MIRA INFORM REPORT

 

 

Report Date :

23rd June 2006

 

IDENTIFICATION DETAILS

 

Name :

TONG TEIK PTE LTD

 

 

Registered Office :

7 Temasek Boulevard, #20-02, Suntec Tower One

Singapore        

 

 

Country :

Singapore        

 

 

Financials (as on) :

31/12/2005

 

 

Date of Incorporation :

29/04/1998

 

 

Com. Reg. No.:

199802094D                 

 

 

Legal Form :

Pte Ltd

 

 

Line of Business :

Engaged in trading of rubber & dealing in rubber futures

 

RATING & COMMENTS

 

MIRA’s Rating :

A

 

RATING

STATUS

PROPOSED CREDIT LINE

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 


 

Subject Company  

 

TONG TEIK PTE LTD

 

 

Line Of Business  

 

TRADING OF RUBBER & DEALING IN RUBBER FUTURES

 

 

Parent Company  

 

RCMA COMMODITIES ASIA PTE LTD

(PERCENTAGE OF SHAREHOLDING: 100%)

 

 

Financial Elements

 

  FY2005

  COMPANY

Sales                            : US$347,819,164

Networth                                   : US$6,788,897

Paid-Up Capital              : US$5,000,000

Net result                      : -US$909,967

Net Margin(%)               : -0.26

Return on Equity(%)       : -13.40

Leverage Ratio               : 5.21 TIMES

 

 

Rating

 

Credit Requested           : NA

Credit Rating                : Singapore $ 10000001 to  Singapore $ 50 000000

Credit Opinion                : NA

 

 

BUSINESS INFORMATION REPORT

 

COMPANY IDENTIFICATION

 

Subject Company                   : TONG TEIK PTE LTD

Former Name                                                 : DIANY INVESTMENTS PTE LTD

Business Address                  : 7 TEMASEK BOULEVARD

  #20-02

  SUNTEC TOWER ONE

Town                                                               : SINGAPORE                                              

Postcode                                 : 038987

County                                                             : -

Country                                                           : Singapore

Telephone                               : 6332 2282                            

Fax                                                                  : 6332 3788

ROC Number                                                 : 199802094D                        

Reg. Town                              : -

 

 

PREVIOUS IDENTIFICATION

 

DIANY INVESTMENTS PTE LTD          (DATE OF CHANGE OF NAME: 18/06/1998)

 

 

SUMMARY

 

Legal Form                                                     : Pte Ltd                                  

Date Inc.                                                         : 29/04/1998

Previous Legal Form                                     : -

Summary year                                                                         : 31/12/2005    

All amounts in this report are in                    :  USD

Sales                                                                                       : 347,819,164                         

Net Worth                                                       : 6,788,897

Capital                                                                                    : 5,882,353                                                     

Paid-Up Capital                                                                     : 5,000,000

Employees                                                      : 28                                                                 

Net Result                                                      : -909,967

Share value                                                     : 1

Auditor                                                                                    : BDP RAFFLES

 

 

REFERENCES

 

CCMS Number                                              : 702003229183                     

Report Date                            : 23/06/2006

Update Date                           : 23/06/2006

Credit Requested                  : NA                                        

Credit Opinion                                                : NA

Litigation                                 : No

Company status                      : TRADING                           

Started                                                            : 29/04/1998

 

 

PRINCIPAL(S)

 

OEI HONG BIE @ NG KIM TJING @ HABI WIDJAJA     S2160222A      Managing Director

 

 

DIRECTOR(S)

 

WEE ENG HWA                                                                    S0004624H      Director

Appointed on                           : 01/05/2002

Street                                                              : 25 SIGLAP PLAIN

Town                                                               : SINGAPORE

Postcode                                 : 456014

Country                                                           : Singapore

 

SOON BEE SUAN CATHERINE                                        S1620182J      Director

Appointed on                           : 31/10/1998

Street                                                              : 422 PASIR RIS DRIVE 6

  #08-145

Town                                                               : SINGAPORE

Postcode                                 : 510422

Country                                                           : Singapore

 

OEI HONG BIE @ NG KIM TJING @ HABI WIDJAJA     S2160222A      Director

Appointed on                           : 06/07/1998

Street                                                              : 27 CLAYMORE ROAD

  #19-02

  THE CLAYMORE

Town                                                               : SINGAPORE

Postcode                                 : 229544

Country                                                           : Singapore

 

NG SWAN CHU @ LINDA SOEWARNI                                                    S2165246F      Director

Appointed on                           : 01/02/2000

Street                                                              : 29 JALAN SEMPADAN

  #04-12

Town                                                               : SINGAPORE

Postcode                                 : 457402

Country                                                           : Singapore

 

OEI HONG BIE @ NG KIM TJING @ HABI WIDJAJA     S2160222A      Managing Director

Appointed on                           : 09/01/2003

Street                                                              : 27 CLAYMORE ROAD

  #19-02

  THE CLAYMORE

Town                                                               : SINGAPORE

Postcode                                 : 229544

Country                                                           : Singapore

 

NG SWAN CHU @ LINDA SOEWARNI                                                    S2165246F      Managing Director

Appointed on                           : 20/04/2006

Street                                                              : 29 JALAN SEMPADAN

  #04-12

Town                                                               : SINGAPORE

Postcode                                 : 457402

Country                                                           : Singapore

 

