Source : The Business Times, January 9, 2008
Developing countries robust enough to pull advanced economies along
EAST Asia and Pacific economies will be hardly deflected from their growth path this year by fallout from the US sub-prime mortgage crisis, the World Bank says in its latest Global Economic Prospects report published today.
It also maintains an upbeat tone about prospects for the global economy, arguing that developing country growth in Asia and elsewhere is robust enough to pull advanced economies along. This optimism echoes that expressed by the Organisation for Economic Cooperation and Development (OECD) last month in its latest Economic Outlook, and in the World Bank's East Asia and Pacific Update last November.
But the bank does acknowledge growing risks, such as that of a sudden collapse of the dollar or even the failure of a 'key' financial system. So far, the sub-prime crisis and related financial market distress have taken only a slight toll on the world economy, the latest report says.
Global growth slowed 'modestly' last year to 3.6 per cent from 3.9 per cent in 2006 and should decline gently again this year, to 3.3 per cent, it argues. 'World output should pick up in 2009, expanding by 3.6 per cent as the US economy regains momentum.'
GDP in East Asia and the Pacific is expected to grow about 10 per cent in 2007, with China set to grow by more than 11 per cent. Growth for the region should ease to 9.7 per cent in 2008 and 9.6 per cent by 2009.
'Effects from turmoil in world financial centres may be small in most economies in the region. Except in China, direct exposure of financial institutions in the region to mortgage-based securities or the sub-prime crisis is limited,' says the report.
Growth in South Asia edged down slightly in 2007 to 8.4 per cent, with industrial production and GDP growth driven by strong domestic demand. 'An expansion of credit, rising incomes, and strong worker remittances are buoying private consumption.'
Meanwhile, 'improvements in business sentiment along with rising corporate profits are providing a further boost', the World Bank says. Growth in Latin America should also ease only slightly this year while output is predicted to expand in 2008 in the Middle East and much of Africa, owing to high oil prices and to strong domestic demand.
'Overall, we expect developing country growth to moderate only somewhat over the next two years,' commented Uri Dadush, director of the World Bank's development prospects group.
'Strong import demand across the developing countries is helping to sustain global growth,' said Hans Timmer, manager of the global trends team in the development prospects group. 'As a result, and given a cheaper US dollar, American exports are expanding rapidly. This is helping to shrink the US current account deficit and contributing to a decline in global imbalances.'
The World Bank admits, however, that 'a much sharper US slowdown is a real risk that could weaken mid-term prospects in developing countries'. A US recession, or an excessive easing of US monetary policy could contribute to further sharp declines in the dollar, it notes.
'A weaker dollar would benefit developing countries with dollar debt but impose losses on those holding dollar-denominated assets. It would hurt the competitiveness of firms exporting to the US.
However, 'the main impact of a precipitous decline in the dollar would likely stem from the increased uncertainty and financial market volatility it would provoke'. Recent financial turbulence has shown how 'sudden and pervasive adjustments in financial markets can be', the report says.
'Because the dynamics of financial behaviour are inherently difficult to control, and new securitised instruments have made identifying the location or magnitude of underlying risk difficult, the possibility of a breakdown in a key financial institution or system cannot be fully discounted.'
To date, the report adds, 'strong fundamentals in developing countries have helped mitigate the slowdown in the US but in the case of a major disruption, adverse effects in emerging markets are unlikely to be avoided, which at some point would exacerbate the US slowdown'.
Wednesday, January 9, 2008
Woh Hup Wins $1b Keppel Land Contract
Source : The Business Times, January 9, 2008
WOH Hup has been awarded the $1 billion main contract for Keppel Land's Reflections at Keppel Bay. The 1,129-unit development will take about five years to build and is expected to be completed by 2013.
On the challenges facing the construction industry in the next few years, Woh Hup vice-chairman Yong Tiam Yoon said: 'We are lucky because we lined up our sub-contractors at the tender stage. We have been around a long time and have the support of sub-contractors and suppliers.'
