Go for Goldilocks growth

After six months of brainstorming, the Economic Strategies Committee is now polishing up its recommendations for its much-awaited report to be unveiled next month. What new directions will the committee chart for the Singapore economy in a post-recession world? What new ideas will it throw up to ensure sustainable growth in turbulent times? Insight figures out what might lie in store.

By Sue-Ann Chia, Senior Political Correspondent

Eight areas to be focused on

Seizing growth opportunities

Developing a vibrant SME sector and globally competitive local companies

Attracting and rooting multinational corporations and global SMEs

Growing knowledge capital

Making Singapore a leading global city

Fostering inclusive growth

Ensuring energy resilience and sustainable growth

Maximising value from land as a scarce resource

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The Economic Strategies Committee (ESC) is expected to release its report soon. What recommendations would you like to see, and why? What other ideas would you offer to ESC?

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THE beloved children's story of Goldilocks and the three bears holds a lesson on getting the economic growth model just right - not too hot or too cold.

Just as Goldilocks went around tasting the porridge of papa bear (too hot) and mama bear (too cold) before slurping up baby bear's porridge which was just right, Singapore also has to find the right degree of growth for the future.

It is referred to as 'Goldilocks growth', the optimal level of economic expansion that is not overheated, to prevent problems such as inflation and capacity constraints.

Neither is it too cool so as to avoid slipping into a situation in which weak growth leads to insufficient jobs.

What is the ideal economic growth figure for Singapore, and how to achieve it?

That is the task for the Economic Strategies Committee (ESC), set up by the Government last May to find new ways to grow the economy in this post-recession world.

Chaired by Finance Minister Tharman Shanmugaratnam, the ESC has 24 members from the private and public sectors. They held their first meeting in July, and decided to focus on eight areas (see box).

Eventually, more than 230 people were involved in mapping out the blueprint for sustainable growth in Singapore. They worked within a tight deadline of six months as the report is scheduled to be released before the annual Budget next month.

Amid the flurry of meetings, feedback was sought from business organisations and expert groups. Reams of reports became required reading.

Nothing was taboo. The growth model was questioned, from Singapore's heavy reliance on global trade which led to the country being among the first few economies to slide into a recession during the economic crisis, to its continuing dependence on foreign labour as a key growth driver in the last few years.

Worrying issues were also highlighted - declining labour productivity, dipping share of contribution from local companies to growth figures, and low domestic consumption due to lower wages and increases in financial liabilities.

Proposals to tackle these problems were plentiful. Among the suggestions put up by the Government Parliamentary Committee (GPC) for Finance and Trade and Industry was the setting-up of a National Investment Agency to grow more local enterprises.

GPC chairman and a PAP MP for East Coast GRC Jessica Tan tells Insight: 'While I am not advocating special privileges for our local companies, I hope to see more focus and deliberate strategies to nurture local champions in key industries.'

The Singapore Chinese Chamber of Commerce and Industry also has its wish list. Its president, Nominated MP Teo Siong Seng, is hoping that at least two out of 10 suggestions will be given the green light - more support for local companies venturing overseas and more help for trade associations.

Along the way, several hints have been dropped by Government leaders about the changes to come.

One consistent message is the need for companies to boost productivity levels, rely less on foreign workers, improve the skills and wages of local workers, and grow Singapore's external wing.

While reshaping the economy looks set to be a major feature of the recommendations, these economic changes are also aimed at improving the livelihood and living standards of Singaporeans.

As Mr Liang Eng Hwa, a PAP MP for Holland-Bukit Timah GRC and deputy chairman of the GPC for Finance and Trade and Industry, puts it: 'Inclusive growth means that our GDP growth cannot lead only to increase in asset values. It should also increase the income levels so that a broader cross-section of Singaporeans will benefit from the growth.'

Some analysts believe the ESC report will also include proposals to help low-wage Singaporeans.

'The ESC is likely to echo the political message of recent months, to reassure Singaporeans in the lower-income, lower-skill segments of our society that they will not be neglected, even as the country as a whole needs to embrace the opportunities that the global economy presents,' says Singapore Management University economist Davin Chor.

Can Singapore keep the bears away and find the Goldilocks formula to grow its economy steadily, sustainably and equitably? Insight checks out the possible ideas and solutions that may surface in the ESC report.

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Pumping up productivity

IT IS no secret that Singapore workers are slacking. Official figures show that labour productivity has been plummeting over the years.

But the blame cannot be pinned solely on the workers as employers must also bear their share of the responsibility.

Many have not stretched their manpower resources to the fullest or changed work processes to make them more efficient. That is because of their heavy dependence on a never-ending supply of cheap foreign labour - thanks to liberal immigration policies.

Economists have long argued that such a situation is not tenable.

By last year, foreigners accounted for a third of the three-million-strong labour force, up from only a quarter in 2004. While this has fuelled economic growth, the actual productivity of each worker has fallen.

For some sectors like manufacturing, hotels and restaurants, the productivity decline started in 2006 - about the same time foreign workers started entering Singapore on a massive scale.

Arresting the slide in productivity is therefore expected to be a major focus in the report from the ESC. What can really be done?

Moderate the influx of foreign low-skilled workers by prioritising sectors that really need them and those that have more scope for automation, suggests economist Choy Keen Meng from Nanyang Technological University (NTU).

'As wages rise to reflect the true scarcity of labour in Singapore, firms will likely come up with ways to improve productivity,' he says.

He also proposes introducing a subsidy to encourage companies to mechanise or computerise by purchasing labour-saving equipment. The subsidy can also cover worker training, which could dovetail with the existing Skills Programme for Upgrading and Resilience (Spur) scheme.

'Management probably also has to be retrained to wean them off their acquired dependency on imported labour,' he adds.

In addition, he believes the tripartite partners - the labour movement, employers and Government - should set up an institute to research and conduct courses on productivity-enhancing measures.

Curbing the inflow of foreign workers will, however, have some consequences such as slower economic growth, inflationary wage hikes because of the need to attract Singaporeans to fill jobs normally done by foreigners, and the loss of labour-intensive industries to cheaper locations.

On the upside, it could ease the downward pressure on the wages of low- income Singaporeans, possibly narrowing the income gap which has widened in recent years.

Growing GNP, not just GDP

AS CAUTIONED by Prime Minister Lee Hsien Loong in his New Year Day message, Singaporeans may have to brace themselves for slower growth.

'In terms of total gross domestic product or GDP, our economy will likely expand more slowly than before,' he said.

'But we must make up for this, firstly by growing our gross national product or GNP, which means expanding our external wing; and secondly, by focusing on raising per capita income, through up-skilling and economic upgrading.'

GDP is the sum of output, or value-added, by all residents, including foreigners in the country. GNP, on the other hand, is GDP minus income of non-residents in the country plus net income of citizens abroad.

Some economists like Mr Kit Wei Zheng from Citigroup have noted that GDP is at best an imperfect measure of the economic welfare of citizens.

This is because Singapore's GDP growth has been driven by, and largely benefited, foreign entities, according to Mr Kit in his paper, ESC: Issues In Charting The Path Ahead.

While resident companies and individuals accounted for roughly two-thirds of GDP in 1998, this share had declined to 54.3 per cent a decade later, in 2008.

It is even more worrying when one looks at the contribution to GDP growth.

Residents contributed slightly more than half of GDP growth in 2004, a figure that dipped to less than a third from 2005 to 2008.

This has led to a growing gap between overall per capita GDP ($53,192) and resident per capita GDP ($38,372), Mr Kit notes, pointing to a 'widening gap between high-productivity foreign economic entities and lower-productivity indigenous SMEs and workers'.

In his view, the relevant question the ESC has to reflect on is: Growth by whom, for whom and to what end?

To stop the slide in GDP contribution by local enterprises, analysts expect to see Government funding to promote local companies, nurture more local enterprises and help them venture abroad.