CHAN SIEW HONG                                                             S1459262H      Director

Appointed on                           : 03/05/2004

Street                                                              : 287B JURONG EAST STREET 21

  #18-338

Town                                                               : SINGAPORE

Postcode                                 : 602287

Country                                                           : Singapore

 

CHRISTIAN TOLLKUEHN                                                  S6961341A      Director

Appointed on                           : 13/01/2003

Street                                                              : 45 BEDOK ROAD

  #05-14

  COUNTRY PARK CONDOMINIUM

Town                                                               : SINGAPORE

Postcode                                 : 469565

Country                                                           : Singapore

 

 

FORMER DIRECTOR(S)

 

FRANS ANDREW DE JONG                         F5512604Q

 

 

ACTIVITY(IES)

 

RUBBER BROKERS And DEALERS                                                         Code: 18680

 

RUBBER - CRUDE                                                                                      Code: 18660

 

PLYWOOD And VENEERS - WHSLE And MFRS             Code: 17190

 

TIMBER EXPORTERS And IMPORTERS                        Code: 21720

 

BASED ON ACRA'S RECORD AS AT 28/04/2006

1) WHOLESALE OF RUBBER (INCLUDING RUBBER BROKERS)

 

 

CHARGES

 

Date                                        :                       19/10/1999

Comments      :                       CHARGE NO: 199904522 (DISCHARGED)

AMOUNT SECURED: 0.00 AND ALL MONIES OWING

CHARGEE(S): THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED

 

Date                                        :                       16/10/1998

Comments      :                       CHARGE NO: 199805322

AMOUNT SECURED: 0.00 AND ALL MONIES OWING

CHARGEE(S): FORTIS BANK S.A./N.V.

 

Date                                        :                       11/09/1998

Comments      :                       CHARGE NO: 199804700 DISCHARGED

AMOUNT SECURED: 0.00 AND ALL MONIES OWING

CHARGEE(S)                       : CORPORATIEVE CENTRALE RAIFFEISEN -   BOERENLEEBANK

 

Date                                        :                       03/09/1998

Comments      :                       CHARGE NO: 199804592

AMOUNT SECURED: 0.00 AND ALL MONIES OWING

CHARGEE(S): FORTIS BANK S.A./N.V

 

Date                                        :                       14/11/2000

Comments      :                       CHARGE NO(S): 200005484/ 20005485/ 20005486/ 20005487

AMOUNT SECURED: 0.00 AND ALL MONIES OWING

CHARGEE(S): FOPTIS BANK (NEDERLAND) N.V. SINGAPORE BRANCH

 

 

PREMISES/PROPERTY INFORMATIONS

 

No Premises/Property Information In Our Databases

 

 

BANKERS

 

FORTIS BANK S.A./N.V.

 

THE HONGKONG & SHANGHAI BANKING CORPORATION LTD

 

 

SHAREHOLDERS(S)

 

RCMA COMMODITIES ASIA PTE LTD                    8,500,000   Company

Street                                      : 7 TEMASEK BOULEVARD

  #20-02

  SUNTEC TOWER ONE

Town                                       : SINGAPORE

Postcode         : 038987

Country                                   : Singapore

 

 

HOLDING COMPANY

 

RCMA COMMODITIES ASIA PTE LTD           199801641W      % :  100

 

 

SUBSIDIARY(IES)

 

No Participation In Our Database

 

 

PAYMENT HISTORY AND EXPERIENCES

 

Trade Morality                                                : AVERAGE

Liquidity                                  : SUFFICIENT

Payments                                : REGULAR

Trend                                                              : LEVEL

Financial Situation                 : AVERAGE

 

 

LITIGATION(S)

 

No Litigation In Our Database

 

 

FINANCIAL ELEMENTS

 

All amounts in this report are in :    USD

 

Audit Qualification:        UNQUALIFIED (CLEAN)        UNQUALIFIED (CLEAN)

Date Account Lodged:                 25/04/2006

 

Balance Sheet Date:                  31/12/2005                 31/12/2004

Number of weeks:                             52                         52

Consolidation Code:                       COMPANY                    COMPANY

 

--- ASSETS ---

 

Tangible Fixed Assets:                  183,831                    196,368

Investments                              26,030                     26,030

 

Total Fixed Assets:                     209,861                    222,398

 

Inventories:                          9,525,002                  5,804,768

Receivables:                         30,913,666                 14,726,547

Short Term Fin. Assets:               1,209,982                  2,002,787

Cash, Banks, Securities:                 59,407                    623,779

Other current assets:                   224,561                     23,656

 

Total Current Assets:                41,932,618                 23,181,537

 

TOTAL ASSETS:                        42,142,479                 23,403,935

 

--- LIABILITIES ---

 

Equity capital:                       5,000,000                   5,000,000

Profit & lost Account:                1,788,897                   5,698,864

 

Total Equity:                         6,788,897                  10,698,864

 

L/T deferred taxes:                                                 272,373

 

Total L/T Liabilities:                                              272,373

 

Trade Creditors:                      3,090,151                   3,860,238

Due to Bank:                         32,037,754                   7,535,505

Provisions:                              34,683                     412,345

Other Short term Liab.:                  12,910                      24,496

Prepay. & Def. charges:                 178,084                     600,114

 