The $1 billion main contract covers all major construction works including, piling, structural, mechanical and electrical, and architectural. It is Woh Hup's biggest-ever contract - but Mr Yong said the company, which is also working on the MRT Circle Line, has no problem with projects of this size.
Estimating that Reflections will require about 10,000 cubic metres of structural concrete per month, he said Woh Hup is already handling projects of close to this magnitude.
The first phase of Reflections, comprising 620 waterfront homes, has been sold out and the second phase is expected to be launched this year.
On the expected date of completion, a Keppel Land spokesman said that while the target is 2013 he expects the development will be completed sooner. The time-frame of construction is not long considering the size of the development, which has a gross floor area of 2.1 million sq ft and a site area of 8.4 hectares, he said.
WOH Hup has been awarded the $1 billion main contract for Keppel Land's Reflections at Keppel Bay. The 1,129-unit development will take about five years to build and is expected to be completed by 2013.
On the challenges facing the construction industry in the next few years, Woh Hup vice-chairman Yong Tiam Yoon said: 'We are lucky because we lined up our sub-contractors at the tender stage. We have been around a long time and have the support of sub-contractors and suppliers.'
The $1 billion main contract covers all major construction works including, piling, structural, mechanical and electrical, and architectural. It is Woh Hup's biggest-ever contract - but Mr Yong said the company, which is also working on the MRT Circle Line, has no problem with projects of this size.
Estimating that Reflections will require about 10,000 cubic metres of structural concrete per month, he said Woh Hup is already handling projects of close to this magnitude.
The first phase of Reflections, comprising 620 waterfront homes, has been sold out and the second phase is expected to be launched this year.
On the expected date of completion, a Keppel Land spokesman said that while the target is 2013 he expects the development will be completed sooner. The time-frame of construction is not long considering the size of the development, which has a gross floor area of 2.1 million sq ft and a site area of 8.4 hectares, he said.
UOB Launches Home Loan With An Overdraft Feature
Source : The Business Times, January 9, 2008
AMID the current negative interest rate environment, where inflation is rising faster than interest rates, United Overseas Bank (UOB) has launched a housing loan with an overdraft (OD) feature.
The OD facility gives customers the flexibility to invest, to reap potentially higher returns.
Kevin Lam, head of UOB's loans division, said he expects interest rates to remain stagnant for 2008. 'This year, I think interest rate will remain flat, with the general trend of softening, as we see some correlation with US interest rates,' he said.
The key three-month interbank rate stood at 1.81 per cent yesterday, after hovering between 2.4 and 3.4 per cent last year.
Inflation rate - as measured by the Consumer Price Index (CPI) - surged 4.2 per cent in November, compared with a year ago.
In this environment where asset prices are rising quickly and interest rates are low, consumers can capitalise on it by putting their money into other instruments or other uses, said Mr Lam. He added that asset inflation will probably remain for some time, and that asset prices will appreciate at a more modest level now, after having surged in the past few years.
The FlexiMortgage loan, launched recently, combines a conventional housing loan and an overdraft facility. Customers can decide on how much will go to paying the housing loan, and how much the OD will be.
For the housing loan component, the customer pays a normal monthly instalment, but for the OD component, customers service only the interest. The principal is not paid down in this component, and customers can decide when they want to pay the full sum of the principal.
The interest rate for this loan comes up higher than an average home loan interest rate, but Mr Lam said the bank is not competing on the basis of rates.
'We don't want to compete on interest rates since whatever rate you can come up with, a competitor will go lower,' he explained. 'We are moving away from that to redefine and create a new competitive advantage with this loan.'
In a typical home loan, wealth is locked in. 'If you want to take out your money, you must sell your place and downgrade your house for the extra cash,' said Mr Lam.
Another alternative is to go to the bank and take out an OD facility on the home. All that takes time and the legal processes can drag on for months, he explained.
However, with this loan, he said, the OD facility that comes with it can be used to tap business or investment opportunities quickly.
The OD facility currently has a floating rate of 4.25 per cent and follows UOB's prime rate of 5 per cent. If the prime rate moves up or down, the OD follows accordingly. The interest rate on the OD facility is comparable with those of other banks.
