MIRA INFORM REPORT

Report Date :

22^ndJune 2006

IDENTIFICATION DETAILS

Name :	LOUIS DREYFUS ASIA PTE LTD
Registered Office :	^501 Orchard Road, #19-01,Wheelock Place, Singapore
Country :	^Singapore
Financials (as on) :	31/12/2004
Date of Incorporation :	^05/10/1993
Com. Reg. No.:	^199306551Z
Legal Form :	^Pte Ltd
Line of Business :	Wholesalers of agricultural raw material, live animals, food, beverages and tobacco, commodity trading (agriculture, mineral & energy) & shipping

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

Subject Company

LOUIS DREYFUS ASIA PTE LTD

Line Of Business 

TRADING IN COMMODITIES.

Parent Company

LOUIS DREYFUS INTERNATIONAL B.V.

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2004

COMPANY

Sales : US$1,304,885,000

Networth : US$14,625,000

Paid-Up Capital : US$19,097,000

Net result : US$-12,732,000

Net Margin(%) : -0.98

Return on Equity(%) : -87.06

Leverage Ratio : 4.91

Rating

Credit Requested : -

Credit Rating : Singapore $ 10000001 to Singapore $50000000

Credit Opinion : -

BUSINESS INFORMATION REPORT

COMPANY IDENTIFICATION

^{Subject Company: LOUIS DREYFUS ASIA PTE LTD}

^{Former Name: -}

^{Business Address: 501 ORCHARD ROAD}

^#19-01

^{WHEELOCK PLACE}

^{Town: SINGAPORE}

^{Postcode: 238880}

^{County: -}

^{Country: Singapore}

^{Telephone: 6735 9700}

^{Fax: 6735 9600}

^{ROC Number: 199306551Z}

^{Reg. Town: -}

SUMMARY

^{All amounts in this report are in: USD unless otherwise stated}

^{Legal Form: Pte Ltd}

^{Date Inc.: 05/10/1993}

^{Previous Legal Form: -}

^{Summary year: 31/12/2004}

^{Sales: 1,304,885,000}

^{Networth: 14,625,000}

^{Capital: 31,818,000}

^{Paid-Up Capital: 19,097,000}

^{Employees: NOT AVAILABLE}

^{Net result: -12,732,000}

^{Share value: 1 (SGD)}

^{BASED ON ACRA'S RECORD AS AT 19/06/2006:}

^{ISSUED ORDINARY : SGD 30,174,200}

^{PAID-UP ORDINARY: SGD 30,174,200}

^{AUDITOR: PAUL WAN & CO}

REFERENCES

^{CCMS Number: 702000136336}

^{Report Date: 22/06/2006}

¹⁹⁶¹²

^{Update Date: 22/06/2006}

^{Credit Requested: -}

^{Credit Opinion: -}

^{Litigation: No}

^{Company status: TRADING}

^{Started: 05/10/1993}

PRINCIPAL(S)

^{HENANT KUMAR BHATT S2553719Z Managing Director}

DIRECTOR(S)