Total short term Liab.:              35,353,582                  12,432,698

 

TOTAL LIABILITIES:                   35,353,582                   12,705,071

 

 

--- PROFIT & LOSS ACCOUNT ---

 

Net Sales                           347,819,164                 286,147,982

Gross Profit:                         2,042,558                   5,609,730

NET RESULT BEFORE TAX:               -1,182,340                   1,651,104

Tax :                                   272,373                     410,623

Net income/loss year:                  -909,967                   1,240,481

Interest Paid:                          760,838                     422,255

Depreciation:                           115,666                     135,099

Dividends:                                                        1,050,245

Directors Emoluments:                   557,467                     744,240

Purchases,Sces & Other Goods:       345,776,606                 280,538,252

Wages and Salaries:                     884,793                   1,994,994

Financial Income:                       122,321                     214,480

 

 

RATIOS

 

31/12/2005                  31/12/2004

 

Turnover per employee:                12422113.00                 10219570.79

Net result / Turnover(%):                       -0.00                        0.00

Stock / Turnover(%):                             0.03                        0.02

Net Margin(%):                                  -0.26                        0.43

Return on Equity(%):                       -13.40                       11.59

Return on Assets(%):                            -2.16                        5.30

Dividends Coverage:                              0                             1.18

Net Working capital:                   6579036.00                 10748839.00

Cash Ratio:                                      0.00                        0.05

Quick Ratio:                                     0.88                        1.23

Current ratio:                                   1.19                        1.86

Receivables Turnover:                           32.00                       18.53

Leverage Ratio:                                  5.21                        1.19

 

Net Margin : (100*Net income loss year)/Net sales

Return on Equity : (100*Net income loss year)/Total equity

Return on Assets : (100*Net income loss year)/Total fixed assets

Dividends Coverage : Net income loss year/Dividends

Net Working capital : Total current assets-Total short term liabilities

Cash Ratio : Cash Bank securities/Total short term liabilities

Quick Ratio : (Cash Bank securities+Receivables)/Total Short term liabilities

Current ratio : Total current assets/Total short term liabilities

Inventory Turnover : (360*Inventories)/Net sales

Receivables Turnover : (Receivable*360)/Net sales

Leverage Ratio : Total liabilities/(Total equity-Intangible assets)

 

 

 

FINANCIAL COMMENTS

 

THE FINANCIAL CONDITION OF THE COMPANY WAS DEEMED TO BE FAIR IN VIEW OF THE FOLLOWING:

 

NET WORTH:

THE BALANCESHEET WAS CONSIDERED PASSALBLE WITH TOTAL EQUITY REGISTERING LOWER BY 36.55%, AMOUNTING TO US$6,788,897 (2004: US$10,698,864). THIS WAS ATTRIBUTED BY A SIGNIFICANT DROP IN RETAINED EARNINGS OF 68.61%, TOTALLING US$1,788,897

(2004: US$5,698,864).

 

LEVERAGE:

THE LEVERAGE RATIO INCREASED NOTABLY AND WAS AGGRESSIVE AT 5.21 TIMES (2004: 1.19 TIMES).

 

IN THE SHORT-TERM, BANK BORROWINGS (CLASSIFIED UNDER AMOUNT DUE TO BANKS) COMPRISED OF 90.62% (2004: 60.61%) OF THE TOTAL CURRENT LIABILITIES, ACCOUNTING FOR US$32,037,754 (2004: US$7,535,505).

 

THE AMOUNT DUE TO BANKS COMPRISED OF:

* BANK OVERDRAFTS OF US$14,425,975 (2004: US$73,717)

* BILLS PAYABLES OF US$17,611,779 (2004: US$7,461,788)

 

BANK BORROWINGS:

THE COMPANY AND ITS RELATED CORPORATIONS HAVE ENTERED INTO A FACILITIES AGREEMENT WITH SEVERAL BANKS WHEREBY TRADE FINANCING AND/OR OTHER CREDIT FACILITIES IN THE AGGREGATE AMOUNT OF US$40.5 MILLION (2004: US$41.5 MILLION) WERE GRANTED TO THE COMPANY. THE COMPANY AND ITS RELATED CORPORATIONS, NAMED AS CO-DEBTORS UNDER THIS AGREEMENT, ARE JOINTLY AND SEVERALLY LIABLE FOR ALL SUMS PAYABLE UNDER THE PROVISION OF THIS AGREEMENT.

 

THE FACILITIES ARE SECURED BY FIXED AND FLOATING CHARGES OVER THE ASSETS OF THE COMPANY AND CORPORATE GUARANTEE FROM THE HOLDING COMPANY.

 

LIQUIDITY:

THE OVERALL LIQUIDITY SITUATION OF THE COMPANY WAS FAIRLY HEALTHY BUT SHOWED SIGNS OF DETERIORATING. BOTH QUICK AND CURRENT RATIOS REGISTERED LOWER AT 0.88 TIMES (2004: 1.23 TIMES) AND 1.19 TIMES (2004: 1.86 TIMES) RESPECTIVELY. NET WORKING CAPITAL ALSO FELL NOTABLY BY 38.79%, AMOUNTING TO US$6,579,036 (2004: US$10,748,839).

