MIRA INFORM REPORT

Report Date :

12.01.2007

IDENTIFICATION DETAILS

Name :	CHUGOKU MARINE PAINTS (SINGAPORE) PTE LTD
Registered Office :	^21 Tuas Street, Singapore 638458
Country :	Singapore
Financials (as on) :	31.12.2005
Date of Incorporation :	^10/03/1980
Com. Reg. No.:	^198000761G
Legal Form :	^Pte Ltd
Line of Business :	Manufacture and Merchandising of Marine Paints.

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

CHUGOKU MARINE PAINTS (SINGAPORE) PTE LTD

Line Of Business

MANUFACTURE AND MERCHANDISING OF MARINE PAINTS.

Parent Company

CHUGOKU MARINE PAINTS LTD

(PERCENTAGE OF SHAREHOLDING: 100%)

Financial Elements

FY2005

COMPANY

Sales : S$108,471,129

Networth : S$ 44,799,738

Paid-Up Capital : S$ 36,516,000

Net result : S$ 3,052,856

Net Margin(%) : 2.81

Return on Equity(%) : 6.81

Leverage Ratio : 0.25 TIMES

Rating

Credit Rating : Sing $ 10000001 - 50000000

COMPANY IDENTIFICATION

^{Subject Company : CHUGOKU MARINE PAINTS (SINGAPORE) PTE LTD}

^{Former Name : -}

^{Business Address : 21 TUAS STREET}

^{Town : SINGAPORE}

^{Postcode : 638458}

^{County : -}

^{Country : Singapore}

^{Telephone : 6861 6500/2264}

^{Fax : 6861 3002/8306}

^{ROC Number : 198000761G}

^{Reg. Town : -}

SUMMARY

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

^{Legal Form : Pte Ltd}

^{Date Inc. : 10/03/1980}

^{Previous Legal Form : -}

^{Summary year : 31/12/2005}

^{Sales : 108,471,129}

^{Net Worth : 44,799,738}

^{Capital : 50,000,000}

^{Paid-Up Capital : 36,516,000}

^{Employees : NA}

^{Net Result : 3,052,856}

^{Share value : 1}

^{Auditor : PRICEWATERHOUSECOOPERS}

REFERENCES

^{Litigation : No}

^{Company status : TRADING}

^{Started : 10/03/1980}

PRINCIPAL(S)

^{MITSUAKI MIYAUCHI G5527151N Managing Director}

DIRECTOR(S)

