Complete Property Market Updates of Singapore

June 11, 2008

The radiant face of Singapore

Filed under: About Singapore, General, Singapore Economy — Propertymarketupdates @ 4:29 am

From the Republic’s early days, the buildings that define its skyline reflect a nation that is increasingly vibrant

IF a country had a face, it would be the skyline of its city. Like a portrait on a sky-blue canvas, it is the profile of a nation - as visually unique as the individuals who inhabit it. And, like a face, it reflects the character and spirit of its people too.


Impressive edifices: An upcoming marquee project is the Marina Bay Financial Centre, a $2b complex of residential and commercial buildings. The Marina Bay Sands IR will also be a ground-breaking development in many ways

The economic success story of Singapore is not just recorded in the history books, but literally etched in stone. Well, concrete anyway. Soaring office towers decked out in glass and steel gleam proudly, shoulder-to-shoulder, scraping the sky above the Central Business District (CBD). But despite the rush to build on increasingly limited and expensive land, Singapore hasn’t become as suffocating a concrete jungle as many other developed cities. For all the human activity that is part and parcel of a bustling cosmopolitan city, Singapore’s business district is surprisingly well-ordered and efficient.

The brain behind the city’s pleasant face is the Urban Redevelopment Authority (URA). Since the mid-1970s it has been tasked with striking a balance between designing an aesthetically distinctive yet land-efficient cityscape. Beyond figuring out how to make the most of limited land, it also sees ‘the need for the CBD to be attractive and distinctive’. Indeed, the number of postcards that promote Singapore’s photogenic skyline to the world bear testament to the efficacy of URA’s work over the years.


Changing profile: Singapore’s skyline in 1977 and 1997. The city hasn’t become as suffocating a concrete jungle as many other developed urban areas

What is also notable is how young - compared with other developed cities - Singapore’s cityscape is.

A significant early development that contributed to the definition of its skyline came about a couple of decades ago in 1986 with the completion of OUB Centre at Raffles Place. The tower, which has 63 floors and is 280 metres high, was the tallest building outside the United States at the time of its opening.

Today, 22 years later, it still stands as an icon, sharing the title of Singapore’s tallest building with two other structures - UOB Plaza One and Republic.


 
Plaza, the former having been completed in 1992 and the latter three years later. Togetherthey comprise a triumvirate of titans that stand as towering witnesses to the economic growth of the nation.

But bigger plans are afoot for an island with ambitions bigger than its land mass. Reclamation has been actively pursued to meet the infrastructural demands of a burgeoning economy for decades. Between 1960 and 1990, 51.5 sq km of land was reclaimed, accounting for almost 10 per cent of Singapore’s total land area at the time. By 2030, it is estimated that another 100 sq km will have been added.

The swathe of land that houses the buildings in the Marina Bay area is, in fact, reclaimed. Comprising 3.6 sq km of prime real estate, it is the focal point of existing and future developments that will cement Singapore’s status as a financial and business hub. Set picturesquely by the waterfront, the area is set to evolve into what URA terms a ‘Garden City by the Bay’.

It is envisioned as a round-the-clock microcosm of cosmopolitan living, with a vibrant lifestyle and leisure component that will complement its business environment.

One way URA hopes to infuse more vibrancy in the area is to designate certain zones ‘white sites’, which means developers can mix commercial, retail and residential components within a single project.

But while many of these new buildings will have a premium view of the bay area and encompass a mix of lifestyle and business facilities, they will not soar as high as the other buildings in the vicinity. This is another deliberate feature - planners do not want to obstruct the view of earlier developments.

Graduating arrangement

In fact, a glance at a picture of Singapore’s existing skyline reveals that very trend. The result is a dynamic yet uncluttered and harmoniously graduating arrangement of heights that do not have to vie for the best view.

One significant development now being built that will acquire some height and prominence in the cityscape is The Sail @ Marina Bay, a luxury condominium which, at 70 stories tall, will be among the 10 tallest residential buildings in the world when it is completed next year. Comprising two distinctively sail-shape towers that are bound to become iconic fixtures of the future skyline, it will provide 1,100 apartments with a splendid view of the bay area.

Another upcoming marquee project is the Marina Bay Financial Centre, a $2 billion complex of residential and commercial buildings that will peak at 55 stories. When it is eventually up, it is expected to add a considerable 150,000 sq ft of Grade A office space, effectively doubling what is currently available in Singapore. The first phase is expected to be ready by 2010.

In fact, when the entire Marina Bay area is fully developed and integrated with the existing financial district, it will be twice the size of London’s famous Canary Wharf financial district and will provide a combined total of 2.82 million sq m of office space, equalling what is available in Hong Kong’s main business centre.

The most prominent - and anticipated - of these new developments will, no doubt, be the Marina Bay Sands integrated resort that is set to open for business next year. It will be a ground-breaking project in many ways.

A drive across Benjamin Sheares Bridge, which overlooks the expansive site, reveals an orchestra of cranes and a flurry of construction work - an impressive sign of the scale of things to come.

Its one-of-a-kind Sky Park - a two-acre stretch of landscaped gardens that will be perched atop and bridge its three 50-storey hotel towers - will offer breathtaking views of the entire city. When completed, it will offer six million sq ft of retail and entertainment space, 3,000 hotel rooms and a plethora of lifestyle and leisure activities.

While it may not be the tallest upcoming structure, it will undoubtedly be deemed the crown jewel on the eventual skyline. Certainly, at an estimated cost of more than $5 billion, it is likely to be one of the most expensive projects of its kind in the world.

With Singapore’s expanding skyline gradually taking form, the fact that each new storey of every eventual building represents a business opportunity is not lost on the different businesses involved in the building industry.

A significant portion of the investment pouring into the city will go to them, as developers continue dreaming up more impressive edifices to meet those increasing demands.

In fact, the total amount generated by the construction and building industry here is expected to hit a whopping $55 billion by 2011.

Last year, the industry grew by almost 10 per cent and awarded $19 billion of contracts.

International building centre

While its position as a financial and leisure hub continues to solidify, Singapore is also becoming a centre for the international building and construction industry.

With such an array of opportunities available and its reputation for business efficiency, almost everyone in the industry’s supply chain is finding some reason to do business here. They are either directly involved in the local industry or use it as a regional hub to reach out to larger markets in the region.

