DESPITE the US subprime crisis, which will have a cyclical impact, Liew Mun Leong remains bullish on Singapore’s property market in the medium term.
‘Main street America is suffering from the sins and mistakes of Wall Street,’ he says. ‘And when main street gets hit, that will affect Asia, we can’t run away from it.’
However, Singapore’s property market has some strong underpinnings, he maintains. Most importantly, the drivers of Singapore’s property market have changed in recent years. ‘The rise in property prices since 2002 is no longer due to domestic policy changes such as the liberalisation of CPF and the HDB sub-sale policy.
‘It is driven by the remaking of Singapore. Singapore as a global city, as a gateway to Asia, the integrated resorts, plus the displacement demand from en-bloc sales.’
The change in the number and profile of foreign buyers is also notable, he points out. ‘In the past foreign buyers were mainly from Malaysia and Indonesia. But now, there are big buyers from at least 12 countries.’
The proportion of foreign buyers for private properties has also risen from 13.7 percent of the total in 1996 to 25 per cent in 1997. And the number of foreign professionals coming to live in Singapore has tripled over that period, as has foreign direct investment.
At the same time, the affordability of private residential properties as measured by mortgage payments as a percentage of household income has improved, going from around 46 per cent to 36 per cent.
And then Mr. Liew points to the big picture: ‘Singapore has 700 sq km, with 4.5 million people. The population is projected to grow to more than 6 million, but the city cannot grow. If we reclaim another 11 per cent we’ll be in international waters already.’
‘Another point, I tell foreigners. Compare putting $5 million in a house in Singapore with putting $5 million in a house in, say, Bangkok or Jakarta. In Singapore, the government provides so much support in the form of infrastructure. What infrastructure support would you get in Bangkok or Jakarta? This is an important issue when you buy property. Investors realise this.
‘So, if you analyse all the fundamentals, Singapore as a global city is a winning formula. And I’m not saying this because I’m selling property.’
Source : Business Times - 5 Apr 2008
Showing posts with label comments. Show all posts
Showing posts with label comments. Show all posts
Friday, April 04, 2008
Sunday, March 30, 2008
Views from the top: Business confidence sagging?
Do you agree that business confidence in Singapore is at its lowest point in several years? Why? What can be done to boost confidence here?
S’pore / Region remains sound
WE ARE currently witnessing a crisis of confidence brought about by several forces, including high energy and commodity prices, the sub-prime mortgage crisis, reduced liquidity, the weakening US dollar, and more. Due to this ‘perfect storm’, business confidence has dropped to its lowest level in years.
Although confidence is low, fundamentally Singapore remains very sound. The current economic climate doesn’t change the fact that Singapore is a First World country with Third World growth rates. In other words, we are not faced with a long-term economic outlook that warrants the current doom-and-gloom pessimism. However, we shouldn’t ignore the current downbeat sentiments in case they become self-fulfilling prophecies - which could happen if businesses scale back on expenditures, investments and plans due to the negative sentiments..
Remember the phrase ‘irrational exuberance’ coined by Alan Greenspan? Perhaps what we are observing now is the exact opposite. Call it what you will, but perhaps what Singapore needs are a few public displays of confidence in the strength and resilience of the Singapore economy.
For example, Temasek Holdings and the GIC made headlines not too long ago with their high-profile, high-stakes investments in financial institutions like UBS, Citigroup and Merrill Lynch. If I may say so, perhaps another high-profile acquisition will go a long way towards boosting public confidence as well as growing their asset portfolios. And good deals are probably available if they can be sniffed out!
In addition, the government should continue with the current masterplan to position Singapore as an ideal country for multinational corporations and high-net-worth individuals to sink their roots in. If we can do this, then it sends a strong signal that Singapore has what it takes to succeed over the long term regardless of what the short-term conditions are. But this requires a multi-pronged approach encompassing policies related to economics, immigration, taxation, urban planning, and other areas.
- Goh Chong Theng General Manager Rabobank International, Singapore Branch
THE sub-prime debacle and the veiled threat of a similar financial exposure in the credit card space is no good news! Add to that rising oil prices, the Middle East situation, and the consequential impact of these eventualities is taking its toll on the business sentiment in Asia. That said, let’s be very pragmatic - Asia has come a long way since the 1995 and 2001 crises.
On top of a manifold increase in critical mass and financial discipline, we have a unique situation where most Asian nations are firing their economic cylinders and building a unique status of being producers and consumers. The recent election results in Korea and Taiwan spell more hope than ever before. Then of course there is China and India - two economies driving consumption and capital formation with committed investments in infrastructure to the tune of $1.2 trillion and $700 billion over the next 5-7 years!
Some knee-jerk reactions in certain financial markets have been visible, but it has not been a rapid downward spiral and has come with partial recovery. While I will not be too vocal in saying that Asia has largely de-coupled itself from the West in the way of economic impact, we certainly do not catch a fever when they sneeze!
At Brocade, we see several opportunities amid these circumstances and are working closely with our customers and partners to provide more value to them, mostly financial. The benefit will be apparent through technology that consumes less electricity and generates less heat. We are also providing services where we provide a comprehensive implementation and support solution to customers and partners at a pre-determined price point, instead of leaving them with an open-ended, complex implementation process that becomes cost-prohibitive and brutal on their operating expenditure budgets, especially during times like this!
- Deb Dutta Brocade Vice-President, Asia Pacific & Japan
ONLY one per cent of muvee’s revenue is local. In fact, we feel the business climate in Singapore is overly buoyant. With low unemployment rates, and interest amongst young graduates in entrepreneurial activities, we have found recruitment a challenge, and that is stemming our growth. We have been hiring internationally (50 per cent of our 84 staff are from 18 different nations) and are starting an office in Silicon Valley later this year; we have been increasing sales activities in traditionally difficult-to-penetrate places like Korea and Japan, and have been introducing new products targeted at the US consumer marketplace.
With a slowdown globally, it only means we have to work harder to reach more users. Local sentiments really only affect businesses if you are operating in a mature market and have stopped innovating along the way. We constantly re-invent and create new markets for ourselves, so we believe we are able to operate on a different rhythm from the local climate, and indeed the global business climate.
- Terence Swee Founder / CEO muvee
WE CANNOT say for sure that business confidence is at its lowest point, but we do know that Singapore remains well poised for sustained long-term growth. IT investments reflect companies’ long-term goals and strategies, and our performance so far suggests that the long-term prospects for Singapore and other regional markets remain good despite the current turmoil.
For example, according to a recent survey by Gartner, Asia is expected to lead the rest of the world in IT expenditure this year. IT budgets for 2008 are projected to rise by 8.3 per cent in Asia, which is much higher than the 3.3 per cent rise in the global average.
To boost business confidence, the government must continue to transform Singapore into a services-based economy, and to make the country an ideal city to live and work in. These will serve to attract multinational corporations and high net-worth individuals to Singapore’s shores, which is a sign that its long-term value proposition remains compelling despite the short-term uncertainties.
- Noboru Oi Group CEO Fujitsu Asia
THIS lapse in confidence from businesses in Singapore could be largely due to the most significant dip in the global economy seen in the past decade. It is therefore not surprising that companies are employing cautionary tactics at this time.
Despite the economic downturn, there are vast opportunities in the Asia Pacific for businesses as the region is still experiencing positive growth in several industries and sectors. In the booming economies of China and India, for instance, challenges posed by the economy are being translated into business opportunities for investors.
In Singapore, both the public and private sectors continue to show signs of positive growth. With projects like the government’s most recent $20 billion announcement to extend the train lines in the works, Singapore will surely battle the impact of the US economic downturn and the cloud of uncertainty will be lifted.
- Charles Reed CEO interTouch
AS THE US economy weakens, we observe that businesses have become more cautious in their outlook compared to last year. Companies selling to the rest of the world will face more headwind; business and input costs have increased; funding, in the debt and equity markets, has become more expensive and scarce. The situation looks worse with the consolidation of the property market that set record volume and prices last year. But we believe there are reasons to remain positive in the long run. US policymakers have shown that they are committed to dealing with the debt crisis using both monetary policy and other unconventional measures. The Singapore economy, having been restructured to take advantage of globalisation, should do well again on the first sign of stability returning to the global economy.
- Deborah Ho CEO DBS Asset Management
THE decline in business confidence reflects greater pessimism about the current business situation than declining expectations for the future. That is, expectations for business activity, revenues, profits, spending and employment have not fallen. Instead the pessimism comes from fear that slower consumer spending in advanced economies like the US, Germany and Japan will affect emerging economies. Already, this has been exacerbated by the US economy’s stagflation.
Singapore, however, has a healthy Budget aimed at raising growth. We are ranked third globally for network readiness in the World Economic Forum’s latest Global Information Technology Report. The national business mood might thus be overblown because the global rankings underscore the central role technology plays as an engine of growth and competitiveness of Singapore.
- Lars Ronning President, Asia Pacific (excluding China and Japan) Tandberg
WE NEED to put things into perspective. If you accept the general scenario from the IMF that world growth will be moderate but continue in the 4 per cent range in 2008, Singapore’s expected growth rate of 5.7 per cent for the first quarter is still healthy. And while the recent survey does show that overall business confidence is down, Singapore’s sales and profit figures still present a healthy picture for the Republic. Certainly there will be a squeeze if the global markets keep going down, but the fact that the Asian economy is continuing to grow should bode well for Singapore which serves as a major hub in this region.
Take advantage of Singapore’s strengths! A significant portion of Singapore’s success has been around our role as a value-creation hub and gateway to tap into the regional markets. Singapore’s proximity to key growth markets, India, China and Asean gives the country a distinct advantage, as does its focus on grooming and attracting multi-cultural talent. In that context, an ailing global economic climate can actually be an opportunity for Singapore to further differentiate itself as a choice hub for multinationals. It is interesting to note that while overall confidence in Singapore is down, business confidence is buoyant amongst the larger multinational firms. At Lenovo, Singapore is the base of several of our worldwide functions including treasury. In addition, our worldwide heads of services, as well as global supply chain, are based here. Our CEO lives in Singapore - a testament of our confidence in Singapore’s value as a hub, as well as our confidence in the region. It’s part of our Worldsourcing strategy - rather than having any single HQ, we locate and obtain talent wherever it makes the most sense.
Attracting the number of successful multinationals here will have a positive spillover effect for all businesses in Singapore - through industry partnerships, support requirements, as well as more business being brought into the local market. When it comes to competing for multinational investment, Singapore already rolls out the red carpet. Now, Singapore needs to rally the talent that already resides in the country to look at the region, and indeed the globe, as one big business opportunity.
- David Miller President of Asia Pacific & Senior Vice-President Lenovo
THE increasingly cautious sentiment is probably driven by the global - and in particular the US - economic situation. Singapore has received many accolades for having one of the top business environments and has been ranked as the world’s easiest place to do business by the World Bank. Both short and long-term issues are addressed via well-planned, transparent and comprehensive economic policies. Risks are also controlled through a robust set of regulations and checks. While the recent spike in inflation has increased costs, Singapore remains a relatively cost-competitive place.
On the demand side, the series of near-term national projects, eg, SOEasy, integrated resorts, Formula 1, NG-NBN, Sports Hub, Youth Olympics, etc, will also continue to boost local businesses. Within Alcatel-Lucent, growth in our business in Singapore remains healthy and the opportunity pipeline from these projects alone is strong. It’s clear that Singapore will remain a major regional hub for us.
- Oliver Foo Managing Director Alcatel-Lucent, Singapore & Brunei
Government measures can help
THE dramatic shift in business sentiment, from ‘nothing can go wrong with growth’ to ‘nothing is going right’, in the last three months has been amazing. It speaks volumes about how fragile business sentiment can be and how important it is to nurture this.
Clearly, Singapore businesses recognise the oncoming challenge of a slowing global growth and surveys reflect that anxiety. Having said that, I believe this is certainly not the worst we have seen here - Sars and Asian Crisis ‘97 notwithstanding. Singapore is lucky to be intricately tied with the Asian economic trade and growth cycle - which will continue, albeit slightly slowly. This will ensure sustained growth over time for Singapore. The healthy pipeline and order book that we see with local companies are a reflection of this.
The government can help at this juncture when the economic sentiment is weakening. Increased domestic investments and attacting new inward foreign investments with lower tax rates and incentives can be very useful. Hong Kong has reduced taxes - both corporate and personal - and Singapore will need to review its own rates and align them.
The high costs of real estate have been a dampener for the last two years, and increased inflation and GST have created a high-cost environment which is making business increasingly uncompetitive. This needs to be tackled boldly as hope alone cannot be a survival strategy!
- Girija Pande Regional Director Tata Consultancy Services
IT IS said that when the United States sneezes, the rest of the world catches a cold. Although some of the slack in the US can be taken over by China and India, both these countries themselves depend to a large extent on the US economy to absorb their exports.
The US recession and the weak US dollar will curb the demand of Asian exports to the US. Businesses are feeling the effects of more cautious lending and so are more pessimistic about growth. A strong Singapore dollar makes exports less competitive, and the increase in rents and currency-adjusted wages contribute towards the weaker sentiment.
Wages have risen also because of full employment and businesses have turned cautious, not knowing whether the US will have a short-lived or prolonged recession.
Our government needs to look into these concerns in the next Budget to prevent Singapore from going into a more severe slowdown.
- Tan Ser Giam Chairman Eastern Navigation Pte Ltd
MAY I suggest the following:
Reduce personal income and corporate taxes - to attract MNC investments and foreigners to Singapore so as to increase ’spending income’ in Singapore.
GIC, Temasek and Temasek-linked companies should increase the proportion of their investments in Singapore compared to overseas (overseas investments benefit their profit & loss figures but not the majority of Singaporeans).
Build at least six integrated resorts instead of two to have a real impact - learn from Dubai and Macau. Do it bravely, and do not do it ‘half big, half small’.
Increase government spending with more government projects and encourage spending to support local small and medium-sized enterprises (SMEs); in return, the government will receive more taxes from SMEs and this will help to boost the local economy via SMEs.
- David Ong LE Managing Director ASophia Asia Systems Pte Ltd
No need to be pessimistic
I DON’T share the pessimistic view on business confidence. I think that with the current global economical and political situation, one has to be cautious, but definitely not pessimistic. That is because with the megatrends of urbanisation and demographic change that we’re facing today, there are in fact more business opportunities available.
In 2007, for the first time in history, more people in the world lived in urban areas than in rural areas. With increasing urbanisation, we face an increased demand for basic needs of societies - for energy, clean water and better standard of living. Better standard of living will also require better public infrastructure - housing, transportation, sewage systems, healthcare, efficient administration, etc.
The most obvious demographic change that we’re facing today is the greying population, which calls for more private and public healthcare measures. All these mean the need for more planning, building, investment and development - both by the government and private businesses.
And that in turn translates into more businesses for MNCs and SMEs.
I think what makes people nervous is the lack of transparency in the banking sector. The lack of funds is not exactly the issue that we’re dealing with here. Rather, I believe the issues are the lack of information and sense of uncertainty on how the financial sector will develop. Even more so when it concerns the global financial sector, which is beyond Singapore’s control. I think the banks have to act with a lot more openness and transparency, so as to give consumers and businesses more assurance about the economy.
- Hans-Dieter Bott CEO Siemens Pte Ltd
LET’S not forget that business confidence is not linked to any specific element and tends to lag behind the current market scenario; when the markets start to get worried, confidence can continue to be high, and when markets start to improve, consumer confidence can remain low. What we do need to be cautious about is not to exaggerate the situation.
Many media articles are reporting doom and gloom but this is a cycle that the market goes through, as history shows. The silver lining here is that we are living and working in one of the strongest-growing regions in the world, which provides us with tremendous opportunities.
Confidence is tricky in the sense that it could change in either direction; so unfortunately while it takes time to move into positive mode, we as business leaders need to keep our organisations focused on delivering results to our customers.
- Gary Harvey CEOIpac Wealth Management Asia
THE uncertainty surrounding financial markets, particularly in the US, is definitely taking its toll on the confidence of businesses everywhere. That said, nobody knows for sure how this turbulence will pan out in the real economy with each economist having his/her own opinion on the impact.
It is perhaps inevitable that businesses in Singapore suffer a hit in confidence levels, because we have just exited a period of stellar growth.
Business cycles will however always prevail, and a possible period of slower growth is an opportune time for companies to prepare themselves to be more competitive during the next expansion.
This may include improving internal operational processes, and upgrading current equipment and employee skills.
Such steps will create a positive, forward-looking mindset instead of a pessimistic atmosphere which may be self-fulfilling.
- Poul Lorentzen Vice-President Dematic SEA Pte Ltd
Uncertainty lies ahead
I AGREE that business confidence in Singapore has been shaken in the last few months. There are real concerns about rising costs and inflation is at a 26-year high. Escalating fuel prices are driving up the costs of grocery items, electricity, transportation, education, housing and healthcare. Singaporeans are expecting higher salaries to meet their rising expenses. All these will contribute towards increasing business costs and impacting profits, as revenues are not keeping pace with costs. As economic conditions in the US worsen, there is an expectation that the worse is yet to come for Singapore and Asia.
However, if we look at the fundamentals, while there will indeed be tough times ahead, Singapore still has good reason to be optimistic.Nevertheless, we must take this time to re-invent ourselves and take positive action if Singapore is to overcome these challenges. For example, one of the highest business costs is salaries. Employees must be more realistic in their expectations to take a longer-term perspective towards employment and not just seek immediate personal reward. Beyond salaries, they should factor other tangible and intangible benefits such as work-life balance or career and personal development into their decisions. Employers too can re-look at their employment package, and offer a dynamic and conducive working environment and attractive training and staff welfare programmes to retain staff.
If we are going to build a foundation for long-term stability and growth, employees and employers must work together to facilitate a mindset change, moving away from a fixation on short-term gains. We must put an end to the handout mentality. If Singaporeans redefine their expectations accordingly to suit the challenges ahead, we will emerge stronger to position ourselves for even greater growth if we make a concerted effort to ride the storm together.
