Tax waiver extended to enhance Singapore port's attractiveness

By Desmond Wong, Channel NewsAsia
08 January 2009

SINGAPORE: The government is extending a waiver on tax for the purchase of Singapore-flagged vessels.

The waiver of withholding tax on overseas interest payments to finance the vessel purchase will be extended for another five years.

Previously, the waiver applied only if two ships were purchased. But now, a single vessel of 40,000 net tons or more will qualify for the waiver.

The waiver extension is aimed at increasing Singapore's attractiveness as a base for ship owners.

This and other measures were announced by Transport Minister Raymond Lim at a cocktail reception organised by the Singapore Maritime Foundation on Thursday.

Industry players welcomed the tax waiver extension, saying it will make Singapore a popular choice for ship owners once the global economy recovers.

S S Teo, chairman of Singapore Maritime Foundation, said: "Things are difficult and ship financing is not so easy to find, but eventually, ship financing will come back, and trade will resume. It's good that we announce such a scheme so that when shipping eventually recovers, we can capture the opportunities."

Singapore, one of the busiest ports in the region, has also reported an 11.1 per cent improvement in shipping tonnage to a record 1.6 billion gross tons in 2008.

The transport minister said this reflects the long-term strength of the fundamentals in the maritime industry.

"The long-term fundamentals of the maritime industry remain strong. There is no substitute for shipping as more than 90 per cent of world trade is transported by sea. Once the global economy improves, we can expect the maritime sector to resume its steady growth," he said.

And it looks like it is still full steam ahead for Singapore's maritime industry, with a slew of activities like the Singapore Maritime Week lined up for the year ahead.

- CNA/ir

Slowing global demand, excess capacity hit dry bulk shipping firms

By Desmond Wong, Channel NewsAsia
09 January 2009

SINGAPORE : Slowing global demand and overcapacity are sinking dry bulk shipping firms, with several seeking bankruptcy protection in the past three months.

Experts expect this trend to continue into 2009 as major economies like China slow consumption and financing becomes harder to secure in the industry.

The key Baltic Dry Bulk shipping index has dropped 92 per cent in the past year alone.

Falling demand for trade and difficulty in obtaining financing have led to an increase in the number of dry bulk ship operators and owners seeking bankruptcy protection.

Hiring rates have also plunged, with vessels which could have been hired out for US$200,000 a day in the past now going for between US$2,000 and US$9,000 a day.

And flagging demand is not the only stumbling block the industry is facing. An oversupply of ships in the dry bulk sector have kept rates down, and this could worsen next year.

Divay Goel, director, Drewry Maritime Services, said: "We would expect that even if demand were to pick up to historical levels which we saw in 2006 and 2007, we have a huge order book overhang in 2009 and 2010."

With the sector facing increasing financial difficulties, cancellations of ship orders and scrappings of half built vessels have increased.

While bad for shipbuilders, this could help the dry bulk sector in general to recover more quickly by trimming the number of excess vessels.

Christopher A Jones, director, Sale & Purchase, Island Shipbrokers, said: "With scrapping increasing and with cancellations in the new building order book, we expect that we will reach a more balanced fleet sooner than we expected."

Market watchers said the current correction is expected to bring dry bulk rates back to levels seen in 2004 before the boom seen in the past three years.

At that time, Cape-sized vessels were going for between US$60,000 and US$70,000 per day. - CNA/ms

PSA records rise in container volumes for 2008

12 January 2009 (CNA)

SINGAPORE: Singapore port operator PSA International on Monday reported handling record container volumes in 2008 despite the global economic crisis, but warned that this year was likely to be tough.

PSA said container volumes handled by its global terminals last year rose 7.3 per cent to 63.2 million twenty-foot equivalent units (TEUs), from the record of 58.9 million set in 2007.

Eddie Teh, group chief executive officer of PSA International, said: "2008 started strongly amidst the gathering storm clouds over the financial services industry and the major economies.

"By the end of the year, though, any lingering confidence that the major economic powerhouses would be able to stay out of a recession had been dashed and global trade worldwide had slowed to a crawl.

"Unless global economies are able to recover in the course of 2009 with the help of huge amounts of proposed spending by governments around the world, our industry will likely experience an extremely difficult year."

Teh said in a statement the port operator was preparing for the tougher months ahead, but gave no further details.

PSA International is owned by investment firm Temasek Holdings. It is one of the world's leading port operators with facilities in 16 countries across Asia, Europe and the Americas, with a total capacity of 111 million TEUs.