A good example is the upcoming BEX Asia 2008 exhibition, when building material and equipment suppliers from around the world showcase their latest products and technologies in Singapore. The event, from May 21-23 at Suntec Singapore, is expected to attract prominent industry players, both local and international.

And so, as developers build bigger and taller, they will continue to redefine Singapore’s skyline in the process. From the smattering of grey monoliths that sprouted up in the early days of the economic boom to the myriad glistening peaks and pinnacles that scrape our skies today - and those that will join them in the future - the skyline represents the face of a nation which, as it matures, begins to look increasingly radiant.

Source : Business Times - 20 May 2008

Singapore the second most competitive economy

Filed under: General, Singapore Economy — Propertymarketupdates @ 12:49 am

It is closing the gap on top-ranked US; 2008 may be the year the US falls from its pole position

SINGAPORE remains the world’s second most competitive economy but is closing the gap on the top-ranked United States, according to an annual analysis.

Now in its 20th year, the World Competitiveness Yearbook (WCY) by Swiss business school IMD gives Singapore a score of 99.33 in its 2008 study, up from 99.12 last year. The US - firmly entrenched in pole position since 1994 - has the 100 perfect score.

But the latest report has IMD asking if the US run will continue - or go the way of Japan, which was by far the most competitive in 1989, when the WCY was first published but has since dropped out of the top league, beset by numerous domestic economic crises. (In the 2008 rankings, Japan is 22nd, up from 24th in 2007.)

Says Stephane Garelli, director of IMD’s World Competitiveness Center: ‘In our 20th anniversary edition this year, we may be seeing the US in the number one position for the last time. Singapore is closing the gap with the US and 2008 might be the turning point where the US falls from its leadership of top competitors.’

Taking lessons from Japan’s downfall in the 1990s, Prof Garelli says that the present turmoil in the US ‘bears some resemblance’ with past crises in Japan that followed ‘a period of economic boom, real estate price follies and exuberant assets expansion’.

But there are also huge differences between the two economic societies, he notes: Apart from ‘notable successes’ such as Toyota and Canon, much of Japanese industry was ‘paralysed’ by the 1990s as ‘the Japanese never practised creative destruction’.

The US, on the other hand, ‘because of its openness, resilience and entrepreneurship, always seems to find the means to re-invent itself in ways that Japan (and much of Europe) often lacks’, he says.

In any case, one takeaway from 20 years of analysing competitiveness: ‘No nation, however competitive, is immune to a breakdown, especially when it stems from the financial sector.’

The WCY - which sees competitiveness as essentially the capacity of a country to manage its long-term prosperity - uses a mix of hard statistical data and soft survey feedback for its analyses. In all, 55 economies are assessed on some 330 criteria in four broad factors: economic performance, government efficiency, business efficiency and infrastructure.

Singapore is third on economic performance (up from fourth last year); up to second on business efficiency (fourth in 2007); and retains for the second straight year its first and third places on government efficiency and infrastructure, respectively.

Singapore’s challenges are, in the short term, managing costs in a global inflationary environment, and in the medium term, becoming a globalised, entrepreneurial and diversified economy, IMD notes.

According to Prof Garelli, a more advanced economy increasingly focuses on the ’something else’ that makes the difference between economic growth and prosperity, such as sustainable development, quality of life, even happiness. ‘These objectives, which would not be attainable without economic growth, are very subjective, hard to measure and linked to national value systems,’ he says. ‘Managing the ’softer’ side of an economy is thus a priority for any leader today.’

Competitiveness encompasses all these dimensions, and remains the key to success and prosperity, he maintains.

Source : Business Times - 15 May 2008

Diversified Singapore economy to do well: economist

Filed under: General, Singapore Economy — Propertymarketupdates @ 12:47 am

THE Singapore economy has held up well despite slower exports in the past 18 months, an economist said yesterday.

HSBC senior economist Robert Prior-Wandesforde said that tech exports in particular have been contracting, but this has not drastically affected the economy.

‘What we’ve seen over the past 18 months is something unprecedented,’ he said. ‘At the same time that the electronics sector has been under pressure, Singapore’s gross domestic product growth has held up remarkably well.

‘If we had known how electronics exports were going to be, we might have thought GDP would be growing at, say, 2 to 3 per cent at the moment. But it’s not. It grew 7.2 per cent in the first quarter.’

This indicates that the economy has decoupled from the electronics sector and diversified into other areas, ‘many of which are not correlated with the US or the developed world’s economic cycle’, Mr Prior Wandesforde said.

These include marine and offshore engineering and pharmaceuticals, which have doubled and grown 85 per cent respectively in the past four years.

Speaking yesterday at International Enterprise Singapore’s open house, Mr Prior-Wandesforde said that ‘older industries’ such as financial services and construction have been reborn.

‘In the financial industry, for example, we’ve seen a heavy push into wealth management, which is structurally a huge growth area, going forward,’ he said.

‘So clearly, structurally, Singapore has changed massively. It has diversified away from some of the traditional sources of growth.’

He believes that the economy ‘will do pretty well’ regardless of any ‘global storm’, and predicts 6 per cent GDP growth this year.

Source : Business Times - 15 May 2008

June 10, 2008

HSBC economist tips inflation at 6% this year

Filed under: General, Singapore Economy — Propertymarketupdates @ 4:14 am

INFLATION is set to peak in the coming months before falling to 4 per cent by the end of the year, said HSBC Bank economist Robert Prior-Wandesforde yesterday.

However, he expects overall inflation for the year to average 6 per cent because of higher oil and food prices.

The Monetary Authority of Singapore anticipates inflation this year to be in the upper half of the 4.5 per cent to 5.5 per cent range.

Inflation in March hit a 26-year high of 6.7 per cent.

Mr Prior-Wandesforde, who was speaking on the economic outlook for Singapore, said: ‘We think the central bank will need to raise its inflation projection…the size of the oil and food shocks has taken everyone by surprise.’

Oil hit a record high of nearly US$126 a barrel last week, and food prices have shot up recently due to supply shocks and rising demand.

Mr Prior-Wandesforde expects inflation in Singapore to reach a high of just over 7 per cent by next month, with electricity and petrol prices likely to go up.

But it should fall back to about 4 per cent by year end due to the dissipation of the effect of last year’s goods and services tax hike, and hit 3.5 per cent by the middle of next year.