- Glenn Tan CEO, Motor Image Enterprises (Subaru)
THAT business confidence is at the lowest ebb in several years is not unexpected. It is difficult and unrealistic to expect it not to be so, when you have not one but several large banking and financial institutions with global footprints all in dire financial straits. The constant slew of negative news about the financial turmoil and impending economic crisis is not helping the situation.
The aftermath of the current banking and financial crisis is all about bank liquidity and solvency. If this could be restored in the financial system, business confidence would return.
However, it is still uncertain whether there will be more bad news down the road, so it is not unexpected that businesses, even though they have strong orders and new business, will remain cautious and jittery for quite a while.
I would think that businesses will be more concerned with staying viable, if not going for survival, rather than aggressively growing their business, given the current credit squeeze and the prospect of a global recession.
- Lim Soon Hock Managing Director Plan-B Icag Pte Ltd
BUSINESS confidence is low due to many factors that cannot be controlled locally. As we wait for the price of oil and the US dollar to stabilise, many businesses are unsure what to expect.
There is also a perception that many of the government aid programmes (Workfare, CPF top-up, public relief, community assistance, etc) came a bit too late and offer too little to maintain confidence.
However, while external factors cannot be controlled, Singapore companies and workers could strengthen their bonding and do whatever is necessary to remain viable and competitive. Further boost can be expected from the upcoming integrated resorts, F1, Youth Olympics - and other initiatives, if businesses can hold on bravely through these times.
Furthermore, bureaucratic rigidities and over-regulations can be further relaxed to encourage entrepreneurship and risk-taking, which are required in a free enterprise system - and boost morale and confidence.
- R Theyvendran Chairman / Managing Director Stamford Media International Group
Source : Business Times - 31 Mar 2008
S’pore / Region remains sound
WE ARE currently witnessing a crisis of confidence brought about by several forces, including high energy and commodity prices, the sub-prime mortgage crisis, reduced liquidity, the weakening US dollar, and more. Due to this ‘perfect storm’, business confidence has dropped to its lowest level in years.
Although confidence is low, fundamentally Singapore remains very sound. The current economic climate doesn’t change the fact that Singapore is a First World country with Third World growth rates. In other words, we are not faced with a long-term economic outlook that warrants the current doom-and-gloom pessimism. However, we shouldn’t ignore the current downbeat sentiments in case they become self-fulfilling prophecies - which could happen if businesses scale back on expenditures, investments and plans due to the negative sentiments..
Remember the phrase ‘irrational exuberance’ coined by Alan Greenspan? Perhaps what we are observing now is the exact opposite. Call it what you will, but perhaps what Singapore needs are a few public displays of confidence in the strength and resilience of the Singapore economy.
For example, Temasek Holdings and the GIC made headlines not too long ago with their high-profile, high-stakes investments in financial institutions like UBS, Citigroup and Merrill Lynch. If I may say so, perhaps another high-profile acquisition will go a long way towards boosting public confidence as well as growing their asset portfolios. And good deals are probably available if they can be sniffed out!
In addition, the government should continue with the current masterplan to position Singapore as an ideal country for multinational corporations and high-net-worth individuals to sink their roots in. If we can do this, then it sends a strong signal that Singapore has what it takes to succeed over the long term regardless of what the short-term conditions are. But this requires a multi-pronged approach encompassing policies related to economics, immigration, taxation, urban planning, and other areas.
- Goh Chong Theng General Manager Rabobank International, Singapore Branch
THE sub-prime debacle and the veiled threat of a similar financial exposure in the credit card space is no good news! Add to that rising oil prices, the Middle East situation, and the consequential impact of these eventualities is taking its toll on the business sentiment in Asia. That said, let’s be very pragmatic - Asia has come a long way since the 1995 and 2001 crises.
On top of a manifold increase in critical mass and financial discipline, we have a unique situation where most Asian nations are firing their economic cylinders and building a unique status of being producers and consumers. The recent election results in Korea and Taiwan spell more hope than ever before. Then of course there is China and India - two economies driving consumption and capital formation with committed investments in infrastructure to the tune of $1.2 trillion and $700 billion over the next 5-7 years!
Some knee-jerk reactions in certain financial markets have been visible, but it has not been a rapid downward spiral and has come with partial recovery. While I will not be too vocal in saying that Asia has largely de-coupled itself from the West in the way of economic impact, we certainly do not catch a fever when they sneeze!
At Brocade, we see several opportunities amid these circumstances and are working closely with our customers and partners to provide more value to them, mostly financial. The benefit will be apparent through technology that consumes less electricity and generates less heat. We are also providing services where we provide a comprehensive implementation and support solution to customers and partners at a pre-determined price point, instead of leaving them with an open-ended, complex implementation process that becomes cost-prohibitive and brutal on their operating expenditure budgets, especially during times like this!
- Deb Dutta Brocade Vice-President, Asia Pacific & Japan
ONLY one per cent of muvee’s revenue is local. In fact, we feel the business climate in Singapore is overly buoyant. With low unemployment rates, and interest amongst young graduates in entrepreneurial activities, we have found recruitment a challenge, and that is stemming our growth. We have been hiring internationally (50 per cent of our 84 staff are from 18 different nations) and are starting an office in Silicon Valley later this year; we have been increasing sales activities in traditionally difficult-to-penetrate places like Korea and Japan, and have been introducing new products targeted at the US consumer marketplace.
With a slowdown globally, it only means we have to work harder to reach more users. Local sentiments really only affect businesses if you are operating in a mature market and have stopped innovating along the way. We constantly re-invent and create new markets for ourselves, so we believe we are able to operate on a different rhythm from the local climate, and indeed the global business climate.
- Terence Swee Founder / CEO muvee
WE CANNOT say for sure that business confidence is at its lowest point, but we do know that Singapore remains well poised for sustained long-term growth. IT investments reflect companies’ long-term goals and strategies, and our performance so far suggests that the long-term prospects for Singapore and other regional markets remain good despite the current turmoil.
For example, according to a recent survey by Gartner, Asia is expected to lead the rest of the world in IT expenditure this year. IT budgets for 2008 are projected to rise by 8.3 per cent in Asia, which is much higher than the 3.3 per cent rise in the global average.
To boost business confidence, the government must continue to transform Singapore into a services-based economy, and to make the country an ideal city to live and work in. These will serve to attract multinational corporations and high net-worth individuals to Singapore’s shores, which is a sign that its long-term value proposition remains compelling despite the short-term uncertainties.
- Noboru Oi Group CEO Fujitsu Asia
THIS lapse in confidence from businesses in Singapore could be largely due to the most significant dip in the global economy seen in the past decade. It is therefore not surprising that companies are employing cautionary tactics at this time.
Despite the economic downturn, there are vast opportunities in the Asia Pacific for businesses as the region is still experiencing positive growth in several industries and sectors. In the booming economies of China and India, for instance, challenges posed by the economy are being translated into business opportunities for investors.
In Singapore, both the public and private sectors continue to show signs of positive growth. With projects like the government’s most recent $20 billion announcement to extend the train lines in the works, Singapore will surely battle the impact of the US economic downturn and the cloud of uncertainty will be lifted.
- Charles Reed CEO interTouch
AS THE US economy weakens, we observe that businesses have become more cautious in their outlook compared to last year. Companies selling to the rest of the world will face more headwind; business and input costs have increased; funding, in the debt and equity markets, has become more expensive and scarce. The situation looks worse with the consolidation of the property market that set record volume and prices last year. But we believe there are reasons to remain positive in the long run. US policymakers have shown that they are committed to dealing with the debt crisis using both monetary policy and other unconventional measures. The Singapore economy, having been restructured to take advantage of globalisation, should do well again on the first sign of stability returning to the global economy.
- Deborah Ho CEO DBS Asset Management
THE decline in business confidence reflects greater pessimism about the current business situation than declining expectations for the future. That is, expectations for business activity, revenues, profits, spending and employment have not fallen. Instead the pessimism comes from fear that slower consumer spending in advanced economies like the US, Germany and Japan will affect emerging economies. Already, this has been exacerbated by the US economy’s stagflation.
Singapore, however, has a healthy Budget aimed at raising growth. We are ranked third globally for network readiness in the World Economic Forum’s latest Global Information Technology Report. The national business mood might thus be overblown because the global rankings underscore the central role technology plays as an engine of growth and competitiveness of Singapore.
- Lars Ronning President, Asia Pacific (excluding China and Japan) Tandberg
WE NEED to put things into perspective. If you accept the general scenario from the IMF that world growth will be moderate but continue in the 4 per cent range in 2008, Singapore’s expected growth rate of 5.7 per cent for the first quarter is still healthy. And while the recent survey does show that overall business confidence is down, Singapore’s sales and profit figures still present a healthy picture for the Republic. Certainly there will be a squeeze if the global markets keep going down, but the fact that the Asian economy is continuing to grow should bode well for Singapore which serves as a major hub in this region.
Take advantage of Singapore’s strengths! A significant portion of Singapore’s success has been around our role as a value-creation hub and gateway to tap into the regional markets. Singapore’s proximity to key growth markets, India, China and Asean gives the country a distinct advantage, as does its focus on grooming and attracting multi-cultural talent. In that context, an ailing global economic climate can actually be an opportunity for Singapore to further differentiate itself as a choice hub for multinationals. It is interesting to note that while overall confidence in Singapore is down, business confidence is buoyant amongst the larger multinational firms. At Lenovo, Singapore is the base of several of our worldwide functions including treasury. In addition, our worldwide heads of services, as well as global supply chain, are based here. Our CEO lives in Singapore - a testament of our confidence in Singapore’s value as a hub, as well as our confidence in the region. It’s part of our Worldsourcing strategy - rather than having any single HQ, we locate and obtain talent wherever it makes the most sense.
Attracting the number of successful multinationals here will have a positive spillover effect for all businesses in Singapore - through industry partnerships, support requirements, as well as more business being brought into the local market. When it comes to competing for multinational investment, Singapore already rolls out the red carpet. Now, Singapore needs to rally the talent that already resides in the country to look at the region, and indeed the globe, as one big business opportunity.
- David Miller President of Asia Pacific & Senior Vice-President Lenovo
THE increasingly cautious sentiment is probably driven by the global - and in particular the US - economic situation. Singapore has received many accolades for having one of the top business environments and has been ranked as the world’s easiest place to do business by the World Bank. Both short and long-term issues are addressed via well-planned, transparent and comprehensive economic policies. Risks are also controlled through a robust set of regulations and checks. While the recent spike in inflation has increased costs, Singapore remains a relatively cost-competitive place.
On the demand side, the series of near-term national projects, eg, SOEasy, integrated resorts, Formula 1, NG-NBN, Sports Hub, Youth Olympics, etc, will also continue to boost local businesses. Within Alcatel-Lucent, growth in our business in Singapore remains healthy and the opportunity pipeline from these projects alone is strong. It’s clear that Singapore will remain a major regional hub for us.
- Oliver Foo Managing Director Alcatel-Lucent, Singapore & Brunei
Government measures can help
THE dramatic shift in business sentiment, from ‘nothing can go wrong with growth’ to ‘nothing is going right’, in the last three months has been amazing. It speaks volumes about how fragile business sentiment can be and how important it is to nurture this.
Clearly, Singapore businesses recognise the oncoming challenge of a slowing global growth and surveys reflect that anxiety. Having said that, I believe this is certainly not the worst we have seen here - Sars and Asian Crisis ‘97 notwithstanding. Singapore is lucky to be intricately tied with the Asian economic trade and growth cycle - which will continue, albeit slightly slowly. This will ensure sustained growth over time for Singapore. The healthy pipeline and order book that we see with local companies are a reflection of this.
The government can help at this juncture when the economic sentiment is weakening. Increased domestic investments and attacting new inward foreign investments with lower tax rates and incentives can be very useful. Hong Kong has reduced taxes - both corporate and personal - and Singapore will need to review its own rates and align them.
The high costs of real estate have been a dampener for the last two years, and increased inflation and GST have created a high-cost environment which is making business increasingly uncompetitive. This needs to be tackled boldly as hope alone cannot be a survival strategy!
- Girija Pande Regional Director Tata Consultancy Services
IT IS said that when the United States sneezes, the rest of the world catches a cold. Although some of the slack in the US can be taken over by China and India, both these countries themselves depend to a large extent on the US economy to absorb their exports.
The US recession and the weak US dollar will curb the demand of Asian exports to the US. Businesses are feeling the effects of more cautious lending and so are more pessimistic about growth. A strong Singapore dollar makes exports less competitive, and the increase in rents and currency-adjusted wages contribute towards the weaker sentiment.
Wages have risen also because of full employment and businesses have turned cautious, not knowing whether the US will have a short-lived or prolonged recession.
Our government needs to look into these concerns in the next Budget to prevent Singapore from going into a more severe slowdown.
- Tan Ser Giam Chairman Eastern Navigation Pte Ltd
MAY I suggest the following:
Reduce personal income and corporate taxes - to attract MNC investments and foreigners to Singapore so as to increase ’spending income’ in Singapore.
GIC, Temasek and Temasek-linked companies should increase the proportion of their investments in Singapore compared to overseas (overseas investments benefit their profit & loss figures but not the majority of Singaporeans).
Build at least six integrated resorts instead of two to have a real impact - learn from Dubai and Macau. Do it bravely, and do not do it ‘half big, half small’.
Increase government spending with more government projects and encourage spending to support local small and medium-sized enterprises (SMEs); in return, the government will receive more taxes from SMEs and this will help to boost the local economy via SMEs.
- David Ong LE Managing Director ASophia Asia Systems Pte Ltd
No need to be pessimistic
I DON’T share the pessimistic view on business confidence. I think that with the current global economical and political situation, one has to be cautious, but definitely not pessimistic. That is because with the megatrends of urbanisation and demographic change that we’re facing today, there are in fact more business opportunities available.
In 2007, for the first time in history, more people in the world lived in urban areas than in rural areas. With increasing urbanisation, we face an increased demand for basic needs of societies - for energy, clean water and better standard of living. Better standard of living will also require better public infrastructure - housing, transportation, sewage systems, healthcare, efficient administration, etc.
The most obvious demographic change that we’re facing today is the greying population, which calls for more private and public healthcare measures. All these mean the need for more planning, building, investment and development - both by the government and private businesses.
And that in turn translates into more businesses for MNCs and SMEs.
I think what makes people nervous is the lack of transparency in the banking sector. The lack of funds is not exactly the issue that we’re dealing with here. Rather, I believe the issues are the lack of information and sense of uncertainty on how the financial sector will develop. Even more so when it concerns the global financial sector, which is beyond Singapore’s control. I think the banks have to act with a lot more openness and transparency, so as to give consumers and businesses more assurance about the economy.
- Hans-Dieter Bott CEO Siemens Pte Ltd
LET’S not forget that business confidence is not linked to any specific element and tends to lag behind the current market scenario; when the markets start to get worried, confidence can continue to be high, and when markets start to improve, consumer confidence can remain low. What we do need to be cautious about is not to exaggerate the situation.
Many media articles are reporting doom and gloom but this is a cycle that the market goes through, as history shows. The silver lining here is that we are living and working in one of the strongest-growing regions in the world, which provides us with tremendous opportunities.
Confidence is tricky in the sense that it could change in either direction; so unfortunately while it takes time to move into positive mode, we as business leaders need to keep our organisations focused on delivering results to our customers.
- Gary Harvey CEOIpac Wealth Management Asia
THE uncertainty surrounding financial markets, particularly in the US, is definitely taking its toll on the confidence of businesses everywhere. That said, nobody knows for sure how this turbulence will pan out in the real economy with each economist having his/her own opinion on the impact.
It is perhaps inevitable that businesses in Singapore suffer a hit in confidence levels, because we have just exited a period of stellar growth.
Business cycles will however always prevail, and a possible period of slower growth is an opportune time for companies to prepare themselves to be more competitive during the next expansion.
This may include improving internal operational processes, and upgrading current equipment and employee skills.
Such steps will create a positive, forward-looking mindset instead of a pessimistic atmosphere which may be self-fulfilling.
- Poul Lorentzen Vice-President Dematic SEA Pte Ltd
Uncertainty lies ahead
I AGREE that business confidence in Singapore has been shaken in the last few months. There are real concerns about rising costs and inflation is at a 26-year high. Escalating fuel prices are driving up the costs of grocery items, electricity, transportation, education, housing and healthcare. Singaporeans are expecting higher salaries to meet their rising expenses. All these will contribute towards increasing business costs and impacting profits, as revenues are not keeping pace with costs. As economic conditions in the US worsen, there is an expectation that the worse is yet to come for Singapore and Asia.
However, if we look at the fundamentals, while there will indeed be tough times ahead, Singapore still has good reason to be optimistic.Nevertheless, we must take this time to re-invent ourselves and take positive action if Singapore is to overcome these challenges. For example, one of the highest business costs is salaries. Employees must be more realistic in their expectations to take a longer-term perspective towards employment and not just seek immediate personal reward. Beyond salaries, they should factor other tangible and intangible benefits such as work-life balance or career and personal development into their decisions. Employers too can re-look at their employment package, and offer a dynamic and conducive working environment and attractive training and staff welfare programmes to retain staff.
If we are going to build a foundation for long-term stability and growth, employees and employers must work together to facilitate a mindset change, moving away from a fixation on short-term gains. We must put an end to the handout mentality. If Singaporeans redefine their expectations accordingly to suit the challenges ahead, we will emerge stronger to position ourselves for even greater growth if we make a concerted effort to ride the storm together.
- Glenn Tan CEO, Motor Image Enterprises (Subaru)
THAT business confidence is at the lowest ebb in several years is not unexpected. It is difficult and unrealistic to expect it not to be so, when you have not one but several large banking and financial institutions with global footprints all in dire financial straits. The constant slew of negative news about the financial turmoil and impending economic crisis is not helping the situation.
The aftermath of the current banking and financial crisis is all about bank liquidity and solvency. If this could be restored in the financial system, business confidence would return.
However, it is still uncertain whether there will be more bad news down the road, so it is not unexpected that businesses, even though they have strong orders and new business, will remain cautious and jittery for quite a while.
