Trading and 13.7 per cent higher than the Lees’ own last offer of $5.76 a share.

In an announcement to the Singapore Exchange last night, Knowledge Two also spelt out its intentions for the offer, which included continued development and growth of Straits Trading’s existing businesses and representation on the company’s board.

In addition, if the Lee family continues to control the largest single block of shares after the close of the offer, it intends to ‘propose to STC (Straits Trading Co) to engage a financial adviser to conduct a study on the financial performance of STC and to recommend possible steps to take to further unlock value in STC for the benefit of shareholders’.

Apart from that, the Lee family has no immediate plans for any major changes relating to Straits Trading, including redeployment of fixed assets or the employment of existing employees.

The bidding war for Straits Trading - whose core businesses include interests in tin mining and smelting, hotel operations, property , and investment holdings - was triggered early last month after The Cairns, a privately-held investment firm controlled by family members of the late Tan Chin Tuan, made a conditional cash offer for the firm at $5.70 per share. About two weeks later, the Lee family counterbid with an offer price of $5.76 a piece. This was followed by a revision of offer by the Tan family on Jan 28 to $6.50 per share.

The Lee family, who are descendents of the late philanthropist Lee Kong Chian, own 33.42 per cent of Straits Trading including holdings through concert parties OCBC and Great Eastern Holdings. On the other hand, the Tans own more than a fifth of Straits Trading through Tecity.

Apart from owning stakes in one of the world’s largest tin smelters, Straits Trading also runs 14 hotels, mostly in Australia and New Zealand, and China. In addition, the group owns commercial and residential properties in Singapore and Malaysia.

The bidding war for Straits Trading has since driven the share price of the company to record highs in the past month. The counter last traded at $6.55.

Land Sales To Generate $9.8b In '08/09

Source : The Straits Times, Feb 15, 2008

PROCEEDS from land sales are expected to slip six per cent in the coming fiscal year to $9.8 billion, according to the 2008 Singapore budget.

That follows an expected rise of 65 per cent from land sales in the current fiscal year to $10.5 billion.

This beat the government's original estimate for land sales of $3.08 billion when it announced the 2007/08 budget, as the city-state saw a booming property market.

The government will offer 12 sites for hotel development this year on top of land for office, factory and residential development.

$1b Worth Of Public Projects To Be Deferred: Tharman

Source : The Straits Times, Feb 15, 2008

THE Government will defer $1 billion worth of public projects to ease demand on the construction industry, Finance Minister Tharman Shanmugaratnam said on Friday.

The Government will delay projects that are 'less urgent', he said.

Key investments including expressways, subway systems and university campuses will not be affected.

'The combination of higher raw material prices and work on major new projects has caused costs to spike up,' Mr Shanmugaratnam said in his budget speech in Parliament. 'We have to keep our business costs competitive, and not let them run ahead of the cities we are competing with.'

Singapore has already deferred about $2 billion worth of public projects.

Tender For Playfair Road Industrial Site Closes With 12 Bids

Source : Channel NewsAsia, 14 February 2008

The tender for an industrial site at Playfair Road has attracted strong bids.

There were 12 bids for the 8,600 square metre site.

The highest bid of S$33 million was submitted by Trio Link Development. It works out to about S$142 per square foot per plot ratio.

According to property consultants CB Richard Ellis, this was the highest bid ever for a 60-year leasehold industrial site.

The Playfair Road site was opened for public tender on 10 January this year. - CNA/ac

DBS Profit Falls 18%, Still Beats Forecast

Source : The Straits Times, Feb 15, 2008

DBS Group Holdings, South-east Asia's biggest bank, posted an 18 per cent drop in fourth-quarter profit, but still beat market expectations, as strong loan growth offset writedowns linked to the global credit turmoil.

The Singapore-based bank, in which state investor Temasek Holdings has a 28 per cent stake, reported on Friday net profit of $491 million for its fourth quarter from October to December, compared with $596 million a year earlier.

Four analysts had expected DBS to post profit of $466 million, according to Reuters Estimates two days before the result.