^{HENANT KUMAR BHATT S2553719Z Director}

^{Appointed on: 08/04/1996}

^{Street: 4 HACIENDA GROVE}

^#01-02

^{THE HACIENDA}

^{Town: SINGAPORE}

^{Postcode: 457910}

^{Country: Singapore}

^{HENANT KUMAR BHATT S2553719Z Managing Director}

^{Appointed on: 14/06/2001}

^{Street: 4 HACIENDA GROVE}

^#01-02

^{THE HACIENDA}

^{Town: SINGAPORE}

^{Postcode: 457910}

^{Country: Singapore}

^{LOUIS DREYFUS, PHILIPPE DIDIER, BERNARD 99LP07912 Director}

^{Appointed on: 17/02/2003}

^{Street: 15 RUE ALBERIC MAGNARD}

^{Town: PARIS}

^{Postcode: 75016}

^{Country: France}

^{CIRO ECHESORTU 13.736.101 Director}

^{Appointed on: 10/11/2003}

^{Street: JUNCAL 754, BUENOS AIRES}

^{Town: ARGENTINA}

^{Postcode: -}

^{Country: Argentina}

^{BERNARD PAUL ANONIE LAFERRIERE 99LP08944 Director}

^{Appointed on: 10/11/2003}

^{Street: 16 VILLA MEYER}

^{Town: PARIS}

^{Postcode: 75016}

^{Country: France}

^{LOW GEOK ENG SUSIE S0167313J Company Secretary}

^{Appointed on: 29/06/2005}

^{Street: 201 BISHAN STREET 23}

^#08-469

^{Town: SINGAPORE}

^{Postcode: 570201}

^{Country: Singapore}

^{TAN BOON CHNG S1477939F Director}

^{Appointed on: 10/11/2003}

^{Street: 75 HUDDINGTON AVENUE}

^{Town: SINGAPORE}

^{Postcode: 557657}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{RANDLES BRANT HOWARD SBC005313}

^{BAFITIS PETER THOMAS SZ7048404}

^{EPSTEIN REMI MARIE 91RE56073}

^{MARTIN SEAN WILLIAM 140650648}

^{LOH SHU CHUN S0159495H}

^{ANIL MOTILAL SHAMDASANI S1426831F}

ACTIVITY(IES)

^{COMMODITY TRADERS Code: 5010}

^{AGRICULTURAL MARKETING Code: 370}

^{BASED ON ACRA'S RECORD AS AT 19/06/2006}

1) WHOLESALE OF AGRICULTURAL RAW MATERIAL, LIVE ANIMALS, FOOD, BEVERAGES AND TOBACCO, COMMODITY TRADING (AGRICULTURE, MINERAL & ENERGY) & SHIPPING

2) WHOLESALE TRADE

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{BNP PARIBAS}

^{INDIAN OVERSEAS BANK}

SHAREHOLDERS(S)

^{LOUIS DREYFUS INTERNATIONAL B.V. 30,174,200 Company}

^{Street: WESTBLAAK 92, 3RD FLOOR, 3012 KM R}

^OTTERDAM

^{Town: THE NETHERLANDS}

^{Postcode: -}

^{Country: Netherlands}

FORMER SHAREHOLDER(S)

^{RANDLES BRANT HOWARD 1}

^{BAFITIS PETER THOMAS 1}

^{SOCIETE ANONYME LOUIS DREYFUS ETCIE 7,119,998}

^{LOUIS DREYFUS SEGOCE S.A 10,494,200}

HOLDING COMPANY

^{LOUIS DREYFUS INTERNATIONAL B.V. UF41643Z %: 100}

SUBSIDIARY(IES)

^{LDT SDN. BHD.}

Malaysia

^{LOUIS DREYFUS INDIA PRIVATE LTD}

^India

^{LOUIS DREYFUS (SHANGHAI) CO LTD}

China

^{PT LOUIS DREYFUS INDONESIA}

^Indonesia

^{LOUIS DREYFUS PHILIPPINES, INC}

^Philippines

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity: SUFFICIENT}

^{Payments: REGULAR}

^{Trend: DOWNWARD}

^{Financial Situation: AVERAGE}

LITIGATION(S)