Mr Lam said he expects this loan to contribute 10-20 per cent to the bank's loan business this year. He said UOB did well last year in terms of market share and growth for loans.
UOB 'does not depend on deferred payment loans to grow its loan book', he said, dismissing perceptions that the bank has a large pipeline of deferred payment loans. 'Our business growth is in secondary market transactions,' said Mr Lam.
AMID the current negative interest rate environment, where inflation is rising faster than interest rates, United Overseas Bank (UOB) has launched a housing loan with an overdraft (OD) feature.
The OD facility gives customers the flexibility to invest, to reap potentially higher returns.
Kevin Lam, head of UOB's loans division, said he expects interest rates to remain stagnant for 2008. 'This year, I think interest rate will remain flat, with the general trend of softening, as we see some correlation with US interest rates,' he said.
The key three-month interbank rate stood at 1.81 per cent yesterday, after hovering between 2.4 and 3.4 per cent last year.
Inflation rate - as measured by the Consumer Price Index (CPI) - surged 4.2 per cent in November, compared with a year ago.
In this environment where asset prices are rising quickly and interest rates are low, consumers can capitalise on it by putting their money into other instruments or other uses, said Mr Lam. He added that asset inflation will probably remain for some time, and that asset prices will appreciate at a more modest level now, after having surged in the past few years.
The FlexiMortgage loan, launched recently, combines a conventional housing loan and an overdraft facility. Customers can decide on how much will go to paying the housing loan, and how much the OD will be.
For the housing loan component, the customer pays a normal monthly instalment, but for the OD component, customers service only the interest. The principal is not paid down in this component, and customers can decide when they want to pay the full sum of the principal.
The interest rate for this loan comes up higher than an average home loan interest rate, but Mr Lam said the bank is not competing on the basis of rates.
'We don't want to compete on interest rates since whatever rate you can come up with, a competitor will go lower,' he explained. 'We are moving away from that to redefine and create a new competitive advantage with this loan.'
In a typical home loan, wealth is locked in. 'If you want to take out your money, you must sell your place and downgrade your house for the extra cash,' said Mr Lam.
Another alternative is to go to the bank and take out an OD facility on the home. All that takes time and the legal processes can drag on for months, he explained.
However, with this loan, he said, the OD facility that comes with it can be used to tap business or investment opportunities quickly.
The OD facility currently has a floating rate of 4.25 per cent and follows UOB's prime rate of 5 per cent. If the prime rate moves up or down, the OD follows accordingly. The interest rate on the OD facility is comparable with those of other banks.
Mr Lam said he expects this loan to contribute 10-20 per cent to the bank's loan business this year. He said UOB did well last year in terms of market share and growth for loans.
UOB 'does not depend on deferred payment loans to grow its loan book', he said, dismissing perceptions that the bank has a large pipeline of deferred payment loans. 'Our business growth is in secondary market transactions,' said Mr Lam.
F&N Reveals $5m Parting Gift For Former CEO Han
Source : The Business Times, January 9, 2008
Accountant Nicky Tan paid $3m for brokering Temasek investment
After much to-ing and fro-ing, the fee for accountant Nicky Tan's role in getting Temasek Holdings to invest $900 million for a 14.9 per cent stake in Fraser & Neave has been settled at $3 million.
Mr Tan, who is on F&N's board and received $99,000 in director's fees, is said to have earlier billed $5 million for his work but several other F&N board members reportedly felt that the figure was too high. They reportedly offered to pay $1.25 million instead, which Mr Tan refused.
The final fee for Mr Tan was disclosed in F&N's latest annual report which was released this week.
The report also showed that former deputy chairman and chief executive Han Cheng Fong, who quit suddenly last October, was given a parting gift of $5.05 million in addition to his remuneration of $3.8 million.
Dr Han, who has since joined property tycoon Ng Teng Fong's Hong Kong- based Sino Land, however, lost out on nearly $1 million worth of gains on share options when he quit.