I would think that businesses will be more concerned with staying viable, if not going for survival, rather than aggressively growing their business, given the current credit squeeze and the prospect of a global recession.
- Lim Soon Hock Managing Director Plan-B Icag Pte Ltd
BUSINESS confidence is low due to many factors that cannot be controlled locally. As we wait for the price of oil and the US dollar to stabilise, many businesses are unsure what to expect.
There is also a perception that many of the government aid programmes (Workfare, CPF top-up, public relief, community assistance, etc) came a bit too late and offer too little to maintain confidence.
However, while external factors cannot be controlled, Singapore companies and workers could strengthen their bonding and do whatever is necessary to remain viable and competitive. Further boost can be expected from the upcoming integrated resorts, F1, Youth Olympics - and other initiatives, if businesses can hold on bravely through these times.
Furthermore, bureaucratic rigidities and over-regulations can be further relaxed to encourage entrepreneurship and risk-taking, which are required in a free enterprise system - and boost morale and confidence.
- R Theyvendran Chairman / Managing Director Stamford Media International Group
Source : Business Times - 31 Mar 2008
Friday, March 28, 2008
Oh, that elusive HDB flat
Board should do more to weed out insincere applicants
My fiancee and I are young executives who are looking for a place to live after we get married.
We have applied for a Housing and Development Board (HDB) flat under the Design, Build and Sell Scheme (DBSS) and the Build-To-Order (BTO) schemes several times, but have repeatedly drawn very high queue numbers.
The application fee of $10 should be raised to help filter out people who apply “just for fun”, as well as fence-sitters whose final decision on purchasing a flat depends on a favourable queue number.
Even though they were over-subscribed, the take-up rates for recent BTO projects in Sengkang and DBSS projects - Premiere@Tampines and City View@Boon Keng - were eventually low.
Some applicants were also turned down because their combined monthly family income exceeded the $8,000 limit.
This is precisely the point: Discounting the cash-rich, affordable public housing should be just that - affordable.
DBSS flats are far from affordable - many 4-room flats at City View@Boon Keng were priced between $500,000 to $700,000.
The HDB should step in with pricing guidelines for future DBSS and Executive Condominium (EC) projects. There also seems to be little differentiation between EC and DBSS units.
I also understand that there are plans to privatise both Premiere and City View in 10 years. Why the need to wait so long?
My fiancee and I have been eagerly anticipating the launch of the DBSS site in Simei since it was announced late last year.
The tender of land for this site was slated for last month, and from past trends for the earlier two projects, it should have taken place at the end of February. But there is still no sign of of the tender being called.
Is the HDB delaying it in view of cooling property prices?
There has been no official statement on this, but a simple explanation on the HDB website explaining the delay would be a nice gesture.
The HDB should bear in mind their objective of providing affordable, subsidised public housing and not ride on market trends like a corporate entity.
Back to the issue of the $10 application fee: Many Singaporeans are kiasu - when they read of developments being over-subscribed, they perpetuate the vicious cycle of over-subscription by “applying for fun” for every project, since the application fee is low.
It does not take a rocket scientist to figure out how much money is then collected from these fees, given the number of applications for each project.
How does the HDB justify this?
The Board should consider alternatives such as charging a $100 application fee that is fully or partially refundable upon successful booking of a unit in the development.
Another option could be an upfront application deposit of 1 per cent of the average selling price of a unit in the project.
This amount could later be converted to part of the option fee.
Such steps would help weed out non-genuine “buyers”, especially for developments in attractive locations.
Letter from Samuel Lee
Source : Today - 28 Mar 2008
My fiancee and I are young executives who are looking for a place to live after we get married.
We have applied for a Housing and Development Board (HDB) flat under the Design, Build and Sell Scheme (DBSS) and the Build-To-Order (BTO) schemes several times, but have repeatedly drawn very high queue numbers.
The application fee of $10 should be raised to help filter out people who apply “just for fun”, as well as fence-sitters whose final decision on purchasing a flat depends on a favourable queue number.
Even though they were over-subscribed, the take-up rates for recent BTO projects in Sengkang and DBSS projects - Premiere@Tampines and City View@Boon Keng - were eventually low.
Some applicants were also turned down because their combined monthly family income exceeded the $8,000 limit.
This is precisely the point: Discounting the cash-rich, affordable public housing should be just that - affordable.
DBSS flats are far from affordable - many 4-room flats at City View@Boon Keng were priced between $500,000 to $700,000.
The HDB should step in with pricing guidelines for future DBSS and Executive Condominium (EC) projects. There also seems to be little differentiation between EC and DBSS units.
I also understand that there are plans to privatise both Premiere and City View in 10 years. Why the need to wait so long?
My fiancee and I have been eagerly anticipating the launch of the DBSS site in Simei since it was announced late last year.
The tender of land for this site was slated for last month, and from past trends for the earlier two projects, it should have taken place at the end of February. But there is still no sign of of the tender being called.
Is the HDB delaying it in view of cooling property prices?
There has been no official statement on this, but a simple explanation on the HDB website explaining the delay would be a nice gesture.
The HDB should bear in mind their objective of providing affordable, subsidised public housing and not ride on market trends like a corporate entity.
Back to the issue of the $10 application fee: Many Singaporeans are kiasu - when they read of developments being over-subscribed, they perpetuate the vicious cycle of over-subscription by “applying for fun” for every project, since the application fee is low.
It does not take a rocket scientist to figure out how much money is then collected from these fees, given the number of applications for each project.
How does the HDB justify this?
The Board should consider alternatives such as charging a $100 application fee that is fully or partially refundable upon successful booking of a unit in the development.
Another option could be an upfront application deposit of 1 per cent of the average selling price of a unit in the project.
This amount could later be converted to part of the option fee.
Such steps would help weed out non-genuine “buyers”, especially for developments in attractive locations.
Letter from Samuel Lee
Source : Today - 28 Mar 2008
Monday, February 25, 2008
Views from the top: Balanced budget
How well does Budget 2008 address the business needs of your industry and the economic needs of Singaporeans generally? Is there more that can be done to fine-tune particular proposals?
Chaly Mah
CEO
Deloitte Asia Pacific
FINANCE Minister Tharman Shanmugaratnam presented a well-balanced Budget, not only in macroeconomic terms (with the Budget in rough balance) but also in balancing the interests of many different constituencies. Personal tax rebates and spending programmes have been designed to benefit the lower and middle income groups to a greater extent while the abolition of estate duty will benefit the more affluent sections of our society, and at the same time will provide yet another boost to the mushrooming wealth management sector in Singapore.
The focus on education, training, and research and development will undoubtedly strengthen the economy over time. The commitment to increase overall research spending to 3 per cent of the GDP by 2010, with one-third of this being publicly funded research, the topping-up of the National Research Fund by $800 million to a total of $1.8 billion, together with the slew of education and training initiatives, will help the economy to continue to move up the value chain. This is imperative if we are to continue to prosper in an increasingly competitive and globalised economic environment.
The decision to leave personal tax rates unchanged for now was somewhat disappointing. The gap between the highest personal tax rate in Singapore (20 per cent) and Hong Kong (standard rate 16 per cent) is significant for the top foreign talents who are high income earners whom Singapore is trying to attract. The gap is in fact higher if the impact of our 7 per cent Goods and Services Tax (which Hong Kong does not levy), is taken into account. Mr Tharman did, however, say that personal and corporate tax rates will be reviewed again and lowered if necessary. Hopefully, this will happen in the not-too-distant future.
Danny Teoh
Managing Partner
KPMG
AS anticipated, Budget 2008 reinforced the message that the government continues to focus on the longer term sustainability of the local economy while caring for the more needy in our society.
What has perhaps been left to future deliberation are some of the new issues that may ultimately drive Singapore’s future development and competitiveness.
For example, Finance Minister Tharman Shanmugaratnam signalled that innovation would be a key thrust of Singapore’s future economic progress and announced new incentives for promoting entrepreneurship. We would have liked to see more tax incentives encouraging the retention in Singapore of the intellectual property created from innovation.
New tax incentives targeted at encouraging energy efficient and pollution-reducing equipment for businesses in the light of current concerns about environmental protection would also have been welcome.
Lastly, with the view of encouraging workers to continually upgrade themselves as they age, we had hoped to see more tax incentives for encouraging businesses to employ older workers.
Lim Soon Hock
Managing Director
Plan-B ICAG Pte Ltd
THE 2008 Budget excels in form, but more can be done to fine-tune particular proposals.
I applaud the government in making the bold move to invest in education and the development of our human capital to power Singapore into the future. The doubling of the Lifelong Endowment Fund to $800 million, enhanced aid for needy varsity and poly students, subsidy for part-time degree courses and top-up of education accounts for students, are all steps in the right direction.
The removal of estate duty is also a step in the right direction, but I feel that we are somewhat overdue in not adjusting the personal tax reliefs. In addition, the proposed Growth Dividends and increased public assistance payouts for the poor may not be sufficient to help them tide over inflation and the increased costs of living in the next one year.
The top-up of Medisave accounts for those aged above 51 by up to $450 is another welcome move. However, the tax reliefs for topping up of CPF accounts, incentives for CPF Life and the 20 per cent income tax rebate may have inadvertently missed out on those who need this most.
I would like to suggest that the government take a radical step to reduce GST by 2 percentage points for at least the current fiscal year, to rein in inflation, projected at 4.5 to 5.5 per cent for 2008. I believe our government can afford to do this, given that in the last fiscal year, GST of $6 billion accounted for 15.1 per cent of the total revenue of $39.65 billion. It also registered an increase of $1.15 billion over the budgeted figure which translates into 18.1 per cent of the $6.35 billion surplus.
For businesses, perhaps more could be done to address the rising cost of doing business, as a result of increased costs in transportation, utilities and rentals. This is a more pressing need of many companies, which may not be adequately addressed by the proposed increase in tax deductions on R&D and tax reliefs for renovation costs, although easier tax exemptions for SMEs are a boon. The training levy for higher wage workers will further increase the costs for companies with graduate workers and executive staff.
Lastly, as the icing on the cake, our government can afford to give out more from our large surplus, to help deserving charitable organisations as a one-time effort to provide the much needed relief for fund raising, to provide better care for our fellow citizens who are disabled, chronically sick, destitute, aged or less privileged.
Albert Phuay
Chairman and Group CEO
Excelpoint Technology Ltd
THE 2008 Budget recognises that innovation and self-rejuvenation are essential to Singapore’s continued growth. What we have in Singapore today is talent. As such, talent-building is crucial for our survival and growth in the changing global environment.
I’m heartened to see that the Singapore government has even taken into consideration the two heavy items on our expense sheets - talent and infrastructure costs - and has put in place new measures such as freeing up space in prime areas, the equity remuneration incentive scheme and tax incentives for R&D and learning to help us maintain costs while capitalising on growth opportunities in our industry.
I believe that the tax incentives for R&D and continual learning will help to create an innovation hub in Singapore in the long run.
Speaking as a Singaporean, I believe that the future is in our hands. We have to build for ourselves and our families a solid future with a good income through hard work and continual learning. We must also play an active role in managing our health and wealth. The 2008 Budget has provided incentives to help us ordinary Singaporeans take the future into our own hands. We must not lag behind.
Oliver Foo
Managing Director
Alcatel-Lucent, Singapore & Brunei
ITâ€TMS clear that Budget 2008 emphasises laying strong foundations for our economy. The government has been very transparent and has set clear goals to accomplish its desired objectives. Alcatel-Lucent welcomes these measures where the technology sector will benefit from increased priorities on education, training and R&D.
These initiatives will help businesses and start-ups in the technology sector improve and expand their talent base. This way, they stay prepared, competitive and ready to innovate. We believe these strategies will help Singapore businesses weather uncertain times ahead and be poised for growth once the global economy recovers.
Gerald Chan
Country Head
UBS Singapore
OVERALL, it was a good Budget aimed at creating a stronger economy, enhancing business competitiveness and building a resilient community.
The multi-year step-up in development spending (especially in transportation) and the generous cash-back to low-mid-income families is very positive.
The removal of estate duty should further benefit Singapore as a wealth management hub. The removal might further attract wealthy individuals from Asia as will the tax incentive scheme for family offices. Furthermore, the incentives to foster Islamic banking could help the financial industry further.
The incentives to foster R&D in Singapore are also a good structural initiative to move Singapore’s economy up to higher value-added sectors.
EH Lim
CEO
Avi-Tech Electronics Ltd
BUDGET 2008 is generally a balanced one with something for everyone with particular attention given to older Singaporeans and the lower income group. Among the welcome announcements for Singaporeans must be the 20-per-cent personal income tax rebate and the $865 million Growth Dividend to be distributed in cash to all adult Singaporeans.
Nevertheless, the tax rebate was capped at $2,000. It would have been better to have a rebate of 10 per cent with no cap which would have benefited the society as a whole more fairly.
With respect to healthcare and education, the $200 million top-up to the Medifund and Comcare fund will help the less well-off with medical and education needs. However, the rising cost of healthcare in general was not addressed and this must be worrying for all Singaporeans.
With respect to businesses, those in fields such as biomedics will benefit greatly from tax incentives for research and development. Having said that, businesses in general will not benefit much from the 2008 Budget as higher operating costs were not specifically addressed in the Budget. No incentives, allowances or rebates were given to manufacturing companies such as ours. The cost of doing business is expected to further increase this year and this will impact many companies which do not fall within the incentivised group.
Gary Harvey
CEO
ipac Wealth Management Asia
I BELIEVE the Budget unveiled several measures that will encourage the further development of Singapore into a major wealth management centre. The one-off income tax rebate of 20 per cent, incentives for start-up companies, tax credits on foreign-sourced income, and a 5 per cent concessionary tax rate for offshore Islamic insurers will help us turn into a key private banking centre. The abolishment of estate duty will help draw foreign investors and encourage the creation of multi-generation wealth.
These initiatives, in time, will encourage both the growth of the economy and development of the financial market. However, some points we may need to fine-tune are the potential for the range of incentives to become too complex. Hence, they require simplification if people are to benefit from and understand the changes easily so that all individuals take retirement planning seriously. We should also look at creating more incentives to motivate those who are 55 years old to enhance their retirement funds especially as demographic changes will cause people to stay in the workforce longer.
Deborah Ho
CEO
DBS Asset Management
FOR the wealth management industry, Budget 2008 will be remembered for the elimination of estate duty, which brings Singapore in line with other countries such as Hong Kong and Malaysia. This will boost our reputation as a global wealth management hub, in attracting both Singaporeans and foreigners to base their assets here. It is also a timely move that complements the launch of Formula One and the integrated resorts, in drawing more well-to-do individuals who can contribute to our economy.
I am also pleased to note that this Budget is an inclusive one, as all Singaporeans will get a share of our nationâ€TMs surpluses through the Growth Dividends. This will go some way in boosting incomes and helping to counter the impact of inflation. This is especially so for the middle class in managing spiralling living costs.
Gery Messer
President
Red Hat Asia Pacific/Japan
BUSINESSES and citizens should be encouraged by the generous Budget 2008. Most importantly, the focus on innovation would be key in augmenting Singapore’s competitiveness globally. As companies leverage on the R&D and innovation incentives, it would be advantageous for them to also be cognisant of the added abilities of various developer communities at large, such as the open source developer community in driving accelerated innovation.
The prowess of communities coupled with the government’s focus on innovation can result in a formidable synergy towards propelling Singapore ahead in the global innovation race. This will forge a truly competitive position for Singapore as the economy of choice on a global front.
VR Srivatsan
Vice-President, South Asia
Business Objects
I AM heartened to know that Finance Minister Tharman Shanmugaratnam had highlighted in his 2008 Budget speech that Singapore will invest in a total upgrade of business and IT infrastructure to enable new growth in the decades to come, as this commitment reflects a positive outlook for the IT industry. The focus on providing affordable top-tier tertiary education reflects Singapore’s investment in human capital which companies in various industries can benefit from in the near future.
The much welcomed measures, such as Growth Dividends and income tax rebates - to help Singaporeans of various income groups cope with inflation and the rising cost of living - does reduce some pressure on businesses to help their employees cope with the burden, especially in the first half of the year.
Mary Yeo
Managing Director
UPS Singapore
UPS applauds the government for a comprehensive Budget with an overall beneficial scope for the nation. Although there are no major breaks for multinational companies, we believe MNCs will still benefit, as the 2008 Budget lays the framework for Singaporeâ€TMs continued stability and attractiveness as an investment destination.
According to UPS Asia Business Monitor, a survey on SMEs’ competitiveness, innovation is consistently highlighted as one of the key obstacles SMEs face in Singapore. The move by the government to provide tax incentives for SMEs to encourage R&D and innovation is definitely a booster shot for them. With SMEs forming the backbone of the economy, their growth will provide strong growth impetus for Singapore’s economy, which will drive the nationâ€TMs competitiveness and benefit logistics and supply chain companies like UPS.
We agree that the best way to stay competitive, in an uncertain global climate, is to invest in the future. Hence, we are heartened to note that our commitment to the long-term economic benefits of education is one that the government shares.
On the whole, we are satisfied that the Budget will have a positive impact on MNCs, SMEs and ordinary Singaporeans alike. UPS looks forward to a resilient and growing economy in 2008.
Tan Chong Huat
Managing Partner
KhattarWong
BUDGET 2008 addresses the needs of the legal industry through various initiatives. The unilateral tax credit claim for foreign income taxes incurred to all types of foreign-sourced income earned in countries that have yet to conclude an Avoidance of Double Taxation Agreement will mean better profit margins for legal firms with regional aspirations and may provide the impetus for them to further their practice.
Likewise, the double tax deduction for recruitment and relocation costs for global talent will provide a much needed shot in the arm for the increasing demands of good legal professionals here in Singapore. These, together with the measures taken to liberalise the legal services market, will enable Singaporean firms to both look outwards and grow locally in this increasingly competitive marketplace.