One interesting proposal came from the Singapore Chinese Chamber of Commerce and Industry (SCCCI). The Government could set aside affordable land to help traditional industries - such as fishery and horticulture - to restructure their business for long-term survival, and develop business hubs.

Instead of letting them fade away, they could add to Singapore's growth.

Just as Tokyo transformed its Tsukiji fish market into an iconic landmark, Singapore could develop, say, its Jurong fish market into a tourist attraction too, notes SCCCI president Teo Siong Seng.

DBS economist Irvin Seah also argues for the promotion of local enterprises in new growth sectors.

Rather than invite foreign participants into new areas such as the environment-related and green energy sector, the Government should encourage organic growth in these sectors with significant growth potential, he says.

All these moves could hopefully boost the resident GDP per capita, resulting in, to a certain extent, a higher living standard for Singaporeans.

Sharper shift to services

WITH mounting concern over the declining contribution of local enterprises to growth figures, there have been calls to grow the domestic market.

Dr Choy from NTU had said at an economics conference last year that a 'long-held bias in favour of manufacturing must be shed' so as to develop the services sector.

Singapore's high but declining growth rate has been accompanied by severe volatility not merely because of external factors such as the global economy or electronics cycles, but also because of domestic industrial restructuring and falling consumption ratio, he noted.

Thus, a stronger services sector would help temper volatility and stimulate private consumption, he said, adding that he expects services to make up 70 per cent of output in future.

To this end, he suggested that the Government offer greater tax incentives and reduce start-up costs for service-sector companies.

Government Parliamentary Committee (GPC) chairman for Finance and Trade and Industry Jessica Tan also sees value in developing the services sector.

'Given the opportunities in the service industry, I do hope to see deliberate strategies to develop and professionalise this industry. This will need to go beyond providing incentives and skills training,' says the East Coast GRC Member of Parliament.

The move towards greater emphasis on the domestic market was also highlighted by Professor Basant Kapur from the National University of Singapore in an article last June.

He argued that domestic consumption's share of Singapore's GDP - which has been falling over the years, and is now less than 40 per cent - is much too low. By contrast, the figure for Hong Kong is more than 60 per cent.

'If Singapore's figure could move closer to Hong Kong's, domestic consumption would be a stronger pillar of our economy - and a more stable one,' he noted.

It would also provide more scope for domestic enterprises such as BreadTalk, Sakae Sushi and Charles & Keith to arise and develop, first by serving a larger home market, and then expanding abroad.

Extending trade corridors

MANUFACTURING is still regarded as a critical sector for Singapore, but there could be some shifts as seen in Hong Kong and Taiwan, says the GPC for Finance and Trade and Industry in its proposal to the ESC.

Companies there have moved their manufacturing facilities to China while retaining their headquarters in Hong Kong and Taiwan. This has given their home-grown companies a significant competitive edge.

For Singapore, it could look to Iskandar Malaysia - a project to develop southern Johor's economic corridor - as a suitable alternative space for manufacturing companies, says the GPC.

By relocating their factories there to reduce costs and expand production, they can maintain their headquarters, and research and development, in Singapore.

Economist Manu Bhaskaran from Centennial Group had also recommended that Singapore link up with Iskandar Malaysia and open up a larger market for local businesses.

From G-3 to BRIC

WHILE the Government is committed to developing local enterprises, there is no denying that foreign participation will remain a core economic strategy.

'We should continue to position ourselves to multinational companies (MNC) and global small- and medium-sized enterprises as the gateway to Asia,' says Mr Seah from DBS. 'But rather than targeting companies from traditional sources (the Group of Three economies), it is time we focus our efforts on companies from the BRIC countries.'

The G-3 economies are the United States, Europe and Japan, while BRIC refers to the emerging economies Brazil, Russia, India and China.

Similarly, analysts have urged Singapore companies to focus less on exports to the G-3 economies, but consider more tie-ups with the BRIC countries as a lot of incremental demand is likely to come from these emerging markets.

This could mean some form of restructuring and re-engineering of economic strategies, such as moving into new growth areas like health tourism and clean energy, diversifying business models and tapping on technology.

Companies should also work on having more value-added services that set Singapore apart from its neighbours.

Narrowing the wage gap

ONE reason for falling domestic consumption has been attributed to the low-wage share as a percentage of GDP, which could mean growth in disposable income is lower than GDP growth.

There are various factors for this, such as Singapore's MNC-driven growth model in which a large proportion of a company's profits is likely to be repatriated than recycled among the local population as wages, says Mr Kit from Citigroup.

Other reasons include wage restraint policies to ensure competitiveness that lead to lower salaries, and a rise in housing prices that could result in people saving more - and hence spending less - to purchase property.

As analysts call on the Government to look into this issue of low-wage share, they see the need to prop up the salaries of low-wage earners whose pay packages have been stagnating.

The social security net should be gradually expanded and institutionalised beyond its current emphasis on housing, health care and retirement needs towards providing a cushion against transitional pains from economic restructuring, notes Mr Kit.

'Ideological resistance to such moves may need to be gradually overcome,' he says, adding that policymakers ought to look at increased social protection as a tool that promotes social cohesion rather than inhibiting incentives to work.

One suggestion, he says, is a wage insurance scheme for retrenched workers which will pay them only when they find employment. This will induce them to look for jobs instead of holding out for better pay.

Maximising value from land

THE hotly debated issue of housing prices could be touched on by the ESC.

Associate Professor Hui Weng Tat from the Lee Kuan Yew School of Public Policy expects some policy recommendations that de-emphasise the use of residential property as an investment and ensure the sustainability of affordable housing for future generations of Singaporeans.

'The extremely limited land, high population density and potentially explosive property prices pose a severe threat to the competitiveness of Singapore,' he warns.

What is needed, he says, are innovative policies that will rein in rising property prices and discourage capital gains achieved at the expense of the quality of life for most people.

There could also be better planning and coordination of policies to ensure reasonable housing standards for the large population of transient foreign workers whose numbers are likely to increase further in future.

Cosmopolitan Singapore

AS SINGAPORE seeks to change its economic strategy, there will be moves to make the country an attractive home for locals and foreigners.

'Any leading global city needs to be able to develop and retain its human capital, to maintain a vibrancy and dynamism in the economy,' says economist Davin Chor from Singapore Management University.

'More emphasis could be given to the need to attract overseas Singaporeans to return to Singapore to pursue their careers here, as well as to assimilate and root foreign talent more seamlessly in our society.'

Source: Straits Times, 28 Jan 2010.

Beijing holds all the cards

GOOGLE'S threat to withdraw from China, on grounds that it has been the object of cyber attacks and censorship, is not the opening salvo in a battle between the future and the past. Rather, it is a battle between two equally plausible visions of the future with initial advantage on the side of China.

In attacking Google, China comes across to many Americans and Europeans as King Canute, trying to hold back the tides of progress. From Beijing, things look much different.

To China's officials, the future may be about continuing to lift hundreds of millions of people out of poverty, facilitating the rise of a rapidly growing middle class, and providing a major boost to world trade. In their eyes, an uncontrolled Internet is a threat to national stability.

Indeed, it seems imperative to ensure the survival of the government that rescued a nation from the devastation and misery of Mao Zedong's failed Communist Revolution. Chinese officials no doubt look at the way America's financial system imploded, its deteriorating physical infrastructure, and its problem-plagued system of secondary education, and conclude that the West no longer has the standing to define where civilisation ought to be heading.

Globalisation could be slowing down now. The internationalisation of banking may experience some obstacles in the wake of the world-wide credit crisis, as many international financial institutions are compelled to stay closer to home. The recent fiasco in Copenhagen has set back prospects for serious cross-border cooperation on climate change. Global trade negotiations have been moribund for several years, and after a half-century of leading the charge for freer trade, Washington is virtually silent on the subject.