 

IN ADDITION, CASH AND CASH EQUIVALENTS ALSO POSTED MUCH LOWER AT US$59,407 (2004: US$          623,779), DOWN BY 90.48%.

 

PROFITABILITY:

REVENUE INCREASED BY 21.55%, ACCOUNTING FOR US$347,819,164 (2004: US$286,147,982). HOWEVER, THE COMPANY RECORDED A NET LOSS OF US$909,967 (2004: US$1,240,481), DECREASING BY 1.73 TIMES. THIS COULD BE ATTRIBUTABLE TO A RISE OF 23.25% IN COST OF SALES AMOUNTING TO US$345,776,606 (2004: US$280,538,252).

 

AS A RESULT, NET MARGIN POSTED AT -0.26% (2004: 0.43%).

 

DEBT SERVICING:

DEBT SERVICING PROBLEMS MIGHT BE ANTICIPATED IF THE LIQUIDITY SITUATION OF THE COMPANY CONTINUED TO DETERIORATE AND IF TRADE RECEIVABLES WERE NOT FORTHCOMING.

 

IN ADDITION, INTEREST COVERAGE RATIO WAS INSUFFICIENT AT 0.55 TIMES

(2004: -2.91 TIMES).

 

NOTES TO THE FINANCIAL STATEMENTS:

 

CURRENT ASSETS:

THIS COMPONENT OF US$224,561 (2004: US$23,656) COMPRISED OF:

* OTHER RECEIVABLES OF US$60,968 (2004: US$1,840)

* STAFF ADVANCES OF US$769 (2004: US$1,259)

* DEPOSITS OF US$9,483 (2004: US$9,864)

* PREPAYMENTS OF US$15,321 (2004: US$10,693)

* DUE FROM RELATED COMPANIES (NON-TRADE) OF US$138,020 (2004: -)

 

CONTINGENT LIABILITIES:

AS AT THE BALANCE SHEET DATE, THERE WERE CONTINGENT LIABILITIES IN RESPECT OF GUARANTEE GIVEN BY THE COMPANY TO SUPPORT THE INITIAL AND VARIATION MARGIN WITH THE FUTURES MARKET AND FUTURES BROKERS AMOUNTING TO US$1,676,628 (US$1,735,157).

 

 

BACKGROUND/OPERATION

 

THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 29/04/1998 AS A LIMITED PRIVATE COMPANY AND WAS FORMERLY KNOWN AS "DIANY INVESTMENTS PTE LTD".

 

SUBSEQUENTLY ON 18/06/1998, SUBJECT CHANGED TO ITS PRESENT NAMESTYLE OF "TONG TEIK PTE LTD".

 

AS AT 28/04/2006, SUBJECT HAS AN ISSUED AND PAID-UP CAPITAL OF 8,500,000 SHARES OF A VALUE OF S$8,500,000.

 

PRINCIPAL ACTIVITIES:

SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:

1) WHOLESALE OF RUBBER (INCLUDING RUBBER BROKERS) DURING THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY ARE THOSE OF TRADING OF RUBBER AND DEALING IN RUBBER FUTURES.

 

SUBJECT IS WHOLLY-OWNED SUBSIDIARY OF RCMA COMMODITIES ASIA PTE LTD, A COMPANY INCORPORATED IN SINGAPORE. FROM THE RESEARCH CONDUCTED, THE FOLLOWING INFORMATION WAS GATHERED:

 

SUBJECT IS LISTED IN THE SINGAPORE LOCAL DIRECTORY UNDER THE CLASSIFICATION OF: RUBBER - CRUDE.

 

SUBJECT ENGAGES IN THE FOLLOWING ACTIVITY:

* RUBBER AND LATEX MERCHANT

* PLYWOOD

* SAWN TIMBER

 

BRANDS:

* TONG TEIK

 

SUBJECT IS A MEMBER OF THE FOLLOWING ENTITY:

* SINGAPORE INTERNATIONAL CHAMBERS OF COMMERCE

 

SUBJECT COVERS THE FAR EASTERN MARKET.

 

NO OTHER TRADE INFORMATION WAS GATHERED AS A TELE-INTERVIEW WAS DENIED BY SUBJECT'S PERSONNEL.

 

NUMBER OF EMPLOYEES (31 DECEMBER):

* COMPANY - 2005: 28 (2004: 30)

 

REGISTERED AND BUSINESS ADDRESSES:

7 TEMASEK BOULEVARD

#20-02 SUNTEC TOWER ONE

SINGAPORE 038987

DATE OF CHANGE OF ADDRESS: 01/10/2002

 

WEBSITE:

* http://www.rcma-rubber.com

(PARENT COMPANY'S WEBSITE)

 

EMAIL:

* stt@tongteik.com.sg

* trading@tongteik.com.sg

 

 

MANAGEMENT

 

THE DIRECTORS AT THE TIME OF THIS REPORT ARE:

 

1) CHAN SIEW HONG, A SINGAPOREAN

- HOLDS NO OTHER DIRECTORSHIPS IN OUR DATABASE

 

2) SOON BEE SUAN @ LOH BEE SUAN, A SINGAPOREAN

- HOLDS OTHER DIRECTORSHIPS IN OUR DATABASE

SINGAPORE TONG TEIK (PRIVATE) LIMITED

 

 