- AFP/so

Asian economies expected to grow 5.5% in 2009

By Ng Baoying, Channel NewsAsia
13 January 2009 1927 hrs

SINGAPORE: Asian economies, excluding Japan, are expected to grow a weighted 5.5 per cent this year – down from the 7 per cent growth seen in 2008.

HSBC said this slide will be led by Hong Kong, Korea, Taiwan and Singapore, while countries like China and India will be the main supports of growth.

Falling demand from most developed nations in the wake of the global downturn has hit economic growth in Asia. But observers said domestic factors are also contributing to the slowdown.

Robert Prior-Wandesforde, senior Asian economist, HSBC, said: "The other factor is domestic demand, in particular consumer spending and investment. Actually, the domestic demand in Singapore and rest of Asia slowed before exports. Over here, initially at least, it was due to the huge commodity price shock that we had a few months ago."

HSBC said it sees little upside in the near future, but it is taking comfort in the massively synchronised and powerful fiscal and monetary policies Asian economies are adopting, and also in falling commodity prices which are seeing the largest declines in 50 years.

Of all Asian countries, Singapore's open, export-dependent economy is expected to fare the worst. But it is also expected to bounce back the fastest and strongest.

"After a fall of nearly 3 per cent on average this year, I think that GDP could rise more than 5 per cent in 2010. That's the kind of recoveries Singapore often gets. Sharp downturns followed by sharp upturns," said Mr Prior-Wandesforde.

Speaking at a media conference on the bank's outlook for Asia on Tuesday, he said he expects Singapore's economy to bottom out in the first quarter, with a GDP contraction of 7 per cent on-year – the largest since the mid-1970s.

Overall, he expects Singapore to round up the year with a 2.8 per cent contraction.

FairPrice extends discounts

Jan 14, 2009
By Jessica Lim (Straits Times)

NTUC FairPrice will keep its markdowns on hundreds of items till December, and double the number of budget buys on its shelves by March.

This is the longest extension on discounts since they were started in December 2007 to bring relief to shoppers from the soaring food prices then.

Yesterday, FairPrice also had relief for more than 6,000 staff members.

No one will be retrenched this year.

Instead, 500 more employees will be hired to fill the ranks at three new supermarkets to open this year in undisclosed locations.

It will also put 5,000 front-line employees through customer service training programmes at a cost of half a million dollars.

Not forgotten were some 100 small and medium-sized suppliers, who can expect payments twice as quickly this year from the supermarket giant.

Add to this increased funding to its trade union parent and more money from its charitable foundation to the community, and FairPrice is looking at commitments of $15 million this year, said chairman Ng Ser Miang.

In its stores, consumers will find reductions on 500 house brand items.

Soon they will have more of even cheaper goods to choose from, as the supermarket's buyers scour the world for 100 more items to expand its lowest- priced range.

These include Aro Soya Bean Oil at $2.95 a litre, and Care Goat's Milk Whitening Shower Cream at $2.95 for 1.2l.

This range of the supermarket's most affordable goods - named the yellow dot range for its distinguishing sticker on the shelf display price - will be extended to include other frequently used essentials.

They have been met by 'overwhelming response', said its director of integrated purchasing Tng Ah Yiam.

He noted that sales of Aro Soya Bean Oil have tripled since October last year when the range was launched, and that of Goat's Milk Whitening Shower Cream have doubled.

'This is an indication that during the downturn, people are looking for cheaper alternatives. We want to cater to this sector of the population,' he added.

The cooperative is also helping its smaller suppliers by cutting payment times from 60 to 30 days to ease cash flow and reduce dependence on loans.

Said Mr Ng: 'The crisis became bad in the last few months of last year, and discussions with suppliers started in September. We could see problems building up for them so we decided to come up with a way to help them.'

FairPrice will also increase its funding to NTUC, amounting to more than the $4.3 million last year, by at least half. Most of it will be used to help low-wage workers.

The FairPrice Foundation, the chain's new charity arm, will contribute at least 20 per cent more to the community this year. It gave $6.7 million last year.

In the meantime, consumers are looking forward to a wider range of budget items.

'This is great. It means I am not limited to just a few budget items when I want to save money,' said Mrs Stella Lim, 47, a mother of three.

Consumers have three tiers of lower-priced items to choose from.

First, 400 national brands - belonging to the Everyday Low Priced range - that are sold at the same price or lower than other retailers.

Second, 500 house brand products - including staples like bread, rice and cooking oil - tagged at 10 to 15 per cent lower than national brand equivalents.

Third, yellow dot items, which are about 25 per cent cheaper than national brands.

Ms Louisa Chua, 41, who now buys the cheapest brand of floor cleaner, is happy for the help.

