MIRA INFORM REPORT

Report Date :

25.04.2007

IDENTIFICATION DETAILS

Name :	ITOCHU SINGAPORE PTE LTD.
Registered Office :	9 Raffles Place # 41-01, Republic Plaza, Singapore 048619
Country :	Singapore
Financials (as on) :	31.03.2006
Date of Incorporation :	02/10/1989
Com. Reg. No.:	198904241G
Legal Form :	Pte Limited
Line of Business :	Trading and related Financing of Machinery, Foodstuff, Chemicals and General Merchandise, and The Holding of Investments

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

Company Name

ITOCHU SINGAPORE PTE LTD

Line Of Business 

THE TRADING AND RELATED FINANCING OF MACHINERY, FOODSTUFF, CHEMICALS AND GENERAL MERCHANDISE, AND THE HOLDING OF INVESTMENTS

Parent Company

ITOCHU CORPORATION

(PERCENTAGE OF SHAREHOLDING: 100%)

Financial Elements

FY 2006

CONSOLIDATED

Sales : US$863,734,000

Networth : US$42,494,000

Paid-Up Capital : US$21,383,000

Net result : US$7,949,000

Net Margin(%) : 0.92

Return on Equity(%) : 18.71

Leverage Ratio : 2.95

Rating

Credit Rating : Sing $ 50 000 001 & over

COMPANY IDENTIFICATION

Subject Company : ITOCHU SINGAPORE PTE LTD

Former Name : ITOCHU ASIA PTE., LTD.

Business Address : 9 RAFFLES PLACE, #41-01, REPUBLIC PLAZA

Town : SINGAPORE

Postcode : 048619

County : -

Country : Singapore

Telephone : 6536 3328

Fax : 6230 0560

ROC Number : 198904241G

Reg. Town : -

PREVIOUS IDENTIFICATION

ITOCHU ASIA PTE., LTD.

DATE OF CHANGE OF NAME: 01/10/2002

C. ITOH (ASIA) PTE. LTD.

DATE OF CHANGE OF NAME: 01/10/1992

SUMMARY

All amounts in this report are in: USD unless otherwise stated

Legal Form : Pte Ltd

Date Inc. : 02/10/1989

Previous Legal Form : -

Summary year : 31/03/2006

Sales : 863,734,000

Networth : 42,494,000

Capital : -

Paid-Up Capital : 21,383,000

Employees : 69

Net result : 7,949,000

Share value : -

AUDITOR : KPMG

BASED ON ACRA'S RECORD DATED 11/12/2006

NO.OF SHARES CURRENCY AMOUNT

ISSUED ORDINARY 37,397,000 SGD 37,397,000

PAID-UP ORDINARY SGD 37,397,000

REFERENCES

^{CCMS Number : 702000100291}

^{Report Date : 14/12/2006}

²⁷²⁰⁶

^{Update Date : 14/12/2006}

^{Credit Requested : -}

^{Credit Opinion : -}

^{Litigation : Yes}

^{Company status : TRADING}

^{Started : 02/10/1989}

PRINCIPAL(S)

^{YUKIHIRO MIYAKE G5872927U Managing Director}

DIRECTOR(S)

MASAYOSHI TAGA G5602093X Director

Appointed on : 01/03/2004

Street : 32 ORANGE GROVE ROAD, #M-606

Town : SINGAPORE

Postcode : 258354

Country : Singapore

KOSAKU SHIMADA G5652845N Director

Appointed on : 01/04/2006

Street : 60 HAVELOCK ROAD, #07-25

Town : SINGAPORE

Postcode : 169658

Country : Singapore

YUKIHIRO MIYAKE G5872927U Director

Appointed on : 04/05/2006

Street : 2 WALSHE ROAD, #08-01, CHELSEA GARDENS

Town : SINGAPORE

Postcode : 257662

Country : Singapore

YUKIHIRO MIYAKE G5872927U Managing Director

Appointed on : 04/05/2006

Street : 2 WALSHE ROAD, #08-01, CHELSEA GARDENS

Town : SINGAPORE

Postcode : 257662

Country : Singapore

CHANG SOW KUEN S1365694J Company Secretary

Appointed on : 01/04/2006

Street : 130 GEYLANG EAST AVENUE 1, #02-299

Town : SINGAPORE

Postcode : 380130

Country : Singapore

FORMER DIRECTOR(S)