3) OEI HONG BIE @ NG KIM TJING @ HABI WIDJAJA, A SINGAPORE PERMANENT RESIDENT

- HOLDS OTHER DIRECTORSHIPS IN OUR DATABASE

SINGAPORE TONG TEIK (PRIVATE) LTD

NEW CONTINENT ENTERPRISES (PRIVATE) LIMITED

RCMA COMMODITIES ASIA PTE LTD

 

4) NG SWAN CHU @ LINDA SOEWARNI WIDJAYA, A SINGAPORE PERMANENT RESIDENT

- HOLDS OTHER DIRECTORSHIPS IN OUR DATABASE

NEW CONTINENT ENTERPRISES (PRIVATE) LIMITED

R1 INTERNATIONAL PTE LTD

 

5) CHRISTIAN TOLLKUEHN, A SINGAPORE PERMANENT RESIDENT

- HOLDS NO OTHER DIRECTORSHIPS IN OUR DATABASE

 

 

SINGAPORE'S COUNTRY RATING 2006

 

INVESTMENT GRADE

 

IN SINGAPORE, THE POLITICAL SITUATION APPEARS TO BE VERY STABLE.

 

ECONOMIC GROWTH IS BECOMING MORE MODERATE AS INVESTMENT HAS BEEN FLAT DUE TO INCREASING OIL PRICES AND LESS BUOYANT DEMAND FOR ELECTRONIC PRODUCTS.

 

ECONOMIC PERFORMANCE HAS REMAINED STRONG, UNDERPINNED BY PHARMACEUTICALS AND SERVICES. EXPORTS HAS BENEFITED FROM THE STEADINESS OF DEMAND FROM ITS MAIN TRADING PARTNERS, MALAYSIA, THE UNITED STATES, CHINA AND HONG KONG. OTHER THAN ITS BALANCED PUBLIC SECTOR ACCOUNTS, LIMITED FOREIGN DEBT AND COMFORTABLE FOREIGN CURRENCY RESERVES HAVE CONTRIBUTED TO SINGAPORE'S STRONG FINANCIAL CONDITION.

 

AS THE ELECTRONICS SECTOR FACES COMPETITION FROM THE ASIAN ECONOMIES, SINGAPORE HAS BEEN PURSUING DIVERSIFICATION STRATEGY THAT HAS BEEN CONSOLIDATING ITS POSITION. PHARMACEUTICALS ALREADY REPRESENT 10% OF EXPORTS IN COMPARATIVE TO ITS INSIGNIFICANT CONTRIBUTION IN YEAR 1995. ELECTRONICS SECTOR SECTOR'S SHARE HAS DECLINED FROM 80% TO 60% DURING THE SAME PERIOD. THERE IS HIGH RELIANCE ON DEVELOPMENT OF PETROCHEMICAL PRODUCTS, HIGH VALUE-ADDED SERVICES AND BIOTECHNOLOGIES.

 

ASSETS

- ONE OF THE MOST OPEN ECONOMIES IN THE WORLD WITH EXPORTS PLAYING A MAJOR

ROLE IN ITS PERFORMANCE.

- ONE OF ASIA'S MOST ADVANCED COUNTRIES IN QUALITY COMPETITIVENESS TERMS.

- WORKFORCE'S EDUCATION AND SKILL LEVEL IS VERY HIGH.

- A MAJOR EXPORT OF CAPITAL IN ASIA, PARTICULARLY THE STATE-OWNED HOLDING

COMPANY, TEMASEK.

- THE BUSINESS ENVIRONMENT HAS BEEN VERY FAVOURABLE.

- GREAT POLITICAL STABILITY.

 

WEAKNESSES

- ECONOMY REMAINED OVERSPECIALISED IN THE ELECTRONICS SECTOR.

- MUST ACCELERATE DIVERSIFICATION IN SERVICES TO MAINTAIN ITS LEAD OVER

OTHER ASIAN ECONOMIES

- REFORMS ARE STILL NEEDED TO FOSTER INNOVATION AND EDUCATION-SYSTEM

MODERNIZATION.

- AGING POPULATION COULD ULTIMATELY AFFECT ECONOMIC PERFORMANCE.

 

 

OVERVIEW OF SINGAPORE

 

PAST PERFORMANCE

 

THE SINGAPORE ECONOMY GREW BY 7.0% IN 3Q2005, AN IMPROVEMENT OVER THE 5.4%

GROWTH IN THE SECOND QUARTER. GROWTH MOMENTUM (ON AN ANNUALISED QUARTER-ON-QUARTER BASIS) REMAINED STRONG AT 7.1%, ALTHOUGH IT SLOWED FROM THE 19%

REGISTERED IN 2Q2005.

 

TOTAL DEMAND POSTED AN 8.7% RISE IN 3Q2005, FOLLOWING A GAIN OF 6.8% IN 2Q2005.