The bank, which this week named Richard Stanley from Citigroup as its new chief executive to replace Jackson Tai who resigned last year, said it was 'cautiously optimistic' for 2008.

Singapore's banking loans grew by 20 per cent in 2007, the highest pace since the end of September 1995, according to official data, boosted by a property boom and rebounding construction sector.

But analysts have become cautious about the sector this year because of fears that the credit crisis, which began with defaults in United States subprime mortgages, may lead to a global economic slowdown.

Singapore's central bank warned in December that the worsening of the recent credit squeeze or a sharp slowdown in the US economy may hurt profits of Singapore banks in 2008.

Investors punished DBS shares in the second half of last year when it disclosed it had more direct exposure to credit derivatives than earlier thought.

DBS ended the year 8.4 per cent lower, trailing United Overseas Bank, which rose 2.6 per cent while shares of Oversea-Chinese Banking Corp jumped 7.7 per cent.

DBS shares are down about 17 per cent since the start of the year and have fallen more than 30 per cent since hitting a year high of $25 in late May last year.

DBS derives about one-third of its earnings from Hong Kong, where it has around a third of its assets.

The bank is ramping up its China operations and recently bought Taiwan's failed lender Bowa Commercial Bank in a government auction to strengthen its North Asian operation. -- REUTERS

Singapore Cuts Growth Forecast To 4% To 6%

Source : The Straits Times, Feb 15, 2008

Concern over a US recession leads to revision; inflation estimate is raised to 4.5%-5.5%

SINGAPORE has lowered its economic growth forecast for the year but also tipped that consumer prices are expected to rise faster than previously thought.

Concern over a possible United States recession led the Government to trim its growth forecast from an earlier estimate of 4.5 to 6.5 per cent to between 4 and 6 per cent. Last year, the economy expanded by 7.7 per cent.

Its inflation estimate has gone the other way with prices now tipped to rise on average between 4.5 and 5.5 per cent, up from a three-month-old forecast of between 3.5 and 4.5 per cent.

The Ministry of Trade and Industry (MTI) released the revised figures yesterday and raised its concerns about the US economy.

'Compared to three months ago, there is broad consensus now that the US economy is entering a slowdown,' said the ministry.

'The key uncertainty is over the length and severity of this slowdown, which will in turn influence how the rest of the world and key industries are affected.'

The MTI's new forecast shaves 0.5 percentage point off the estimate made three months ago and reflects the recent welter of bad news from the US.

MTI Second Permanent Secretary Ravi Menon told a news conference that the earlier forecast had already factored in a US slowdown.

But 'since then, the downside risks have increased somewhat... The US is really experiencing a significant slowdown in growth.'

Economists were not surprised at the revision, given the deteriorating global outlook. Many had slashed their Singapore estimates in light of surprisingly weak data out of the US in recent weeks.

The MTI said current conditions suggest that the US will probably enter a mild recession in the first half but recover as the year goes on.

'Strong fundamentals, coupled with fiscal and monetary stimulus, will help to support recovery in the second half,' it said.

In this scenario, the local economy should grow in the upper half of the forecast range, said the MTI. But if the US has a more severe recession, growth here will be nearer the lower end of the range.

Electronics exporters and the trading and logistics firms that serve the industry will take the biggest hit, said the MTI, while financial services will be more vulnerable to weaker market sentiment.

The slower growth comes after four years of robust expansion and is still within the economy's underlying potential growth rate, said Mr Menon.

Singapore should also escape a technical recession, defined as two straight declines in quarter-on-quarter growth. 'Most of the simulations we have done do not show that outcome,' said Mr Menon.

Action Economics economist David Cohen said, '4 to 6 per cent is realistic. It's nothing to be embarrassed about.'

On the inflation front, prices are set to rise even faster than the record-breaking pace of recent months, due largely to surging oil and food costs.

Mr Menon said inflation will peak by the middle of the year before moderating.

The Monetary Authority of Singapore (MAS) said its policy of allowing a slightly faster appreciation of the Sing dollar remains appropriate.

Economists said the Government may announce today a more generous Budget to help low-income earners cope with escalating living costs.