^{KOH SWEE TIAN S0204995C}

^{TATSUO AOKI F2501948L}

^{MURATA TAKASHI SH1853806}

^{MATSUMOTO KYOICHI SH9010170}

^{KOBAYASHI NOBUO K1074259}

^{SADO HIROSHI SL9172930}

^{SAKAE KAMEDA MM0562772}

^{HIROMI IIZUKA MN9329329}

^{HIROMU TANAKA F5585704X}

^{AKIO FUJIWARA MP0502504}

^{MASAYA TAKEI MP5489693}

^{TOSHIMASA YAMANAKA G5634070Q}

^{SHINICHIRO MAKIDA TZ0216763}

^{RYUICHI KOMATSUZAKI F1442277M}

ACTIVITY(IES)

^{INVESTMENT COMPANIES Code:12095}

^{IMPORTERS And EXPORTERS Code:11760}

^{TRADING COMPANIES Code:22190}

^{BASED ON ACRA'S RECORD AS AT 11/12/2006}

^{1) OTHER INVESTMENT HOLDING COMPANIES; INVESTMENT COMPANIES}

^{2) GENERAL WHOLESALE TRADE (INCLUDING GENERAL IMPORTERS AND}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{No Bankers Information In Our Database}

ASSOCIATED COMPANY(IES)

^{ITOCHU PLASTICS PTE., LTD.}

^Singapore

^{ITOCHU PULP & PAPER ASIA PTE LTD}

^Singapore

^{PANCARAN ABADI SDN BHD}

^Malaysia

^{PT SUZUKI FINANCE INDONESIA}

^Indonesia

^{PT ITC AUTO MULTI FINANCE}

^Indonesia

SHAREHOLDERS(S)

^{ITOCHU CORPORATION 37,397,000 Company}

Street : 5-1 KITA AOYAMA, 2-CHOME, MINATO-KU

^{Town : TOKYO}

^{Postcode : 107-77}

^{Country : Japan}

FORMER SHAREHOLDER(S)

C ITOH & CO LTD [ JAPAN ] 121,397,000

INTERNATIONAL MERCHANDISE MART 1,000,000

HOLDING COMPANY

^{ITOCHU CORPORATION UF09347W % : 100}

SUBSIDIARY(IES)

^{PT ITOCHU INDONESIA}

^Indonesia

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality : AVERAGE}

^{Liquidity : SUFFICIANT}

^{Payments : REGULAR}

^{Trend : UPWARD}

^{Financial Situation :AVERAGE}

LITIGATION(S)

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS019632/2003}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

^{Type Of Case: District Court - W/S}

^{Case Number: DCS000783/1996}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS021466/1996}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS020416/1996}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS009431/1996}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS005790/1996}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS14527/1994}