She said: 'For some items, like floor cleaner, it does not matter if you buy the cheapest type. If I see a lower- priced version, I will buy it instead.'

FairPrice extends ahelping hand
January 14, 2009
Loh Chee Kong (TODAY)
cheekong@mediacorp.com.sg

A TOUGH year lies ahead but the island’s largest supermarket chain is bringing some cheer not just to budget-conscious shoppers but also for the first time, suppliers who are equally short on cash.

Yesterday, NTUC FairPrice announced a broad range of initiatives — which will cost $15 million — to “help Singapore ride through this recession”, in the words of FairPrice chairman Ng Ser Miang.

Said Mr Ng: “2009 will be a challenging year ... Amid this challenging landscape, NTUC FairPrice as a social enterprise is all the more committed to doing more.”

Apart from pledging $8 million to the community through the FairPrice Foundation, the measures include expanding its three-month-old programme to bring in and help customers identify the cheapest products in its supermarkets.

Such items, which are between 20 and 25 per cent cheaper than rival brands, will be tagged with bright yellow stickers. Their number will also be doubledto 200 by the end of March.

FairPrice is also extending its 5-per-cent discount scheme on 500 selected housebrands, initially due to end in March, until the end of the year.

As for its 100 or so suppliers, they can look forward to an assistance programme in which the supermarket chain will pay these small and medium enterprises (SMEs) earlier, reduce the listing and advertising fees it charges them and help to promote made-in-Singapore products.

Mr Ng said suppliers will also be paid much faster — with the waiting time for payment cut by about half. Currently, FairPrice has between 60 and 75 days — depending on agreed trading terms — to pay itssuppliers.

“We know that in various crises, the most critical part is really cashflow,” said Mr Ng, adding that the programme will cost FairPrice some $2 million in terms of the opportunity cost based on a monthly interest rate of between 1 and 2 per cent.

Suppliers and distributors — especially the smaller ones — are naturally pleased, given the economic slowdown made worse by a general shortage of credit in the global marketplace.

“With less business, cashflow would naturally be a problem,” said one distributor.

Noting that FairPrice has always paid up promptly,Mr Kenneth Goh, the purchasing manager of food importer Goh Joon Hin, said while the situation is not dire, “early payments are always welcomed”.

A representative from a fast-moving consumer goods distributor told Today that it received its payment early from FairPrice last month.

He added: “We thought it was a one-off ... the fact that they will be paying us early for the year ahead is good news. Ours is a business based on cash and everyone is experiencing a tighter cashflow.”

When contacted, other supermarket chains said they have no plans to follow FairPrice’s move to ease suppliers’ cashflow worries. But a Sheng Siong spokesperson reiterated that it is constantly on the look out for opportunities to lower the prices of its products to benefit customers.

Mr Ng added that in spite of the economic gloom, FairPrice, which has some 6,000 employees on its payroll, will continue its expansion plans this year by opening three new outlets and hiring another 500 staff.

Promising not to retrench any staff for the next two years, Mr Ng said the supermarket chain will also be doing some astute shopping of its own — in terms of looking out for new management staff.

“We will also take advantage of the downturn to look out for new talent for succession planning,” said Mr Ng.

CapitaLand lowers electricity and water consumption, saves some S$1.5m

By May Wong, Channel NewsAsia
14 January 2009

SINGAPORE : Real estate giant CapitaLand saved some S$1.5 million last year by reducing its electricity and water consumption.

The green efforts were carried out across 23 properties such as its retail malls and office buildings.

The amount of electricity saved can power about 13,000 five-room HDB flats for one month, while the amount of water saved can fill 24 Olympic-sized swimming pools.

Last year, CapitaLand achieved its target of lowering its utilities consumption by two per cent compared to 2007.

This year, the company wants to reduce the use of water and electricity in about 150 local and overseas properties by three per cent.

That will help save up to S$4 million in utility costs. - CNA/ms

Singapore firms invest nearly S$1b in Iskandar Malaysia project

By S Ramesh, Channel NewsAsia
17 January 2009

SINGAPORE: Singapore-Malaysia ties will remain positive under Malaysia's next premier Najib Tun Razak – that is the view of Malaysia's new High Commissioner to Singapore, Hussin Nayan, who has described current ties as excellent.

An important sign is the nearly S$1 billion (RM2.5 billion) worth of projects that Singapore companies have invested in the mega Iskandar Malaysia project in Johor.

Mr Hussin said: "Najib is not unfamiliar with Singapore leaders. He knows most of the Cabinet ministers in Singapore. I could assume that whatever changes that will take place would be gradual in nature and very smooth.

"I would imagine that Malaysian leaders would continue to improve relations with Singapore because Singapore is a very important country for us."