The average Singaporean who can now claim tax relief for course fees leading to a vocational qualification will stand to benefit as it will encourage the spirit of life-long learning. I laud the move to make CPF top-ups more easily available to Singaporeans below the age of 55, with tax reliefs of up to $7,000 for those who wish to top up their CPF to the Minimum Sum before age 55. Employers are now permitted to contribute to an employee’s pension fund via the Supplementary Retirement Scheme (SRS). This gives Singaporeans more incentive to start planning earlier for retirement.
The annual values of properties were recently revised upwards. In this exercise, we felt that the restraining effect of an existing lease (if any) on the rent attributable to a property cannot objectively be overlooked, as is the current practice. This was something we had hoped the Budget would have addressed because of the very significant impact it has on business costs in Singapore.
Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd
I MUST commend the Minister for a fine balance and addressing a wide spectrum of needs.
In my Views from the Top piece previously, I had alluded to the potential double whammy of inflation and an economic slowdown.
However, quick fixes against inflation only address symptoms. I am glad that besides the goodies to individuals, there are provisions in the Budget for R&D incentives which address longer-term economic sustainability. Perhaps the threat of a slowdown is ironically also helping to impose a reality check, and hopefully a check on inflation, as people are brought back to the need for true value creation.
Our business, which is protective technologies, straddles both construction and manufacturing. The R&D and start-up incentives are particularly relevant. However, because our business is a niche and new market, it does not quite fall into the incentives for categories like maritime or finance. It is our hope that we can grow our particular business into an industry by itself worthy of even greater government attention and incentives in the future beyond start-up incentives.
Shaun Meadows
Chief Executive Officer
Aviva
IN A volatile business environment with changing employment patterns, we understand that lifetime employment is no longer a common trend. Employees will need continuous in-patient medical provision when they change jobs.
With the introduction of the 2 per cent tax deduction limit extending to in-patient benefits through Portable Medical Benefits Scheme (PMBS) either by paying insurance premiums directly or by reimbursing premiums into employeesâ€TM Medisave, the employer can ensure that their employees get a portable medical plan instead of doing nothing to their Medisave top-up.
We anticipate greater demand from employers for group insurance coverage now that the tax incentive has been introduced. This should further encourage insurance companies to provide better and more innovative products and is a good step forward for us.
Douglas Foo
CEO
Apex-Pal International
WE welcome the changes announced in the 2008 Budget. As an F&B company that is expanding aggressively overseas, every little bit will help us achieve our vision of building global brands. For one, we will certainly benefit from changes to the Skills Development Fund levy as we employ many mature employees and foreign service crew earning less than $2,000. The savings from the levy can be channelled into non-functional company-wide training programmes such as cardiopulmonary resuscitation skills.
With the relaxation to the Equity Remuneration Incentive Scheme, we can also consider using share options or shares to reward our employees. We hope this will help us to attract and retain staff especially when manpower shortage is a constant challenge for the F&B industry.
The Fixtures and Fittings Incentive will give a much needed boost to companies in the service industries who may be reconsidering plans to renovate in view of climbing costs and a slowdown in economic growth and business. This is also critical at a time when Singapore is attracting mega sports and arts events to be hosted here.
Timely renovation is one of the key aspects that can provide an unforgettable experience and thus enable us to meet the sophisticated demands and high expectations of tourists and increasingly well-heeled and well-travelled locals. While the quantum is not a lot, especially for bigger F&B companies managing multiple F&B outlets, it’s a good start.
More can be done for those who aspire to be global companies with a presence in every corner of the world. With merger and acquisition as a key strategy that can help companies expand quickly, changes to the treatment of fees of professional services such as legal fees and financial advisory fees, that is, as tax deductible expenses, will also help SMEs.
Overall, we are happy that the government is giving us the help we need in the challenging year ahead.
Valerie Wong
General Manager
Rolls Royce Motor Cars Singapore
I WELCOME a Budget that has invested in the community and tried to help curb inflation. This is a cautious Budget which anticipates the threat of global economic recession.
Against this, we see a backdrop of oil prices breaking the US$100 mark, shrinking COE quota and other pressures on the consumer which will definitely affect the outlook for the motor industry this year.
In terms of fine-tuning, perhaps one idea could be to examine niche demands and look at how we can catalyse the automotive industry in other areas - for example, high value chain activities such as motorsport R&D, which was successfully implemented in the UK, attracting a wealth of Formula One intellectual capital.
Kenny Chan
Managing Director
The Hour Glass Ltd
THE government is driving business growth and attracting investments here by removing estate duty, as well as grants and rebates for companies engaging in R&D activities. The former makes Singapore an attractive place for wealth to be invested and built up, for both Singaporeans and foreigners; while the latter helps to lure companies with a strong technological edge to expand their presence here.
The Hour Glass applauds this approach to grow Singaporeâ€TMs economy and hopes that the government will continue to attract and retain foreign investors. This way, the economy will be kept buoyant, building the momentum in the high-end retail sector.
Bernard Lim
Chief Executive Officer
Design Studio Furniture Manufacturer Ltd
WE applaud this Budget for being people-centric with more incentives for the low to middle income families. This will help to offset the rising cost of living with $1.8 billion set for individuals by way of top-ups, cash handouts, Growth Dividends and personal tax rebates.
While Budget 2008 defers $1 billion worth of the construction sector’s public projects to spread demand till 2010 and beyond, we still see growth in real estate developments as Singapore is currently at the implementation stage of multi-year initiatives announced since 2006.
Our furniture manufacturing facilities leverage on computerised automation and we are constantly seeking ways to incorporate new technologies and innovation methodologies to further strengthen our competitive edge. As such, the incentives extended to encourage R&D are certainly welcomed.
Goh Chong Theng
General Manager
Singapore Branch
Rabobank International
BUDGET 2008 seems more people-friendly rather than business-friendly which I think reflects the general consensus that inflation, rather than a possible recession, is the biggest worry for Singapore this year.
However, I’m not sure if all of the people-friendly policies are in sync with one another. For example, abolishing estate duty with immediate effect will make Singapore a more attractive home for the overseas-based high net worth individuals (HNWIs) whom we want to attract. On the other hand, the Budget goodies will benefit mainly the lower and middle income groups. In other words, we are trying to cater to diverse needs, which is noble - but is it feasible?
The Budget has addressed concerns in many areas including cash on hand (Growth Dividends), education (Post Secondary Education Account), healthcare (Medisave), retirement (CPF Life) and more. Generally, the way the goodies have been structured - meaning who gets what, and how much - suggests that the government is looking to achieve two aims - one, to address the rising cost of living (which impacts retirement planning); and two, to tackle the widening income gap which poses potential risks.
Both aims are laudable but let’s be honest - as Singapore further globalises and transforms into a services-led economy, our Gini coefficient will inevitably rise because of the HNWIs’ higher marketability. Therefore, can we realistically achieve the second aim?
Overall, Budget 2008 subtly illustrates one of Singapore’s biggest conundrums - how to strike a balance between interlinked needs such as economic growth, talent attraction, living costs and social cohesion.
From a commercial standpoint, perhaps more could be done to address business concerns such as higher salaries, costlier rents and pricier materials. Then again, incentives for fostering innovation, continual learning and other traits are always nice to have.
Teng Yeow Heng Michael
Managing Director
TR Formac Pte Ltd
THIS is indeed a peopleâ€TMs Budget because Singaporeans from the poor to the rich will benefit from it. I am happy that the middle class is also benefiting from this Budget. But I am disappointed that it does not do much to lower business costs in the short term especially for the manufacturing sector.
Rising business costs are not addressed for manufacturers such as lowering costs associated with utilities, power, factory rental, manpower and transport.
There are some sweeteners provided in the financial support for innovation and R&D as well as manpower training, but these are long term benefits for manufacturers. Also, corporate tax was not lowered further to attract multinational and foreign companies to set up manufacturing operations or continue to operate in Singapore.
Many manufacturers need immediate financial help to survive the current slowdown in the global electronics sector and defray escalating business costs.
However, I am glad that the government is providing some financial assistance to our manufacturing enterprises in innovation and R&D as these are crucial for us to sustain and hone our competitive edge.
I define innovation as a good idea that gets successfully developed and marketed. Merely having a good idea is not good enough. Many successful corporations started off not with great breakthrough technologies or fabulous R&D effort, but because the founders found a market niche or innovative idea, got it successfully developed and marketed to dominate the global market. Thus, I hope that the financial incentives provided for the R&D projects would also include the whole gamut of product development, prototyping, market testing right up to commercialisation for all local and foreign manufacturing companies operating in Singapore.
Vijay Iyengar
CEO
Agrocorp International Pte Ltd
QUITE frankly, we were not expecting anything specific to our business in the Budget.
The only request that had been made specific to international trade and entrepot business had been to see if some of the special tax incentives such as the Global Trader Programme companies could be brought down in keeping with the declining corporate tax rates but this was not to be.
The Budget has been described a safe one. There are probably measures in reserve that may be brought into play if there is an economic slowdown later in the year.
Standout features are concessions to start-up ventures and the seed funding for research and development.
Removal of estate duty and personal tax rebates are all steps in the right direction.
Rising business costs in Singapore are a worry but this applies to all major international centres that compete with Singapore.
Food inflation is another worldwide phenomenon and the concessions to the elderly and low income earners are welcome.
These are issues that the government will have to deal with on a continuing basis.
Incentives could have been given to promote the use of energy efficient equipment or fuels in keeping in worldwide environmental concerns. However, this is something that we may see in future Budgets.
Poul Lorentzen
Vice-President
Dematic SEA Pte Ltd
THE diversification of food sources, as announced in the Budget, strikes Dematic as highly relevant to Singaporeâ€TMs logistics industry. In food handling and storage, Singaporeâ€TMs challenge lies in consolidating an integrated cold chain food supply, while maintaining a diverse network of relationships with import sources.
While more food sources may negate possible cost spikes, the overall cost of ownership may be higher without a concise plan to manage a large inventory effectively. This may further lead to risks like compromises in food safety, as seen in recent health scares in Asia. Coupling this vision with the possibilities of automation in large distribution centres can be the next step in providing higher standards of hygiene, cost efficiency and safety for food handling and storage in Singapore. Automation also addresses the problem of an ageing workforce which can continue to contribute in such an environment.
Wee Piew
CEO
HG Metal Manufacturing Ltd
BUDGET 2008 continues the theme of the previous years’ Budgets which seek to address the widening gap between the lower and higher income groups. While the Budget is generous, I cannot help but feel that the government could have been less prudent in its fiscal policy given that Budget 2007 threw up an unexpectedly large surplus of $6.4 billion. I think more could have been given in cash handouts to the lower income and senior citizens and also rebates and tax allowances for SMEs and businesses.  This could have helped lessen the impact of rising inflation as well as boost domestic consumption as a counter-balance to the impact of a very likely US recession.   While the much-anticipated personal income tax cuts did not materialise, the one-time tax rebate of $2,000 will help middle income earners.  However, I think that personal income tax will have to be aligned with the corporate tax rate of 18 per cent sooner rather than later in order for Singapore to continue to attract high net worth individuals and to stay competitive with other Asian cities like Hong Kong.
On the other hand, the abolishment of estate duty is a right step to help Singapore’s bid to establish itself as a wealth management centre.
Tan Ser Giam
Chairman
Eastern Navigation Pte Ltd
THE Budget, while giving tax reliefs and cash benefits to the adult population, does not provide adequate help to the lower income and those with larger families to alleviate the higher cost of food and inflation.
While a wealthy family might spend about 10 per cent of its income on food, a poorer family could spend up to 50 per cent on feeding itself and thus the burden of higher food prices falls disproportionately on poorer and larger families.
Families who have more children at the urging of the government are at a disadvantage.
Food prices are likely to trend higher and it is best to find a longer term solution to the situation instead of having the disadvantaged depend on unpredictable handouts.
Just as in the US and Australia, we could re-visit the granting of GST exemption on basic foodstuff like rice, sugar and flour to remove the double whammy of the price increases.
R Theyvendran
Chairman/Managing Director
Stamford Media International Group
THOUGH generally encouraging, Budget 2008 is lacking in measures to keep business costs down and facilitate growth.
Inflation, which is expected to be between 4.5 and 5.5 per cent (a 25-year high), needs radical action.
With a surplus of some $4.6 billion remaining, corporate tax could be reduced from the current 18 per cent. Office rentals and utility services for relocated start-ups and SMEs could be decreased.
Even for the few vibrant small-and-medium media and related companies as well as SMEs in other industries, the Budget does not stir up any passion for entrepreneurial risk-taking. However, necessary interventions for some industries, like the financial sector, have been made.
The governmentâ€TMs financial backing for technological upgrading could be increased. The tax reduction and allowance for R&D could be further fine-tuned to link up with foreign counterparts and markets. Recruitment of workers could be for the company rather than for a particular job.
Finally, in an “inclusive nation”, those concerned should bear in mind that not all workers earn enough to pay income tax. Others, for some reason or other, are not part of the mainstream. Yet, they all are subject to the GST regime. Public transport in itself is too expensive for some. Basic necessaries could be taken off GST.
Charles Reed
CEO
interTouch
THE comprehensive range of business incentives in this yearâ€TMs Budget is generally good news to companies. It is especially heartening to note that the Budget has been allocated to subsidise the costs of businesses that rely heavily on intensive R&D. interTouch, for instance, will benefit from the tax incentives with its ongoing investment in R&D to enhance its technology offerings for the hospitality industry.
Over the long term, such incentives also encourage more entrepreneurs to enter the thriving R&D sector, and help Singapore grow as a knowledge hub.
Another sector that could be addressed is the hospitality and service industry. With the upcoming integrated resorts in Singapore and with the Asia Pacific being the fastest growing tourism destination in the world, it is increasingly critical to provide incentives that encourage hospitality companies to train talent as well as pursue product and service excellence.
On the individual level, while the Budget provided bonuses to help Singaporeans cope with the the rising cost of living, perhaps providing long-term assistance such as a special discount card for the needy to purchase basic amenities would be more targeted and effective.
Dora Hoan
Group CEO
Best World International Ltd
NOTWITHSTANDING the mild forecast for economic growth, there is good reason to have faith in the future of Singapore’s economy. Strategies and measures outlined in the 2008 Budget should spur the growth of innovative enterprises with significant incentives for innovation. The emphasis on education and training opportunities for our students and those in the workforce is laudable as it is key to an increasingly knowledge-based economy.
It is also worth noting the adjustments on tax policies to enable Singapore to remain competitive through supportive measures for the growth of SMEs, and the enhancement of our role in the region as a financial and business hub.
As expected, measures to deal with inflation have been outlined. Knowing that those who have less in life will be the hardest hit, I believe in strengthening our financial security programmes to protect the aged workforce, and in social intervention and targeted assistance for the less well-off members of society. Among the many measures cited, needless to say, keeping our economy competitive and building up our people’s capabilities for economic growth is the most fundamental.
I note with keen interest the abolition of estate duty which I have been anticipating for years. I believe it is high time that we re-think our policies on wealth creation. Today, wealth is being created in an entirely different manner through the spirit of entrepreneurship by people who started off with little.
In the final analysis, each must do his part to realise the nation’s economic growth prospects. As a nation in the new global order, we shall be all the better for creating a mindset where anyone who works hard enough to create new wealth and opts to maintain their assets within the country will be inspired and well-equipped to do so. That in turn will benefit Singapore’s economy and society for years to come.
Sam Yap S G
Group Executive Chairman
Cherie Hearts Group Int’l Pte Ltd
THE S$1.8 billion giveaway in Budget 2008 is a huge ‘hong bao’ for individuals and companies alike; it is definitely a boost to our economy. For instance, the ease with which start-ups can now qualify for tax exemptions, as well as the strong emphasis on R&D, are highly welcome and augurs well for the long-term growth and sustainability of businesses in Singapore.
Slightly regrettable, though, is the lack of direct benefits for childcare businesses, which in my opinion, play a pivotal role in improving the quality of life for middle to high income families in Singapore, and more indirectly, to all other businesses in general by allowing both husband and wife to work.
Lars Ronning
President, Asia Pacific (excluding China and Japan)
Tandberg
THE Singapore government’s ICT (information and communications technology) industry policies have generally focused on setting the right framework through improved information flow and streamlined procedures. Like Norway and Korea, Singapore has a good track record investing in, and widely adopting ICT.
The next steps must address the changing skill levels and skill mix of employees, the expanded range of services and capabilities (of enterprises) vis-a-vis ICT. Also, besides large firms, the government needs to look at how it can help small and medium-sized businesses fully exploit the broadband environment.
There was little mention of such initiatives in Budget 2008 to overcome any lack of awareness, skilled personnel or specialist services in these firms. In the mid to long term, measures such as education, skills and professionalism will address this disparity, and increase the competitive edge of Singapore companies on a global scale.
Poh Mui Hoon
CEO
NETS
WE are encouraged by the fact that Budget 2008 included rebates and dividends that are weighted towards middle and lower income households. Higher income households are also not forgotten as they receive more in absolute dollars. Given the growing concerns of inflation and a lurking recession in the US, this will provide some comfort for consumers. These goodies are made possible because of sound economic policies and good business performance.
Together with the focus on mitigating the effects of inflation, fiscal policies that continue to keep the economy buoyant are certainly welcome. The emphasis on spurring the growth of innovative enterprises, and adjusting tax policies to ensure businesses stay competitive is indeed timely given the uncertain global outlook.
Such measures will support the growth of SMEs and encourage companies to be better risk takers. This is a well-balanced Budget which will ensure that Singapore remains an attractive place to engage in business and for Singaporeans to call home.
Fong Loo Fern
Managing Director
CYC The Custom Shop Pte Ltd
THE 2008 Budget is both stimulating and generous. I believe the economy will continue to do well despite the uncertainties in the global market. We hope that the extra money in people’s pocket will translate into more consumption. I appreciate the generosity of the Finance Minister in sharing the surpluses chalked up. My only concern is that more could be done for the needy, the aged and the disadvantaged.
Tan Kok Leong
Principal
TKL Consulting
THE 2008 Budget is the biggest and probably the best in a decade. Its size of $43 billion expanded 23.2 per cent from $33 billion previously, with the biggest surplus of $6.4 billion. The assistance measures to help the low income, the old and the sick, and to innovate the economy was the highest at $5.4 billion.