It has been an article of faith among most American leaders in government, finance and business that economic engagement with China will slowly, but inexorably, bend China's society towards Western values such as the rule of law and free expression. For almost three decades, the essence of that involvement has been penetration into China by international companies such as Google. Multinationals have brought Western-style change in other parts of Asia - think about Japan, South Korea, Taiwan - so why not the Middle Kingdom? Surely, so the reasoning also goes, all those Chinese employees of Western firms and all those Chinese students returning from US schools will exert a powerful Western influence, too.

However, for centuries, the West has always failed to make the kind of inroads it expected. It's not that the Middle Kingdom doesn't incorporate foreign ideas, but that it does so in ways that suit its own needs, its own timing, and within the framework of its own culture and national priorities. What Yale historian Jonathan Spence once wrote some 40 years ago about the efforts of Western advisers in China between 1625 and 1960 is still true: 'China, which once surpassed the West, then almost succumbed, now offers to the world her own solutions.'

The two visions of the future - openness, globalisation, Westernisation on the one hand, versus controls, nationalism and far less Anglo-American influence on the other - must be seen in the context of certain political realities that make China's perspective far more viable than most Westerners like to admit.

First, Washington's soaring debts and increasing reliance on loans and investments from China, plus its need for Beijing's help when it comes to preventing nuclear proliferation in Iran and North Korea, tie its hands in providing sustained and high-profile support for one of its great companies.

It is also a good bet that many governments who are beholden to Beijing will hold their tongues, and that a number of them - such as Russia, Saudi Arabia, Iran, Venezuela and Vietnam, plus many dozens of authoritarian governments throughout the former Soviet Union and Africa that fear the power of the Internet to be a subversive force - are rooting for Beijing.

Not only does Beijing hold all the cards, but also it could actually reinforce its authority and enhance its standing among many countries of the world by humbling Google.

Nor can Google expect very much support from other Western companies, almost none of which would risk their prospects in China's rapidly growing market by offending Beijing.

Finally, compared to the 1980s and 1990s, the lustre and clout of Western multinationals have been vastly reduced, their reputations soiled by the Enrons and AIGs. Beyond that, emerging markets are producing their own corporate champions which are providing ferocious competition to their developed nation counterparts, and in many cases being savvier about serving their own populations.

Long term, I'd say we'll end up with less openness and globalisation because, in addition to China's having the political winds in its sails, other issues such as concerns over privacy and the need to combat terrorist threats against critical cyber networks will slow down the expansion of an open, unregulated Internet.

Nevertheless, we will see more freedom than China is currently willing to allow, because China's domestic Internet system is expanding so quickly and becoming so vibrant.

Ultimately, its tens of millions of tech-savvy inquisitive minds will have the ability and the compulsion to scale any firewalls the Chinese authorities erect.

Many already do.

Jeffrey Garten is the Juan Trippe professor of international trade and finance at the Yale School of Management. He was Undersecretary of Commerce for International Trade in the first Clinton administration and a managing director of The Blackstone Group.

YALEGLOBAL ONLINE

Source: Straits Times, 28 Jan 2010.

Why the US is back in Asia for keeps

ACCORDING to United States Secretary of State Hillary Clinton's speech on Jan 12, 'the US is back in Asia... to stay'.

Given this policy declaration, it is useful to review and update US maritime security priorities in Asia. First and foremost for the US is keeping critical military and commercial sea lanes open, safe and secure for its vessels and those of its friends and allies. Such sea lanes include strategic straits like the Malacca and Singapore straits, and certain Indonesian straits like Makassar and Ombai-Wetar, as well as the Taiwan Strait and the Korean Strait in North-east Asia.

The other side of this coin - not often mentioned by US government spokesmen - is the US strategy to deny use of these straits to enemies in times of conflict. Such potential enemies include China, which claims much of the East China and South China Seas in various ways for various purposes.

This 'strategic denial' imperative underlies much of US policy in South-east Asia. To advance its interests, the US government has offered assistance to the Malacca Strait countries, and proposed the Regional Maritime Security Initiative and its follow-on, the Maritime Domain Awareness programme.

Singapore has always supported direct US involvement in securing the Malacca and Singapore Straits. But Malaysia and Indonesia have been wary of such direct foreign involvement.

So far, there are no US naval assets based in the Malacca Strait. But of course its warships already frequent the area and 'show the flag' by calling at Singapore and Port Klang in Malaysia, and by transiting the Strait.

Moreover, since Sept 11, 2001, the US has been concerned with the possibility of maritime 'terrorism' in South-east Asia, and its intelligence agencies work closely with those of its allies and friends to prevent attacks on its vessels and assets in their ports and waters.

As part and parcel of this US interest in securing these sea lanes, it undertakes military surveys and surveillance of the region, including Chinese waters and its naval assets. As China expands its interests and capabilities seaward, these interests clash, producing such incidents as the downing of the US EP-3 in April 2001, the September 2008 US Bowditch/

Chinese destroyer confrontation in the Yellow Sea and, more recently, the dangerous manoeuvres in March last year between the US Impeccable and Chinese vessels.

Another US maritime security priority in Asia - which can, given the right circumstances, supersede the first - is to constrain shipments of weapons of mass destruction (WMD), their components and delivery systems. This is a global struggle, but it focuses on East and Southeast Asia because a main concern is the transfer of WMD components from North Korea to the Middle East, especially Iran, and between Pakistan and North Korea. What was transferred in the past probably moved mainly by sea. But now movement by air is probably the main means of transfer.

Nevertheless the seaborne option remains and, if this could be closed off, then the US could concentrate on air and land routes. But Malaysia and Indonesia have declined to participate in the Proliferation Security Initiative the US created to prevent the transport of WMD.

A subsidiary US maritime security priority is to ensure the safety of US companies and their personnel in their efforts to explore for and exploit offshore oil in the region. In early 2008, US giant ExxonMobil quit a major offshore concession in the South China Sea granted to it by Vietnam because of veiled threats from China, which also claimed the area. There are many other disputed areas with petroleum potential that are of interest to US companies in the South China and East China Seas.

As Mrs Clinton said, the US is 'back to stay'. But China never really left, and is bent on reclaiming its sphere of influence and areas that it considers stolen from it by colonial powers and that are now held by their seceding colonies.

It seems inevitable that warships, submarines and military aircraft of the two will increasingly confront each other in and over the South and East China Seas. Needed urgently is at least an Incidents at Sea Agreement, if not an informal set of agreed guidelines regarding the operations of US military vessels and aircraft in China's claimed waters. Otherwise, the seas of East Asia may become increasingly dangerous for all concerned - both politically and otherwise.

The writer is a maritime policy analyst based in Hawaii.

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Needed urgently is at least an Incidents at Sea Agreement, if not an informal set of agreed guidelines regarding the operations of US military vessels and aircraft in China's claimed waters. Otherwise, the seas of East Asia may become increasingly dangerous for all concerned - both politically and otherwise.

Source: Straits Times, 28 Jan 2010.

Bank of S'pore makes a mega comeback

BOS is now the only stand-alone, fully licensed private bank here

By Robin Chan

AFTER months of secret talks, OCBC has settled on a completely different brand name for its recently expanded mega private banking arm, sources say.

The new brand is: the Bank of Singapore (BOS), although it is a name OCBC has owned for more than 50 years and has used before.

The local bank stunned the market last October with a US$1.5 billion (S$2.1 billion) acquisition of Dutch bank ING's Asian private banking assets.

Since then, the proposed new image and name of the merged operations have been tightly held by senior management.

OCBC's current private banking operations are known as OCBC Private Bank.

Sources have told The Straits Times that the BOS name has been confirmed after extensive planning and tests on customers.

OCBC is putting together the final touches to its rebranding exercise.

The surprise marriage of local bank OCBC and the globally well-known ING brand left the bank with a dilemma as to how to position its merged operations.

A banker familiar with the project said it was a good move as OCBC could use the name to capitalise on the Republic's burgeoning reputation as a private banking hub - on a par with Switzerland.