DBS Bank economist Irvin Seah said of HSBC’s forecast: ‘Six per cent’s possible if food and fuel prices continue to creep upwards.’

He tips inflation to be 5 per cent this year.  Mr Prior-Wandesforde expects gross domestic product to grow by 6 per cent this year - at the upper end of the Government’s forecast range of 4 per cent to 6 per cent.

‘It will slow down gradually this year,’ he noted. ‘Some cooling in the Singapore economy is to be welcomed, because the economy was growing a little too fast, resulting in cost and price pressures.’

Source : Straits Times - 14 May 2008

June 4, 2008

Eye on the US economy

Filed under: Community Voices, General, Market Watch, Singapore Economy, USA — Propertymarketupdates @ 5:30 am

How do you see the downturn in the US playing out? Will it be V-shaped, U-shaped or L-shaped? Given your prediction, how do you see that downturn affecting your organisation and how are you planning for it?

MY ASSESSMENT is that the US is likely to go through a U-shaped scenario, where the downturn is prolonged and takes longer to recover from. While the fallout from the sub-prime mortgage crisis is pretty much evident, the full extent of the damage has yet to manifest itself as there is usually a lag between what is reported and the actual impact on the economy. Given that the crisis has not bottomed out yet, I am not optimistic that the US downturn will take the form of a V-shape.

The situation in the US will definitely impact consumer confidence in Asia, and Singapore is unlikely to be spared. As a leading mode of cashless payment pitched at everyday spending, Nets will not escape unscathed once consumers start tightening their belts. Should our economy slow down, our business will certainly be affected.

However, the impact is unlikely to be significant as consumers will still need to purchase daily necessities, which have always been Nets’ traditional strongholds in the payments market. As a point of reference, Nets’ transaction volumes actually rose during the Sars crisis, when the retail economy took a hit and businesses floundered.

Against such an economic backdrop, our strategy is to remain prudent as a company in monitoring our costs and discretionary spending. This will ensure that Nets remains on course to expand beyond Singapore, in becoming Asiaâ€TMs preferred world-class solutions provider for payment and processing services.

- Poh Mui Hoon
CEO
Nets

US downturn may be U-shaped

With the recent data from US pointing to an unexpected lower unemployment followed by a spike in the stock market, it may indeed indicate a U-shaped recovery. Most companies have reported their financial results within expectations, but we do see some big companies missing their numbers. Hopefully, all the bad news from the finance sector is already out. Hence, the few factors that could be hampering a speedy economic recovery would be the ever-increasing petroleum prices and spiralling commodity costs. This current high inflation would eventually have a negative effect on the world economy that extends far beyond the US economy.

As a US-headquartered company, there are several steps that we can take to counter the effects of a slowing US economy.

Firstly, we will have to continue to source and grow new opportunities within Asia. Secondly, we will have to closely monitor our sales operations costs. It is imperative that we maintain our Singapore business while seeking to expand our sales opportunities into other markets such as Vietnam and even Cambodia. All employees will be expected and encouraged to watch all business expenditures carefully. Therefore, we will have to work more with less budget. We are cautiously optimistic about our strong pipeline in Asia and believe our growth rate will continue to accelerate and outshine all other regions.

- Benjamin Low
Managing Director, South-east Asia and India
Secure Computing

We are taking a moderate view of the situation and predict a U-shaped reversal of the trend in next 12-18 months. The loss from securitisation of housing loans initially estimated at US$100 billion could now hit US$1 trillion. The looming crisis has bequeathed a recession in the US economy which could last as long as two years.

Nonetheless, signs are encouraging. The US economy grew at an annual pace of 0.6 per cent in the first three months of 2008, slightly faster than expected. Fewer jobs were lost than expected - at 20,000 jobs in April. And measures are underway. The Federal Reserve has announced its seventh rate cut since September last year, bringing down the federal funds rate from 5.25 per cent to a mere 2 per cent. On top of that, the Federal Reserve has also lent billions of dollars to the banking sector to avoid a financial meltdown. But worrying signs persist. Consumer spending, a key driver of growth, rose by just one per cent in Q1 2008. However, it will receive a boost with the US government’s tax rebates.

The US economy has a ripple effect on the rest of the world. Shrinking margins will force many US companies to shift business to India and other low-cost countries, hence increasing offshoring and outsourcing. The key is for organisations to constantly innovate and provide the best solutions that increase the productivity of the business while helping the organisations to reduce operating costs.

- Pramod Ratwani
President and CEO
Consilium Software Inc

WHILE many economists have ruled out an L-shaped recession because of US’s aggressive monetary and fiscal policies, the US economy will face a U-shaped recession because of several factors. While the US central bank has helped regain some confidence in credit markets, particularly in its bold rescue of Bear Stearns, many investors are choosing to wait on the sidelines. This will further aggravate the US economy.

The impact of the US recession will be definitely felt in Singapore in several sectors which Prime Minister Lee Hsien Loong had highlighted in his May Day Rally. Because of the nature of our business and our reach of clients from a range of industries and countries, the GMP Group will be affected as well. However, we have faced similar challenges during the Sars outbreak in 2003. During that time, recruitment was at its lowest since the economic crisis in 1997. We capitalised on the demand for health screeners from local hospitals.

Such an experience has taught us to look for opportunities amid adversity - the US recession is no different. This is a good time for us to take stock and re-evaluate our business goals. The ability to adapt to market changes and the foresight of such change are some of the hallmarks of a successful company. GMP will channel its energies and resources to where talents are needed most and re-focus our business strategy. With this, I believe we will be able to weather the storm.

- Annie Yap
CEO
The GMP Group

PEERING into the future can be dangerous because one single event could change everything, but it seems the worst of the credit crisis has passed. Thatâ€TMs the message from heavyweight analysts, who say economic health now hinges on how well the US and other governments tackle inflationary pressures. This is likely to take months, suggesting a U-shaped curve.

CA is in a strong position because our technology is sound, essential and difficult to live without in the enterprise community. An interesting aspect is that our solutions are extremely helpful in times like this because they help enterprises to manage risk and control costs. The group is also safeguarded to a degree by the very nature of our business plan, which is cautious and prevents us from over-extending ourselves at times of uncertainty.