The Budget is built on the foundation of the past and the booming economy. It is to equip Singapore for the long term global challenges. It has the interest of every citizen at heart and it strives to maintain social cohesiveness.
Derek Goh
Executive Chairman/Group CEO
Serial System Ltd
BUDGET 2008 is a landmark Budget for our citizens as we share the fruits of our labour. Although the Budget does not introduce fresh fiscal measures for the corporate sector, the enhancements for individuals have the overall impact of boosting domestic consumption. This will in turn benefit business.
In anticipation of a potential recession in the US, the government can put in a contingency plan to mitigate any possible business slowdown. The business federation together with the Ministry of Finance and the Ministry of Trade and Industry can jointly set up a Business Contingency Council to develop a series of economic scenarios as guard posts to signal businesses on responses to different economic challenges. Such engagements will prepare businesses mentally and financially for any adverse challenges.
Dhirendra Shantilal
Senior Vice-President, Asia Pacific
Kelly Services
BUDGET 2008 is a commendable peopleâ€TMs Budget looking into the needs of the population through several types of grants including medical and educational grants. Weâ€TMre seeing rising living costs in Singapore and this yearâ€TMs Budget has identified ways to help the local community overcome it in the short term and at the same time advising that handouts are not the long term solution to an upward trend in inflation. Government-aided training and certification programmes will help individuals advance their careers to the next level and Singaporeans should continue to take advantage of these courses.
Younger Singaporeans are privileged to have tremendous support from the Singapore Budget. Our education system is a much sought after system by students in the region and many covet the opportunity to have a place in our schools. So it is encouraging to see the strengthening of our educational system to adequately equip our talent for future challenges in the workforce. Our young people need to understand why the government is placing so much emphasis on their education, appreciate the educational grants given to them and utilise them wisely.
From an industry point of view, businesses have been challenged with very rapidly rising business cost issues within a short span of time. Weâ€TMre also facing a talent crunch which adds to the rising costs. We were hoping to see government-aided training programmes in the Budget, specifically targeted at the professional and technical talent, that would allow them to pick up skills that are transferable across industries. The Budget could also have addressed the corporate income tax rate and reduced it further.
The CPF Life scheme is much more attractive now with a dozen options to choose from but we may not see organisations immediately taking this up as their companyâ€TMs ‘pension scheme’ as it would be considered an additional business cost.
David Miller
President of Asia Pacific & Senior Vice-President
Lenovo
LENOVO’S presence in Singapore has stemmed from its need to centralise key sales support, procurement and treasury operations in a secure, stable and economically progressive Asian base. To date, we’ve been able to achieve economies of scale through our seamless and streamlined value chain using Singapore as a key hub. According to the most recent Budget, the government will be attempting to adjust its tax policies so that we stay competitive, support the growth of SMEs, encourage risk-taking, as well as strengthen Singapore’s role as a financial and business hub which all lend credence to our decision to strengthen our position here.
Singapore’s strong financial infrastructure and taxation policies have allowed us to base many of our key financial and business functions here. Our Treasury operations are based in Singapore, as are our worldwide heads of Global Supply Chain and of Services. Despite the projected slowdown in the global economy, the Budget shows a commitment to manage pressures on the currency, easing the planning burden of companies in the IT industry amongst others so on that front, we’re not worried about any drastic changes to the way we do business.
On a personal level, the tax regime has definitely made it easier for multinationals, such as Lenovo, to attract executive talent. This has led to Singapore being one of the best (if not the best) and most logical place for global executives to be based in Asia.
I am also glad to see a healthy amount of attention being paid to cultivate knowledge creation and innovation within industry, academia and the public service. Hopefully this will lead to the creation of new enterprises and ventures which will in turn enhance the position of other companies like Lenovo within the economic ecosystem here in Singapore and throughout the region. We’ve always believed that the next wave of global companies will be moving towards globally sourcing or “worldsourcing” their talent, resources, intellectual property and services. Building this ecosystem of cutting edge firms positions Singapore as a vital node in this future global network.
Source : Business Times - 25 Feb 2008
Chaly Mah
CEO
Deloitte Asia Pacific
FINANCE Minister Tharman Shanmugaratnam presented a well-balanced Budget, not only in macroeconomic terms (with the Budget in rough balance) but also in balancing the interests of many different constituencies. Personal tax rebates and spending programmes have been designed to benefit the lower and middle income groups to a greater extent while the abolition of estate duty will benefit the more affluent sections of our society, and at the same time will provide yet another boost to the mushrooming wealth management sector in Singapore.
The focus on education, training, and research and development will undoubtedly strengthen the economy over time. The commitment to increase overall research spending to 3 per cent of the GDP by 2010, with one-third of this being publicly funded research, the topping-up of the National Research Fund by $800 million to a total of $1.8 billion, together with the slew of education and training initiatives, will help the economy to continue to move up the value chain. This is imperative if we are to continue to prosper in an increasingly competitive and globalised economic environment.
The decision to leave personal tax rates unchanged for now was somewhat disappointing. The gap between the highest personal tax rate in Singapore (20 per cent) and Hong Kong (standard rate 16 per cent) is significant for the top foreign talents who are high income earners whom Singapore is trying to attract. The gap is in fact higher if the impact of our 7 per cent Goods and Services Tax (which Hong Kong does not levy), is taken into account. Mr Tharman did, however, say that personal and corporate tax rates will be reviewed again and lowered if necessary. Hopefully, this will happen in the not-too-distant future.
Danny Teoh
Managing Partner
KPMG
AS anticipated, Budget 2008 reinforced the message that the government continues to focus on the longer term sustainability of the local economy while caring for the more needy in our society.
What has perhaps been left to future deliberation are some of the new issues that may ultimately drive Singapore’s future development and competitiveness.
For example, Finance Minister Tharman Shanmugaratnam signalled that innovation would be a key thrust of Singapore’s future economic progress and announced new incentives for promoting entrepreneurship. We would have liked to see more tax incentives encouraging the retention in Singapore of the intellectual property created from innovation.
New tax incentives targeted at encouraging energy efficient and pollution-reducing equipment for businesses in the light of current concerns about environmental protection would also have been welcome.
Lastly, with the view of encouraging workers to continually upgrade themselves as they age, we had hoped to see more tax incentives for encouraging businesses to employ older workers.
Lim Soon Hock
Managing Director
Plan-B ICAG Pte Ltd
THE 2008 Budget excels in form, but more can be done to fine-tune particular proposals.
I applaud the government in making the bold move to invest in education and the development of our human capital to power Singapore into the future. The doubling of the Lifelong Endowment Fund to $800 million, enhanced aid for needy varsity and poly students, subsidy for part-time degree courses and top-up of education accounts for students, are all steps in the right direction.
The removal of estate duty is also a step in the right direction, but I feel that we are somewhat overdue in not adjusting the personal tax reliefs. In addition, the proposed Growth Dividends and increased public assistance payouts for the poor may not be sufficient to help them tide over inflation and the increased costs of living in the next one year.
The top-up of Medisave accounts for those aged above 51 by up to $450 is another welcome move. However, the tax reliefs for topping up of CPF accounts, incentives for CPF Life and the 20 per cent income tax rebate may have inadvertently missed out on those who need this most.
I would like to suggest that the government take a radical step to reduce GST by 2 percentage points for at least the current fiscal year, to rein in inflation, projected at 4.5 to 5.5 per cent for 2008. I believe our government can afford to do this, given that in the last fiscal year, GST of $6 billion accounted for 15.1 per cent of the total revenue of $39.65 billion. It also registered an increase of $1.15 billion over the budgeted figure which translates into 18.1 per cent of the $6.35 billion surplus.
For businesses, perhaps more could be done to address the rising cost of doing business, as a result of increased costs in transportation, utilities and rentals. This is a more pressing need of many companies, which may not be adequately addressed by the proposed increase in tax deductions on R&D and tax reliefs for renovation costs, although easier tax exemptions for SMEs are a boon. The training levy for higher wage workers will further increase the costs for companies with graduate workers and executive staff.
Lastly, as the icing on the cake, our government can afford to give out more from our large surplus, to help deserving charitable organisations as a one-time effort to provide the much needed relief for fund raising, to provide better care for our fellow citizens who are disabled, chronically sick, destitute, aged or less privileged.
Albert Phuay
Chairman and Group CEO
Excelpoint Technology Ltd
THE 2008 Budget recognises that innovation and self-rejuvenation are essential to Singapore’s continued growth. What we have in Singapore today is talent. As such, talent-building is crucial for our survival and growth in the changing global environment.
I’m heartened to see that the Singapore government has even taken into consideration the two heavy items on our expense sheets - talent and infrastructure costs - and has put in place new measures such as freeing up space in prime areas, the equity remuneration incentive scheme and tax incentives for R&D and learning to help us maintain costs while capitalising on growth opportunities in our industry.
I believe that the tax incentives for R&D and continual learning will help to create an innovation hub in Singapore in the long run.
Speaking as a Singaporean, I believe that the future is in our hands. We have to build for ourselves and our families a solid future with a good income through hard work and continual learning. We must also play an active role in managing our health and wealth. The 2008 Budget has provided incentives to help us ordinary Singaporeans take the future into our own hands. We must not lag behind.
Oliver Foo
Managing Director
Alcatel-Lucent, Singapore & Brunei
ITâ€TMS clear that Budget 2008 emphasises laying strong foundations for our economy. The government has been very transparent and has set clear goals to accomplish its desired objectives. Alcatel-Lucent welcomes these measures where the technology sector will benefit from increased priorities on education, training and R&D.
These initiatives will help businesses and start-ups in the technology sector improve and expand their talent base. This way, they stay prepared, competitive and ready to innovate. We believe these strategies will help Singapore businesses weather uncertain times ahead and be poised for growth once the global economy recovers.
Gerald Chan
Country Head
UBS Singapore
OVERALL, it was a good Budget aimed at creating a stronger economy, enhancing business competitiveness and building a resilient community.
The multi-year step-up in development spending (especially in transportation) and the generous cash-back to low-mid-income families is very positive.
The removal of estate duty should further benefit Singapore as a wealth management hub. The removal might further attract wealthy individuals from Asia as will the tax incentive scheme for family offices. Furthermore, the incentives to foster Islamic banking could help the financial industry further.
The incentives to foster R&D in Singapore are also a good structural initiative to move Singapore’s economy up to higher value-added sectors.
EH Lim
CEO
Avi-Tech Electronics Ltd
BUDGET 2008 is generally a balanced one with something for everyone with particular attention given to older Singaporeans and the lower income group. Among the welcome announcements for Singaporeans must be the 20-per-cent personal income tax rebate and the $865 million Growth Dividend to be distributed in cash to all adult Singaporeans.
Nevertheless, the tax rebate was capped at $2,000. It would have been better to have a rebate of 10 per cent with no cap which would have benefited the society as a whole more fairly.
With respect to healthcare and education, the $200 million top-up to the Medifund and Comcare fund will help the less well-off with medical and education needs. However, the rising cost of healthcare in general was not addressed and this must be worrying for all Singaporeans.
With respect to businesses, those in fields such as biomedics will benefit greatly from tax incentives for research and development. Having said that, businesses in general will not benefit much from the 2008 Budget as higher operating costs were not specifically addressed in the Budget. No incentives, allowances or rebates were given to manufacturing companies such as ours. The cost of doing business is expected to further increase this year and this will impact many companies which do not fall within the incentivised group.
Gary Harvey
CEO
ipac Wealth Management Asia
I BELIEVE the Budget unveiled several measures that will encourage the further development of Singapore into a major wealth management centre. The one-off income tax rebate of 20 per cent, incentives for start-up companies, tax credits on foreign-sourced income, and a 5 per cent concessionary tax rate for offshore Islamic insurers will help us turn into a key private banking centre. The abolishment of estate duty will help draw foreign investors and encourage the creation of multi-generation wealth.
These initiatives, in time, will encourage both the growth of the economy and development of the financial market. However, some points we may need to fine-tune are the potential for the range of incentives to become too complex. Hence, they require simplification if people are to benefit from and understand the changes easily so that all individuals take retirement planning seriously. We should also look at creating more incentives to motivate those who are 55 years old to enhance their retirement funds especially as demographic changes will cause people to stay in the workforce longer.
Deborah Ho
CEO
DBS Asset Management
FOR the wealth management industry, Budget 2008 will be remembered for the elimination of estate duty, which brings Singapore in line with other countries such as Hong Kong and Malaysia. This will boost our reputation as a global wealth management hub, in attracting both Singaporeans and foreigners to base their assets here. It is also a timely move that complements the launch of Formula One and the integrated resorts, in drawing more well-to-do individuals who can contribute to our economy.
I am also pleased to note that this Budget is an inclusive one, as all Singaporeans will get a share of our nationâ€TMs surpluses through the Growth Dividends. This will go some way in boosting incomes and helping to counter the impact of inflation. This is especially so for the middle class in managing spiralling living costs.
Gery Messer
President
Red Hat Asia Pacific/Japan
BUSINESSES and citizens should be encouraged by the generous Budget 2008. Most importantly, the focus on innovation would be key in augmenting Singapore’s competitiveness globally. As companies leverage on the R&D and innovation incentives, it would be advantageous for them to also be cognisant of the added abilities of various developer communities at large, such as the open source developer community in driving accelerated innovation.
The prowess of communities coupled with the government’s focus on innovation can result in a formidable synergy towards propelling Singapore ahead in the global innovation race. This will forge a truly competitive position for Singapore as the economy of choice on a global front.
VR Srivatsan
Vice-President, South Asia
Business Objects
I AM heartened to know that Finance Minister Tharman Shanmugaratnam had highlighted in his 2008 Budget speech that Singapore will invest in a total upgrade of business and IT infrastructure to enable new growth in the decades to come, as this commitment reflects a positive outlook for the IT industry. The focus on providing affordable top-tier tertiary education reflects Singapore’s investment in human capital which companies in various industries can benefit from in the near future.
The much welcomed measures, such as Growth Dividends and income tax rebates - to help Singaporeans of various income groups cope with inflation and the rising cost of living - does reduce some pressure on businesses to help their employees cope with the burden, especially in the first half of the year.
Mary Yeo
Managing Director
UPS Singapore
UPS applauds the government for a comprehensive Budget with an overall beneficial scope for the nation. Although there are no major breaks for multinational companies, we believe MNCs will still benefit, as the 2008 Budget lays the framework for Singaporeâ€TMs continued stability and attractiveness as an investment destination.
According to UPS Asia Business Monitor, a survey on SMEs’ competitiveness, innovation is consistently highlighted as one of the key obstacles SMEs face in Singapore. The move by the government to provide tax incentives for SMEs to encourage R&D and innovation is definitely a booster shot for them. With SMEs forming the backbone of the economy, their growth will provide strong growth impetus for Singapore’s economy, which will drive the nationâ€TMs competitiveness and benefit logistics and supply chain companies like UPS.
We agree that the best way to stay competitive, in an uncertain global climate, is to invest in the future. Hence, we are heartened to note that our commitment to the long-term economic benefits of education is one that the government shares.
On the whole, we are satisfied that the Budget will have a positive impact on MNCs, SMEs and ordinary Singaporeans alike. UPS looks forward to a resilient and growing economy in 2008.
Tan Chong Huat
Managing Partner
KhattarWong
BUDGET 2008 addresses the needs of the legal industry through various initiatives. The unilateral tax credit claim for foreign income taxes incurred to all types of foreign-sourced income earned in countries that have yet to conclude an Avoidance of Double Taxation Agreement will mean better profit margins for legal firms with regional aspirations and may provide the impetus for them to further their practice.
Likewise, the double tax deduction for recruitment and relocation costs for global talent will provide a much needed shot in the arm for the increasing demands of good legal professionals here in Singapore. These, together with the measures taken to liberalise the legal services market, will enable Singaporean firms to both look outwards and grow locally in this increasingly competitive marketplace.
The average Singaporean who can now claim tax relief for course fees leading to a vocational qualification will stand to benefit as it will encourage the spirit of life-long learning. I laud the move to make CPF top-ups more easily available to Singaporeans below the age of 55, with tax reliefs of up to $7,000 for those who wish to top up their CPF to the Minimum Sum before age 55. Employers are now permitted to contribute to an employee’s pension fund via the Supplementary Retirement Scheme (SRS). This gives Singaporeans more incentive to start planning earlier for retirement.
The annual values of properties were recently revised upwards. In this exercise, we felt that the restraining effect of an existing lease (if any) on the rent attributable to a property cannot objectively be overlooked, as is the current practice. This was something we had hoped the Budget would have addressed because of the very significant impact it has on business costs in Singapore.
Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd
I MUST commend the Minister for a fine balance and addressing a wide spectrum of needs.
In my Views from the Top piece previously, I had alluded to the potential double whammy of inflation and an economic slowdown.
However, quick fixes against inflation only address symptoms. I am glad that besides the goodies to individuals, there are provisions in the Budget for R&D incentives which address longer-term economic sustainability. Perhaps the threat of a slowdown is ironically also helping to impose a reality check, and hopefully a check on inflation, as people are brought back to the need for true value creation.
Our business, which is protective technologies, straddles both construction and manufacturing. The R&D and start-up incentives are particularly relevant. However, because our business is a niche and new market, it does not quite fall into the incentives for categories like maritime or finance. It is our hope that we can grow our particular business into an industry by itself worthy of even greater government attention and incentives in the future beyond start-up incentives.
Shaun Meadows
Chief Executive Officer
Aviva
IN A volatile business environment with changing employment patterns, we understand that lifetime employment is no longer a common trend. Employees will need continuous in-patient medical provision when they change jobs.
With the introduction of the 2 per cent tax deduction limit extending to in-patient benefits through Portable Medical Benefits Scheme (PMBS) either by paying insurance premiums directly or by reimbursing premiums into employeesâ€TM Medisave, the employer can ensure that their employees get a portable medical plan instead of doing nothing to their Medisave top-up.
We anticipate greater demand from employers for group insurance coverage now that the tax incentive has been introduced. This should further encourage insurance companies to provide better and more innovative products and is a good step forward for us.