Chairman Lee Hsien Yang, who is currently also the company's caretaker pending the appointment of a new CEO, has also decided to leave the fee package for the board to shareholders to decide at the company's annual general meeting on Jan 31.
The company has proposed that the chairman be paid $1.25 million compared with $250,000 now. Mr Lee has decided to incorporate the $1 million fee he now gets into the chairman's package. The former SingTel head honcho also received another $150,000 in his capacity as non-executive chairman of F&N's property arm, Frasers Centrepoint.
The report also showed that former chairman Michael Fam, who retired on Oct 14 after 24 years with the group, received $2.33 million of which 77 per cent was his salary.
Group company secretary Anthony Cheong, who will be relinquishing his board seat to make way for more independent directors, was paid nearly $1.8 million, comprising salary of 31 per cent, 28 per cent in bonuses and 36.5 per cent in long-term incentives (largely share options).
Asia Pacific Breweries CEO Koh Poh Tiong was paid $3.77 million in 2007 - 32 per cent of which was salary, 62.5 per cent came by way of bonuses and 4.4 per cent in long-term incentives. F&N effectively owns 39 per cent of APB.
Centrepoint CEO Lim Ee Seng got $2.98 million of which 33.4 per cent was salary, 46.5 per cent was a bonus and 19.5 per cent was a long-term incentive.
The report also revealed some other nuggets, including the purchase of three condominium units at St Thomas Suites by director Stephen Lee and/or his associates for $21.98 million, and two units at the same condo by Nicky Tan and/or his associates for $22.59 million. Mr Lee also bought a unit at Soleil@Sinaran for $2.22 million. Dr Han and/or his associates bought two units at the same condo for $3.85 million.
F&N, which reported a 28 per cent increase in net earnings to a record $378 million on a 25 per cent jump in turnover to $4.7 billion for the financial year ended Sept 30, 2007, disclosed that it had unutilised tax losses carried forward of about $351.59 million last year compared with $444.55 million the previous year. Just over $200 million was the result of writedowns by the Chinese arm of Frasers Properties.
In his maiden annual report statement, chairman Lee thinks the outlook for the current financial year, is fraught with uncertainties arising from the US sub-prime mortgage issue and the high price of crude oil.
'The group will need to address the challenges of more cautious consumer spending and higher costs of doing business. However, economic growth in Asia is expected to continue albeit at a slower rate,' he said.
Accountant Nicky Tan paid $3m for brokering Temasek investment
After much to-ing and fro-ing, the fee for accountant Nicky Tan's role in getting Temasek Holdings to invest $900 million for a 14.9 per cent stake in Fraser & Neave has been settled at $3 million.
Mr Tan, who is on F&N's board and received $99,000 in director's fees, is said to have earlier billed $5 million for his work but several other F&N board members reportedly felt that the figure was too high. They reportedly offered to pay $1.25 million instead, which Mr Tan refused.
The final fee for Mr Tan was disclosed in F&N's latest annual report which was released this week.
The report also showed that former deputy chairman and chief executive Han Cheng Fong, who quit suddenly last October, was given a parting gift of $5.05 million in addition to his remuneration of $3.8 million.
Dr Han, who has since joined property tycoon Ng Teng Fong's Hong Kong- based Sino Land, however, lost out on nearly $1 million worth of gains on share options when he quit.
Chairman Lee Hsien Yang, who is currently also the company's caretaker pending the appointment of a new CEO, has also decided to leave the fee package for the board to shareholders to decide at the company's annual general meeting on Jan 31.
The company has proposed that the chairman be paid $1.25 million compared with $250,000 now. Mr Lee has decided to incorporate the $1 million fee he now gets into the chairman's package. The former SingTel head honcho also received another $150,000 in his capacity as non-executive chairman of F&N's property arm, Frasers Centrepoint.
The report also showed that former chairman Michael Fam, who retired on Oct 14 after 24 years with the group, received $2.33 million of which 77 per cent was his salary.