This would allow the MAS to focus more on the slowing economy when it reviews its policy stance in April.

Regional Expansion Helps Lift F&N First-Quarter Gain To $109m

Source : The Straits Times, Feb 15, 2008

FRASER & Neave's (F&N's) aggressive drive to expand its businesses regionally from property development to soft drinks has paid off handsomely.
A breakdown of its first-quarter results by region showed that while Singapore remained the drink and property giant's top profit-earner, markets like Malaysia and other parts of Asia enjoyed double-digit percentage growth in pre-tax earnings.

This drove up profit by 41.8 per cent to $108.6 million for the three months ended Dec 31 last year. The bumper number includes $5.4 million of exceptional gains, mostly from property sales. Revenue rocketed 19.2 per cent to $1.32 billion.

PROFIT CENTRE: F&N's beverages division remains profitable, with gains in its soft-drink arm growing 9.9 per cent and subsidiary Asia Pacific Breweries, which makes Tiger Beer, reporting a profit of $42.6 million. -- PHOTO: ASIA PACIFIC BREWERIES

'The robust profit growth... clearly supports our strategy of industry-cum-geographical diversification,' said F&N chairman Lee Hsien Yang yesterday.

F&N's property arm was the star performer. Pre-tax profit from property development rose 15 per cent to $66 million, with the group benefiting from strong profits booked from earlier sales in Singapore.

F&N sold 120 flats in the 417-unit Soleil@Sinaran in Novena and replenished its land bank by securing a residential site at Boon Lay/Lakeside Drive via a tender.

Revenue from commercial properties rose 21 per cent to $69 million, supported by the high occupancy of retail malls, industrial parks and offices, as well as management fees from Fraser Hospitality's operations.

The beverages division also sparkled, with pre-tax profit in its soft-drink arm growing 9.9 per cent to $15.3 million, while income from dairies jumped 84 per cent to $7.5 million.

F&N's weakest link - publishing and printing - recorded a 6.8 per cent drop in pre-tax profit to $15.4 million.

Earnings per share rose from 6.5 cents to 7.7 cents, while net asset value per share increased from $3.77 to $3.81. No dividend was declared.

F&N said 'economic growth in the Asia-Pacific region is expected to be moderate for the next 12 months'. Still, it expects profit to further improve in the current financial year.

Separately, F&N's 39.7 per cent-owned unit - Asia Pacific Breweries - reported a 5.4 per cent jump in first-quarter profit to $42.6 million.

Its earnings were dented by a $2.1 million provision for professional fees, while revenues rose 19.2 per cent to $567.8 million.

During the quarter, it started production at two plants in India and Laos, bringing its total number of breweries in the Asia-Pacific to 35.

Preserve Unique Older Condos Like Clementi Park

Source : The Straits Times, Feb 15, 2008

MY CONDO Clementi Park was built in the 1980s. It is a rambling, spacious and spread-out estate with 494 units on a million sq ft of land. There isn't a condo like it anywhere in Singapore. In the heart of my condo lies the unspoilt woods of Clementi Park. The hillside terrain, mature trees and park-like atmosphere would never be planned in the hustle-bustle world of today with its too-close buildings and utilitarian maximisation of land.

Apart from the Clementi Park hill, the blocks of the condo were built to match the undulating character of the land. Blocks were built into the hillside so a fourth floor apartment could be four storeys high from the front, but on road level at the rear. Unique stepped structures with charm and quaintness are surrounded by utter greenery.

Today, we marvel at conservation houses of 100 years ago for their historical value. Too many of them were demolished before we could fully appreciate what their loss would mean to us. I wonder if 50 years from now, our children's children will find unique estates like Clementi Park of historical value architecturally? In any case, for its stunning internal nature parks, it is already worth preserving.

In view of the urban renewal to Singapore's old condos which is happening at an astonishing rate, perhaps we should stop the demolition of mature estates for now. Enough. Let's look at the buildings of the past two, three or four decades with a different eye. They are a part of our history too.