Defendant ITOCHU SINGAPORE PTE LTD ROC # : 198904241G

FINANCIAL ELEMENTS

^{All amounts in this report are in : USD}

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

^{Date Account Lodged: 26/09/2006}

^{Balance Sheet Date: 31/03/2006 31/03/2005}

^{Number of weeks: 52 52}

^{Consolidation Code: CONSOLIDATED CONSOLIDATED}

ASSETS

^{Preliminary Exp 2,451,000 2,538,000}

^{Intangible Fixed Assets: 844,000 84,000}

^{Tangible Fixed Assets: 3,747,000 3,717,000}

^{Investments 5,264,000 3,721,000}

^{Total Fixed Assets: 12,306,000 10,060,000}

^{Inventories: 10,997,000 7,871,000}

^{Receivables: 134,131,000 87,780,000}

^{Cash,Banks, Securitis: 3,463,000 3,135,000}

^{Other current assets: 4,352,000 3,057,000}

^{Total Current Assets: 152,943,000 101,843,000}

^{TOTAL ASSETS: 165,249,000 111,903,000}

LIABILITIES

^{Equity capital: 21,383,000 21,383,000}

^{Reserves: -603,000 -627,000}

^{Profit & lost Account: 21,711,000 16,862,000}

^{Other: 3,000 3,000}

^{TOTAL EQUITY: 42,494,000 37,621,000}

^{L/T deffered taxes: 84,000 84,000}

^{Total L/T Liabilities: 84,000 84,000}

^{Trade Creditors: 96,135,000 62,214,000}

^{Due to Bank: 22,675,000 10,174,000}

^{Provisions: 894,000 697,000}

^{Other Short term Liab.: 2,967,000 1,113,000}

^{Total short term Liab.: 122,671,000 74,198,000}

^{TOTAL LIABILITIES: 122,755,000 74,282,000}

PROFIT & LOSS ACCOUNT

^{Net Sales 863,734,000 790,217,000}

^{Result of ordinary operations 11,286,000 7,395,000}

^{NET RESULT BEFORE TAX: 9,764,000 9,288,000}

^{Tax : 1,815,000 2,123,000}

^{Net income/loss year: 7,949,000 7,165,000}

^{Interest Paid: 2,672,000 1,680,000}

^{Depreciation: 671,000 511,000}

^{Dividends: 3,100,000 2,000,000}

^{Wages and Salaries: 9,358,000 6,439,000}

^{Financial Income: 2,150,000 1,587,000}

RATIOS

^{31/03/2006 31/03/2005}

^{Turnover per employee: 12517884.06 11452420.29}

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

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

^{Net Margin(%): 0.92 0.91}

^{Return on Equity(%): 18.71 19.05}

^{Return on Assets(%): 4.81 6.40}

^{Dividends Coverage: 2.56 3.58}

^{Net Working capital: 30272000.00 27645000.00}

^{Cash Ratio: 0.03 0.04}

^{Quick Ratio: 1.12 1.23}

^{Current ratio: 1.25 1.37}

^{Receivables Turnover: 55.91 39.99}

^{Leverage Ratio: 2.95 1.98}

^{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 GROUP WAS SEEN TO BE FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE WITH NET WORTH IMPROVED BY 12.95% FROM US$37,621,000 IN FY 2005 TO US$42,494,000 IN FY 2006. THIS WAS DUE TO HIGHER ACCUMULATED PROFIT OF US$21,711,000 (2005: US $16,862,000); A RISE OF 28.76% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 78.37% (2005: 83.85%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$96,135,000 (2005: US$62,214,000). THE BREAKDOWN IS AS FOLLOWS:}

^{-TRADE AND BILLS PAYABLES - 2006: US$96,135,000 (2005: US$62,214,000)}

^{AMOUNT DUE TO BANKS OF US$22,675,000 (2005: US$10,174,000) CONSISTED OF:}

^{-BANK OVERDRAFTS (UNSECURED) - 2006: US$255,000 (2005: US$2,671,000)}

^{-SECURED BANK LOANS - 2006: US$11,050,000 (2005: US$5,411,000)}

^{-UNSECURED BANK LOANS - 2006: US$11,370,000 (2005: US$2,092,000)}

^{IN ALL, LEVERAGE RATIO ROSE FROM 1.98 TIMES TO 2.95 TIMES AS A RESULT OF A GREATER RISE IN TOTAL LIABILITIES THAN TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE CHANGES IN NET WORKING CAPITAL AND LIQUIDITY RATIOS. CURRENT RATIO FELL TO 1.25 TIMES, DOWN FROM 1.37 TIMES AND QUICK RATIO FELL TO 1.12 TIMES FROM 1.23 TIMES IN FY 2005.}

^{NET WORKING CAPITAL IMPROVED BY 9.50% FROM US$27,645,000 IN FY 2005 TO US$30,272,000.}

^{CASH AND CASH EQUIVALENTS COMPRISE OF:}

^{-FIXED DEPOSITS - 2006: US$1,322,000 (2005: US$500,000)}

^{-CASH IN HANDS AND AT BANKS - 2006: US$2,141,000 (2005: US$2,635,000)}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 9.30% FROM US$790,217,000 IN FY 2005 TO US$863,734,000 AND NET PROFIT ROSE BY 10.94% TO US$7,949,000 (2005: US$7,165,000). HENCE, NET MARGIN ROSE TO 0.92% (2005: 0.91%).}