Douglas Foo
CEO
Apex-Pal International
WE welcome the changes announced in the 2008 Budget. As an F&B company that is expanding aggressively overseas, every little bit will help us achieve our vision of building global brands. For one, we will certainly benefit from changes to the Skills Development Fund levy as we employ many mature employees and foreign service crew earning less than $2,000. The savings from the levy can be channelled into non-functional company-wide training programmes such as cardiopulmonary resuscitation skills.
With the relaxation to the Equity Remuneration Incentive Scheme, we can also consider using share options or shares to reward our employees. We hope this will help us to attract and retain staff especially when manpower shortage is a constant challenge for the F&B industry.
The Fixtures and Fittings Incentive will give a much needed boost to companies in the service industries who may be reconsidering plans to renovate in view of climbing costs and a slowdown in economic growth and business. This is also critical at a time when Singapore is attracting mega sports and arts events to be hosted here.
Timely renovation is one of the key aspects that can provide an unforgettable experience and thus enable us to meet the sophisticated demands and high expectations of tourists and increasingly well-heeled and well-travelled locals. While the quantum is not a lot, especially for bigger F&B companies managing multiple F&B outlets, it’s a good start.
More can be done for those who aspire to be global companies with a presence in every corner of the world. With merger and acquisition as a key strategy that can help companies expand quickly, changes to the treatment of fees of professional services such as legal fees and financial advisory fees, that is, as tax deductible expenses, will also help SMEs.
Overall, we are happy that the government is giving us the help we need in the challenging year ahead.
Valerie Wong
General Manager
Rolls Royce Motor Cars Singapore
I WELCOME a Budget that has invested in the community and tried to help curb inflation. This is a cautious Budget which anticipates the threat of global economic recession.
Against this, we see a backdrop of oil prices breaking the US$100 mark, shrinking COE quota and other pressures on the consumer which will definitely affect the outlook for the motor industry this year.
In terms of fine-tuning, perhaps one idea could be to examine niche demands and look at how we can catalyse the automotive industry in other areas - for example, high value chain activities such as motorsport R&D, which was successfully implemented in the UK, attracting a wealth of Formula One intellectual capital.
Kenny Chan
Managing Director
The Hour Glass Ltd
THE government is driving business growth and attracting investments here by removing estate duty, as well as grants and rebates for companies engaging in R&D activities. The former makes Singapore an attractive place for wealth to be invested and built up, for both Singaporeans and foreigners; while the latter helps to lure companies with a strong technological edge to expand their presence here.
The Hour Glass applauds this approach to grow Singaporeâ€TMs economy and hopes that the government will continue to attract and retain foreign investors. This way, the economy will be kept buoyant, building the momentum in the high-end retail sector.
Bernard Lim
Chief Executive Officer
Design Studio Furniture Manufacturer Ltd
WE applaud this Budget for being people-centric with more incentives for the low to middle income families. This will help to offset the rising cost of living with $1.8 billion set for individuals by way of top-ups, cash handouts, Growth Dividends and personal tax rebates.
While Budget 2008 defers $1 billion worth of the construction sector’s public projects to spread demand till 2010 and beyond, we still see growth in real estate developments as Singapore is currently at the implementation stage of multi-year initiatives announced since 2006.
Our furniture manufacturing facilities leverage on computerised automation and we are constantly seeking ways to incorporate new technologies and innovation methodologies to further strengthen our competitive edge. As such, the incentives extended to encourage R&D are certainly welcomed.
Goh Chong Theng
General Manager
Singapore Branch
Rabobank International
BUDGET 2008 seems more people-friendly rather than business-friendly which I think reflects the general consensus that inflation, rather than a possible recession, is the biggest worry for Singapore this year.
However, I’m not sure if all of the people-friendly policies are in sync with one another. For example, abolishing estate duty with immediate effect will make Singapore a more attractive home for the overseas-based high net worth individuals (HNWIs) whom we want to attract. On the other hand, the Budget goodies will benefit mainly the lower and middle income groups. In other words, we are trying to cater to diverse needs, which is noble - but is it feasible?
The Budget has addressed concerns in many areas including cash on hand (Growth Dividends), education (Post Secondary Education Account), healthcare (Medisave), retirement (CPF Life) and more. Generally, the way the goodies have been structured - meaning who gets what, and how much - suggests that the government is looking to achieve two aims - one, to address the rising cost of living (which impacts retirement planning); and two, to tackle the widening income gap which poses potential risks.
Both aims are laudable but let’s be honest - as Singapore further globalises and transforms into a services-led economy, our Gini coefficient will inevitably rise because of the HNWIs’ higher marketability. Therefore, can we realistically achieve the second aim?
Overall, Budget 2008 subtly illustrates one of Singapore’s biggest conundrums - how to strike a balance between interlinked needs such as economic growth, talent attraction, living costs and social cohesion.
From a commercial standpoint, perhaps more could be done to address business concerns such as higher salaries, costlier rents and pricier materials. Then again, incentives for fostering innovation, continual learning and other traits are always nice to have.
Teng Yeow Heng Michael
Managing Director
TR Formac Pte Ltd
THIS is indeed a peopleâ€TMs Budget because Singaporeans from the poor to the rich will benefit from it. I am happy that the middle class is also benefiting from this Budget. But I am disappointed that it does not do much to lower business costs in the short term especially for the manufacturing sector.
Rising business costs are not addressed for manufacturers such as lowering costs associated with utilities, power, factory rental, manpower and transport.
There are some sweeteners provided in the financial support for innovation and R&D as well as manpower training, but these are long term benefits for manufacturers. Also, corporate tax was not lowered further to attract multinational and foreign companies to set up manufacturing operations or continue to operate in Singapore.
Many manufacturers need immediate financial help to survive the current slowdown in the global electronics sector and defray escalating business costs.
However, I am glad that the government is providing some financial assistance to our manufacturing enterprises in innovation and R&D as these are crucial for us to sustain and hone our competitive edge.
I define innovation as a good idea that gets successfully developed and marketed. Merely having a good idea is not good enough. Many successful corporations started off not with great breakthrough technologies or fabulous R&D effort, but because the founders found a market niche or innovative idea, got it successfully developed and marketed to dominate the global market. Thus, I hope that the financial incentives provided for the R&D projects would also include the whole gamut of product development, prototyping, market testing right up to commercialisation for all local and foreign manufacturing companies operating in Singapore.
Vijay Iyengar
CEO
Agrocorp International Pte Ltd
QUITE frankly, we were not expecting anything specific to our business in the Budget.
The only request that had been made specific to international trade and entrepot business had been to see if some of the special tax incentives such as the Global Trader Programme companies could be brought down in keeping with the declining corporate tax rates but this was not to be.
The Budget has been described a safe one. There are probably measures in reserve that may be brought into play if there is an economic slowdown later in the year.
Standout features are concessions to start-up ventures and the seed funding for research and development.
Removal of estate duty and personal tax rebates are all steps in the right direction.
Rising business costs in Singapore are a worry but this applies to all major international centres that compete with Singapore.
Food inflation is another worldwide phenomenon and the concessions to the elderly and low income earners are welcome.
These are issues that the government will have to deal with on a continuing basis.
Incentives could have been given to promote the use of energy efficient equipment or fuels in keeping in worldwide environmental concerns. However, this is something that we may see in future Budgets.
Poul Lorentzen
Vice-President
Dematic SEA Pte Ltd
THE diversification of food sources, as announced in the Budget, strikes Dematic as highly relevant to Singaporeâ€TMs logistics industry. In food handling and storage, Singaporeâ€TMs challenge lies in consolidating an integrated cold chain food supply, while maintaining a diverse network of relationships with import sources.
While more food sources may negate possible cost spikes, the overall cost of ownership may be higher without a concise plan to manage a large inventory effectively. This may further lead to risks like compromises in food safety, as seen in recent health scares in Asia. Coupling this vision with the possibilities of automation in large distribution centres can be the next step in providing higher standards of hygiene, cost efficiency and safety for food handling and storage in Singapore. Automation also addresses the problem of an ageing workforce which can continue to contribute in such an environment.
Wee Piew
CEO
HG Metal Manufacturing Ltd
BUDGET 2008 continues the theme of the previous years’ Budgets which seek to address the widening gap between the lower and higher income groups. While the Budget is generous, I cannot help but feel that the government could have been less prudent in its fiscal policy given that Budget 2007 threw up an unexpectedly large surplus of $6.4 billion. I think more could have been given in cash handouts to the lower income and senior citizens and also rebates and tax allowances for SMEs and businesses.  This could have helped lessen the impact of rising inflation as well as boost domestic consumption as a counter-balance to the impact of a very likely US recession.   While the much-anticipated personal income tax cuts did not materialise, the one-time tax rebate of $2,000 will help middle income earners.  However, I think that personal income tax will have to be aligned with the corporate tax rate of 18 per cent sooner rather than later in order for Singapore to continue to attract high net worth individuals and to stay competitive with other Asian cities like Hong Kong.
On the other hand, the abolishment of estate duty is a right step to help Singapore’s bid to establish itself as a wealth management centre.
Tan Ser Giam
Chairman
Eastern Navigation Pte Ltd
THE Budget, while giving tax reliefs and cash benefits to the adult population, does not provide adequate help to the lower income and those with larger families to alleviate the higher cost of food and inflation.
While a wealthy family might spend about 10 per cent of its income on food, a poorer family could spend up to 50 per cent on feeding itself and thus the burden of higher food prices falls disproportionately on poorer and larger families.
Families who have more children at the urging of the government are at a disadvantage.
Food prices are likely to trend higher and it is best to find a longer term solution to the situation instead of having the disadvantaged depend on unpredictable handouts.
Just as in the US and Australia, we could re-visit the granting of GST exemption on basic foodstuff like rice, sugar and flour to remove the double whammy of the price increases.
R Theyvendran
Chairman/Managing Director
Stamford Media International Group
THOUGH generally encouraging, Budget 2008 is lacking in measures to keep business costs down and facilitate growth.
Inflation, which is expected to be between 4.5 and 5.5 per cent (a 25-year high), needs radical action.
With a surplus of some $4.6 billion remaining, corporate tax could be reduced from the current 18 per cent. Office rentals and utility services for relocated start-ups and SMEs could be decreased.
Even for the few vibrant small-and-medium media and related companies as well as SMEs in other industries, the Budget does not stir up any passion for entrepreneurial risk-taking. However, necessary interventions for some industries, like the financial sector, have been made.
The governmentâ€TMs financial backing for technological upgrading could be increased. The tax reduction and allowance for R&D could be further fine-tuned to link up with foreign counterparts and markets. Recruitment of workers could be for the company rather than for a particular job.
Finally, in an “inclusive nation”, those concerned should bear in mind that not all workers earn enough to pay income tax. Others, for some reason or other, are not part of the mainstream. Yet, they all are subject to the GST regime. Public transport in itself is too expensive for some. Basic necessaries could be taken off GST.
Charles Reed
CEO
interTouch
THE comprehensive range of business incentives in this yearâ€TMs Budget is generally good news to companies. It is especially heartening to note that the Budget has been allocated to subsidise the costs of businesses that rely heavily on intensive R&D. interTouch, for instance, will benefit from the tax incentives with its ongoing investment in R&D to enhance its technology offerings for the hospitality industry.
Over the long term, such incentives also encourage more entrepreneurs to enter the thriving R&D sector, and help Singapore grow as a knowledge hub.
Another sector that could be addressed is the hospitality and service industry. With the upcoming integrated resorts in Singapore and with the Asia Pacific being the fastest growing tourism destination in the world, it is increasingly critical to provide incentives that encourage hospitality companies to train talent as well as pursue product and service excellence.
On the individual level, while the Budget provided bonuses to help Singaporeans cope with the the rising cost of living, perhaps providing long-term assistance such as a special discount card for the needy to purchase basic amenities would be more targeted and effective.
Dora Hoan
Group CEO
Best World International Ltd
NOTWITHSTANDING the mild forecast for economic growth, there is good reason to have faith in the future of Singapore’s economy. Strategies and measures outlined in the 2008 Budget should spur the growth of innovative enterprises with significant incentives for innovation. The emphasis on education and training opportunities for our students and those in the workforce is laudable as it is key to an increasingly knowledge-based economy.
It is also worth noting the adjustments on tax policies to enable Singapore to remain competitive through supportive measures for the growth of SMEs, and the enhancement of our role in the region as a financial and business hub.
As expected, measures to deal with inflation have been outlined. Knowing that those who have less in life will be the hardest hit, I believe in strengthening our financial security programmes to protect the aged workforce, and in social intervention and targeted assistance for the less well-off members of society. Among the many measures cited, needless to say, keeping our economy competitive and building up our people’s capabilities for economic growth is the most fundamental.
I note with keen interest the abolition of estate duty which I have been anticipating for years. I believe it is high time that we re-think our policies on wealth creation. Today, wealth is being created in an entirely different manner through the spirit of entrepreneurship by people who started off with little.
In the final analysis, each must do his part to realise the nation’s economic growth prospects. As a nation in the new global order, we shall be all the better for creating a mindset where anyone who works hard enough to create new wealth and opts to maintain their assets within the country will be inspired and well-equipped to do so. That in turn will benefit Singapore’s economy and society for years to come.
Sam Yap S G
Group Executive Chairman
Cherie Hearts Group Int’l Pte Ltd
THE S$1.8 billion giveaway in Budget 2008 is a huge ‘hong bao’ for individuals and companies alike; it is definitely a boost to our economy. For instance, the ease with which start-ups can now qualify for tax exemptions, as well as the strong emphasis on R&D, are highly welcome and augurs well for the long-term growth and sustainability of businesses in Singapore.
Slightly regrettable, though, is the lack of direct benefits for childcare businesses, which in my opinion, play a pivotal role in improving the quality of life for middle to high income families in Singapore, and more indirectly, to all other businesses in general by allowing both husband and wife to work.
Lars Ronning
President, Asia Pacific (excluding China and Japan)
Tandberg
THE Singapore government’s ICT (information and communications technology) industry policies have generally focused on setting the right framework through improved information flow and streamlined procedures. Like Norway and Korea, Singapore has a good track record investing in, and widely adopting ICT.
The next steps must address the changing skill levels and skill mix of employees, the expanded range of services and capabilities (of enterprises) vis-a-vis ICT. Also, besides large firms, the government needs to look at how it can help small and medium-sized businesses fully exploit the broadband environment.
There was little mention of such initiatives in Budget 2008 to overcome any lack of awareness, skilled personnel or specialist services in these firms. In the mid to long term, measures such as education, skills and professionalism will address this disparity, and increase the competitive edge of Singapore companies on a global scale.
Poh Mui Hoon
CEO
NETS
WE are encouraged by the fact that Budget 2008 included rebates and dividends that are weighted towards middle and lower income households. Higher income households are also not forgotten as they receive more in absolute dollars. Given the growing concerns of inflation and a lurking recession in the US, this will provide some comfort for consumers. These goodies are made possible because of sound economic policies and good business performance.
Together with the focus on mitigating the effects of inflation, fiscal policies that continue to keep the economy buoyant are certainly welcome. The emphasis on spurring the growth of innovative enterprises, and adjusting tax policies to ensure businesses stay competitive is indeed timely given the uncertain global outlook.
Such measures will support the growth of SMEs and encourage companies to be better risk takers. This is a well-balanced Budget which will ensure that Singapore remains an attractive place to engage in business and for Singaporeans to call home.
Fong Loo Fern
Managing Director
CYC The Custom Shop Pte Ltd
THE 2008 Budget is both stimulating and generous. I believe the economy will continue to do well despite the uncertainties in the global market. We hope that the extra money in people’s pocket will translate into more consumption. I appreciate the generosity of the Finance Minister in sharing the surpluses chalked up. My only concern is that more could be done for the needy, the aged and the disadvantaged.
Tan Kok Leong
Principal
TKL Consulting
THE 2008 Budget is the biggest and probably the best in a decade. Its size of $43 billion expanded 23.2 per cent from $33 billion previously, with the biggest surplus of $6.4 billion. The assistance measures to help the low income, the old and the sick, and to innovate the economy was the highest at $5.4 billion.
The Budget is built on the foundation of the past and the booming economy. It is to equip Singapore for the long term global challenges. It has the interest of every citizen at heart and it strives to maintain social cohesiveness.
Derek Goh
Executive Chairman/Group CEO
Serial System Ltd
BUDGET 2008 is a landmark Budget for our citizens as we share the fruits of our labour. Although the Budget does not introduce fresh fiscal measures for the corporate sector, the enhancements for individuals have the overall impact of boosting domestic consumption. This will in turn benefit business.
In anticipation of a potential recession in the US, the government can put in a contingency plan to mitigate any possible business slowdown. The business federation together with the Ministry of Finance and the Ministry of Trade and Industry can jointly set up a Business Contingency Council to develop a series of economic scenarios as guard posts to signal businesses on responses to different economic challenges. Such engagements will prepare businesses mentally and financially for any adverse challenges.
Dhirendra Shantilal
Senior Vice-President, Asia Pacific
Kelly Services
BUDGET 2008 is a commendable peopleâ€TMs Budget looking into the needs of the population through several types of grants including medical and educational grants. Weâ€TMre seeing rising living costs in Singapore and this yearâ€TMs Budget has identified ways to help the local community overcome it in the short term and at the same time advising that handouts are not the long term solution to an upward trend in inflation. Government-aided training and certification programmes will help individuals advance their careers to the next level and Singaporeans should continue to take advantage of these courses.
Younger Singaporeans are privileged to have tremendous support from the Singapore Budget. Our education system is a much sought after system by students in the region and many covet the opportunity to have a place in our schools. So it is encouraging to see the strengthening of our educational system to adequately equip our talent for future challenges in the workforce. Our young people need to understand why the government is placing so much emphasis on their education, appreciate the educational grants given to them and utilise them wisely.
From an industry point of view, businesses have been challenged with very rapidly rising business cost issues within a short span of time. Weâ€TMre also facing a talent crunch which adds to the rising costs. We were hoping to see government-aided training programmes in the Budget, specifically targeted at the professional and technical talent, that would allow them to pick up skills that are transferable across industries. The Budget could also have addressed the corporate income tax rate and reduced it further.