I also feel CA became even stronger this year after adopting a channel partner-led sales strategy in parts of Asia, including Singapore. As well as streamlining our cost structure, this bold move provides CA with broader coverage and deeper penetration of markets, which equals access to more prospective customers.

- Gavin Selkirk
Senior Vice-President & General Manager
CA Asia Pacific & Japan

I BELIEVE that the US economy will follow a U-shaped trajectory whereas Singapore will experience a V-shaped one. This stems from the fact that unlike the US, Singapore is small, adaptive, and has a government that is able to respond quickly to the needs of the economy. Besides, we have several large-scale projects in the pipeline, including the integrated resorts and Youth Olympics, which are expected to greatly boost our economy.

In the case of Best World, we have weathered various crises and economic downturns in our 18-year history and have built on our core competencies and capabilities. Being in the direct selling industry, Best World is fairly ‘economy-proof’. When times are good, we place emphasis on selling our innovative products; and when times are tough, we focus on grooming business builders. During the latter scenario, people are keen on making money and seeking business opportunities. We would then be able to support their needs via the entrepreneurial platform we offer. In addition, the group has developed into a regionally strong organisation that does not depend solely on Singapore for continued growth and success.

- Dora Hoan
Group CEO
Best World International Ltd

MY PREDICTION is that we’ll see a U-shaped trajectory, with a definite recovery at the end. However, I also believe that the fallout from the US sub-prime crisis is still in its early days, and thus the ‘bottom of the U’ will be at least 18 months to four years.

While much of Singapore trade is directly US-based, even non-US-direct trade will be affected simply by referral, as other economies we trade with also suffer setbacks for the same underlying reason.

Our organisation remains focused both internally, and in assisting Singapore companies, to continue to restrain and manage costs in the IT area, and look carefully at all near-term expansion plans for viability in this scenario.

- Peter Rigbye
Managing Director
PASR Technologies Pte Ltd

US downturn may be V-shaped

I BELIEVE that the US is likely to see a V-shaped downturn. To me, whether there is a technical recession in the US is moot, but the economy is likely to have slowed dramatically in the first half of 2008. The slowdown would have been more pronounced had the Fed not taken decisive actions for JP Morgan to rescue Bear Stearns, put more liquidity in the market and cut interest rates in quick succession. With these measures in place, I think the US economy is likely to show some signs of a recovery in the second half of the year once the government’s stimulus package kicks in.

Notwithstanding the slowdown in the US economy, demand for steel worldwide continues to be strong. The Middle East is undergoing a huge infrastructure and building boom fuelled by petro-dollars. The Chinese and Indian success stories are likely to continue for many more years to come. The other two Bric countries - Russia and Brazil - have also benefited from the rise of commodity prices and embarked on major infrastructure and building projects.

- Wee Piew
CEO
HG Metal Manufacturing Ltd

IN TERMS of the economic outlook for Asean, I will go with the V-shaped projection. The US slowdown will inevitably have some impact on the region’s economic performance, but the foundation that the region has built over the past decade is strong enough for it to weather a downturn and see its economy bounce back quite quickly.

The Asean region particularly has shown strong resilience in the face of the slowing US economy. The service sector, for example, is one area that Asean is performing exceptionally well in. Hospitality establishments understand the importance of maintaining high service standards to continue to attract the growing influx of visitors.

The outlook for DoCoMo interTouch also remains positive. Even in times of economic slowdown, renowned hotel brands will not cut back on providing first-class broadband Internet and in-room entertainment to their guests. We therefore plan to continue our rapid expansion into new markets to ensure support for our global hotel partners.

- Charles Reed
CEO
DoCoMo interTouch

CORPORATE America has the uncanny ability at turning around businesses and entreprises that are in trouble or in dire straits. It is a characteristic of the US corporate and business culture - ‘bite the bullet, take the hit, restructure and start on a clean slate’.

Therefore, I am cautiously optimistic that the US economy will follow a V-shaped trajectory which involves a quick recession, followed by a quick rebound. My prediction is also predicated on the fact that any prolonged recession in the US is bad for the global economy; the economic forces, including that of government interventions, will provide the necessary check and balance to ensure that this will not happen. If the lower unemployment rate announced recently is anything to go by, the US may be getting out of the recession.

In times like this, CEOs should follow the key economic indicators closely, from as many sources as possible, to monitor the situation. I would carry out scenario planning to ensure that when the turnaround happens, I have the plan ready, be it Plan A, Plan B or Plan C.

While most companies may adopt a cautiously optimistic stance, given the current climate, it would be to their advantage and in their interests to avoid the pitfall of underscoping the opportunities, which often leads to under-providing for critical resources such as human capital, manufacturing capacity and financial capital to win a larger slice of the upturn.

- Lim Soon Hock
Managing Director
Plan-B Icag Pte Ltd

THE latest indicators on the US economy seem to suggest that we might be looking at a V-shaped recession in the US, and a bit of a plateau for Asia.

Despite global instability, most of the Asian economies look surprisingly resilient. While we may not see the growth rates of the past few years in Asia, there is still significant latent demand, tremendous desire to consume and sufficient resources to support this desire.

By focusing on the fundamentals - delivering the business outcomes that our customers are looking for (greater cost efficiency, more performance, security and value-added telecoms services) - Cable & Wireless is enabling our customers to weather the current business environment.

- Nick Lambert
President of Asia Pacific
Cable & Wireless Europe, Asia & US

Other views

NO ONE can say with certainty how the US economy will play out or its impact on Asian economies, although the next few months will give a clearer indication of where it is headed. I prefer to be a cautious optimist. We have learnt much from the last Asian crisis and many Asian economies today are in a better position to handle the situation than before.

I believe that we are only digging our own graves if we let ourselves be too affected by the doom and gloom surrounding the US economy - we cannot let it become a self-fulfilling prophecy. For example, if there is an opportunity for me to expand my business further, I would seize it rather than be paralysed into non-action by all the ‘what ifâ€TMs’. Of course, recognising how things could play out for the worse, I would not, at the same time, be on an expansion or spending spree.

Those who are in the retail business like us are often the first to experience the effects of a downturn. Instead of making two or three shirts in one go, some customers may cut back and make only one or postpone the spending. Fortunately, business has been steady and we have not noticed any out of the ordinary drop in sales. We are looking to grow organically and looking at extending special privileges to reward loyal customers, while growing a base of newer and younger customers.