That is why Mr Hussin feels it is important not to be distracted by the occasional hiccups.

"Ups and downs will always be there, just like a family. It depends on how best we resolve these issues. From my own perspective, the best way to resolve all these ups and downs is through common sense and willingness, goodwill and open-mindedness, rather than harping on the negatives all the time.

"If we harp on the negatives, we will never improve and this has not happened in Singapore-Malaysia relations because leaders from both sides are positive," he added.

Since the Iskandar Malaysia project kicked off in 2005, Singapore companies have been involved in some 220 projects there. But Mr Hussin wants to encourage them to venture to other development programmes in Malaysia.

"I would encourage Singaporeans to go beyond Iskandar Malaysia. As you know, there are other regional development programmes that are being implemented in other stages. We do not doubt that Singapore investors would come in because Malaysia is not a new area for them," Mr Hussin said.

He also assures Singapore businessmen a friendly experience when discussing investment proposals with their Malaysian counterparts.

Singapore seen unveiling anti-recession budget

20 January 2009 0948 hrs (CNA)

SINGAPORE: Singapore's budget to be unveiled on Thursday should contain tax cuts and a hefty financial package to help the country weather what could be its worst recession since independence, analysts said.

As the open, trade-driven economy takes a sharp turn for the worse, the spectre of rising bankruptcies and mass layoffs is striking fear in a country long used to near-full employment and bustling economic activity.

"The Singapore economy is probably headed for its deepest recession since independence" in 1965, said Citigroup economist Kit Wei Zheng.

Officials might even take the unprecedented step of dipping into the country's multi-billion-dollar national savings, Senior Minister Goh Chok Tong was quoted as saying on Monday.

The government is announcing its budget one month early, underscoring the need to react quickly.

Prime Minister Lee Hsien Loong warned at the weekend that forecasts for the economy to contract by as much as two per cent this year would be further scaled down.

Many analysts believe the economy could shrink by three per cent, while some said the contraction could be even more severe. That would leave the economy in its worse shape ever, after 2001 when growth fell by 2.4 per cent.

The city-state became the first Asian economy to enter recession last year after problems in the US subprime, or higher-risk, mortgage sector developed into the worst global economic crisis since the Great Depression of the 1930s.

"The weather is so bad and we've always said the reserves are for a rainy day," Goh was quoted as saying in The Straits Times. "If this is not a rainy day, I don't know what is a rainy day," he said.

Experts, business executives and trade unionists have said they want an aggressive budget to cushion the impact of a worsening economic situation.

Loans to small businesses have tightened, and companies have laid off workers or slashed wages.

Macquarie Research said that, in addition to cost-cutting measures, it expects the budget "to include sizeable infrastructure spending and transfer payments to middle/lower income Singaporeans". It also expects the budget to include incentives for new growth industries and programmes aimed at upgrading workers' skills.

During previous economic crises the government responded with financial muscle. In the 1985 economic downturn, it unveiled about 2.5 billion dollars in fiscal measures, or 6.5 per cent of gross domestic product (GDP), while the 1998 Asian financial crisis saw fiscal programmes worth 12.5 billion dollars, or 9.1 per cent of GDP, Macquarie Research said.

The 2001 budget measures totalled 13.5 billion dollars or 8.8 per cent of GDP, Macquarie added.

Singapore's GDP in 2007 totalled 243.2 billion dollars (164 billion US).

Finance Minister Tharman Shanmugaratnam has said this year's "significantly expansionary" budget will emphasise help for businesses. Late last year, the government pledged 2.3 billion dollars in credit support for firms trying to survive the economic turmoil.

In a commentary published in The Straits Times, Citigroup's Kit said the budget should focus on easing financial stress on companies, improving cost-competitiveness, providing support for affected families and giving a modest demand stimulus to the economy.

This would translate into corporate and individual tax cuts, rebates on taxes and utility bills, financial doleouts and funding for the retraining of laid-off workers so they can find jobs in less-affected sectors, other analysts said.

Accounting firm KPMG suggested the government should reduce the corporate tax rate from 18 per cent to 17 per cent.

Kit proposed a wider two or three-percentage point cut that would "send a powerful signal of the government's commitment to maintain Singapore's competitive position and encourage companies to make longer-term investments in the country".

While the government should draw up a power-packed budget this year it should also reserve ammunition in case the recession gets worse and lasts longer, analysts said.

Singapore is Southeast Asia's wealthiest economy in terms of gross domestic product per capita, but its trade dependence makes it sensitive to problems in developed economies, particularly key export markets of the United States and Europe, which are also in recession.

- AFP/yt