Susan Prior (Ms)

Playfair Rd Site Gets Bullish Top Bid Of $142 psf ppr

Source : The Business Times, February 15, 2008

Sim Lian unit's offer is whopping 63% above second highest bid

A 60-YEAR leasehold industrial site at Playfair Road has attracted a top bid of $142 per square foot per plot ratio (psf ppr) from Sim Lian Development unit Trio Link Development - a record price for such a site in the Ubi/Paya Lebar/Eunos area.

The tender for the 92,870 sq ft reserve-list plot attracted 12 bids, reflecting growing interest in industrial property as it comes into play amid the breather in residential and office values, says Colliers International director (industrial) Tan Boon Leong.

Sim Lian's top bid of $33 million, or $142.13 psf ppr, was a huge 63 per cent above the next highest bid of $20.23 million, or $87.13 psf ppr, by Orion-Three Development.

Orion group, which is linked to Indonesian interests, has also been active in state tenders for industrial sites. It clinched plots at Serangoon North Ave 4 and Changi North St 1 in 2006.

Asked about Sim Lian's aggressive bidding in yesterday's tender, executive director Ken Kuik said the company had been encouraged by recent demand for strata-titled flatted and ramp-up factories at its Vertex project at Ubi Ave 4/Ubi Link.

'We've sold about 160 of the 200 units released since September last year, achieving an average price of about $330 psf,' he said.

The eight-storey property has 552 strata-titled units. Sim Lian is developing it on a 60-year leasehold site it won at a state tender in 2006.

Like the Playfair Road site contested yesterday, the Ubi plot is zoned for Business 1, allowing clean and light industrial and warehouse uses.

Mr Kuik said Sim Lian plans to develop the Playfair Road plot into a 13-storey project with strata-titled units for sale.

He noted that the site is just a few minutes' walk from Upper Paya Lebar MRT Station on the Circle Line.

Colliers' Mr Tan estimates Sim Lian's breakeven cost could be around $260 psf, considering the saleable area for such industrial developments can exceed the maximum permitted gross floor area by 15-20 per cent after factoring in features like terraced areas and air-con ledges.

'This is the first time a 60-year leasehold industrial site is being sold in the area, which traditionally has freehold industrial properties. That may have added to the plot's attraction,' he suggested.

Property consultants say the $142 psf ppr that Sim Lian offered for the Playfair plot surpasses the last high achieved in the Ubi/Paya Lebar/Eunos area - $85.50 psf ppr for a 60-year plot at Eunos Link/Kaki Bukit Avenue 1 in 1996.

However, yesterday's top bid is still shy of the island-wide high of $170 psf ppr achieved late last year for a 30-year leasehold site near Commonwealth MRT Station.

The other bidders in yesterday's tender were KNG Development, Soilbuild Group, Prosperity Realty (linked to Hotel Royal's Lee family), HLH Development & Brothers (Holdings), Superbowl Land, See Young Investments, Lian Beng Group unit LB Property, Boustead Projects, Boon Keng Development and Lim Huay Ren, which placed the lowest bid of $12 million or $51.68 psf ppr.

F&N Posts 41.8% Rise In Q1 Net Profit To $108.6m

Source : The Business Times, February 15, 2008

FRASER & Neave has gotten off to a good start in the current financial year by reporting a 41.8 per cent jump in net profit to $108.6 million for the first quarter ended Dec 31, 2007, from $76.6 million for the previous corresponding period.

The profit attributable to shareholders included an exceptional gain of $5.4 million mainly from the disposal of properties. But even without including exceptional items, net profit for the quarter surged 33.2 per cent to $103.2 million from $77.5 million.

'This impressive profit growth stemmed from the progressive recognition of development property income and continued growth in food and beverage,' said the property, publishing and food and beverage group. Turnover for the quarter climbed 19.2 per cent to $1.32 billion from $1.11 billion the year before.

Earnings per share after exceptional items rose to 7.8 cents from 6.5 cents despite the increase in issued share capital, almost all attributable to the 14.9 per cent stake sold to Temasek Holdings. Net asset value per share strengthened to $3.81 from end-September 2007's $3.77.