The name had been tested on existing private banking customers and was well-received, and was also signed off on by prominent Filipino banker Renato 'Bing' de Guzman, the new outfit's chief executive, formerly head of ING Asia Private Bank (IAPB).

The renaming of IAPB also makes BOS the only stand-alone, fully licensed private bank in Singapore.

The BOS name was incorporated in 1954 as a wholly owned OCBC unit with a single branch in Cecil Street.

Amid the e-commerce frenzy at the turn of the century, the branch was shut and OCBC's Internet banking services were relaunched in 2000 as BOS.

OCBC's then chief executive, Mr Alex Au, said at the time it would mark the start of BOS' drive to become a globally recognised financial brand.

There were even plans to list it separately within five years, although that never came to fruition.

In fact, within two years, two of its three main operations - a venture capital arm and e-banking services for businesses - were closed, leaving just its consumer business finatiQ, which exists today with about 3,000 customers.

The Straits Times understands that while finatiQ will not be affected, its parent company will be given a new name.

OCBC has been on the offensive since it beat seven bidders for ING in a gutsy move analysts have praised for propelling the local bank into the ranks of the region's top wealth managers, in a growing private wealth market.

It doled out hefty retention packages to all 150 of ING's private bankers to add to its existing pool of 50 private bankers.

Sources said the bank has also been poaching bankers from rivals.

It was the biggest acquisition by a Singapore bank since OCBC paid $2.8 billion to raise its stake in insurer Great Eastern Holdings from 49 per cent to 81 per cent six years ago.

The deal boosted OCBC's private banking assets under management to US$22.5 billion from US$6.7 billion while adding over 5,000 private banking clients to OCBC's 2,500.

Less than a fifth of IAPB's client assets are from the South-east Asian countries - mainly Singapore, Malaysia and Indonesia - that contribute 90 per cent of OCBC's private-banking client assets.

Source: Straits Times, 28 Jan 2010.

65% satisfied with property agents: Poll

TWO out of three people are satisfied with the service they get from real estate agents but there is still room for improvement, according to a survey conducted by Ngee Ann Polytechnic.

Of the 1,041 people questioned in the poll - 564 of whom had prior experience of property transactions - 64.6 per cent said they were either satisfied or very satisfied with the service they got from their agents.

Another 27.7 per cent felt neutral about the service provided, while the remainder were either very dissatisfied or dissatisfied.

Even among those who were satisfied, 71.1 per cent reported negative experiences of their property agents.

Chief among their complaints was failing to negotiate a 'good' price for the property. The second most common gripe was being given the 'wrong advice'.

Of the survey's respondents, 63.8 per cent felt that a property agent should have at least two years of relevant work experience before being accredited by a professional body.

The polytechnic's real estate lecturer Nicholas Mak, who is the survey's research coordinator, said: 'Two years is an indicator of the standard a real estate professional accreditation body should require from its members.'

An overwhelming majority - 96.6 per cent - of respondents called on the Government to implement changes to the industry.

The most popular proposed action was for the implementation of a property agent certification scheme. Although such a scheme might involve higher costs, 49.1 per cent of respondents did not mind paying a higher commission if they got experienced property agents.

Dr Tan Tee Khoon, chief executive of the Singapore Accredited Estate Agencies, acknowledged that despite a variety of measures taken towards self-regulation, 'there is still much to be desired of this industry'.

Publication of the Ngee Ann Polytechnic survey, which was conducted in the middle of last year, comes before the expected publication of the Ministry of National Development's proposed regulatory framework for the real estate industry.

Source: Straits Times, 28 Jan 2010.

ICBC 'won't rush to lend or stop lending'

But move to stop rolling some loans over seen as clampdown by China

BEIJING: China's largest bank, ICBC, said yesterday it has stopped rolling over some loans to slow credit growth after a surge at the start of the year, offering the latest evidence of a government-directed clampdown on lending.

In a statement issued after a week of reports and rumours of China's monetary tightening that have roiled global markets, the world's biggest lender by market value stressed that it would not halt new lending.

But given that Chinese companies typically borrow for short periods of as little as six months, and then roll the financing over, Industrial and Commercial Bank of China's move is tantamount to calling loans in.

'ICBC will not rush to lend, nor will it stop lending,' the bank said. 'In the first 20 days of January this year, due to concentrated capital demand from ongoing projects, the bank's credit offering was a bit fast but was still below that of the same period last year,' it said.

For the rest of this month, 'due to the expiry and return of a concentrated volume of existing loans and repayment of credit card debt, loan growth has eased,' it added.

World markets have been betting that China, the first major economy to regain cruising speed after the global slump, will lead economic recovery this year and reports of Beijing's action stoked fears that it may step too hard on the brakes.

Chinese banks extended 1.45 trillion yuan (S$298 billion) in new loans during the first 19 days of the year as they scrambled to front-load lending before policy tightening shut the door on them, local media have reported.

Chinese officials, however, have made clear they do not want to freeze lending, only to see banks lend more evenly to avoid the kind of surge that now seems to be occurring.

'Banks must reasonably control new lending, manage the pace well and try to achieve the even issuance and steady growth of loans quarter by quarter,' Mr Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), told a meeting, according to a notice on the agency's website.

To that end, regulators have ordered banks to call back some of the loans extended this month, the official Securities Times reported.

Officials are targeting about 7.5 trillion yuan in new loans this year, down from a record 9.6 trillion yuan last year. That would still be the second-highest total ever and more than enough to power the economy to 9.5 per cent growth this year, according to a Reuters poll.

Commercial banks that had made large amounts of loans this month were being instructed not only to halt new lending but also to recall already-issued loans as soon as possible, the Securities Times quoted an unnamed source as saying.

REUTERS

Source: Straits Times, 28 Jan 2010.

Retail boost for CDL Hospitality Trusts

DESPITE a tough year, CDL Hospitality Trusts had some bright news for unit-holders when releasing its annual results yesterday.

Retail space at one property in its portfolio, Orchard Hotel, has been boosted by about 5,000 sq ft - which has been leased by a new tenant who will set up a bistro and live music venue.

The trusts, a combined hospitality real estate investment trust and a business trust, put in a stronger fourth quarter with income to be distributed to unit-holders up 48.3 per cent to 2.67 cents.

However, for the full year ended Dec 31, income to be distributed fell 19.3 per cent to 8.57 cents per unit.

The trusts recorded gross revenue of $26.1 million in the fourth quarter, down 7.1 per cent. Full- year gross revenue slid 20 per cent to $91.8 million.

The decline in gross revenue was attributed to the economic downturn and H1N1 that affected the tourism industry in the first half of last year.

The trusts' net property income showed improvement in the fourth quarter by increasing 14 per cent to $24.7 million. But the full-year figure dropped 16.4 per cent to $85.9 million.

Distributable income for stapled securities holders stands at $21.7 million in the fourth quarter, up 14 per cent from $19 million the year before. The full-year distributable income, however, declined 17.6 per cent to $75.8 million.

Despite the general negative outlook of the full- year results, analysts remain upbeat as they expect the entertainment and tourism industry to grow this year with the opening of the integrated resorts.

Mr Vincent Yeo, chief executive of M&C Reit management, the manager of CDL Hospitality Real Estate Investment Trust, said the trusts saw increasing demand throughout the second half of last year.

'In the fourth quarter, we achieved an occupancy rate of 89 per cent, which was not only the highest for the year, but also higher than that of all four quarters in 2008, albeit at a reduced room rate,' he said.

Source: Straits Times, 28 Jan 2010.

S'pore bourse falls for sixth straight day

STI's longest period of losses since last June; early rebound fizzles out

THERE was little respite from the red ink on the local bourse yesterday as nervous investors headed for the exit for the sixth day running.

An early rebound fizzled out in late trading with blue chips coming under selling pressure from European fund managers, who helped turn the benchmark Straits Times Index's (STI) gain of 23 points into a loss of 34.07 points.