CYC is not making any special provisions to deal with a financial crisis. Rather, we will stick with our tried and tested values: prudent spending, hard work and quality service and products.

- Fong Loo Fern
Managing Director
CYC The Custom Shop Pte Ltd

WE BELIEVE that the bottoming of the US economy is underway but this could be an extended process due to the damage done to key economic segments such as housing. The good news is that accommodative fiscal stimulus and monetary policy have been put in place to reflate the economy. In addition, corporate balance sheets excluding financials remain strong and exports are healthy, aided by a cheaper US dollar.

As such, we think the depth of the downturn may not be as severe as some would believe, but it will take some time before the impact of policy stimulus filters down into the real economy. From a corporate perspective, we need to tighten our belts and balance the financial spreadsheets while we continue to grow our footprint in Asia during this difficult period.

- Deborah Ho
CEO
DBS Asset Management Ltd

WE HAVE ruled out the possibility of a severe L-shaped downturn in the US economy. Though somewhat belated, the US Federal Reserve had acted, thus calming the market turbulence considerably.

We feel that the most likely scenario would be somewhere between the V and U-shaped economic downturn - not terribly harsh - but would take a longer period (from 12 to 18 months) to recover as more unexpected problems emerge.

There are two major problems we face. With the volatile exchange rates, we insist that some customers pay in Sing dollars for services rendered and products delivered.

The other related crisis is the shocking rise in the cost of living. As we have done in the past, our company has to go through this difficult phase as a united, unique family - without any retrenchment. Such a scenario exists globally and is a storm we are prepared to tide over.

- R Theyvendran, PBM
Chairman/Managing Director
Stamford Media International Group of Companies

WHILE I wish for a V-shaped recovery, it’s just my hope. V-shaped, L-shaped or U-shaped, it’s a game of predicting and there are very few who can accurately forecast the path the US economy would take. It is a high-risk game, and my advice to the investor would be to always behave as if a bad market is around the corner, even when the market goes up. This way, your guard is always up and you will always do your research well, hedge bets against sensational reports and be vigilant with your funds.

Never play with money you donate have and never pile up your debts, because in an L-shaped recovery, this could end up being your downfall. Ultimately, when facing uncertainty, it is always a safe bet to consult your financial adviser.

- Gary Harvey
CEO
ipac Wealth Management Asia

AS A region, South-east Asia still has tremendous growth opportunities backed by strong economies in Indonesia, Thailand, Malaysia and Singapore, and a combined GDP of more than 690 billion euros (S$1.459 trillion) per annum. With such impressive figures, TNT is confident that the region will remain robust and resilient even as the US economy slows down, and we believe we’ll see a rebound in the US in the near future. And with the talented workforce and stable infrastructure here, we believe businesses will withstand the current economic downturn.

We expect growth momentum for TNT to increase as we have always maintained a long-term business strategy to successfully build on our capabilities, to ensure that we remain nimble in the highly competitive global business landscape. As part of this strategy, we recently announced a 100 million euro investment in this region that includes the thrice-a-week flights of our Boeing 747-400ER freighter into Singapore, to meet growing demand for air freight services in the region.

- Onno Boots
Regional Managing Director
TNT South-east Asia

WITH US consumer spending growing at its weakest pace, the sub-prime mortgage problems still unravelling, a weakened dollar and high crude oil prices, it is really anybody’s guess how the US economic downturn will pan out. I hope that it will be a quick recession with a quick rebound. Any prolonged US recession will affect the global economy.

Our strategy, even before the current gloomy scenario, was to grow our service offerings, expand our customer base and explore new market opportunities in the region so as to be less dependent on a single market. We will consider ways to take advantage of the cheaper US dollar, utilise hedging instruments to minimise our risk exposure, and innovate for better cost efficiency.

- EH Lim
CEO
Avi-Tech Electronics Ltd

TECHNICALITIES aside, I believe the US has already entered a recession. We are probably looking at a V or U-shaped dip rather than an L-shaped scenario due to a number of factors including a still robust labour market, low interest rates and inflation and continued leadership in technology and innovation which will facilitate growth.

Singapore will only be marginally affected by the US slowdown; only 10 per cent of Singapore’s exports go to the US, with 90 per cent going to the European Union and regional trade partners where strong growth continues.

At Talent2 we continue to support our clients throughout the business cycle. We ensure our client base is diversified across sectors so that if one sector slows down, for instance financial services, we can pick up the slack in other sectors such as energy, construction and hospitality where demand for talent remains strong.

- Matt Beath
CEO
Talent2 International - Singapore

THE recovery could be V-shaped, U-shaped, L-shaped or even W-shaped. It doesn’t matter. What is important is where are we now in relation to these economic cycles. Going forward what should we do? And are there any dramatic shifts in mega-trends or changes in the global market space that demand that we conduct our business or investments differently?

I would say, as financial adviser and portfolio manager to HNWs (high-net-worth individuals), we were more nervous four months back than now.

In every major crisis, there will always be a notable ‘big name’ victim. On March 14, we saw the plight of an 85-year-old institution, Bear Stearns. Bear announced a rescue by JP Morgan Chase and the Fed. It once traded as high as US$172 but was sold to JP Morgan at US$2 a share, later renegotiated to US$10. It was Fortune’s top securities firm in the ‘America’s Most Admired Companies’ survey for three years running, from 2005 to 2007.

History has shown that when a ‘big name’ victim emerges, it is normally the beginning of a healing process for an ‘injured and over-fed market’. Will there be another casualty in the months to come? Possibly, one more. But we at GYC Investment Desk believe that 80 per cent of the risk has been removed.

Going forward, if we have $1 to invest, we would have already invested 30 cents two months back in March and we will invest another 30 cents in the next three months. And we will continue to monitor the situation to further invest the remaining 40 cents when the opportunities arise.

Our favoured asset class remains high-quality equities. Implied yield of equities are still higher than bonds. Balance sheets are still healthy, so are profit margins. Valuations are at a historical mid-to-low range. Emerging markets are offering growth and a US dollar shield. The crisis of confidence appears to be ending or simmering down.

Sub-prime-related writedowns 70-80 per cent disclosed + big-name casualty = improved investing environment compared to three months ago. It is time to be contrarian, not time to realise losses. Look to shift towards more aggressive allocation. We expect equities to reward within a three to four-year time horizon.