Former SingTel head Lee Hsien Yang, who took over the chairmanship of F&N on Oct 15, said: 'The robust profit growth in this quarter clearly supports our strategy of industry-cum-geographical diversification. Our businesses in the core markets of Singapore, Malaysia, Indochina and Australia have all contributed strongly to the sterling results.

'The profit performance was led by the property division which has benefited from strong profits booked from earlier sales launches in Singapore and healthy rental rates achieved from new and renewed leases. The food & beverage division continued to benefit from its regional expansion strategy and turned in a set of sterling results.'

The property division saw profit before interest and tax (PBIT) rising 15 per cent to $66 million, benefiting from higher development margins.

During the quarter, the group secured a residential site at Boon Lay/Lakeside Drive through a tender, covering some 830,000 square feet of developable area. This mid-end segment site is expected to yield a potential pipeline of over 600 units. Including this, the group now has a total land bank of close to 3,000 residential units with total estimated saleable area of four million sq ft. Overseas, in China, Australia and Britain, it has over 34 million sq ft of residential and commercial development space.

Beer maker Asia Pacific Breweries, which is nearly 40 per cent owned by F&N, also delivered a healthy set of results with Q1 net earnings (after exceptionals) attributable to shareholders going up 5.4 per cent to $42.6 million from $40.4 million on a 19 per cent rise in turnover to $567.8 million.

Its chief executive Koh Poh Tiong said: 'Once again, Indochina (ie Cambodia, Laos and Vietnam) has excelled as our best performing region, reporting a robust volume growth of 37 per cent and a PBIT gain of 23 per cent . . . This stronger set of numbers is a testament to our intra-market growth strategy.'

F&N's soft drinks side grew 12 per cent in revenue on higher volume and a price increase but this was offset by higher raw material prices and input costs resulting in PBIT going up only 10 per cent.

The dairies division saw consolidated revenue rising twofold to $254 million but PBIT was a lesser 84 per cent to $7.5 million due to lower margins from its Thai operations and higher raw material and packaging costs.

Its glass containers segment registered revenue and PBIT growth of 10 per cent and 19 per cent, to $35 million and $4 million.

Revenue and PBIT for the publishing and printing segment declined by 2 per cent and 7 per cent respectively, due to the divestment of the Australia printing plant and lower profit from its printing division.

On the Singapore Exchange yesterday, APB saw its share price rise six cents to $13.56 while F&N ended 22 cents up at $4.93.

Why S'pore Trade Breaks Ranks With GDP

Source : The Business Times, February 15, 2008

Three researchers shed light on a conundrum

Three researchers have explained in an article yesterday why Singapore's GDP and trade growth diverged in the past year.

The two figures have tended to move in lock step for export-reliant Singapore, whose small, open economy depends significantly on external growth drivers.

But last year, while real GDP climbed 7.7 per cent, total trade growth - exports plus imports of goods - fell sharply from 13 per cent in 2006 to just 4.5 per cent.

In part, this was due to different performances across sectors, said the researchers, two of whom are from the Ministry of Trade and Industry and the third from International Enterprise Singapore.

Last year's aces - financial services and construction, output of which grew 18 per cent - did not contribute to goods exports and, hence, headline trade growth.

On the other hand, the laggards - manufacturing and wholesale trade, which grew just 6.4 per cent - were the main drivers of the goods exporting sectors.

Another reason for the divergence, according to the article, was a measurement effect, as GDP and trade are calculated on different terms.

Real GDP measures, roughly speaking, the volume of Singapore's output. But trade figures measure the value of exports and imports at current prices and are affected by price changes.

And last year, prices of semiconductors slumped due to increased competition and a capacity glut, dragging down the dollar value of trade.

Despite 4 per cent growth in electronics output, electronics domestic exports still fell 9.3 per cent year on year, meaning higher volume was insufficient to offset the fall in price.

The effect was significant, as electronics trade accounted for about 40 per cent of total trade.

And although oil and commodity prices climbed significantly last year, this could not compensate for falling electronics prices. Oil exports make up about 25 per cent of domestic exports.

The article shows that with prices held constant, total trade last year would have grown 7 per cent - close to real GDP growth.