The STI's six-day losing streak - which saw it close yesterday at 2,706.26 - is now the index's longest period of losses since June last year. At that time, Asian equity markets struggled to find their footing as concern grew that the green shoots then sighted were illusory.

Traders triggered the latest extended bear run by switching out of riskier assets into cash, while they waited for the dust to settle on developments that have so spooked regional markets of late.

What particularly alarmed traders was China's attempt to cool its overheating economy by forcing lenders to retain more cash and scale back their lending. The impact that this dramatic move might have on the buoyant Shanghai stock market stopped everyone in their tracks.

Traders also preferred to keep to the sidelines ahead of the United States Federal Reserve's rates-fixing meeting this morning. While no change in interest rates was anticipated, traders were on the look-out for hints of any policy change the Fed might make going forward.

What added to the overall mood of caution was the pending US Senate's vote - due today - on Mr Ben Bernanke's confirmation as Fed chief for a second term.

Given the turmoil on Wall Street last Friday when his nomination was first thrown in doubt, some traders simply wanted to play it safe and stay out of the market until the voting result was known.

Despite the six-day sell-off, the local bourse has managed to display a lot more resilience than other regional bourses.

Hong Kong's Hang Seng has fallen by a hefty 12.7 per cent since it peaked in November - technically a market correction given that it has corrected by more than 10 per cent from its previous peak.

Some research houses, however, can detect a silver lining in the chaos.

CIMB, for instance, thinks short-selling might have played a part in the market turmoil. This could set the stage for a technical rebound, as traders cover their short positions. 'In the meantime, it might still be too early to get into a shopping mood,' it added.

Among yesterday's biggest losers was CapitaLand, which fell 12 cents to $3.74 on a hefty volume of 50.9 million shares.

Banks were also on the retreat, with DBS Group Holdings falling 22 cents to $14, OCBC Bank dropping 12 cents to $8.08, and United Overseas Bank losing 14 cents to $17.92.

Keppel Corp, however, gained seven cents to $8.16, buoyed by news that it was spinning off its 'green' infrastructure assets into a business trust that is slated for listing within the next few months.

Source: Straits Times, 28 Jan 2010.

Investor sentiment in S'pore hits two-year high

INVESTOR sentiment in Singapore has shot up to a two-year high, according to a quarterly survey released by Dutch bank ING yesterday.

Local investors are confident that the worst is behind them and are poised for more market action in the coming year, the survey found.

Market players here are bullish on the prospects in the first quarter of this year despite tepid confidence in the United States economy.

Investor sentiment has returned to pre-crisis levels, the global financial services group noted in the study.

The survey's Singapore sentiment index soared 168 per cent to 150 for the fourth quarter last year from a grim 56 a year earlier at the height of the crisis.

The fourth-quarter 2009 figure was an all-time high since the study was introduced in the third quarter of 2007.

ING commercial banking's Asia research head and chief economist Tim Condon said: 'Investor confidence has settled at a high level after storming back in the second and third quarters last year, when Singapore investors revised their expectations after realising that the worst-case scenario likely would not happen.'

He added that economic growth here this year will be considerably higher than last year's, with a rise of 2 per cent to 4 per cent on a quarter-on-quarter basis throughout the year.

Investor sentiment in Singapore was also among the highest in Asia, after the high-growth markets of India and China, and Taiwan.

The study's pan-Asia index showed modest quarter-on-quarter growth of 3.5 per cent from 142 in the previous three months, reflecting confidence in the stability of the global recovery.

Local investors are also more confident about job security, as sentiment regarding the economy remains high. A total of 19 per cent said the economic situation has had a positive impact on their job security, compared to 8 per cent in the previous quarter.

The export sector is also expected to rebound. Singapore's recent export rally has been due mainly to China and the rest of Asia, and it is well-positioned to benefit as the world recovery broadens and the major economies reassert themselves as export destinations.

Investor sentiment may also be boosted by the opening of the integrated resorts and a feel-good Budget ahead of a possible general election this year, added Mr Condon.

The ING survey measures and tracks investor sentiment and behaviour of mass affluent investors from 12 Asia-Pacific markets each quarter. It is done by research firm The Nielsen Company.

Source: Straits Times, 28 Jan 2010.

Shaky world recovery tops agenda

Inflation, asset bubbles, jobs are big worries

By Ravi Velloor

DAVOS (SWITZERLAND): The Waldhotel at the back of the World Economic Forum's (WEF) Congress centre was once called the Waldsanatorium.

It is a reminder of the old days when the mountainside resort of Davos was favoured by people being treated for pulmonary diseases.

But for the last four decades, Davos has served as something of a pilgrim centre for the key people who manage the state of global economic health, a place where government and industry leaders and scholars converge every January as though to check out one another's New Year resolutions.

Hence it is quite appropriate that this year's five-day conference, which opened yesterday amid a blanket of snow, is themed 'rethink, redesign and rebuild' the world.

Prominent Singaporeans who will lend their minds to this year's conference include Government of Singapore Investment Corporation deputy chairman Tony Tan, Foreign Minister George Yeo, Lee Kuan Yew School of Public Policy dean Kishore Mahbubani and National University of Singapore president Tan Chorh Chuan.

With the chill of the global crisis that many feared would lead to a Second Great Depression, the WEF has gathered this year's summit around six streams. Values and people are one. Economic and social welfare, global risks, security challenges, resources and sustainability, and new institutional approaches complete the rest.

In some ways, Davos is playing catch-up with the Group of 20 process. But the Davos agenda, which used to focus on celebrating capitalism and open markets, is now getting wider and more introspective. And each of the issues is so critical they all bear iteration at every global forum.

Take security. On Tuesday, the head of Davos police was found dead in his hotel room and although initial reports pointed to suicide, investigators will doubtless check every other angle with world leaders gathered here.

Or take global risks. The International Monetary Fund has just issued an upbeat assessment of the global economy, centred on growth in the United States, China and India. But with jobs and consumer spending in the US still a point of worry, the economic ground is as slippery as the snow here.

This week, Nobel Prize winning economist Paul Krugman, the man who accurately called the Asian economic flu 15 years ago, turned on his former departmental head at Princeton University, Mr Ben Bernanke, for another reason. The chairman of the US Federal Reserve, Professor Krugman complained, was in danger of letting the US financial sector lapse into its bad old ways just after supervising a miraculous recovery of the industry.

From Asia, global heads will be looking for cues on its hottest prospects, the fast-expanding Chinese and Indian economies. Chinese Vice-Premier Li Keqiang's comments are bound to be read very carefully. Last year, his boss, Mr Wen Jiabao, lectured the Western world for causing the financial crisis. Now there are fears that asset bubbles are building in China as well, a factor that has hurt market sentiment across Asia.

Inflation is emerging as a major worry in both China and India, and central bank action to contain price rises, it is feared, may also cool growth by choking off credit or making it more expensive.

Mr Li will surely also be pressed on whether Beijing will allow a quicker appreciation of the yuan's value, as much of the world demands.

Source: Straits Times, 28 Jan 2010.

Local govts urged to 'Buy Chinese

IN CHINA, foreign technology companies are not the only ones facing regulations that favour products made in the country.

Beijing has been quietly pushing local governments and ministries to 'Buy Chinese', especially after the global recession in late 2008.

In May last year, the Chinese government said preference ought to be given to domestic products when spending the 4 trillion yuan (S$824 billion) stimulus.

The latest protectionist measure against foreign technology firms came in November last year, requiring products and technology used by Chinese government agencies to contain intellectual property developed and owned locally.

US businesses have accused Beijing of favouring 'national champions' - a likely reference to Chinese giants such as search engine Baidu and computer maker Lenovo.

Other high-tech industries have had to navigate similar restrictions in China as the country seeks a short cut to acquiring foreign technology.