No Litigation In Our Database

FINANCIAL ELEMENTS

^{All amounts in this report are in: USD unless otherwise stated}

^{Audit Qualification: UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN)}

^{Date Account Lodged: 26/08/2005}

^{Balance Sheet Date: 31/12/2004 31/12/2003 31/12/2002}

^{Number of weeks: 52 52 52}

^{Consolidation Code: COMPANY COMPANY COMPANY}

^{--- ASSETS}

^{Tangible Fixed Assets: 809,000 118,000 326,000}

^{Investments 3,176,000 3,176,000 1,682,000}

^{Total Fixed Assets: 3,985,000 3,294,000 2,008,000}

^{Inventories: 16,547,000 - -}

^{Receivables: 52,475,000 67,289,000 75,260,000}

^{Cash, Banks, Securities: 9,628,000 9,441,000 29,634,000}

^{Other current assets: 3,782,000 2,047,000 820,000}

^{Total Current Assets: 82,432,000 78,777,000 105,714,000}

^{TOTAL ASSETS: 86,417,000 82,071,000 107,722,000}

^{--- LIABILITIES}

^{Equity capital: 19,097,000 7,097,000 10,494,000}

^{Reserves: - - -633,000}

^{Profit & loss Account: -4,472,000 8,260,000 12,368,000}

^{Total Equity: 14,625,000 15,357,000 22,229,000}

^{L/T deferred taxes: - 25,000 -}

^{Other long term Liab.: 6,000 21,000 58,000}

^{Total L/T Liabilities: 6,000 46,000 58,000}

^{Trade Creditors: 52,650,000 62,844,000 36,634,000}

^{Short term liabilities: 14,000 15,000 29,000}

^{Due to Bank: 14,838,000 - 44,350,000}

^{Provisions: 104,000 1,371,000 1,302,000}

^{Other Short term Liab.: 4,180,000 2,438,000 3,120,000}

^{Total short term Liab.: 71,786,000 66,668,000 85,435,000}

^{TOTAL LIABILITIES: 71,792,000 66,714,000 85,493,000}

^{--- PROFIT & LOSS ACCOUNT}

^{Net Sales 1,304,885,000 1,431,443,000 1,551,512,000}

^{Purchases,Sces & Other Goods:1,315,404,000 1,414,267,000 -}

^{Gross Profit: -10,519,000 17,176,000 16,285,000}

^{Result of ordinary operations -12,153,000 13,658,000 10,023,000}

^{NET RESULT BEFORE TAX: -12,474,000 13,609,000 9,959,000}

^{Tax: 258,000 1,235,000 1,096,000}

^{Net income/loss year: -12,732,000 12,374,000 8,863,000}

^{Interest Paid: 321,000 49,000 64,000}

^{Depreciation: 115,000 77,000 123,000}

^{Dividends: - 10,171 4,722,000}

^{Directors Emoluments: 298,000 772,000 495,000}

^{Wages and Salaries: 1,563,000 2,162,000 3,895,000}

^{Financial Income: 7,000 7,000 34,000}

RATIOS

^{31/12/2004 31/12/2003 31/12/2002}

^{Net result / Turnover(%): -0.01 0.01 0.01}

^{Stock / Turnover(%): 0.01 0.00 0.00}

^{Net Margin(%): -0.98 0.86 0.57}

^{Return on Equity(%): -87.06 80.58 39.87}

^{Return on Assets(%): -14.73 15.08 8.23}

^{Dividends Coverage: - 1,216.60 1.88}

^{Net Working capital: 10,646,000.00 12,109,000.00 20,279,000.00}

^{Cash Ratio: 0.13 0.14 0.35}

^{Quick Ratio: 0.87 1.15 1.23}

^{Current ratio: 1.15 1.18 1.24}

^{Receivables Turnover: 14.48 16.92 17.46}

^{Leverage Ratio: 4.91 4.34 3.85}

^{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 2003 AND 2004 FINANCIAL STATEMENTS ARE EXPRESSED IN THE UNITED STATES DOLLARS WHILE THE 2002 FINANCIAL STATEMENT IS IN SINGAPORE DOLLARS.}

THE OVERALL FINANCIAL CONDITION OF THE COMPANY WAS SEEN TO BE FAIR TO LIMITED IN VIEW OF:

NET WORTH:

THE BALANCE SHEET WAS PASSABLE ALTHOUGH NET WORTH DECLINED BY 4.77% TO US$14,625,000 (2003: US$15,357,000) WHICH WAS ATTRIBUTABLE TO ACCUMULATED LOSS OF US$4,472,000 IN 2004, DOWN FROM POSITIVE TERRITORY OF US$8,260,000.

LEVERAGE:

IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 73.34% (2003: 94.26%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$52,650,000 (2003: US$62,844,000). THE BREAKDOWN IS AS FOLLOWS:
-TRADE CREDITORS AND ACCRUALS – 2004: US$33,714,000 (2003: US$29,551,000)

-AMOUNT DUE TO ULTIMATE HOLDING COMPANY (TRADE) – 2004: US$118,000 (2003: US$NIL)

-AMOUNT DUE TO SUBSIDIARY COMPANIES (TRADE) – 2004: US$204,000 (2003: US$4,505,000)

-AMOUNT DUE TO RELATED COMPANIES (TRADE) – 2004: US$18,614,000 (2003: US$28,788,000)

AMOUNT DUE TO BANK OF US$14,838,000 (2003: US$NIL) WERE UNSECURED WITH AN INTEREST RATE OF 2.835% PER ANNUM.