The CPF Life scheme is much more attractive now with a dozen options to choose from but we may not see organisations immediately taking this up as their companyâ€TMs ‘pension scheme’ as it would be considered an additional business cost.
David Miller
President of Asia Pacific & Senior Vice-President
Lenovo
LENOVO’S presence in Singapore has stemmed from its need to centralise key sales support, procurement and treasury operations in a secure, stable and economically progressive Asian base. To date, we’ve been able to achieve economies of scale through our seamless and streamlined value chain using Singapore as a key hub. According to the most recent Budget, the government will be attempting to adjust its tax policies so that we stay competitive, support the growth of SMEs, encourage risk-taking, as well as strengthen Singapore’s role as a financial and business hub which all lend credence to our decision to strengthen our position here.
Singapore’s strong financial infrastructure and taxation policies have allowed us to base many of our key financial and business functions here. Our Treasury operations are based in Singapore, as are our worldwide heads of Global Supply Chain and of Services. Despite the projected slowdown in the global economy, the Budget shows a commitment to manage pressures on the currency, easing the planning burden of companies in the IT industry amongst others so on that front, we’re not worried about any drastic changes to the way we do business.
On a personal level, the tax regime has definitely made it easier for multinationals, such as Lenovo, to attract executive talent. This has led to Singapore being one of the best (if not the best) and most logical place for global executives to be based in Asia.
I am also glad to see a healthy amount of attention being paid to cultivate knowledge creation and innovation within industry, academia and the public service. Hopefully this will lead to the creation of new enterprises and ventures which will in turn enhance the position of other companies like Lenovo within the economic ecosystem here in Singapore and throughout the region. We’ve always believed that the next wave of global companies will be moving towards globally sourcing or “worldsourcing” their talent, resources, intellectual property and services. Building this ecosystem of cutting edge firms positions Singapore as a vital node in this future global network.
Source : Business Times - 25 Feb 2008
Sunday, February 17, 2008
Fair legislation in collective sales needed to protect both buyers and sellers
THE issues in en-bloc sales stem from the rush to redevelop older condos and the resulting lack of mutual benefits between buyers and sellers.
There is absolutely no reason that minority owners should be forced to uproot under the 80/90 per cent rule.
It is ridiculous that majority consenting owners are trying to justify why they should renege the contract they signed when property price increases and not otherwise.
The intrinsic principle and spirit of collective sales for urban renewal in Singapore seem to evaporate into thin air while both parties lock horns in the pursuit of self-benefits. The dynamics of property price fluctuations, distribution of sales proceeds and disputes between aggrieved buyers and sellers only benefit the lawyers.
Looking at the situation from a different angle, I could see some light at the end of tunnel if we address the often-neglected elements of nostalgia as well as the mutual benefit mechanism in a collective sales exercise.
It is impossible to resolve the aspirations of hundreds of condo owners living at the same location for decades. A holistic approach with proper legislation may solve the perennial problems. Redevelopments on the premise of economics may not necessarily be a good thing. Pragmatic measures should be in place to control unnecessary and wonton demolitions for the sake of preserving Singapore’s history and people’s homes.
Paul Chan Poh Hoi
Source : Straits Times - 18 Feb 2008
There is absolutely no reason that minority owners should be forced to uproot under the 80/90 per cent rule.
It is ridiculous that majority consenting owners are trying to justify why they should renege the contract they signed when property price increases and not otherwise.
The intrinsic principle and spirit of collective sales for urban renewal in Singapore seem to evaporate into thin air while both parties lock horns in the pursuit of self-benefits. The dynamics of property price fluctuations, distribution of sales proceeds and disputes between aggrieved buyers and sellers only benefit the lawyers.
Looking at the situation from a different angle, I could see some light at the end of tunnel if we address the often-neglected elements of nostalgia as well as the mutual benefit mechanism in a collective sales exercise.
It is impossible to resolve the aspirations of hundreds of condo owners living at the same location for decades. A holistic approach with proper legislation may solve the perennial problems. Redevelopments on the premise of economics may not necessarily be a good thing. Pragmatic measures should be in place to control unnecessary and wonton demolitions for the sake of preserving Singapore’s history and people’s homes.
Paul Chan Poh Hoi
Source : Straits Times - 18 Feb 2008
Set up hotels in suburbs to create more vibrancy
I REFER to the report, '12 sites set aside for new hotels to ease room crunch' (ST, Feb15).
I don't know why hotels have to be in the city or at the fringes. Why can't they be in the suburbs like Tampines or Jurong East. A hotel in Woodlands would probably do very well. Singapore is compact and our transportation system reasonably good.
New three-star hotels can be located close to train stations and near shopping, food and beverage, and entertainment facilities. These places can be no more than 30 minutes by train to the city centre.
This way the retail trade in the suburbs could be enhanced and there will be greater vibrancy. Hotel rates could also be made more affordable.
Anthony Leong Chee-Hong
Source : Straits Times - 18 Feb 2008
I don't know why hotels have to be in the city or at the fringes. Why can't they be in the suburbs like Tampines or Jurong East. A hotel in Woodlands would probably do very well. Singapore is compact and our transportation system reasonably good.
New three-star hotels can be located close to train stations and near shopping, food and beverage, and entertainment facilities. These places can be no more than 30 minutes by train to the city centre.
This way the retail trade in the suburbs could be enhanced and there will be greater vibrancy. Hotel rates could also be made more affordable.
Anthony Leong Chee-Hong
Source : Straits Times - 18 Feb 2008
Monday, February 04, 2008
Penalise those who break en-bloc contracts
I REFER to the report, ‘CapitaLand tells Gillman Heights owners to honour sale’ (ST, Feb 2). The news, like that of Horizon Towers and Regent Garden, bears similar learning lessons. They concern sellers in a collective property sale who refuse to accede to the terms of the contract they signed with the buyers. The lessons we can draw from these three examples are:
Collective sellers can disregard the terms of a signed contract by simply challenging the rules and rescinding it;
If enough sellers withdraw from a signed contract, the law may not be swift enough to give the buyers due protection as a result of the broken promise made by the sellers; and
Lawyers are the only clear winners in the arena of failed agreements between willing sellers and buyers.
A contract, in the simplest definition, is a promise enforceable by law. In the recent cases, it is crystal clear the sellers went back on their word because the agreed sale price was ‘too low’. I feel the courts should have just enforced penalties here, rather than let the subsequent chain of events run.
So the buyers had to threaten these sellers with lawsuits. The latter responded with a host of ‘reasons’ why the sale agreement should be cancelled. Yet the courts are obliged to hear out both plaintiffs and defendants. Lawyers are hired to represent their respective clients.
All these legal disputes are counter productive, especially for the aggrieved buyers who have the commercial right to proceed with their legal suits against the sellers. Time, money and tears are shed over something that could have been easily resolved by the courts.
An agreement, commercial or social, remains an agreement. If the irresponsible party defaults on the terms of the contract so the aggrieved party takes the issue to court, the court should immediately arrive at a verdict. Penalties should be meted out swiftly against the wrongdoer.
Our society needs to be confident in carrying out the terms of commercial and social contracts. Our children and the next generation are watching us closely in the way we make just decisions. Foreign businesses and enterprises are watching us to see how we deal with simple issues such as breaking a basic contractual agreement.
In this regard, I suggest the Ministry of Education introduce a basic civics education module for students on ‘Keeping one’s word’. Schools should emphasise time-honoured values such as ‘Integrity at all costs’ to children.
Source : Straits Times - 5 Feb 2008
Collective sellers can disregard the terms of a signed contract by simply challenging the rules and rescinding it;
If enough sellers withdraw from a signed contract, the law may not be swift enough to give the buyers due protection as a result of the broken promise made by the sellers; and
Lawyers are the only clear winners in the arena of failed agreements between willing sellers and buyers.
A contract, in the simplest definition, is a promise enforceable by law. In the recent cases, it is crystal clear the sellers went back on their word because the agreed sale price was ‘too low’. I feel the courts should have just enforced penalties here, rather than let the subsequent chain of events run.
So the buyers had to threaten these sellers with lawsuits. The latter responded with a host of ‘reasons’ why the sale agreement should be cancelled. Yet the courts are obliged to hear out both plaintiffs and defendants. Lawyers are hired to represent their respective clients.
All these legal disputes are counter productive, especially for the aggrieved buyers who have the commercial right to proceed with their legal suits against the sellers. Time, money and tears are shed over something that could have been easily resolved by the courts.
An agreement, commercial or social, remains an agreement. If the irresponsible party defaults on the terms of the contract so the aggrieved party takes the issue to court, the court should immediately arrive at a verdict. Penalties should be meted out swiftly against the wrongdoer.
Our society needs to be confident in carrying out the terms of commercial and social contracts. Our children and the next generation are watching us closely in the way we make just decisions. Foreign businesses and enterprises are watching us to see how we deal with simple issues such as breaking a basic contractual agreement.
In this regard, I suggest the Ministry of Education introduce a basic civics education module for students on ‘Keeping one’s word’. Schools should emphasise time-honoured values such as ‘Integrity at all costs’ to children.
Source : Straits Times - 5 Feb 2008
Wednesday, January 30, 2008
Door shuts on flat applicant of ‘Other’ race
Author: John Mc, Henderson Lackey Bangalore, India
I FORMALLY made Singapore my adopted home and took up citizenship in 2006. I believe that my family and I will make many contributions. We are currently posted overseas and look forward to returning home in March.
Like all Singaporeans, we spent a considerable amount of time and money looking for the ideal place to call home, and found such a place in Pasir Ris. When we executed the purchase agreement late last month, there were no restrictions for the ‘Other’ racial group. However, to our dismay, when we went to register the sale with HDB early this month, we were rejected as applications under the ‘Other’ category had closed.
I broadly understand the aim of the national housing policy and the desire to ensure a good racial mix in an estate. However, one needs to look no farther than my family for an example of racial/ethnic diversity. I am a Caucasian who has lived in Asia for the past 12 years. My wife is Malaysian of Indian descent and we have a two-year-old daughter who was born in Hong Kong. I have two older children whose mother is Chinese.
We don’t fit a cookie-cutter definition of race and to simply categorise us as ‘Other’ overlooks our unique blend of race and culture.
I am proud to call Singapore my home but feel it is time for Singapore to recognise that in today’s world the traditional definitions of race/ethnicity no longer exist.
Source : Straits Times - 31 Jan 2008
I FORMALLY made Singapore my adopted home and took up citizenship in 2006. I believe that my family and I will make many contributions. We are currently posted overseas and look forward to returning home in March.
Like all Singaporeans, we spent a considerable amount of time and money looking for the ideal place to call home, and found such a place in Pasir Ris. When we executed the purchase agreement late last month, there were no restrictions for the ‘Other’ racial group. However, to our dismay, when we went to register the sale with HDB early this month, we were rejected as applications under the ‘Other’ category had closed.
I broadly understand the aim of the national housing policy and the desire to ensure a good racial mix in an estate. However, one needs to look no farther than my family for an example of racial/ethnic diversity. I am a Caucasian who has lived in Asia for the past 12 years. My wife is Malaysian of Indian descent and we have a two-year-old daughter who was born in Hong Kong. I have two older children whose mother is Chinese.
We don’t fit a cookie-cutter definition of race and to simply categorise us as ‘Other’ overlooks our unique blend of race and culture.
I am proud to call Singapore my home but feel it is time for Singapore to recognise that in today’s world the traditional definitions of race/ethnicity no longer exist.
Source : Straits Times - 31 Jan 2008
Tuesday, January 29, 2008
Time to raise $8,000 ceiling?
More families exceed income limit set 14 years ago. Households earning $8,000 or more a month
If your household earns more than $8,000 a month, it's...
# No new HDB flats
# No subsidised housing loans
# No maximum $40,000 grant to buy resale flats
IT'S been 14 years since the HDB last raised its income ceiling for new flats from $7,000 to $8,000.
Many things have changed since 1994 - isn't it time for the ceiling to shift too?
Data from the General Household Survey shows that the proportion of resident households earning $8,000 and above every month has nearly doubled from 10.85 per cent in 1995 to 19.9 per cent in 2005.
This means that the proportion of households qualifying to buy new flats shrank by roughly 9 percentage points.
Flat values have also jumped since then.
Consider this. Back then, a new four-room HDB flat in Woodlands would cost you about $96,000, compared to $183,000 for a new four-room unit at nearby Yishun today.
Home-buyer Seline Wee, 29, wants the ceiling to be raised.
SANDWICH CLASS
Ms Wee, a teacher, is getting married to her auditor boyfriend next year.
She said: 'Our combined income is just slightly above the $8,000 ceiling and we feel we're being penalised for it.
'Now we can't buy a new flat and we've to dig deep for either a high-priced resale place or condo, which means possibly spending beyond our means.
'The income ceiling rule has not been changed for so long but income levels and property prices have increased since then.'
A household earning above $8,000 a month also cannot get subsidised housing loans and housing grants of up to $40,000 to buy resale flats.
Knight Frank's research director Nicholas Mak thinks the policy should be reviewed regularly because of inflation, the increase in income and property prices.
He explained: 'This ceiling has to be reviewed regularly or otherwise you're cutting out a certain proportion of the population who can make use of the subsidy.
'On one hand, the Government is restricting the amount of CPF you can spend on housing. On the other hand, they're keeping the income ceiling low, and preventing some in the sandwich class who don't want to over-invest in property from buying new flats.'
Mr Sing Tien Foo, deputy head of the NUS' department of real estate, said that the income ceiling is an eligibility measure to make sure Singaporeans can afford public housing.
To lift this cap, the Government has to look at market conditions and see whether public housing has gone beyond the affordability of Singaporeans.
He said: 'A solution would be a discreet review. If income levels have gone up, is it only applicable to certain groups? And is this change in income cyclical or a permanent structural change?'
Lifting the cap may have widespread effects, he added.
'How big is this sandwich class? By lifting the ceiling, the demand for new flats may surge and their prices may be adjusted higher.
'The resale market will also be affected. Is that the best solution?' he asked.
While some may argue that executive condos (EC) fulfil this niche with its $10,000 ceiling, Mr Mak said that these sites tend to be fewer in number.
HDB announced that there would be a supply of 7,000 new flats available from last November to June this year.
And another 3,200 flats will be built under the Design, Build and Sell Scheme (DBSS) and EC schemes.
Mr Eric Cheng, executive director of HSR Property group, thinks that $8,000 is a fair gauge because those earning more than that can easily afford private property.
Based on a couple's combined income of $8,000, they can easily buy a $700,000 private property on a 35-year loan.
He calculated that the monthly instalment of around $2,300 would be quite affordable.
'If you bring the ceiling higher, there'll be increased demand for new flats and the resale market will be affected. Now, the resale market is quite balanced,' he said.
The Housing Board said it has no plans to raise the income ceiling now as the vast majority of Singaporean families qualify for subsidised public housing.
Said a HDB spokesman: 'At the current $8,000 income ceiling, about 8 in 10 Singaporean families are eligible to buy subsidised public housing.
'Given our limited public housing budget, it is important that we target our housing subsidies to those who need it most.'
HDB said that higher income households exceeding the income ceiling have other housing options, including the purchase of resale HDB flats, which are not subject to any income ceiling.
And first-timer families with household incomes of up to $10,000 can also consider buying new EC units with a housing grant of $30,000.
Source : New Paper - 29 Jan 2008
If your household earns more than $8,000 a month, it's...
# No new HDB flats
# No subsidised housing loans
# No maximum $40,000 grant to buy resale flats
IT'S been 14 years since the HDB last raised its income ceiling for new flats from $7,000 to $8,000.
Many things have changed since 1994 - isn't it time for the ceiling to shift too?
Data from the General Household Survey shows that the proportion of resident households earning $8,000 and above every month has nearly doubled from 10.85 per cent in 1995 to 19.9 per cent in 2005.
This means that the proportion of households qualifying to buy new flats shrank by roughly 9 percentage points.Flat values have also jumped since then.
Consider this. Back then, a new four-room HDB flat in Woodlands would cost you about $96,000, compared to $183,000 for a new four-room unit at nearby Yishun today.
Home-buyer Seline Wee, 29, wants the ceiling to be raised.
SANDWICH CLASS
Ms Wee, a teacher, is getting married to her auditor boyfriend next year.
She said: 'Our combined income is just slightly above the $8,000 ceiling and we feel we're being penalised for it.
'Now we can't buy a new flat and we've to dig deep for either a high-priced resale place or condo, which means possibly spending beyond our means.
'The income ceiling rule has not been changed for so long but income levels and property prices have increased since then.'
A household earning above $8,000 a month also cannot get subsidised housing loans and housing grants of up to $40,000 to buy resale flats.
Knight Frank's research director Nicholas Mak thinks the policy should be reviewed regularly because of inflation, the increase in income and property prices.
He explained: 'This ceiling has to be reviewed regularly or otherwise you're cutting out a certain proportion of the population who can make use of the subsidy.
'On one hand, the Government is restricting the amount of CPF you can spend on housing. On the other hand, they're keeping the income ceiling low, and preventing some in the sandwich class who don't want to over-invest in property from buying new flats.'
Mr Sing Tien Foo, deputy head of the NUS' department of real estate, said that the income ceiling is an eligibility measure to make sure Singaporeans can afford public housing.
To lift this cap, the Government has to look at market conditions and see whether public housing has gone beyond the affordability of Singaporeans.
He said: 'A solution would be a discreet review. If income levels have gone up, is it only applicable to certain groups? And is this change in income cyclical or a permanent structural change?'
Lifting the cap may have widespread effects, he added.
'How big is this sandwich class? By lifting the ceiling, the demand for new flats may surge and their prices may be adjusted higher.
'The resale market will also be affected. Is that the best solution?' he asked.
While some may argue that executive condos (EC) fulfil this niche with its $10,000 ceiling, Mr Mak said that these sites tend to be fewer in number.
HDB announced that there would be a supply of 7,000 new flats available from last November to June this year.