In the automobile industry, for example, government regulations require any foreign investor to form a joint venture with a local company.

Source: Straits Times, 28 Jan 2010.

Made-in-China policy under fire

Move a market barrier, say US business giants which want govt action

By Bhagyashree Garekar, US Correspondent

WASHINGTON: In a development with shades of Google's clash with China, some of the biggest American companies have demanded that Washington intervene against Chinese policies which allegedly champion local businesses at the expense of US firms.

The call came from 19 US business groups, including influential bodies such as the US Chamber of Commerce and the Business Software Alliance, whose members include Microsoft, Apple and Cisco.

These groups have sought a firm US response to China's 'indigenous innovation' programmes which, they argued, will shut out the world's third-largest market to American firms unless they create Chinese brands and transfer the research and development of new products to China.

'For several years, the Chinese government has been implementing indigenous innovation policies aimed at carving out markets for national champions and increasing the locally owned and developed intellectual property of innovative products.

'We are increasingly alarmed by the means China is using to achieve these goals,' they said in a letter addressed to US Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner, US Trade Representative Ron Kirk and other top officials.

The development marks a new wrinkle in US-China ties, which were already under strain from a series of low-level trade disputes even before news of the Google incident broke earlier this month.

The Internet company had threatened to take down its Chinese portal, citing censorship and theft of intellectual property from hacking attacks which it claimed originated from China.

Much to Beijing's annoyance, the State Department raised the Google case in meetings with Chinese officials.

Mrs Clinton is likely to bring it up when she meets her Chinese counterpart in London today for a conference on Afghanistan, said reports.

In Tuesday's letter, the US businesses said they were particularly concerned about the new rules issued by the Chinese government in November to set up a national catalogue of products qualifying for significant preferences in government procurements. For listing in the catalogue, the products need to contain intellectual property that is developed and owned in China.

'This represents an unprecedented use of domestic intellectual property as a market-access condition,' they said.

Under the so-called Indigenous Innovation Product Accreditation system, sectors such as computers, software, telecommunications and green technology were the first to be affected.

When the rules were introduced, the US Chamber of Commerce, as well as business groups from Canada, Europe and Japan, laid out their concerns in a letter to the Chinese government.

But the latest salvo, coming after the Google episode, is likely to create a bigger stir.

In the petition, the US businesses warned that there were signs that Beijing might extend the restriction to more sectors and introduce elements such as subsidies for Chinese companies.

'Such policies, if left unchallenged, will be pursued by other important trading partners,' they argued.

Linking the issue to broader US-China ties, they called on the Obama administration to make it 'a strategic priority' in its economic engagement with Beijing.

Ending the letter on a strong note, they urged the government to consult businesses and like-minded foreign governments to come up with 'a strong, fully coordinated response to the Chinese government'.

Source: Straits Times, 28 Jan 2010.

PRs, new citizens chalking up huge card debts

Many face the burden of supporting large families in their original homeland

NEW citizens and permanent residents (PRs) are an emerging group struggling with credit card debt, forming at least 10 per cent of the 1,285 clients handled by Credit Counselling Singapore (CCS).

CCS, an organisation which provides counselling and helps debtors work out repayment plans, said these debtors - many of whom have racked up large credit card debts - come from various countries, including Malaysia, the Philippines and India.

Their numbers have been growing over the last two to three years, said CCS assistant director Tan Huey Min. Of these, individuals from the Philippines form one of the largest groups.

Last year, 62 PRs and new citizens from the Philippines received counselling, up from just one three years ago.

Typically, the PRs and new citizens who approach CCS for help are professionals who earn about $4,000 to $5,000 a month.

And one of the key reasons many of them get into debt: they have to support large families back where they came from while having to pay rent and other expenses in Singapore.

IT professional Robert (not his real name) is an example. Each time the PR returned to the Philippines, he would go bearing gifts for all his family members.

It may have brought a smile to the faces of his loved ones - but the kind gesture cost him a lot.

'Every month we would pay one bank and not the others, but after some time, some banks said we had to pay in full, and we couldn't do that,' he said.

Robert said he and his wife, who is also working in the IT industry, owed banks about $112,000 when he sought help from CCS last August.

The debt was due to his in-laws' medical bills, unsound investments in the Philippines and having to pay for the education and living expenses of some family members who were not working.

Said Ms Tan: 'One has to do one's sums first before deciding how much one can really send home or make commitments like buying land and property back home.'

But this is difficult as expectations about those living and working abroad are high, said Robert. 'Once you have gone abroad, people expect you to give the most financially because they think you are earning more. But they don't know about the cost of living here.'

Things got worse for Robert and his wife when their company cut their salaries last year.

The amount owed by each individual who seeks help at CCS is on average $70,000, owed to about seven creditors.

But PRs are not the only ones in need of help. On the whole, CCS counselled 1,285 individuals last year, up from 714 in 2008 and 685 in 2007.

Ms Tan said the increase in numbers was partly due to the financial crisis, more awareness of the assistance provided by CCS and an increase in the number of staff, which allowed them to handle more cases.

Figures from the Monetary Authority of Singapore also show the same trend of increasing debt.

As of November last year, credit card debt was an estimated $3.7 billion - a 9.8 per cent increase from a year before. The number of cards, however, increased by only about 6.7 per cent over that time.

CCS said job-related problems such as pay cut and retrenchment, together with overspending, were the top reasons given for indebtedness, followed by gambling, medical bills and renovations.

It advised those in debt to cut down on discretionary spending, such as eating out or clubbing, and to take public transport more often.

'People don't realise, but just $20 here and $30 there, three or four times a week can add up to about $500 a month, and if you don't have the budget for that, you'll have to rely on credit facilities. It all boils down to mismanagement,' said Ms Tan.

Source: Straits Times, 28 Jan 2010.

Fewer foreign workers in five years, says MM

Govt will upgrade Singaporeans' skills to make up for dip

By Kor Kian Beng

FIVE years: this is the time period Singapore will take, from now, to scale back its need for foreign workers.

This timeframe was given yesterday by Minister Mentor Lee Kuan Yew, the first minister to put a time line on the Government's pledge since last year to reduce the inflow of foreign workers.

To make up for the dip in foreign workers, the Government will invest in upgrading the skills of the workforce, with contribution from employers, he said, during a dialogue at an international housing conference here.

'The next five years, we have decided we will tier down our need for foreign workers.

'We will pay for help to educate people, continuing education and training, which means a lot of money, probably co-payment with the employer to send him (the worker) for training so that he's paid whilst he's doing the training, then he increases his skill.'

MM Lee was responding to Mr Steven Choo, chief executive of the Real Estate Developers' Association of Singapore, at the event to mark the Housing and Development Board's 50th anniversary this year.

Mr Choo had asked Mr Lee if he thought the HDB would be able to catch up with Singaporeans' rising aspirations.

The Minister Mentor pointed out that rising aspirations were a worldwide problem, even in wealthy countries such as Switzerland and Finland.

Meeting such needs for higher living standards requires a highly skilled and educated workforce and a government that keeps raising their education and skills, he added.

Also, it needs to attract 'investments of a higher return or higher value-added investments in products and services'.

Said Mr Lee: 'Every government wants to do that. Can it be done? That's the difficult part. You got to motivate your people, raise their standards of education.'

An economic report he read recently showed Singapore scored well on attracting foreign investments, he said.

But the report said Singapore's productivity was around 51 per cent to 52 per cent, just slightly above Hong Kong's, at about 50per cent, he noted.

Japan, at 100, is the benchmark.'How do you get it from 51, 52, not to 100 but say, to 85, 86 to 90? It's a generation's job: educating them, continual education,' he said.

The economy of the future, with fast-changing product cycles, requires a person to continually ramp up his skills and knowledge.

Singaporeans who cannot catch up will be stuck with low salaries because they are 'not more productive', he said.

'We've grown in the last five years by just importing labour. Now, the people feel uncomfortable, there are too many foreigners.