THIS REFLECTED STRONGER CONTRIBUTIONS FROM BOTH EXTERNAL AND DOMESTIC DEMAND IN THE THIRD QUARTER. EXTERNAL DEMAND EXPANDED BY 11%, UP FROM 9.6% IN THE SECOND QUARTER. STRONGER EXPORT PERFORMANCE OF BOTH GOODS AND SERVICES UNDERPINNED THIS IMPROVEMENT. EXPORTS OF GOODS WERE LIFTED BY HIGHER SHIPMENTS OF SEMICONDUCTORS AND TELECOM EQUIPMENT WHILE SERVICES EXPORTS BENEFITED FROM STRONG RECEIPTS IN FINANCIAL SERVICES. TOTAL DOMESTIC DEMAND GREW BY 1.1%, COMPARED TO A CONTRACTION OF 1.6% IN 2Q2005. THE TURNAROUND REFLECTED MAINLY A SMALLER DRAWDOWN IN BUSINESS INVENTORY, COMPARED WITH 3Q2004. THIS RAISED THE CONTRIBUTION OF INVENTORY CHANGES TO ECONOMIC GROWTH.

EMPLOYMENT CREATION CONTINUED TO BE STRONG IN 3Q2005, SUBSTAINING THE TREND IN

THE PAST EIGHT QUARTERS. EMPLOYMENT GREW BY 28,700 IN 3Q2005, WHICH WAS DOUBLED

THE 14,100 IN 3Q2004.

 

THE BULK OF EMPLOYMENT GAINS ARE IN THE SERVICES SECTOR (18,400). THE MAJORITY

OF JOBS CREATED IN THE SERVICES SECTOR WERE IN BUSINESS SERVICES (8,000),

WHOLESALE AND RETAIL TRADE (2,700), AND THE OTHER SERVICES INDUSTRIES COMPRISING

HEALTH, EDUCATION AND PERSONAL SERVICES (3,500). MANUFACTURING JOBS ALSO ROSE BY 8,000, DRIVEN MAINLY BY GAINS IN THE MARINE INDUSTRIES. CONSTRUCTION SECTOR

CONTINUED TO ADD 2,300 JOBS FOR THE THIRD CONSECUTIVE QUARTER.

 

PRELIMINARY FINDINGS FROM A SURVEY OF PRIVATE SECTOR ESTABLISHMENTS EACH WITH AT LEAST 25 EMPLOYEES SHOW THAT 2,500 WORKERS WERE RETRENCHED IN 3Q2005. TOTAL

RETRENCHMENT HAS BEEN GENERALLY ON A DOWNWARD TREND, ALTHOUGH 3Q2005 POSTED A RISE OF 18% FROM THE PREVIOUS QUARTER AND 27% FROM THE SAME QUARTER A YEAR AGO.

 

THE MANUFACTURING SECTOR LAID OFF 1,700 OR SLIGHTLY MORE THAN TWO-THIRDS OF THE TOTAL WORKERS RETRENCHED IN THE QUARTER, MAINLY IN ELECTRONICS INDUSTRIES (43% OF TOTAL RETRENCHEMENTS) AND ELECTRIAL PRODUCTS MANUFACTURING (11%). THE

REMAINING 800 OR ONE-THIRD OF THE LAYOFFS WERE CONTRIBUTED BY THE SERVICES

SECTOR MAINLY FROM BUSINESS SERVICES (9.5%), WHOLESALE AND RETAIL TRADE (7.6%),

FINANCIAL SERVICES (5.0%) AND COMMUNITY ANS PERSONAL SERVICES (4.2%).

 

OVERALL PRODUCTIVITY ROSE BY 2.1% IN 3Q2005, FROM 1.2% IN 2Q2005. IT WAS MAINLY

DUE TO A SHARP TURNAROUND OF PRODUCTIVITY IN THE MANUFACTURING SECTOR, WHILE

MOST OF THE OTHER SECTORS RECORDED WEAKER PRODUCTIVITY GAINS. WITH SOLID OUTPUT GROWTH, MANUFACTURING PRODUCTIVITY GROWTH ROSE TO 6.2%, REVERSING THE 0.3% DECLINE IN 2Q2005. IN CONTRAST, THE CONSTRUCTION SECTOR REGISTERED A LARGER 1.5% FELL IN PRODUCTIVITY IN 3Q2005, FOLLOWING THE 1.2% FALL IN 2Q2005.AS A RESULT OF STRONG EMPLOYMENT GROWTH, WHOLESALE AND RETAIL TRADE (3.8%), TRANSPORT AND COMMUNICATIONS (1.9%) AND HOTEL AND RESTAURANTS (0.9%) SECTORS REGISTERED SLOWER PRODUCTIVITY GROWTH AS COMPARED TO 2Q2005. PRODUCTIVITY FELL IN THE BUSINESS SERVICES (-3.4%), OTHER SERVICES (-1.1%) AND FINANCIAL SERVICES (-0.3%) SECTORS.

THE CONSUMER PRICE INDEX ROSE MARGINALLY BY 0.7% IN 3Q2005, COMPARED TO 2Q2005.

HIGHER ELECTRICITY TARIFFS AND PETROL PRICES CONTRIBUTED LARGELY TO THE

INCREASE.

 

ON A YEAR-ON-YEAR BASIS, THE CPI WAS 0.5% HIGHER, COMPARED TO THE 0.1% GAIN IN

2Q2005. THE RISE IN PRICES WAS UNDERPINNED BY HIGHER ELECTRICITY TARIFFS AND

PETROL PRICES, AS WELL AS DEARER CIGARETTES. IN CONTRAST, LOWER CAR PRICES AND

FOREIGN MAID LEVY CONTINUED TO RESTRAIN OVERALL CONSUMER PRICE INFLATION.