OTHER SHORT-TERM LIABILITIES OF US$4,180,000 (2003: US$2,438,000) COMPRISED MAINLY AMOUNT DUE TO RELATED COMPANY (NON-TRADE) OF US$3,429,000 (2003: US$2,394,000).

OTHER LONG-TERM LIABILITIES OF US$6,000 (2003: US$21,000) REFERRED TO HIRE PURCHASE CREDITORS.

IN ALL, LEVERAGE RATIO ROSE TO 4.91 TIMES (2003: 4.34 TIMES) AS SUBJECT’S TOTAL LIABILITIES WERE SUBTANTIAL IN RELATION TO ITS TOTAL EQUITY.

LIQUIDITY:

IN GENERAL, LIQUIDITY STATUS OF THE COMPANY HAD WEAKENED. NET WORKING CAPITAL FELL BY 12.08% TO US$10,646,000 IN 2004 (2003: US$12,109,000).

LIKEWISE, LIQUIDITY RATIOS HAD DETERIORATED. CURRENT RATIO FELL TO 1.15 TIMES (2003: 1.18 TIMES) AND QUICK RATIO DROPPED TO 0.87 TIMES (2003: 1.15 TIMES).

CASH AND CASH EQUIVALENTS GREW BY 1.98% TO US$9,628,000 (2003: US$9,441,000). THE BREAKDOWN IS AS FOLLOWS:

-FIXED DEPOSIT – 2004: US$9,310,000 (2003: US$9,155,000)

-CASH AND BANK BALANCES – 2004: US$318,000 (2003: US$286,000)

PROFITABILITY:

REVENUE DROPPED BY 8.84% TO US$1,304,885,000 (2003: US$1,431,443,000) AND HENCE INCURRED HUGE NET LOSS OF US$12,732,000 IN FY 2004, DOWN FROM NET PROFIT OF US$12,374,000. THIS WAS MAINLY DUE TO HIGHER COST OF SALES OF US$1,315,404,000 (2003: US$1,414,267,000) WHICH EXCEEDED THE REVENUE GENERATED AND THUS LED TO GROSS LOSS IN FY 2004. AS SUCH, NET MARGIN STOOD UNFAVOURABLE AT -0.98% (2003: 0.86%).

DEBT SERVICING:

DEBT SERVICING PROBLEM MIGHT BE ANTICIPATED IF PROFITABILITY DOES NOT IMPROVE AND TRADE RECEIVABLES ARE NOT FORTHCOMING. IN ADDITION, INTEREST COVERAGE RATIO WAS INSUFFICIENT AT -37.86 TIMES (2003: 278.73 TIMES).

NOTES TO THE FINANCIAL STATEMENTS:

SHARE CAPITAL:

ISSUED AND FULLY PAID:

30,174,200/10,494,200 ORDINARY SHARES OF S$1 EACH – 2004: US$19,097,000 (2003: US$7,097,000)

DURING THE YEAR, THE COMPANY INCREASED ITS PAID-UP SHARE CAPITAL FROM S$10,494,200 TO S$30,174,200 BY ISSUNG 19,680,000 ORDINARY SHARES AT S$1 EACH.

CONTINGENT LIABILITIES:

-BANKERS GUARANTEE, UNSECURED – 2004: US$490,000 (2003: US$NIL)

-STANDBY LETTERS OF CREDIT – 2004: US$NIL (2003: US$2,034,000)

BACKGROUND/OPERATION

^{THE SUBJECT WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 05/10/1993 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE OF "LOUIS DREYFUS ASIA PTE LTD".}

^{AS AT 19/06/2006, SUBJECT HAS AN ISSUED AND PAID-UP CAPITAL OF 30,174,200 SHARES OF A VALUE OF S$30,174,200.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) WHOLESALE OF AGRICULTURAL RAW MATERIAL, LIVE ANIMALS, FOOD, BEVERAGES AND}

^{TOBACCO, COMMODITY TRADING (AGRICULTURE, MINERAL & ENERGY) & SHIPPING}

^{2) WHOLESALE TRADE}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY ARE THOSE OF TRADING IN COMMODITIES.}

^{FROM THE RESEARCH DONE, SUBJECT IS IN THE TRADING OF ALL AGRICULTURAL COMMODITIES AND PROVIDES MARKETING AND LOGISTICAL SUPPORT ACTIVITIES.}