^REVENUE:

^{-SALES - 2006: US$852,304,000 (2004: US$780,681,000)}

^{-COMMISSION INCOME - 2006: US$8,120,000 (2005: US$6,675,000)}

^{-SERVICE FEE INCOME - 2006: US$3,310,000 (2005: US$2,861,000)}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING.}

^{THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:}

^{LONG TERM INVESTMENTS}

^{-UNQUOTED EQUITY SECURITIES AVAILABLE-FOR-SALE, AT COST - 2006: US$646,000 (2005: US$646,000)}

^{-TRANSFERABLE CLUB MEMBERSHIP - 2006: US$2,159,000 (2005:}

^{US$2,159,000)}

^{LESS IMPAIRMENT LOSSES - 2006: (US$485,000) (2005: (US$425,000)}

^{TOTAL - 2006: US$2,320,000 (2005: (US$2,380,000)}

^{-DEFERRED TAX ASSETS - 2006: US$131,000 (2005: US$77,000)}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{CONTINGENT LIABILITIES}

^{GUARANTEES ISSUED BY BANKS TO COVER CERTAIN PROJECTS OF}

^{CUSTOMERS/INVESTEE COMPANY - 2006: US$17,219,000 (2005: US$1,165,000)}

^{GUARANTEES GIVEN TO SECURE BANKING AND OTHER FACILITIES PROVIDED TO A}

^{SUBSIDIARY - 2006: - (2005: -)}

^{GUARANTEES GIVEN FOR THE PURCHASE OF COMMITMENT ON BEHALF OF RELATED}

^{COMPANY - 2006: US$500,000 (2005: -)}

^{GUARANTEES GIVEN FOR THE PURCHASE OF EQUIPMENT ON BEHALF OF HOLDING}

^{COMPANY - 2006: US$15,522,000 (2005: US$2,388,000)}

^{ACQUISITIONM OF BUSINESS UNDERTAKINGS}

^{DURING THE FINANCIAL YEAR, THE COMPANY ACQUIRED THE PAPER AND PULP BUSINESS UNDERTAKINGS FROM A RELATED COMPANY FOR A CONSIDERATION OF US $760,000. THE NET IDENTIFICABLE ASSETS ACQUIRED WERE THE BOOKS, ACCOUNTS, LIST OF CUSTOMERS AND SUPPLIERS, CREDIT REPORTS, PRICE LISTS, COST AND ALL OTHER DOCUMENTS, PAPERS AND RECORDS RELATING TO THE BUSINESS ACQUIRED. THE FAIR VALUES OF THESE ASSETS WERE DETERMINED ON A PROVISIONAL BASIS. ADJUSTMENTS TO THOSE PROVISIONAL FAIR VALUES WILL BE FINALISED WITHIN 12 MONTHS OF THE DATE OF ACQUISITION FOR WITH EFFECT FROM THE DATE OF ACQUISITION.}

^{THE PAPER AND PULP BUSINESS CONTRIBUTED SALES OF US$88.8 MILLION AND PROFIT BEFORE TAX OF US$150,000 DURING THE FINANCIAL YEAR.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 02/10/1989 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS NAMESTYLE AS "C. ITOH (ASIA) PTE. LTD.".}

^{SUBSEQUENTLY, ON 01/10/1992, THE COMPANY CHANGED TO ITS NAMESTYLE AS "ITOCHU ASIA PTE., LTD."}

^{SUBSEQUENTLY, ON 01/10/2002, THE COMPANY CHANGED TO ITS PRESENT NAMESTYLE AS "ITOCHU SINGAPORE PTE LTD".}

^{AS AT 11/12/2006, THE COMPANY HAS ISSUED AND PAID-UP CAPITAL OF 37,397,000 SHARES OF A VALUE OF S$37,397,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) OTHER INVESTMENT HOLDING COMPANIES; INVESTMENT COMPANIES}