'Trains are overcrowded with foreigners, buses too, property prices have gone up because foreigners with permanent residence are buying into the market.

'The answer is simple: We check the flow of foreigners, raise your productivity, do the job better, so that instead of two workers, eventually you'll do it with one worker, like the Japanese do.'

The foreigner issue had been highlighted by Prime Minister Lee Hsien Loong last August, when he said there was a limit to the intake of foreigners and he could not imagine their population doubling to two million.

Lately, government leaders had also pointed out the need to improve productivity and the Economic Strategies Committee is expected to make recommendations on it in its report due on Feb 1.

MM Lee said workers needed to understand that by working harder, they contribute to their companies' success which, in turn, benefits them.

But getting them to understand this is a challenge, he added.

'Can we do it? Yes, I think we can. Will it take time? Ten years, 15 years, one generation, but you've got to keep at it.'

Source: Straits Times, 28 Jan 2010.

Separate ethnic quota for PRs

Move to prevent them from forming enclaves in public housing estates

By Kor Kian Beng

THE Housing Board is considering introducing a separate ethnic quota for permanent residents to prevent them from forming enclaves in public housing estates.

Its spokesman disclosed yesterday that the HDB was considering tweaking the Ethnic Integration Policy (EIP) but did not elaborate on the details.

PRs and Singaporeans are now subject to the same quota under the EIP, which aims to maintain a healthy racial mix in housing estates by stipulating maximum proportions for the key ethnic groups.

The HDB's statement followed comments made by Minister Mentor Lee Kuan Yew during a dialogue at an event marking the HDB's 50th anniversary.

Asked by the moderator, Professor Tommy Koh, if the EIP would be expanded to include new Singaporeans, Mr Lee said the Government was doing so.

Said Mr Lee: 'We're not allowing new Singaporeans, whether from China, India or Malaysia or whatever, to congregate in the same tower blocks, which they are already beginning to do. They buy second-hand flats and they congregate.

'So we say 'no, no'. We have a record of how many new citizens living where, and we keep their numbers dispersed.

'It (EIP) is a very valuable instrument of communal harmony.'

The HDB spokesman clarified later that it was still considering the proposed change for PRs, whose numbers have risen in recent years.

The swell has triggered concerns of PRs forming enclaves in housing estates.

Last November, National Development Minister Mah Bow Tan said, in response to a query in Parliament, that the Government was monitoring the situation and would consider measures to prevent the congregation of PRs and foreigners in the housing estates.

Mr Mah also said PRs are already subject to the EIP, which was introduced in 1989. Latest official statistics show there are 533,200 PRs.

They own around 5 per cent of the nearly 900,000 HDB flats islandwide. PRs can buy only resale flats.

Under the EIP, proportions for the main ethnic groups - Chinese, Malays and Indian/Others - in each block and each precinct of around 10 to 12 blocks are subject to quotas. Sale of an HDB flat to a buyer from an ethnic group that has reached the block or the precinct limit is not allowed.

Over the years, disgruntled buyers and sellers have called for the HDB to tweak the quota or to abolish it completely.

Mr Lee said yesterday the situation was no different in the EIP's early years, when residents preferred neighbours of their own ethnic group.

The audience got a clear sense of how seriously he viewed the EIP, in his reply to Prof Koh's question if he considered the scheme a 'successful experiment'.

Said Mr Lee: 'No, it was not an experiment... It was force majeure. We inflicted it on the people, we knew it would work, we knew it would be uncomfortable.

'I got the Malay MPs and the ministers together, explained it and I said this was the only way. If we didn't do this, we would remain separate communities and never integrate.'

Source: Straits Times, 28 Jan 2010.

Don't cast protest vote over rising flat prices: MM

THE current contentious issue on the affordability of public housing was given another airing by Minister Mentor Lee Kuan Yew who cautioned Singaporeans not to cast a protest vote against the ruling party over this.

As Singaporeans lament rising flat prices, he said they ought to understand that the Government sells them at a subsidised price, below market rate, so that they can own an asset that will appreciate in value over the years.

It adds to their wealth and this is an asset-enhancing policy Mr Lee believes citizens should not find fault with.

If they do, they must be 'daft', he said, at a dialogue during a housing conference as part of a series of events to mark the Housing and Development Board's 50th anniversary.

And if National Development Minister Mah Bow Tan is unable to defend this policy, 'he deserves to lose' at the next general election, he quipped, to laughter from the participants, including a chuckling Mr Mah.

But if Mr Mah loses to the opposition, he warned that Singaporeans better sell their flats fast as they would no longer be of any value.

Mr Lee's blunt remarks were in response to a question by dialogue moderator Tommy Koh, who pulled out a Straits Times report which said at least three opposition parties are keen to contest Tampines GRC, which Mr Mah helms, as they want to raise the affordability of public housing as an election issue to gain votes.

'It will always be an issue,' noted Mr Lee. 'They always want it cheaper and better.'

The Government, he said, has to price the flats at a level which is fair, not only to current buyers but past and future buyers, as it will affect property prices.

He went on to explain why the Government had put in place a five-year limit before people can sell their new flat, saying it was to prevent speculation in the property market.

'Because the moment you buy a flat, you can sell it to make a profit,' he said.

'We are giving you something more valuable than you're paying for. So we say you cannot sell it for five years.'

This philosophy of giving citizens an asset that will grow in value and give them a stake in the country was a recurring message in the 60-minute dialogue.

Asked why the Government placed such emphasis on housing the population in the early days after Singapore gained self-rule in 1959, Mr Lee, who was the Republic's first prime minister, said:

'We decided from the very beginning, everybody must have a home, every family will have something to defend. And that home, we developed over the years into the most valuable asset.'

It was also about giving people a clean place to live, as living conditions then were squalid and overcrowded.

To a question from Hong Kong's Secretary for Transport and Housing, Ms Eva Cheng, on letting the private sector play a bigger role, he said they cannot take over the housing responsibility.

'We give them land, they build, and they sell it below market price? Cannot be done,' he said.

'We give our buyer an asset which is below market price the moment he buys it. So there is no profit, it's a loss, but there's a strategy behind that loss.

'That loss is to give the man an asset which he will value, which will grow in price as the country develops, as his surroundings become better.'

He added: 'This is a social responsibility which we have undertaken and that's the reason why we are re-elected.'

Referring to the three opposition parties that are targeting Mr Mah, he said: 'If Mr Mah is not re-elected and these three wise men take over, then I say you better sell and get out quickly.'

---

OPPOSITION EYEING TAMPINES GRC?

'If Mr Mah is unable to defend himself, he deserves to lose. No country in the world has given its citizens an asset as valuable as what we've given every family here. And if you say that policy is at fault, you must be daft.'

MM Lee when asked about a Straits Times report that cited keen opposition interest in contesting Tampines GRC, which National Development Minister Mah Bow Tan helms, so that they can raise the affordability of public housing as an election issue

Source: Straits Times, 28 Jan 2010.

HDB looks forward on its 50th birthday

EVEN as Singapore's public housing agency looks back to celebrate its achievements over the past 50 years, it will face increasing challenges that mean evolving to meet changing needs.

The Housing and Development Board (HDB), which marks its 50th birthday on Feb 1, must meet these challenges while maintaining its three-pronged approach of environmental, economic and social sustainability, National Development Minister Mah Bow Tan said yesterday.

He was addressing more than 500 delegates from around the world at the opening ceremony of a three-day international housing conference hosted by the HDB and held at Suntec City.

'In this globalised world, we face many common challenges: climate change, migration, demographic shifts, shrinking resources, among others,' he told the conference. 'These changes impact all cities alike, large or small, developed or developing, sooner or later.'

The conference was a great opportunity for policymakers, architects and urban planners to exchange ideas.

The growing challenges that HDB will face include an ageing population, which may require further innovations in housing policies or building design, he said. Others included integrating the growing number of new Singapore citizens and the effects of rising affluence.