The divergence between real GDP and trade growth is unlikely to lend credence to the decoupling theory - the idea that strong domestic demand might reduce Singapore's reliance on exports.

Separately, Citigroup economist Kit Wei Zheng said: 'Singapore is still a very open economy. The indirect knock-on effects will still be quite important.'

HSBC economist Prakriti Sofat pointed out that while US growth slowed substantially in Q4 2007, Singapore exports to the United States actually grew about 0.6 per cent year on year, compared with a 4 per cent slump in Q3.

'The other point is that personal consumption has been weak despite hefty wage gains, which has been quite puzzling,' she said. 'However, our assumption remains that households should let loose the purse strings in the period ahead.'

Govt Raises Inflation Forecast, Sees Peak In H1

Source : The Business Times, February 15, 2008

Forecast upped to 4.5-5.5% as S'pore feels effect of rising food and oil prices

Singapore's inflation will get worse before it gets better, the Ministry of Trade and Industry (MTI) said yesterday, expecting inflation to peak in the first half of 2008 before moderating in the second half.

The government raised its full-year forecast for the headline consumer price index (CPI) to 4.5-5.5 per cent, from 3.5-4.5 per cent previously.

Rising food and oil prices globally have filtered through to domestic prices of food and oil-related items here, MTI said.

Last year, Singapore's CPI grew 2.1 per cent year-on-year after growing by one per cent in 2006. It hit a 25-year high in December when it grew 4.4 per cent year-on-year. It rose 4.1 per cent for the fourth quarter.

MTI second permanent secretary Ravi Menon noted that part of the increase in the headline inflation here was due to the one-off effect of the two percentage-point hike since last July and technical factors like the revision of annual values of HDB flats.

'We expect inflation to get worse before it gets better,' he said at a media briefing yesterday. 'The revised forecast is premised on fairly high inflation rates in the next few months. This is only to be expected given the very low base in the first half of last year.'

While inflation is expected to taper off in the second half during which the effect of the GST hike wanes, a return to the low inflation rates enjoyed in recent years will not happen any time soon as commodity prices are still likely to rise albeit at a slower pace than in 2007, Mr Menon added.

When asked if the Monetary Authority of Singapore (MAS) would be prompted to change its monetary policy stance given the higher inflation outlook, MAS deputy managing director Ong Chong Tee said the current monetary policy stance 'remains appropriate and the macroecnomic and inflation outlook has been broadly consistent with the planning parameters'.

This policy of a modest and gradual appreciation of the S$NEER policy band has been in place since April 2004.

Mr Menon noted that the current inflation outlook has to be viewed in the context of historically low inflation.

For the last 40 years, Singapore's inflation rate averaged 1.5 per cent, excluding the two oil shocks in the mid 1970s and early 1980s. Average inflation for the past 10 years was half that rate at 0.7 per cent due to the weak global demand in the aftermath of the Asian financial crisis, the downswing of the technology cycle and disinflationary impact from the emergence of China and other economies.

After years of low inflation, the world is now returning to 'a more normal inflation environment,' Mr Menon said.

But he added that the fact that long-term bond yields remain low and reflect that despite the current spike in inflation, the long-term inflation outlook remains low. And as long as jobs are created and wages grow, the impact of inflationary pressures will be dampened.

A recent report released by the Department of Statistics shows that household income has risen faster than inflation. Average household income from work was 32.4 per cent higher than 10 years ago, while consumer prices rose by a smaller 7.6 per cent over the same period.

Ministry of Manpower divisional director (manpower planning and policy) Jeffrey Wong said he expects employment growth to be sustained into 2008, after adding a record 236,600 jobs in 2007.

Slower Growth, Higher Prices And Uphill Climb Ahead

Source : The Business Times, February 15, 2008

2008 growth forecast cut to 4-6% in shadow of US uncertainty

The Singapore economy will see lower growth and higher inflation this year, but remains well-poised to ride the upturn when it comes, says the Ministry of Trade and Industry (MTI). Most economists agree.

In view of heightened risks in recent months, chiefly a sharp US slowdown, MTI has shaved its forecast of Singapore's 2008 GDP growth by half a percentage point to 4-6 per cent, which would be down a few notches from 2007's revised 7.7 per cent pace.