^{2) GENERAL WHOLESALE TRADE (INCLUDING GENERAL IMPORTERS AND}

^{EXPORTERS); GENERAL TRADING}

^{DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF THE TRADING AND RELATED FINANCING OF MACHINERY, FOODSTUFF, CHEMICALS AND GENERAL MERCHANDISE, AND THE HOLDING OF INVESTMENTS. DURING THE FINANCIAL YEAR, THE COMPANY ACQUIRED THE BUSINESS RELATING TO THE TRADING OF PULP AND PAPER PRODUCTS, FROM A RELATED COMPANY.}

^{FROM THE RESEARCH DONE, THE FOLLOWING INFORMATION WAS GATHERED:}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* GENERAL IMPORTERS AND EXPORTERS OF MACHINERY, IRON & STEEL, CEMENT,}

^{GENERAL MERCHANDISE, CHEMICAL AND FOODSTUFF PRODUCTS}

^{SUBJECT IS A MEMBER OF THE FOLLOWING ENTITIES:}

^{* JAPANESE CHAMBER OF COMMERCE & INDUSTRY}

^{* SINGAPORE INTERNATIONAL CHAMBERS OF COMMERCE}

^{FROM THE TELE-INTERVIEW CONDUCTED ON 14/12/2006, THE FOLLOWING WAS}

^GATHERED:

^{NUMBER OF EMPLOYEES:}

^{* COMPANY - 2006: 100+}

^{NO OTHER TRADE INFORMATION IS AVAILABLE ON 14/12/2006.}

^{THE IMMEDIATE AND ULTIMATE HOLDING COMPANY IS ITOCHU CORPORATION,}

^{INCORPORATED IN JAPAN.}

^{NUMBER OF EMPLOYEES (31 MARCH):}

^{* COMPANY - 2006: NOT AVAILABLE (2005: 69; 2004: 63)}

^{* GROUP - 2006: NOT AVAILABLE (2005: 181; 2004: 173)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{9 RAFFLES PLACE}

^{#41-01 REPUBLIC PLAZA}

^{SINGAPORE 048619}

^{- RENTED PREMISE}

^{- OWNED BY CDL PROPERTIES LTD}

^{- DATE OF CHANGE OF ADDRESS: 18/03/1996}

^WEBSITE:

^{http://www.itochu.co.jp}

^EMAIL:

^-

MANAGEMENT

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

^{1) MASAYOSHI TAGA, A JAPANESE}

^{- BASED IN SINGAPORE.}

^{2) KOSAKU SHIMADA, A JAPANESE}

^{- BASED IN SINGAPORE.}

^{3) YUKIHIRO MIYAKE, A JAPANESE}

^{- OTHER DIRECTORSHIP(S) IN OUR DATABASE:}

^{ITOCHU PLASTICS PTE., LTD.}

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

SINGAPORE’S ECONOMIC GROWTH MODERATED IN THE SECOND QUARTER TO 7.5% YEAR-ON-YEAR DUE TO A WEAKER MANUFACTURING SECTOR. PRELIMINARY ESTIMATES ISSUED SHOWN GROWTH IN REAL GROSS DOMESTIC PRODUCT SLOWED FROM A REVISED 10.7% IN THE FIRST QUARTER. ON A QUARTER-ON-QUARTER BASIS, SEASONALLY ADJUSTED ANNUALISED BASIS, GDP GREW 1.1% AFTER A 7% EXPANSION IN THE PREVIOUS QUARTER.

THE MANUFACTURING SECTOR IS FORECASTED TO HAVE EXPANDED BY A MORE MODERATE 10.2% IN THE SECOND QUARTER, MAINLY ATTRIBUTED TO LOWER PRODUCTION FROM THE BIOMEDICAL MANUFACTURING CLUSTER. IT FELL BY ABOUT HALF FROM THE 20.2% IN THE FIRST QUARTER BUT HIGHER THAN THE 9.3% REGISTERED FOR THE WHOLE OF 2005. THE MANUFACTURING SECTOR ACCOUNTS FOR ABOUT A THIRD OF SINGAPORE’S ECONOMY WORTH S$194 BILLION.