^{SUBJECT IS THE REGIONAL HEADQUARTERS FOR THE GROUP'S SOFT COMMODITY TRADING MARKETING, AND LOGISTICAL SUPPORT ACTIVITIES IN THE REGION. WITH OFFICES IN SINGAPORE, BEIJING, SHANGHAI, GUANGZHOU, BANGKOK, JAKARTA, DELHI, BOMBAY AND DHAKA, THE LOUIS DREYFUS ASIA TEAM IS WELL PLACED TO SERVICE THE GROWING DEMAND BASE IN THE REGION. LOCAL OFFICES HAVE BEGUN WAREHOUSING AND DOMESTIC OPERATIONS TO BETTER SERVICE THE LOCAL CUSTOMER BASE.}

^PRODUCTS:

^{*OILSEEDS AND PRODUCTS, WHEAT, CORN, RICE, SUGAR AND BY-PRODUCTS, ETC}

^PURCHASES:

^{*IMPORTS (%): NOT AVAILABLE}

^{*TERMS OF IMPORT: LETTER OF CREDITS, ETC}

^{*IMPORT COUNTRIES: MALAYSIA, CHINA, ETC}

^MARKETS:

^{*LOCAL (%): NOT AVAILABLE}

^{*TERMS SALES: LETTER OF CREDITS, ETC}

^{*EXPORT (%): NOT AVAILABLE}

^{*TERMS OF EXPORT: LETTER OF CREDITS, ETC}

^{*EXPORT COUNTRIES: ASIAN REGION}

^{SUBJECT IS A MEMBER OF FOLLOWING ENTITIES:}

^{*THE PALM OIL REFINERS ASSOCIATION OF MALAYSIA}

^{*AMERICAN SOYBEAN ASSOCIATION}

^{*FRENCH CHAMBER OF COMMERCE IN SINGAPORE}

^{*SINGAPORE BUSINESS FEDERATION}

^{FROM THE TELE-INTERVIEW CONDUCTED ON 22/06/2006, IT WAS REVEALED THAT SUBJECT IS INTO AGRICULTURAL COMMODITIES TRADING. THERE ARE ABOUT 50 PERSONS EMPLOYED IN THE BUSINESS. NO OTHER TRADE INFORMATION WAS MADE AVAILABLE.}

^{DURING THE FINANCIAL YEAR, THE COMPANY WAS A WHOLLY-OWNED SUBSIDIARY OF LOUIS DREYFUS NEGOCE S.A.S, INCORPORATED IN FRANCE. THE COMPANY'S ULTIMATE HOLDING COMPANY WAS LOUIS DREYFUS S.A.S, INCORPORATED IN FRANCE.}

^{HOWEVER, BASED ON ACRA'S RECORD, SUBJECT IS A SUBSIDIARY OF LOUIS DREYFUS INTERNATIONAL B.V., INCORPORATED IN THE NETHERLANDS.}

^{NUMBER OF EMPLOYEES (31 DECEMBER):}

^{*COMPANY - 2004: NOT AVAILABLE (2003: 28; 2002: 30; 2001: 27)}

^{*GROUP - 2004: NOT AVAILABLE (2003: AROUND 80; 2002: 82; 2001: 80)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{501 ORCHARD ROAD}

^#19-01

^{WHEELOCK PLACE}

^{SINGAPORE 238880}

^{DATE OF CHANGE OF ADDRESS: 01/10/1998}

^{- RENTED PREMISE}

^{--REGIONAL HEADQUARTER}

^WEBSITE:

^{www.louisdreyfus.com}

^EMAIL:

^{ldsingapore@ldasia.com.sg}

MANAGEMENT

^{THE DIRECTORS AT THE TIME OF THIS REPORT ARE:}

^{1) CIRO ECHESORTU, AN ARGENTINIAN}

^{- BASED IN ARGENTINA.}

^{2) LOUIS DREYFUS, PHILIPPE DIDIER, BERNARD, A FRENCH}

^{- BASED IN FRANCE.}

^{3) BERNARD PAUL ANONIE LAFERRIERE, A FRENCH}

^{- BASED IN FRANCE.}

^{4) TAN BOON CHNG, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

^{5) HEMANT KUMAR BHATT, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIPS AS RECORDED 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 (EXTRACTS)

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 TH 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 OF 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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