AMONG THE MAJOR SEGMENTS OF CONSUMER ITEMS, EDUCATION AND STATIONERY COSTS ROSE BY 2.4%, WHILE RECREATION AND OTHERS COSTS WAS 1.9% HIGHER. BOTH FOOD AND

HOUSING COSTS ROSE BY 1.1% EACH DURING THE QUARTER. THE INCREASE IN FOOD COSTS

REFLECTED MAINLY HIGHER PRICES OF COOKED FOOD. AS A RESULT OF THE GREATER

DISCOUNTS ON THE PRICES OF READY-MADE GARMENTS DURING THE GREAT SINGAPORE SALE, THE PRICE INDEX FOR CLOTHING AND FOOTWEAR DECLINED BY 1.3%. A LARGER 2.3% DIP IN TRANSPORT AND COMMUNICATION COST WAS DUE TO THE CONTINUING DOWNWARD TREND IN CAR PRICES.

 

AHEAD

 

THE COMPOSITE LEADING INDEX (CLI), AN INDICATOR THAT LEADS ECONOMIC ACTIVITY BY

ABOUT THREE QUARTERS AHEAD, REGISTERED A RISE OF 1.2% IN 3Q2005, FOLLOWING A

0.9% RISE IN THE SECOND QUARTER.OF THE NINE COMPONENTS WITHIN THE INDEX, ONLY

THE BUSINESS EXPECTATIONS FOR WHOLESALE TRADE SHOWED A DECLINE THE PERIOD.

THE OTHER COMPONENTS - BUSINESS EXPECTATIONS FOR STOCK OF FINISHED GOODS, MONEY SUPPLY, STOCK PRICE, NEW COMPANIES FORMED, US PURCHASING MANAGERS' INDEX, NON- OIL SEA CARGO HANDLED, DOMESTIC LIQUIDITY AND NON-OIL RETAINED IMPORTS EITHER REMAINED UNCHANGED OR ROSE FROM THE PREVIOUS QUARTER.

 

THE SLOW ECONNOMIC GROWTH RECORDED IN THE EARLY PART OF THE YEAR HAS BEEN OFFSET BY THE STRENGTH OF THE REBOUND IN THE SECOND AND THIRD QUARTERS. THIS RESURGENCE WHICH WAS LED BY MANUFACTURING, FINANCIAL SERVICES AND ENTREPOT TRADE REFLECTED THE IMPROVING GLOBAL ECONOMY.

THE HEALTHY GROWTH TREND IS LIKELY TO BE SUBSTAINED IN THE COMING MONTHS.

DESPITE THE DISRUPTIONS OF SEVERE WEATHER CONDITIONS (PARTICULARY TO THE OIL AND NATURAL GAS INDUSTRIES), US ECONOMIC GROWTH IS FORECASTED TO REMAIN STRONG. EASING INVENTORY PROBLEMS IN THE GLOBAL ELECTRONICS INDUSTRY IS ALSO EXPECTED TO BOOST ELECTRONICS PRODUCTION IN SINGAPORE. A SIMILAR OUTLOOK IS SUGGESTED BY THE COMPOSITE LEADING INDEX FOR THE THIRD QUARTER, WHICH REGISTERED THE LARGEST QUARTERLY GAIN SINCE 1Q2004.

 

THE LATEST BUSINESS EXPECTATIONS SURVEY CONTINUES TO SHOW POSITIVE SENTIMENTS IN ALL MAJOR INDUSTRY SEGMENTS. NEVERTHELESS, WITH THE STRONG GAINS MADE IN THE

PAST HALF YEAR OR SO, SOME CAUTION HAS TEMPERED WITH THE OPTIMISIM.

 

FOR 2006, SINGAPORE SHOULD BE ABLE TO ACHIEVE ITS MEDIUM TERM GROWTH POTENTIAL

AS OUTLOOK FOR GLOBAL ECONOMY AND ELECTRONICS INDUSTRY REMAINS SANGUINE.GROWTH RATES IN BOTH THE DEVELOPED AND EAST ASIAN DEVLEOPING ECONOMIES ARE PREDICTED TO BE LITTLE CHANGED FROM 2005. THE SALES OF GLOBAL SEMICONDUCTOR IS EXPECTED TO PICK UP IN 2006. THIS WOULD BOOST MANUFACTURING AND TRADE-RELATED ACTIVITIES IN SINGAPORE. THE IMPROVING LABOUR MARKET AND THE LOW INFLATIONARY ENVIRONMENT SHOULD ALSO LIFT DOMESTIC DEMAND FURTHER.

 

NEVERTHELESS, RISKS TO ECONOMIC GROWTH ARE MOUNTING. LIMITED SPARE CAPACITIES IN THE GLOBAL OIL INDUSTRY MEANT THAT SUPPLY DISRUPTIONS WOULD CONTINUE TO SEND PRICES UPWARDS. IN VIEW OF RISING INFLATION, TIGHTENING MONETARY CONDITIONS IN THE DEVELOPED ECONOMIES COULD DAMPEN REAL ESTATE PRICES, WHICH WOULD REMOVE AN IMPORTANT SUPPORT FOR CONSUMER DEMAND IN THESE ECONOMIES. FINALLY, SHOULD THE AVIAN FLU OUTBREAK ESCALATE INTO A PANDEMIC, IT COULD SEVERELY DISRUPT ECONOMIC ACTIVITIES WORLDWIDE.