THE KEY ELECTRONICS SECTOR IN MANUFACTURING IS GROWING STRONGLY, AGAINST THE VOLATILE BIOMEDICAL SEGMENT. ELECTRONICS ARE SINGAPORE’S MAIN EXPORT AND THE INDUSTRY ROSE 8.6% YEAR-ON-YEAR IN MAY, BOOSTED BY A 38.9% GROWTH IN THE SEMICONDUCTOR SEGMENT.

THE ACTUAL FIGURES SHOWN THAT THE CONSTRUCTION SECTOR GREW 0.2% IN THE SECOND QUARTER OVER 2Q2005. THIS IS IN CONTRAST WITH A 0.8% DECLINE IN THE TWO PRECEDING QUARTERS AND DECLINES IN THE SIX QUARTERS BEFORE THAT.

THE SERVICES SECTOR ACTUALLY ROSE 7% FROM A YEAR EARLIER, SLOWER THAN THE 8.2% IN THE FIRST QUARTER BUT ABOVE THE 6% RECORDED IN 2Q2005. SERVICES INDUSTRIES, WHICH RANGE FROM HOSPITALITY TO TRANSPORT, MADE UP NEARLY TWO-THIRDS OF THE ECONOMY LAST YEAR. THOSE IN FINANCIAL SERVICES, PARTICULARLY BANKERS, FUND MANAGERS AND STOCKBROKERS, REPORTED STRONG GROWTH OF 9.5% FROM THE SAME PERIOD LAST YEAR AND UP FROM 8.7% IN THE PREVIOUS QUARTER.

WHOLESALE AND RETAIL TRADE ROSE 10.1% IN THE SECOND QUARTER, AGAINST 15.1% IN THE PREVIOUS QUARTER, AS WHOLESALERS WERE AFFECTED BY A SLOWDOWN IN NON-OIL RE-EXPORTS.

HOTELS AND RESTAURANTS GAINED 6.1% IN THE SECOND QUARTER SLOWER THAN 7.1% IN THE LAST QUARTER.

ON THE EMPLOYMENT MARKET, MORE JOBS WERE CREATED IN THE SECOND QUARTER BUT UNEMPLOYMENT ROSE TO 2.9% AS MORE PEOPLE, ESPECIALLY TERTIARY GRADUATES, ENTERED THE JOB MARKET. SOME 36,500 MORE JOBS WERE CREATED IN THE SECOND QUARTER, REFLECTING THE CONTINUED GROWTH IN THE ECONOMY. IT BROUGHT THE TOTAL NUMBER OF JOBS CREATED IN THE FIRST HALF OF 2006 TO A RECORD 81,500, WHICH IS ABOUT TWO-THIRDS MORE THAN THE 49,500 REGISTERED IN THE SAME PERIOD LAST YEAR.

THE SERVICE INDUSTRY CONTRIBUTED MOSTLY TO THE JOBS CREATION, ADDING 24,200 JODS, WHILE MANUFACTURING AND CONSTRUCTION POSTED INCREASE OF 8,300 AND 4,000 JOBS RESPECTIVELY.

RETRENCHED WORKERS TOTAL 3,100, LOWER THAN THE 3,500 IN THE FIRST QUARTER, BUT HIGHER THAN THE 2,100 IN 2Q2005.

AHEAD

THE OUTLOOK FOR THE ECONOMY REMAINS POSITIVE, AMID SIGNS OF A SLOWDOWN IN GLOBAL GROWTH. ON 8 AUGUST 2006, PRIME MINISTER LEE HISEN LOONG ANNOUNCED THAT THE SINGAPORE ECONOMY GREW 9.4% IN THE FIRST HALF OF 2005. AS A RESULT, BARRING AN OIL SHOCK, THE FULL YEAR OFFICIAL FORECAST IS BEING RAISED TO BETWEEN 6.5% AND 7.5% FOR 2006, UP FROM THE EARLIER 5 TO 7% RANGE.

IN THE SECOND HALF, MODERATE GROWTH WILL BE REGISTERED IN LINE WITH THE COOLING GLOBAL ECONOMY. BUT SURPRISINGLY, THE COMPOSITE LEADING INDEX (CLI), AN INDICATOR THAT LEADS ECONOMIC ACTIVITY BY ABOUT ONE TO TWO QUARTERS AHEAD, ROSE 1.5% IN ITS FASTEST GROWTH IN OVER TWO YEARS. CLI COMPRISES NINE COMPONENTS SUCH AS MONEY SUPPLY, LIQUIDITY AND STOCK PRICES.