And another 3,200 flats will be built under the Design, Build and Sell Scheme (DBSS) and EC schemes.
Mr Eric Cheng, executive director of HSR Property group, thinks that $8,000 is a fair gauge because those earning more than that can easily afford private property.
Based on a couple's combined income of $8,000, they can easily buy a $700,000 private property on a 35-year loan.
He calculated that the monthly instalment of around $2,300 would be quite affordable.
'If you bring the ceiling higher, there'll be increased demand for new flats and the resale market will be affected. Now, the resale market is quite balanced,' he said.
The Housing Board said it has no plans to raise the income ceiling now as the vast majority of Singaporean families qualify for subsidised public housing.
Said a HDB spokesman: 'At the current $8,000 income ceiling, about 8 in 10 Singaporean families are eligible to buy subsidised public housing.
'Given our limited public housing budget, it is important that we target our housing subsidies to those who need it most.'
HDB said that higher income households exceeding the income ceiling have other housing options, including the purchase of resale HDB flats, which are not subject to any income ceiling.
And first-timer families with household incomes of up to $10,000 can also consider buying new EC units with a housing grant of $30,000.
Source : New Paper - 29 Jan 2008
Sunday, January 27, 2008
Help young couples: Cut CPF cap for housing
I WONDER how many Singaporeans are aware they cannot use their CPF savings to pay their housing loan fully.
I did not realise this until I received a letter from the authorities earlier this month which said we could not withdraw more CPF funds to pay for our flat.
Thus, the balance had to be serviced in cash even though we still make monthly CPF contributions.
The reason given by the CPF Board is as follows (quoted from a letter sent to us after repeated appeals to the CPF Board via our MP):
‘The primary objective of CPF is to help members save for old age. We must balance the home ownership objective with the retirement objective. This is done by capping the withdrawal of CPF for a property up to the Valuation Limit (VL), that is the purchase price of the property . Once members have withdrawn their CPF up to the VL, they can only withdraw further CPF if they can set aside Minimum Sum cash component in their CPF Special and Ordinary accounts, this amounts to $120,000.’
Can an exception be made for young couples like us who have many other commitments - young children, aged retired parents - and as a result are not cash-rich at present.
What is more, we have many more years to save towards retirement.
Can we therefore be allowed to service our housing loan fully via CPF, given that this is our first flat?
Lim Keng Chiew
Source : Straits Times - 28 Jan 2008
I did not realise this until I received a letter from the authorities earlier this month which said we could not withdraw more CPF funds to pay for our flat.
Thus, the balance had to be serviced in cash even though we still make monthly CPF contributions.
The reason given by the CPF Board is as follows (quoted from a letter sent to us after repeated appeals to the CPF Board via our MP):
‘The primary objective of CPF is to help members save for old age. We must balance the home ownership objective with the retirement objective. This is done by capping the withdrawal of CPF for a property up to the Valuation Limit (VL), that is the purchase price of the property . Once members have withdrawn their CPF up to the VL, they can only withdraw further CPF if they can set aside Minimum Sum cash component in their CPF Special and Ordinary accounts, this amounts to $120,000.’
Can an exception be made for young couples like us who have many other commitments - young children, aged retired parents - and as a result are not cash-rich at present.
What is more, we have many more years to save towards retirement.
Can we therefore be allowed to service our housing loan fully via CPF, given that this is our first flat?
Lim Keng Chiew
Source : Straits Times - 28 Jan 2008
Property's still hot in Singapore
REAL ESTATE VETERAN SAYS OF COOLING MARKET:
Her view: Upgraders and enbloc sales will keep demand up
WHILE most people her age would be blissfully retired, Madam Marlena Chong, a 70-year-old grandmother, is still working, aggressively.
She's no newbie: Madam Marlena Chong has been an active player on the property market for more than 40 years. - Picture: Kelvin Chng
And her work involves millions of dollars.
She is an active player in Singapore's property market, as she has been since she was in her 20s.
One of her friends even calls her 'Queen of Leedon Park' for owning four bungalows there.
They occupy an area of around 100,000 sq ft.
She also has investments in Australia and Malaysia, and is developing a condominium project in China.
Having invested in property locally and regionally for more than 40 years, Madam Chong has seen her share of people going bankrupt over the last three property cycles.
BRIGHT OUTLOOK
Despite the gloom cast by threats of recession in the US and the battering that Asian stock markets took over the last week, Madam Chong retains her 'bright outlook for the Singapore property market'.
Madam Chong, who recently bought a freehold luxury apartment at Scotts Square for $3 million, said: 'The market has softened, but I think it's still holding up. With many en-bloc sales and HDB upgraders, there is still a demand for private housing in the market.
'The prices of freehold landed properties are still far below those in other global cities like London, Hong Kong and New York. People will soon realise that land is still under-valued and will buy the freehold land,' she added, observing how landed property in Sentosa has shot up from $200 to $1,800 per square foot.
Madam Chong's interest in property was first stimulated through discussions with her father, who was in the hotel business.
But Madam Chong, who is a very private person, declined to reveal more details about her family.
She started out first with a few commercial units at People's Park in the 1960s.
In 1972, she bought an apartment at Beverly Mai, a Tomlinson Road condominium, and slowly expanded the number of properties to her name over the years.
Madam Chong declined to reveal the number of properties she and her family own, and also declined to reveal how much she has earned in the property market.
She bought a plot of land with an area of 1hectare for $16 million some years ago.
The land is now worth a cool $40 million.
UNCANNY ABILITY
Talking about her uncanny ability to make predictions about where the property market is headed, Madam Chong said: 'I can feel it.'
In 2004, she asked her friends to buy property when prices were at their lowest.
'But many of them were reluctant to, because property prices had been declining since 1996.
'The mood was still not there and the market was still quiet so they were still unsure,' she said.
Now, Madam's Chong's friends chip in when she makes investments so that they can get a share of the profits as well.
She said: 'Every high that a property cycle brings with it will be higher than that of the last property cycle. It is a good time to buy freehold land.'
Madam Chong's property agent, MsAnnabelle Khan, describes her client as someone with 'good foresight, careful when she makes decisions'.
Madam Chong has bought three properties through Ms Khan since they got to know each other last September.
Ms Khan said: 'She's not stuck up, and she's always willing to give younger people a chance.
'She's always very happy to help people.'
Ms Khan also described Madam Chong as a 'very compassionate' woman, who, after she knew of Ms Khan's family problems, even offered to visit her family.
Source : New Paper - 27 January 2008
Her view: Upgraders and enbloc sales will keep demand up
WHILE most people her age would be blissfully retired, Madam Marlena Chong, a 70-year-old grandmother, is still working, aggressively.
She's no newbie: Madam Marlena Chong has been an active player on the property market for more than 40 years. - Picture: Kelvin ChngAnd her work involves millions of dollars.
She is an active player in Singapore's property market, as she has been since she was in her 20s.
One of her friends even calls her 'Queen of Leedon Park' for owning four bungalows there.
They occupy an area of around 100,000 sq ft.
She also has investments in Australia and Malaysia, and is developing a condominium project in China.
Having invested in property locally and regionally for more than 40 years, Madam Chong has seen her share of people going bankrupt over the last three property cycles.
BRIGHT OUTLOOK
Despite the gloom cast by threats of recession in the US and the battering that Asian stock markets took over the last week, Madam Chong retains her 'bright outlook for the Singapore property market'.
Madam Chong, who recently bought a freehold luxury apartment at Scotts Square for $3 million, said: 'The market has softened, but I think it's still holding up. With many en-bloc sales and HDB upgraders, there is still a demand for private housing in the market.
'The prices of freehold landed properties are still far below those in other global cities like London, Hong Kong and New York. People will soon realise that land is still under-valued and will buy the freehold land,' she added, observing how landed property in Sentosa has shot up from $200 to $1,800 per square foot.
Madam Chong's interest in property was first stimulated through discussions with her father, who was in the hotel business.
But Madam Chong, who is a very private person, declined to reveal more details about her family.
She started out first with a few commercial units at People's Park in the 1960s.
In 1972, she bought an apartment at Beverly Mai, a Tomlinson Road condominium, and slowly expanded the number of properties to her name over the years.
Madam Chong declined to reveal the number of properties she and her family own, and also declined to reveal how much she has earned in the property market.
She bought a plot of land with an area of 1hectare for $16 million some years ago.
The land is now worth a cool $40 million.
UNCANNY ABILITY
Talking about her uncanny ability to make predictions about where the property market is headed, Madam Chong said: 'I can feel it.'
In 2004, she asked her friends to buy property when prices were at their lowest.
'But many of them were reluctant to, because property prices had been declining since 1996.
'The mood was still not there and the market was still quiet so they were still unsure,' she said.
Now, Madam's Chong's friends chip in when she makes investments so that they can get a share of the profits as well.
She said: 'Every high that a property cycle brings with it will be higher than that of the last property cycle. It is a good time to buy freehold land.'
Madam Chong's property agent, MsAnnabelle Khan, describes her client as someone with 'good foresight, careful when she makes decisions'.
Madam Chong has bought three properties through Ms Khan since they got to know each other last September.
Ms Khan said: 'She's not stuck up, and she's always willing to give younger people a chance.
'She's always very happy to help people.'
Ms Khan also described Madam Chong as a 'very compassionate' woman, who, after she knew of Ms Khan's family problems, even offered to visit her family.
Source : New Paper - 27 January 2008
Commuters cheered by plan for new MRT lines
Those living in areas without MRT like Sin Ming look forward to end of feeder bus woes
FOR the past two years, Miss Ginny Goh, 28, has been leaving her home in Sin Ming an hour before she has to report for work in her Shenton Way office.
The tax consultant waits about 10 minutes to catch a bus for the 15-minute ride to the nearest MRT station in Bishan. From there, it takes her another 20 minutes to travel to Raffles Place MRT station.
But with two new MRT lines in 2020, commuters like Miss Goh will be able to shave 20 minutes off their daily commute to the city, said Transport Minister Raymond Lim on Friday.
The Thomson Line will join Woodlands to Marina Bay, while the Eastern Region Line will connect Changi to Marina Bay via Marine Parade. They will pass through neighbourhoods such as Sin Ming and Siglap that are currently not served by the MRT.
The new lines are part of policy changes to improve Singapore's land transport system.
Miss Goh welcomes the news, as walking to the new train station will 'definitely be more convenient' than having to take a feeder bus.
The inconvenience of having to wait for a bus to take them to the nearest MRT station is a common grouse shared by commuters living in such areas.
Mr Tong Chek Suan, 40, a mechanic who lives in Changi Village, says he usually waits up to 25 minutes for Service 89 which goes to Pasir Ris MRT station.
Long and winding bus rides to MRT stations also frustrate commuters like Mr Kenneth Quek, 23, who is studying at Singapore Polytechnic.
During peak hours, Mr Quek can take up to 45 minutes to get from Changi Village to Tanah Merah MRT station, a trip which takes 19 minutes during off-peak hours.
Commuters like Mr Benson Ang, 46, a businessman, prefer taking the MRT to buses because 'it's more efficient. The waiting time is more fixed'.
Others, like Miss Gwendolyn Loh, 32, a corporate communications manager whose Sin Ming neighbourhood will see a MRT station, are rejoicing for a different reason.
'Now my flat will increase in value!'
Getting to the city
THE two new MRT lines will benefit residents of neighbourhoods such as Changi Village and Sin Ming. The Sunday Times tested out the current routes to the city from those two locations to see how long they take and how much they cost.
Changi Village to City Hall
2pm: Changi Village bus stop opposite Block 4
2.05pm: Service 2 arrives
2.24pm: Bus reaches Tanah Merah MRT station after going past Loyang Industrial Estate, Upper Changi Road and Bedok market
2.32pm: Train arrives after a short walk to the MRT station and some waiting
2.52pm: Train reaches City Hall MRT station
Cost of bus ride:
Ez-link - $1.19
Cash - $1.40
Cost of train ride:
Ez-link - $1.03 (after 25-cent rebate)
Cash - $1.50
Total fare:
Ez-link - $2.22
Cash - $2.90
Sin Ming to City Hall
2pm: Sin Ming bus stop opposite Block 454
2.12pm: Service 52 arrives
2.25pm: Bus heads directly to Bishan MRT station
2.30pm: Train arrives after a short walk to the MRT station and some waiting
2.45pm: Train reaches City Hall MRT station
Cost of bus ride:
Ez-link - 67 cents
Cash - 90 cents
Cost of train ride:
Ez-link - 93 cents (after 25-cent rebate)
Cash - $1.30
Total fare:
Ez-link: $1.60
Cash: $2.20
Source : Straits Times - 27 Jan 2008
FOR the past two years, Miss Ginny Goh, 28, has been leaving her home in Sin Ming an hour before she has to report for work in her Shenton Way office.
The tax consultant waits about 10 minutes to catch a bus for the 15-minute ride to the nearest MRT station in Bishan. From there, it takes her another 20 minutes to travel to Raffles Place MRT station.
But with two new MRT lines in 2020, commuters like Miss Goh will be able to shave 20 minutes off their daily commute to the city, said Transport Minister Raymond Lim on Friday.
The Thomson Line will join Woodlands to Marina Bay, while the Eastern Region Line will connect Changi to Marina Bay via Marine Parade. They will pass through neighbourhoods such as Sin Ming and Siglap that are currently not served by the MRT.
The new lines are part of policy changes to improve Singapore's land transport system.
Miss Goh welcomes the news, as walking to the new train station will 'definitely be more convenient' than having to take a feeder bus.
The inconvenience of having to wait for a bus to take them to the nearest MRT station is a common grouse shared by commuters living in such areas.
Mr Tong Chek Suan, 40, a mechanic who lives in Changi Village, says he usually waits up to 25 minutes for Service 89 which goes to Pasir Ris MRT station.
Long and winding bus rides to MRT stations also frustrate commuters like Mr Kenneth Quek, 23, who is studying at Singapore Polytechnic.
During peak hours, Mr Quek can take up to 45 minutes to get from Changi Village to Tanah Merah MRT station, a trip which takes 19 minutes during off-peak hours.
Commuters like Mr Benson Ang, 46, a businessman, prefer taking the MRT to buses because 'it's more efficient. The waiting time is more fixed'.
Others, like Miss Gwendolyn Loh, 32, a corporate communications manager whose Sin Ming neighbourhood will see a MRT station, are rejoicing for a different reason.
'Now my flat will increase in value!'
Getting to the city
THE two new MRT lines will benefit residents of neighbourhoods such as Changi Village and Sin Ming. The Sunday Times tested out the current routes to the city from those two locations to see how long they take and how much they cost.
Changi Village to City Hall
2pm: Changi Village bus stop opposite Block 4
2.05pm: Service 2 arrives
2.24pm: Bus reaches Tanah Merah MRT station after going past Loyang Industrial Estate, Upper Changi Road and Bedok market
2.32pm: Train arrives after a short walk to the MRT station and some waiting
2.52pm: Train reaches City Hall MRT station
Cost of bus ride:
Ez-link - $1.19
Cash - $1.40
Cost of train ride:
Ez-link - $1.03 (after 25-cent rebate)
Cash - $1.50
Total fare:
Ez-link - $2.22
Cash - $2.90
Sin Ming to City Hall
2pm: Sin Ming bus stop opposite Block 454
2.12pm: Service 52 arrives
2.25pm: Bus heads directly to Bishan MRT station
2.30pm: Train arrives after a short walk to the MRT station and some waiting
2.45pm: Train reaches City Hall MRT station
Cost of bus ride:
Ez-link - 67 cents
Cash - 90 cents
Cost of train ride:
Ez-link - 93 cents (after 25-cent rebate)
Cash - $1.30
Total fare:
Ez-link: $1.60
Cash: $2.20
Source : Straits Times - 27 Jan 2008
Wednesday, January 16, 2008
Is Singapore’s property industry in denial?
Letter from STEVE K NGO
I REFER to the report, “Private home sales shrink 46%” (Jan 16).
I am disturbed by the apparent obsession of “industry experts” in Singapore to over-stimulate the property market by painting a picture that is rosier than the situation dictates, particularly so in the midst of a looming financial crisis.
The truth is that the crunch is already upon us, with the United States in the throes of its housing woes brought on by the sub-prime mortgage issue.
With the uncertainty in the stock market since the start of trading this year, coupled with the repeated warnings from the international business community about the US (one of the world’s biggest consumers) going into a recession, are our property industry experts here in denial?
These experts are trying to justify why property sales were down last month - that buyers were on vacation during the holiday season - and that sales would pick up this year.
Let’s come to terms with the reality: The credit crunch means that the banks are now very tight in dishing out loans - they are beginning to ask more questions before they give out their money.
I don’t see rich Arabs, Chinese, Indians and Indonesians moving in droves into our suburban condominiums. It is also hard to imagine if indeed there are throngs of foreign property buyers snapping up luxury units in Singapore, pushing prices up further.
It would be best if the pundits could paint a more realistic picture given the challenging times ahead.
Source : Today - 17 Jan 2008
I REFER to the report, “Private home sales shrink 46%” (Jan 16).
I am disturbed by the apparent obsession of “industry experts” in Singapore to over-stimulate the property market by painting a picture that is rosier than the situation dictates, particularly so in the midst of a looming financial crisis.
The truth is that the crunch is already upon us, with the United States in the throes of its housing woes brought on by the sub-prime mortgage issue.
With the uncertainty in the stock market since the start of trading this year, coupled with the repeated warnings from the international business community about the US (one of the world’s biggest consumers) going into a recession, are our property industry experts here in denial?
These experts are trying to justify why property sales were down last month - that buyers were on vacation during the holiday season - and that sales would pick up this year.
Let’s come to terms with the reality: The credit crunch means that the banks are now very tight in dishing out loans - they are beginning to ask more questions before they give out their money.
I don’t see rich Arabs, Chinese, Indians and Indonesians moving in droves into our suburban condominiums. It is also hard to imagine if indeed there are throngs of foreign property buyers snapping up luxury units in Singapore, pushing prices up further.
It would be best if the pundits could paint a more realistic picture given the challenging times ahead.
Source : Today - 17 Jan 2008
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