The ability to recognise that there is a major shift of power in the years to come is important. There is certainly more than one engine of global growth in the next decade. History has shown the rise and fall of major empires. We are certainly looking at a turning point of a significant transfer of power in the world economy.

- Goh Yang Chye
Managing Director
GYC Financial Advisory Pte Ltd

IT IS very hard to know how the downturn in the US will play out. And, as Warren Buffett told us, even if you knew what was going to happen in the economy, you still wouldn’t necessarily know what was going to happen in the stock market.

The increased volatility we have seen over the last year reflects systematic instabilities, which will take time to fix. In such an uncertain world, we think that investors will favour fund managers whose process they can understand. With our simple, long-term stock picking approach, we believe that we are well-positioned strategically, whatever the shape of the recovery.

- Hugh Young
Managing Director
Aberdeen Asset Management Asia

THE US slowdown has some way to go. While corrective measures have been taken, the damage to the US financial system created by the sub-prime problem cannot be repaired overnight. Losses have been made by companies and by individuals. Consumers have become unsettled by falling house prices and by widely reported job losses.

Twelve months of very sluggish activity seems likely before activity begins to pick up. We expect our Singapore unit trust business to grow in the next 12 months, but more slowly than in the previous 12 months. Singaporeans may invest more conservatively as a result of the uncertainty caused by the US economic situation.

- Lindsay Mann
Regional Head, Asia
First State Investments

FORMER Federal Reserve chairman Alan Greenspan has said in an interview that the US has fallen into an ‘awfully pale recession’. I certainly hope the economic downturn in the US will turn out to have a V-shaped recovery.

Despite weakening consumer spending in the US and the challenging market conditions faced by the electronics industry, we believe the rapid development in Asian economies will continue to offer opportunities for us. The important things are to manage business risks, stay focused on executing to strategy, and continue to stay ahead of competition.

At times like this, we will maintain our R&D investment and emphasise innovation across the group to ensure that we keep developing new applications and technologies for our customers. Since our transformation to a total solutions provider to Asiaâ€TMs electronic manufacturers and industrial corporations, we now cater to wider customer segments and cover more geographical markets.

Having diversified our business and markets, we believe we are better placed to cope with any downturn in a particular sector or market.

- Albert Phuay
Chairman and Group CEO
Excelpoint Technology Ltd

SCENARIO #1 V-shape: The US federal funds rate will drop further to one per cent by September 2008. By then, the market is expected to rebound strongly ahead of the Nov 4 presidential election. This will lead to a Santa Claus rally in December 2008.

Scenario #2 U-shape: By March 2009, the US recession would have lasted for 16 months, which has happened only twice in the past 60 years.

Scenario #3 L-shape: From March 2009, if the US economy continues to stagnate in the face of rising inflation, then we are facing prolonged stagflation which will eventually lead to the great depression of the world economy.

- Clemen Chiang
CEO
Freely Business School

OPINIONS conflict as to whether the US is entering a recession, is in the midst of an extended decline, or is exiting a shallow downturn. The duration of this economic cycle, and its combination of contributing factors (shaky credit markets, rising energy prices, stagnant employment), are historically unprecedented - making the outcome difficult to predict. At present, we see no signs that conditions are dramatically worsening or improving.

Kelly Services’ strategy is to diversify geographically, lessen our dependence on the US economy, target expanding markets around the globe, increase our skilled professional and technical staffing services, place more emphasis on outsourcing and consulting services, and focus on cost control. Those actions have allowed us to minimise risk, remain profitable, and expand sales.

- Dhirendra Shantilal
Senior Vice-President of Asia Pacific
Kelly Services

THE reality of a downturn in the US is starting to hit home, with businesses across the globe now starting to brace for and ideally reduce the impact of the impending slowdown in the global economy. Although there will still be growth in certain segments across various markets, the ripple effects of reduced corporate spending and consumer demand are undeniable. However, even in periods of reduced activity, there are still opportunities for the resourceful.

A downturn, V, U or L-shaped in nature, would unlikely have any influence on the threat posed to businesses and organisations from malicious online attacks via email, for example, or through denial of service attacks, spam, etc. In fact, a downturn could very likely spawn a flood of spam and phishing campaigns, heightening the need for security. In fact, spam attacks have already demonstrated their immunity to recessionary pressure both in the US and here in Asia in the 1990s.

The Radicati Group recently published a report that estimates 78 per cent of the 210 billion messages sent worldwide each day are unsolicited and squeezing through corporate firewalls; a disturbing statistic for companies trying to improve the efficiency of their mail and web servers. Proofpoint operates in the area of email security and while we see mega projects being scaled down in investment budgets, our position as a best of breed player in the email security space does afford us some new areas of opportunity.

In this climate of reduced spending, as we continue to help our customers better align their defences to these threats, we are seeing that any US slowdown will have little impact on Proofpoint’s triple digit growth targets for the Asian region.

- David Habben
Regional Manager - Asia
Proofpoint

Source : Business Times - 12 May 2008

S’pore to stay competitive with four-pronged strategy

Filed under: General, Singapore Economy — Propertymarketupdates @ 4:20 am

ASIA’S economic prospects look positive despite the financial turmoil in the United States, says Minister for Trade and Industry Lim Hng Kiang, and Singapore is also expected to keep its economy competitive with a four-pronged game plan.

Speaking at the European Chamber of Commerce Europe Day Lunch yesterday, Mr Lim identified the four key areas that Singapore is focusing on such as strengthening growth in the manufacturing sector - the aerospace industry and biomedical sciences, in particular - and exploring new growth areas such as clean energy.

As clean energy is a cluster that presents economic opportunities and has the potential to grow, Singapore is striving for new collaborative projects in this sector with European companies.

Greater focus on innovation and R&D is also part of the strategy, especially in fields such as environmental and water technologies, interactive and digital media, as well as life sciences.

Mr Lim also urged companies to push for an EU-Singapore free trade agreement (FTA) within the framework of the regional Asean-EU FTA so as to foster ‘deeper bilateral trade liberalisation’. An EU-Singapore FTA would produce benefits such as tariff concessions, faster market entry for EU companies as well as intellectual property (IP) protection.

While Singapore’s bank secrecy laws could prove a sticking point in establishing such an FTA, Mr Lim pointed out that Singapore had managed to draft FTAs with both the US and Japan, and that the same could be done with the European Union.