Group company secretary Anthony Cheong, who will be relinquishing his board seat to make way for more independent directors, was paid nearly $1.8 million, comprising salary of 31 per cent, 28 per cent in bonuses and 36.5 per cent in long-term incentives (largely share options).
Asia Pacific Breweries CEO Koh Poh Tiong was paid $3.77 million in 2007 - 32 per cent of which was salary, 62.5 per cent came by way of bonuses and 4.4 per cent in long-term incentives. F&N effectively owns 39 per cent of APB.
Centrepoint CEO Lim Ee Seng got $2.98 million of which 33.4 per cent was salary, 46.5 per cent was a bonus and 19.5 per cent was a long-term incentive.
The report also revealed some other nuggets, including the purchase of three condominium units at St Thomas Suites by director Stephen Lee and/or his associates for $21.98 million, and two units at the same condo by Nicky Tan and/or his associates for $22.59 million. Mr Lee also bought a unit at Soleil@Sinaran for $2.22 million. Dr Han and/or his associates bought two units at the same condo for $3.85 million.
F&N, which reported a 28 per cent increase in net earnings to a record $378 million on a 25 per cent jump in turnover to $4.7 billion for the financial year ended Sept 30, 2007, disclosed that it had unutilised tax losses carried forward of about $351.59 million last year compared with $444.55 million the previous year. Just over $200 million was the result of writedowns by the Chinese arm of Frasers Properties.
In his maiden annual report statement, chairman Lee thinks the outlook for the current financial year, is fraught with uncertainties arising from the US sub-prime mortgage issue and the high price of crude oil.
'The group will need to address the challenges of more cautious consumer spending and higher costs of doing business. However, economic growth in Asia is expected to continue albeit at a slower rate,' he said.
Paragon To Get $82m Makeover
Source : The Straits Times, Jan 8, 2008
NEW LOOK, MORE SPACE
PARAGON Shopping Centre will soon sport a new look.
The icon along Singapore's Orchard Road shopping strip is embarking on an $82-million makeover that will give it a new facade and more retail and office space by the end of the year.
Its new front will include pop-out glass boxes that will lift shopfronts above the ground level.
Stores at the front of the building will sport windows three times taller than the current ones.
And a yet-to-be-disclosed flagship store will make its mark with a five-storey high shopfront.
The makeover 'will provide these tenants with significant visibility and brand expression,' said Mrs Linda Kwan, Paragon's general manager.
The new look for the mall at the junction of Orchard and Bideford roads is the work of DP Architects, which oversaw the integration of Paragon and the former Promenade into a single mall in 2003.
DP aims to create a modern and upmarket look for Paragon, to reflect its status as a leading mall for international luxury goods.
The latest renovation will also add 11,600 sq ft to Paragon's nett lettable area, which now stands at 650,000 sq ft. Besides the extra retail space, two more floors, or 29,000 sq ft, will also be added for use as offices and medical clinics.
The mall will remain open during the renovation.
NEW LOOK, MORE SPACE
PARAGON Shopping Centre will soon sport a new look.
The icon along Singapore's Orchard Road shopping strip is embarking on an $82-million makeover that will give it a new facade and more retail and office space by the end of the year.
Its new front will include pop-out glass boxes that will lift shopfronts above the ground level.
Stores at the front of the building will sport windows three times taller than the current ones.
And a yet-to-be-disclosed flagship store will make its mark with a five-storey high shopfront.
The makeover 'will provide these tenants with significant visibility and brand expression,' said Mrs Linda Kwan, Paragon's general manager.
The new look for the mall at the junction of Orchard and Bideford roads is the work of DP Architects, which oversaw the integration of Paragon and the former Promenade into a single mall in 2003.
DP aims to create a modern and upmarket look for Paragon, to reflect its status as a leading mall for international luxury goods.
The latest renovation will also add 11,600 sq ft to Paragon's nett lettable area, which now stands at 650,000 sq ft. Besides the extra retail space, two more floors, or 29,000 sq ft, will also be added for use as offices and medical clinics.
The mall will remain open during the renovation.
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