'As the public housing authority, HDB's key task is to find innovative ways to accommodate our people, taking these challenges into account,' he said.

Speakers at the three-day conference, which discussed themes such as environmental sustainability, include housing ministers from Spain, Finland and Australia, and senior government officials from the United States and Hong Kong.

Hong Kong's Secretary for Transport and Housing Eva Cheng said Hong Kong faced similar challenges as Singapore over land size and a growing population, and had ensured public housing for lower-income earners. She will be speaking at the conference today.

Addressing the audience, HDB chief executive Tay Kim Poh also acknowledged yesterday that HDB has 'achieved much that we are proud of', but it is also mindful of the 'challenges to housing that are shaped by the changing needs and expectations of our people'.

Source: Straits Times, 28 Jan 2010.

'No' to more rental housing

BUILDING more flats for rent could ease the burden on younger Singaporeans starting out in life - just as it could help others invest their resources in developing their businesses.

The idea of increasing the Housing Board's pool of rental flats to help those Singaporeans concerned about affordable housing, was put to Minister Mentor Lee Kuan Yew at a conference yesterday.

But he was quick to disagree, arguing that it was tantamount to putting the HDB in a position of subsidising rents indefinitely. It would also create a 'dependency group' - those constantly dependent on the Government and on subsidies.

The right policy is to, instead, subsidise the price of the flat for the buyer, who then has an asset that will appreciate in value as the economy grows.

'I'll improve the surroundings, I'll improve the lifts, the conditions, I'll give you more space. But it is yours and you look after it. And we do not have rundown public housing like other countries which are rental (units),' he said.

The idea was put forward by Professor Deng Yongheng, director of the National University of Singapore's Institute of Real Estate Studies. He said that having more rental flats would help low-income earners, and also allow others to put their money into meeting 'entrepreneurship and other demands'.

Mr Lee said that for those needing resources for their businesses, there was 'nothing to stop you from taking your house, your flat, you go to the bank and say... I've got so much more to pay, this is my income, I need this capital to start a business'.

The HDB clarified later to the media, however, that an HDB flat cannot be used as collateral for a bank loan.

In his response at the dialogue, Mr Lee also said that young Singaporeans wanting to invest in business and not be burdened with financing a flat, could rent from the private sector:

'If you believe you can be a great entrepreneur, then rent a flat from somebody. All the HDB flats are now rentable.'

Mr Lee also disagreed with another idea, raised by Ambassador-at-large Tommy Koh, that the HDB could build retirement communities like those found in Australia and the United States.

Mr Lee said he had read an article by a US doctor, who had assets but who stopped his practice and went into such a home.

'This retirement home was like a hotel and there were other doctors with whom he could discuss things at an intellectual level... He is in that profession, so he has saved enough to pay for the facilities as if it were a hotel,' Mr Lee said.

'You want American standards of living, be an American doctor. Singapore cannot give you that. We haven't got that kind of economy, nor that kind of land. Not even the developer can afford to go and retire in that kind of situation.'

Source: Straits Times, 28 Jan 2010

HDB will construct its one millionth flat capping 50 years of achievements

Is there a role for Singapore’s Housing and Development Board (HDB), now that the entire population has been housed?

Prime Minister Lee Hsien Loong said the answer is “Yes” as the HDB is still responsible for providing good public housing and fostering social integration.

Speaking at its 50th anniversary, Mr Lee also revealed the board will celebrate half a century of achievements by building its one millionth flat this year.

The HDB is a central part of the Singapore Story said Prime Minister Lee. Over half a century, it housed a growing population and was integral in nation-building.

PM Lee said: “Two generations of Singaporeans have grown up in HDB flats. Public housing helped to mould our unique national identity and collective experience as Singaporeans. It created and shaped our commu¬nities and provided the foundation for our social stability and economic growth.”

But Mr Lee notes the environment has changed and the aspirations of Singaporeans risen sharply.

He added: “Finding a roof over our heads is no longer the pressing requirement. The HDB flat is not just a shelter but also a key investment asset. People have many considerations in choosing their flats – they want the right flat, in the right locality, at the right time and at the right price.

“Such high expect¬ations are understandable since buying a flat is a major commitment for a young couple setting up a home together.”

And HDB is committed to providing high quality housing, even though it cannot accommodate every preference or expectation.

The Prime Minister also emphasised a point expressed several times by other Ministers and very much an ongoing concern amongst flat buyers in the rising property market. And that is the government’s commitment to keeping HDB flat prices affordable for Singa¬poreans.

But Mr Lee said the government has less control over prices in the resale market.

He explained: “These resale prices are set by individual households who transact flats on a willing-buyer, willing-seller basis, and are affected by movements and sentiments in the wider economy, including in the private property market. Hence, resale prices of HDB flats will fluctuate from year-to-year. But over the long term, the value of HDB flats depends on the strength of the Singa¬pore economy.”

So provided Singapore continues to do well, Mr Lee’s confident the flats will maintain their value and Singaporeans can enjoy an appreciating asset.

Source : Channel NewsAsia – 26 Jan 2010

Frasers Centrepoint Trust to raise up to S$182.2m in private placement

Mainboard-listed Frasers Centrepoint Trust (FCT) plans to raise up to S$182.2 million in a private placement.

It said on Tuesday that it will launch a placement of 137 million new units at an issue price between S$1.29 and S$1.33 per new unit.

This means it would raise gross proceeds of between S$176.7 million and S$182.2 million.

The issue price of the new units represents a discount of between 3.7 per cent and 6.6 per cent to the adjusted volume weighted average price of S$1.38 per unit for trades done on the full market day yesterday.

Money raised from the placement will be used to part finance FCT’s acquisitions of Northpoint 2 and YewTee Point.

Last month, FCT announced it intends to acquire the 2 shopping malls for S$290.2 million.

Source : Channel NewsAsia – 26 Jan 2010

Next phase of Circle Line to open on Apr 17

The second phase of the Circle Line will open to passengers on April 17. The 11-station stretch, from Bartley to Dhoby Ghaut stations, will start operations almost a year after the first five stations were opened to the public last May.

With this new opening, about half the Circle Line or about 16 stations will connect commuters to places like the new Sports Hub through Stadium Station, to Suntec via Promenade Station and the museums via Bras Basah Station.

Transport Minister Raymond Lim said: “This is a significant thing for us because now you have these direct connections. So if you are on the eastern side, north-eastern side, you have a direct line that connects you instead of having to go to the city centre.”

So a commuter going from, say, interchange station Paya Lebar to Bishan can shave off about 18 minutes or half his travelling time, said the Land Transport Authority. Commuters can bypass the busy City Hall and Raffles Place stations.

Building the Paya Lebar Station was not easy. One of the challenges that engineers faced in building this interchange station was that they had to connect an underground line to an existing above ground station.

For commuters who also had to endure congestion during road diversions, the opening has been welcomed.

Said one man in the street: “The transportation was very bad and there used to have jams all over and time taken from one place to another was very bad. Now of course, there are a lot of changes.”

“It saves time, like when we are rushing to meet friends and family, it will be much more better,” said another commuter.

Transport authorities now expect the Circle Line ridership to spike to about 200,000 daily.

Also operating will be the station that caused a delay to the opening of the Circle Line when the site at Nicoll Highway collapsed.

Sim Wee Meng, group director, Rail, Land Transport Authority, said: “Nicoll Highway, we have built at the new site which is 100 metres away from existing site. It’s now completed and will open as part of Circle Line 1 & 2.”

As for the possibility of bus rationalisation, Mr Lim said: “The LTA will have to work with the operators to see whether they need to streamline any of the services in order to feed into the Circle Line.”

The final phase of the Circle Line, which will link up the western parts of Singapore to the line with stops in places like Botanic Gardens and Holland Village, is expected to be ready next year.

Source : Channel NewsAsia – 26 Jan 2010