The EU, which is Singapore’s second largest trading partner after Malaysia, chalked up a record $97.5 billion in bilateral trade with Singapore last year, 6.3 per cent higher than in 2006. Europe is also the largest source of foreign investment - over a third of incoming foreign direct investment (FDI) - in Singapore. Over 7,000 European companies have established a presence in Singapore.

‘One area that deserves to be improved is trade in agricultural and processed agricultural products,’ said Ambassador Holger Standertskjold, who is head of the European Commission’s Delegation in Singapore.

Goods from Europe currently account for about 11 per cent of the total agricultural and processed agricultural products in Singapore, but it is hoped that the figure will eventually double.

Source : Business Times - 10 May 2008

May 12, 2008

Dynamics of the global economy are changing

Filed under: About Singapore, General, Singapore Economy — Propertymarketupdates @ 4:01 am

Emerging economies show global resilience but have set the stage for a boom in prices

THE global economy is being buffeted by powerful crosswinds. Disruptive financial market turmoil is slowing growth in advanced economies. But emerging market economies have provided a measure of global resilience, although this has also set the stage for a boom in food and fuel prices.

The divergence in performance between advanced and emerging economies points to an ongoing shift toward a multi-polar world, with a reduced reliance on the United States as the locomotive of the global economy. Emerging economies will not decouple from the advanced economies, but neither will they be derailed, as witnessed all too often in the past.

These developments reflect three salient trends are transforming the dynamics of the global business cycle. First, strong internal growth momentum in emerging and developing economies is providing a valuable global trade shock-absorber. The US downturn would be a lot steeper but for the support being given to its export sector by growth in many economies around the globe.

Can emerging economies, notably China and India, sustain this internal momentum? Inevitably, in an increasingly globalised economy, growth spillovers from advanced to emerging and developing economies remain sizeable. Indeed, both trade and financial linkages are rising as emerging economies have become more integrated into global markets.

Thus, emerging and developing economies are unlikely to be immune from the economic consequences of the financial turmoil in advanced economies. Nevertheless, improved macroeconomic policy frameworks and strong productivity growth should provide greater resilience than in the past. Sudden stops of capital flows to emerging markets are still possible when policymakers lose their footing, but seem less likely as balance sheet vulnerabilities have been lowered in many countries.

Moreover, careful policymaking has earned some room for manoeuvre, and many countries would be able to use countercyclical policies if growth does falter.

Second, the commodity price shock absorber is no longer working as it did in the past. Moderating demand in advanced economies has not led to the usual softening of commodity prices, in large part because the dynamism of emerging economies has sustained strong demand growth.

Instead, against the backdrop of a falling dollar and rising financial market volatility, oil prices have risen to record highs and food prices have soared. Rising commodity prices have dampened consumption in advanced economies, and even more importantly have sparked inflation pressures globally, just as activity is slowing.

Third, financial shock absorbers are working through new channels as emerging and developing economies as a group have shifted to being a net source of savings for the global economy. For many years, the accumulation of large international reserves by Asian emerging economies and oil exporters in the Middle East helped to finance the large US current account deficit.

Recently, the infusion of financial resources from sovereign wealth funds to recapitalise US and European banks has helped to contain the impact of the financial crisis. It remains to be seen how the dislocations in financial markets will affect the flow of funds into other markets, including emerging economies.

Deepening downturn

These changes in the global business cycle are a positive development, but they do pose challenges for policymaking in both advanced and emerging economies. An effective response to a deepening downturn in global activity would need to involve the large emerging economies as well as the advanced economies, recognising both their increasing weight in global aggregate demand and the policy space they have earned through disciplined policy implementation.

Inflation is also a common challenge for advanced and emerging economies. For advanced economies, particularly in the euro area, rising inflation has constrained the room for monetary easing to respond to a weaker growth outlook. And among emerging markets, central banks have tightened across a broad range of countries, including Brazil, China, India and Russia to name just a few, and continued tightening of monetary policy will be needed.

In addition, fiscal restraint, flexible exchange rate management, and targeted support for lower income groups to ensure access to the food they need must be part of the policy mix.

Similarly, unlike in the 1980s, the global current account imbalances are no longer an issue for the large advanced economies alone - a development recognised by the Multilateral Consultation on Global Imbalances organised by the IMF last year, which involved China and Saudi Arabia in addition to the ‘G-3′ economies (US, euro area, Japan).

What is needed is a further rebalancing of domestic demand across countries, with supporting movements in real exchange rates, notably of emerging economy currencies operating under inflexible exchange rate regimes. This would be desirable both from the individual countries’ perspective as a means of reducing inflation pressures and sustaining growth, as well as for easing global imbalances.

In conclusion, the dynamics of the global economy are changing as it becomes increasingly multi-polar. Emerging economies will need to play a growing leadership role, joining with advanced economies in learning to operate in this still unfamiliar terrain.

By Charles Collyns, a deputy director; and Krishna Srinivasan, an adviser in the Research Department of the International Monetary Fund

Source : Business Times - 9 May 2008

Test of Singapore’s economic resilience

Filed under: About Singapore, General, Singapore Economy — Propertymarketupdates @ 3:59 am

MUCH has been written about the nature of the beast, about whether it’s shaped like a U, V, L or even W. We’re talking of course about the impending - or, as oracles like former US Federal Reserve chief Alan Greenspan and Berkshire Hathaway’s Warren Buffett contend, the ongoing - US recession. What’s clear is that the world’s largest economy, hammered by a massive financial crisis that has reverberated across the globe and further weakened by ever-rising oil prices, is on the ropes. And the impact of a US economy brought to its knees by a recession, whatever the shape, is bound to shake national economies everywhere.

Singapore awaits with concern, but also a measure of quiet assurance. It’s a beast we’ve faced before, this spectre of global slowdown, and the painful lessons have been well learnt. The first hard lesson is that a small and open economy like Singapore’s can never be fully shielded or buffered from external tremors. The corollary, though, is that the right preparation can make all the difference between holding firm in the storm and being blown away.