The previous 2008 forecast in November had already factored in a US slowdown, MTI second permanent secretary Ravi Menon explained at a media briefing yesterday on the 2007 economic results.

But downside risks have since risen. And while it is not known if the US economy is in fact in recession, 'what we do know is that the US is already experiencing a significant slowdown in growth, and the key uncertainty now is the length and severity of this slowdown', said Mr Menon.

The new official 4-6 per cent growth forecast captures two scenarios. The brighter outlook sees - as current conditions suggest, by MTI's reading - the United States tackling a mild recession in the first half but recovering in the second half on the back of strong fundamentals, and fiscal and monetary stimulus.

Singapore will then likely grow in the upper half of the 4-6 per cent forecast, supported by healthy, if slower, growth in Europe and Japan, and a robust Asia.

But if the US falls into a severe recession brought on by a prolonged credit crunch, with knock-on effects in Europe and Asia, 'sentiment-sensitive and external-oriented' sectors in Singapore, such as electronics, wholesale trade and financial services, will be hit hardest, said Mr Menon.

Even sectors with more of a regional exposure, such as health care and tourism, will not be totally unscathed. The Singapore economy will then likely grow nearer the 4 per cent end of the forecast range.

'In either scenario, we're looking at slower growth this year,' he said.

Already, GDP growth slowed to 5.4 per cent in Q4 last year - down from Q3's 9.5 per cent pace, and lower than early estimates of 6 per cent for Q4. On a quarter-on-quarter basis, GDP contracted by 4.8 per cent.

According to MTI, the Q4 slowdown reflected more the plunge in biomedical manufacturing - which fell nearly 30 per cent in Q4 because of cyclical pharmaceutical downtime - rather than any impact from the US.

Asked about the chances of Singapore slipping into a technical recession - if the economy sees a second consecutive negative quarter in quarter-on-quarter terms - Mr Menon said: 'Most of the simulations we have done don't show that outcome.'

MTI's economics and strategy director, Cheang Kok Chung, also declared it 'quite unlikely', adding that there is 'good potential' for a biomedical rebound in Q1.

In fact, some of the more upbeat private sector economists see a quick rebound in GDP - in the current quarter.

While OCBC Bank's treasury economist Selena Ling thinks the slowing growth momentum from Q4 2007 'could bleed over into Q1 2008', others such as HSBC's Prakriti Sofat see the Singapore economy bouncing back strongly in Q1. One reason - she is confident of a pharmaceutical turnaround 'over the next few months'.

A recent Merrill Lynch report also voiced confidence that the Singapore economy is 'well-positioned to cope with a US downturn this time'.

And P K Basu, the ever bullish chief economist (Asia ex-Japan) of Daiwa Institute of Research, declares: 'I see no reason for even one iota of pessimism about the Singapore economy.'

Apart from the pharmaceutical bleed, Q4 was hardly a weak quarter at all, he says, pointing out that the rest of the economy, notably electronics, was 'accelerating'.

But the 'most eye-popping number', Mr Basu said, was the Q4 manufacturing investment commitments of $8.7 billion - that spells jobs and output down the road.

Depending on the pharma sector rebound, he reckons GDP growth could hit 7-8 per cent in Q1.

'I see no significant downside risk to my 7.4 per cent GDP growth forecast for 2008,' he tells BT.

MTI - which yesterday also raised its 2008 inflation forecast for Singapore to 4.5-5.5 per cent - would be cheered by such confidence.

'Growth will be lower and inflation higher, not a great combination,' Mr Menon said. But the slowdown - after four years of above-trend growth - towards the economy's underlying potential will help ease supply-side constraints and relieve cost pressures, he added.

Beyond 2008, the economy is well-positioned for any pick-up, he said. 'Notwithstanding the weakened macroeconomic picture, the economy remains in fundamentally good shape structurally.'

Rising costs - and Singapore's ever-strong fiscal balances - set the stage for the Budget today. Rebates and other goodies for lower-income households, as well as a cut in the personal income tax rate, are widely anticipated.