THE GLOBAL ENERGY PRICES WILL CONTINUE TO FLUCTUATE WITH THE VIOLENCE IN THE MIDDLE EAST AND POTENTIAL SUPPLY PROBLEMS IN NIGERIA, IRAN AND IRAQ. OTHER RISK FACTORS INCLUDE AN AVIAN FLU OUTBREAK, A SLOWDOWN IN THE UNITED STATES ECONOMY, AND THE UNWINDING OF GLOBAL IMBALANCES SUCH AS THE US TRADE DEFICIT.

HOTELS AND RESTAURANTS ARE BANKING ON SEPTEMBER’S INTERNATIONAL MONETARY FUND/WORLD BANK MEETING TO MAINTAIN THE GROWTH MOMENTUM.

THE FINANCIAL SERVICES SECTOR IS HOPEFUL THAT WITH THE PICK-UP IN BUSINESS LOANS, BILLION-DOLLAR HEDGE FUNDS RELOCATING HERE FROM HONG KONG AND STRONG INSURANCE SALES, THE INDUSTRY WILL BE GROWING ROBUSTLY FOR THE REST OF THE YEAR.

SLOWER 8.4% GROWTH IN NON-OIL EXPORTS LAST MONTH

SINGAPORE’S NON-OIL DOMESTIC EXPORTS (NODX) GREW AT A SLOWER-THAN-EXPECTED 8.4% IN JULY 2006 OVER THE SAME MONTH A YEAR AGO, MAINLY DUE TO WEAKER SHIPMENTS OF ELECTRONICS, PHARMACEUTICALS AND PETROCHEMICALS.

ELECTRONICS EXPORTS, WHICH ACCOUNTED FOR SLIGHTLY LESS THAN HALF OF OVERALL NODX IN 2005, GREW 5% IN JULY TO S$6.62 BILLION. IT WAS THE 12TH STRAIGHT MONTH OF EXPANSION BUT WEAKER THAN THE 9.1% GROWTH REGISTERED IN JUNE. IT WAS HURT BY A 23% FELL IN DISK DRIVE EXPORTS, WHICH WAS BEING VALUED AT S$843 MILLION IN JULY, AND A 21% DECLINE IN PERSONAL COMPUTER SHIPMENTS VALUED AT S$86 MILLION.

NON-ELECTRONIC EXPORTS, WHICH CONSIST MAINLY OF PHARMACEUTICALS AND PETROCHEMICALS, ROSE 11.7% TO S$7.14 BILLION. PHARMACEUTICALS ROSE 7.1% TO S$1.27 BILLION IN JULY, SIGNIFICANTLY SLOWER THAN THE JUNE’S RISE OF 25% TO S$1.45 BILLION. PETROCHEMICAL EXPORTS ROSE 11.5% TO S$1.02 BILLION, IN COMPARISON WITH THE 32% GROWTH IN JUNE TO S$1.1 BILLION.

SHIPMENTS TO SINGAPORE’S MAJOR MARKETS SUCH AS MALAYSIA, HONG KONG AND THE UNITED STATES GREW IN JULY BUT THESE WERE OFFSET BY DECLINES IN OTHER DESTINATIONS, INCLUDING JAPAN, CHINA AND EUROPEAN UNION.

TOTAL TRADE IN JULY ROSE 15.9% TO ALMOST S$69 BILLION.

REGIONAL ECONOMIST SONG SENG WUN OF CIMB-GK RESEARCH PREDICTED THAT THE TECHNOLOGY SECTOR COULD ENJOY A REBOUND IN THE COMING MONTHS AS DEMAND TYPICALLY PICK UP WITH THE CHRISTMAS SEASON. THE TECHNOLOGY EXPORTS WILL GROW BY THE LOW-TO-MID TEENS RANGE AS THE DISK DRIVE EXPORTS IMPROVE.

EXTRACTED FROM : MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

IE SINGAPORE

THE STRAITS TIMES

TODAY

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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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