Thus Prime Minister Lee Hsien Loong’s assurance in his May Day message that ‘however the US financial problems play out, I am confident of our ability to cope’. Earlier this week, in a dialogue with over 100 business and financial leaders, PM Lee expanded on that premise. If things do get significantly worse - and at this point that’s a big ‘if’ - the government has several possible options, he noted. Fiscal policy measures would be one such option. There could be directed assistance to help lower-income workers. Or the government could resuscitate construction projects that had been put on hold. ‘We have the resources, we have the wherewithal,’ Mr Lee noted.

Significantly, the savvy audience would have noted that the options he mentioned were not being pulled out of a vacuum. The global situation is being closely tracked by the country’s planners, and Singapore’s own economic performance is comprehensively monitored. Scenarios have been drawn up to cover the spectrum of possibilities. Any urgent or emergency measures would thus be as apt for the situation as is humanly possible.

However, true economic resilience is not just holding firm in the short term, but growing in strength through adversity over the long term. That is why the longer-term initiatives to keep this island-nation globally competitive and relevant must continue apace.

The hardware is being upgraded on schedule, from airports to highways and the MRT system, to a national ultra high-speed infocomm infrastructure that will spark a whole new panoply of high-tech products and services. As important will be developing the ’software’, a new generation of world-class, world-conscious Singaporeans. Get the formula right and the world will beat a path to Singapore’s door, recession or no recession.

Source : Business Times - 9 May 2008

Coping in an age of uncertainty

Filed under: About Singapore, Financing, General, Singapore Economy — Propertymarketupdates @ 2:55 am

SO even accountants and auditors in Singapore are bearish about the economic outlook, joining a list that includes manufacturers and those in the services sector - just about most in the business community, it’s safe to say. As number-crunchers with typically the early eye on the quarter’s figures, accountants and auditors get a snapshot of the business climate, even if it’s just within the microcosm of a company or two (their own or their clients). And a recent poll by the profession has found Certified Public Accountants (CPAs) to be less than upbeat about the economy and business in the quarters ahead; fairly anxious, in fact, about the US downturn and all the attendant uncertainty. That seems to be the prevailing sentiment all round.

Uncertainty is indeed the order of the day, even in today’s relative calm and stability. The global financial markets are thankfully free of mayhem for now, but turmoil and upheaval - as the last several bouts in recent years remind - are always a trigger event away. The worst appears to be over in the prolonged credit crisis but already the doomsayers point to the flipside, saying that a restoration of order in the credit markets could also spell the premature end of reform efforts. For now, however, greater uncertainty lurks in the real economy, where fears and worries about a global downturn, led by a US recession, have been feeding pessimism in the business world and among consumers, even before the first negative numbers appear in the latest US statistics.

That is not to dismiss the very real concerns about a US downturn, with resulting decreases in American consumption and investment, and knock-on effects on Asian exports; but economic uncertainty tends to breed bearishness (rather than bullishness, for one) and sentiment and expectations guide many a business investment (or consumer spending) decision. That leads, in turn, to a further decline in business and economic activity - in the US and in the Asian economies. And then there’s the inflationary cost spiral and the surge in commodity and food prices in recent months. But while the external climate has been cloudy and choppy, things on the domestic front in Singapore have seemed healthy enough, with robust economic figures in the first quarter amid rising inflation. With such mixed signals, little wonder that the man in the street, including business folks, is left feeling even more uncertain about the economic outlook.

The policymakers here have spelt out the best and worst-case scenarios - all of which hinge heavily on the severity of the US downturn - and the prognosis is good. Brace for a rough ride, to be sure, but barring a full-blown economic storm, domestic fundamentals and regional support will prevent the Singapore economy from crashing this year, the central bank says. And a downturn that stretches into 2009 likely still means, in Singapore’s context, growth at the lower end of the trend 4-6 per cent range. Awareness of the risks ahead is good planning, but excessive pessimism could sometimes just become self-fulfilling.

Source : Business Times - 7 May 2008

$9.7b price tag for landmark Tianjin eco-city

Filed under: About Singapore, China, General, Property Investment, Singapore Economy — Propertymarketupdates @ 2:32 am

THE ambitious eco-city being jointly built by Singapore and China in this northern port city will cost about 50 billion yuan (S$9.7 billion), officials here said yesterday, while giving the assurance that the project will not benefit only the rich.

This is the first time an official price tag has been disclosed for the landmark project, the biggest bilateral venture between Singapore and China since the Suzhou Industrial Park in the early 1990s.

Unconfirmed reports in the Chinese media had previously estimated the cost of the eco-city at 30 billion yuan.

Mr Lin Xuefeng, vice-chairman of the Sino- Singapore Tianjin Eco-city Administrative Committee, told a press conference here the project would cost about 50 billion yuan to build.

He added, however, that this preliminary estimate could vary, depending on the projected cost tabled by the Sino-Singapore joint venture company building it.

Environmental awareness is growing in China, especially among the property-owning middle class. But the poor and those living in less developed regions continue to struggle with the fallout from all-out economic growth, such as polluted air and poisoned rivers.

Asked if this flagship project will benefit only those who can afford to live there, Mr Lin said planners will draw on the experience of Singapore’s Housing Board to ensure that residents from a wide spectrum of society are housed in the eco-city.

‘Social harmony is first and foremost a housing issue,’ he added. ‘We hope to create a harmonious city that is suitable for different sectors of society.”

According to a draft master plan released yesterday, at least 20 per cent of homes in the eco- city will be public and subsidised. The 2,000 villagers who have to relocate for the project will also be guaranteed jobs and housing in the new city.

The overall population of the city will be kept at around 350,000, though there are no plans to restrict the number of cars, said Dr Dong Ke, a senior urban planner with the China Academy of Urban Planning and Design.

Instead, planners hope to reduce residents’ reliance on cars by setting up an efficient public transport network and by designing walkways linking homes, shops and public spaces.

Another highlight of the plan is the proposed building of a new university focused on environmental technology.

Mr Lin said the university would be vital in providing the technical expertise and manpower required for the eco-city, though it has yet to get the official green light from Beijing.

Showcase

THE eco-city project involves building from scratch a 30-sq-km city in Tianjin that will showcase a good balance between rapid economic growth and environmental protection.

It is hoped the project will be fully completed in about 10 to 15 years.

Plans for the eco-city will draw heavily on the urban planning experience of HDB new towns in Singapore, while incorporating much of the latest technology and expertise on energy and water conservation.

Source : Straits Times - 7 May 2008

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