 

IN VIEW OF THE ABOVE CONSIDERATIONS, THE MINISTRY OF TRADE AND INDUSTRY

HAS RAISED THE 2005 GDP GROWTH FORECAST TO AROUND 5.0%. ECONOMIC GROWTH IN 2006 IS EXPECTED TO BETWEEN 3.0% AND 5.0%.

 

SINGAPORE'S FOURTH QUARTER GDP UP BY 7.7% ON-YEAR:ESTIMATES

 

ADVANCE ESTIMATES RELEASED SHOW THAT THE SINGAPORE'S ECONOMY GREW 7.7% IN

4Q2005, COMPARED TO A YEAR EARLIER. THIS BROUGHT THE FULL-YEAR ECONOMIC GROWTH TO 5.7%.

THIS BETTER-THAN-EXPECTED FULL-YEAR NUMBERS HAD ALREADY BEEN ANNOUNCED BY PRIME MINISTER LEE HSIEN LOONG IN HIS NEW YEAR'S DAY MESSAGE.

 

SINGAPORE'S ECONOMY ENDED THE YEAR 2005 WITH A BANG, DUE TO THE STRONG SHOWING BY THE MANUFACTURING SECTOR. MANUFACTURING SURGED IN 4Q2005, EXPANDING AT AN ESTIMATED 11.5% FROM A YEAR AGO. THE CONSTRUCTION SECTOR ALSO GREW BY AN ESTIMATED 0.8% - ITS SECOND STRAIGHT QUARTER OF GROWTH AFTER 5 CONSECUTIVE QUARTERS OF CONTRACTION. MEANWHILE, THE SERVICES SECTOR ALSO PUT IN A CREDIBLE PERFORMANCE, GREWING BY 7%, ITS BEST SHOWING IN 6 QUARTERS.

 

SOME ECONOMISTS SAID THAT WHEN THE FINAL NUMBERS ARE TAILLED, THE GROWTH DATA

MAY BE EVEN STRONGER. SONG SENG WUN, REGIONAL ECONOMIST, CIMB-GK RESEARCH

MENTIONED THAT "THE DATA FOR 4Q2005 ARE BASED ON ESTIMATES OF DATA AVAILABLE TO

DATE IN OCTOBER AND NOVEMBER, THERE ARE STILL PLENTY OF HOLES TO FILL FOR A

GREAT CHUNK OF GROWTH FROM THE SERVICES SECTOR. IF THE DECEMBER MANUFACTURING DATA PROVE TO BE BETTER THAN EXPECTED, THERE'S A POSSIBILITY THAT THE FINAL QUARTER GROWTH COULD BE HIGHER THAN 7.7%. IT COULD BE CLOSER TO 8% OR MORE AND FOR THE FULL-YEAR GROWTH, IT COULD BE CLOSER TO 6% OR EVEN HIGHER THAN 6%."

 

BASED ON ADVANCE ESTIMATES, MANUFACTURING GREW BY 8.6%, WHILE SERVICES GREW BY 5.4%. ON THE OTHER HAND, CONSTRUCTION CONTRACTED BY 1.5%. GIVEN A RATHER LOW

BASE IN 1Q2005, WHEN THE ECONOMY GREW BY JUST 2.7%, ECONOMISTS NOW EXPECT 1Q GDP TO RISE BY 8 TO 10% - WITH INDICATORS POINTING TO A STRONG TECH SHOWING IN THE

COMING MONTHS.

 

WITH THE POSITIVE ECONOMIC OUTLOOK, SOME ECONOMISTS HAVE UPGRADED THEIR GDP

FORECASTS FOR 2006. BASED ON THE GOVERNMENT ESTIMATES THAT GDP GROWTH FOR 2006 WILL BE BETWEEN 3 AND 5%, PRIVATE SECTOR ECONOMISTS SAID THAT THE HIGH END OF THIS RANGE IS STILL CONSERVATIVE. DAVID COHEN, DIRECTOR OF ASIAN ECONOMIC

FORECASTING AT ACTION ECONOMICS MENTIONED THAT " 6% IS WITHIN REACH, THAT WOULD REQUIRE ONLY MODERATE QUARTER-ON-QUARTER GROWTH THROUGHOUT 2006.BUT IN VIEW OF THE RISK OF OTHER SHOCKS THAT COULD DRAG DOWN SINGAPORE'S GROWTH RATE AND WORLDWIDE, THE LOWER END OF THE RANGE SEEMS APPROPRIATE. FOR EXAMPLE, THERE COULD BE A BIRD FLU PANDEMIC OR OIL PRICE SHOCK THAT COULD DERAIL THE OPTIMISTIC PROJECTIONS IN 2006."

 

WITH THE CURRENT GROWTH OUTLOOK LOOKING POSITIVE, ECONOMISTS HAVE RAISED THEIR GROWTH FORECASTS FO 2006 TO BETWEEN 5.5% AND 7%.

 

EXTRACTED FROM : MINISTRY OF TRADE AND INDUSTRY, SINGAPORE SINGAPORE DEPARTMENT OF STATISTICS CHANNEL NEWSASIA

 


 

RATING EXPLANATIONS

 

 

RATING

STATUS

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

Credit not recommended

 

 

 

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