^{CHONG KIM FOO S0183647A Company Secretary}

^{Appointed on : 01/10/1990}

^{Street : 444 JURONG WEST AVENUE 1}

^#07-768

^{Town : SINGAPORE}

^{Postcode : 640444}

^{Country : Singapore}

^{KOJI OUE TE5765204 Director}

^{Appointed on : 12/08/1999}

^{Street : 19-9-706 TAKAYAMA}

^{TSUZUKI-KU, YOKOHAMA-SHI}

^{Town : KANAGAWA}

^{Postcode : 224-0065}

^{Country : Japan}

^{MITSUAKI MIYAUCHI G5527151N Director}

^{Appointed on : 01/08/2000}

^{Street : 11 GILSTEAD ROAD}

^#05-03

^{MORISMASA GARDEN}

^{Town : SINGAPORE}

^{Postcode : 309065}

^{Country : Singapore}

^{TETSUO YAMAZUMI TH0032838 Director}

^{Appointed on : 22/04/2002}

^{Street : ARTEVITA B-813, 1-17}

^{TSURUMAKI, TAMA-SHI}

^{Town : TOKYO}

^{Postcode : 206-0034}

^{Country : Japan}

^{MITSUAKI MIYAUCHI G5527151N Managing Director}

^{Appointed on : 02/06/2003}

^{Street : 11 GILSTEAD ROAD}

^#05-03

^{MORISMASA GARDEN}

^{Town : SINGAPORE}

^{Postcode : 309065}

^{Country : Singapore}

^{OSAMU SHIOTA TH1682503 Director}

^{Appointed on : 08/08/1994}

^{Street : 4-2-1015, MINAMI-MIZUMOTO, 3-CHOME,}

^{KATSUSHIKA-KU}

^{Town : TOKYO}

^{Postcode : 125-0035}

^{Country : Japan}

^{TSUBOI MAKOTO TF4851321 Director}

^{Appointed on : 10/05/2004}

^{Street : 18-30, 3-CHOME, FUNAIRIMINAMI,}

^{NAKA-KU, HIROSHIMA-SHI}

^{Town : HIROSHIMA}

^{Postcode : 730-0847}

^{Country : Japan}

FORMER DIRECTOR(S)

^{OURA T SE2514279}

^{OTANI KO E3652888}

^{SHIMAMURA NOBCO E8098828}

^{MIMURA KEIZO E8420827}

^{MIZA TOKIHIRO H3778610}

^{KINUHARA KAZUO H4194917}

^{TETSUMURA HIROICHI L8400967}

^{UETAKE MASATAKA SL9201773}

^{MITSUHIKO FUJIWARA MN2468156}

^{HISAO KIDO MQ2438142}

^{MASAJI KATO MN0176199}

^{KATSUFUMI OKADA TZ6079613}

^{NAOYUKI EDAMATSU TZ0088615}

ACTIVITY (IES)

^{PAINT - WHSLE And MFRS Code: 15800}

^{BASED ON ACRA'S RECORD AS AT 05/01/2007}

^{1) WHOLESALE OF PAINTS (INCLUDING VARNISHES AND SUPPLIES);}

^{MANUFACTURE & MERCHANDISING OF MARINE PAINTS}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

^{Date : 10/01/2007}

^{Tax rate : 10%}

^{Site Address : 19 TUAS STREET}

^{Town : SINGAPORE}

^{Postcode : 638456}

^{Country : Singapore}

^{Annual Value : SGD343,000}

^{Date : 10/01/2007}

^{Tax rate : 10%}

^{Site Address : 21 TUAS STREET}

^{Town : SINGAPORE}

^{Postcode : 638458}

^{Country : Singapore}

^{Annual Value : SGD292,000}

^{Date : 10/01/2007}

^{Tax rate : 10%}

^{Site Address : 22 TUAS STREET}

^{Town : SINGAPORE}

^{Postcode : 638459}

^{Country : Singapore}

^{Annual Value : SGD452,000}

* TAX RATE OF 4% MEANS THE ADDRESS (I.E RESIDENTIAL PROPERTY) IS OWNER OCCUPIED.

* TAX RATE OF 10% MEANS THE ADDRESS (I.E RESIDENTIAL PROPERTY) IS PARTIALLY OR

FULLY RENTED OUT BY THE OWNER/OWNED BY COMPANY.

* FOR PROPERTIES OTHER THAN RESIDENTIAL PROPERTIES REGARDLESS RENTED OUT OR

NOT, THE TAX RATE IS 10% (I.E INDUSTRIAL AND COMMERCIAL PROPERTY).

* ANNUAL VALUE IS THE ESTIMATED ANNUAL RENT THE PROPERTY CAN FETCH IF IT WERE

RENTED OUT. THE ANNUAL VALUE IS DETERMINED IN THE SAME MANNER REGARDLESS OF

WHETHER THE PROPERTY IS LET-OUT, OWNER-OCCUPIED OR VACANT.

BANKERS

^{THE BANK OF TOKYO-MITSUBISHI UFJ, LTD}

^{THE ASAHI BANK LTD}

ASSOCIATED COMPANY(IES)

^{CHUGOKU-JENSON & NICHOLSON LTD India}

SHAREHOLDERS(S)

^{CHUGOKU MARINE PAINTS LTD 36,516,000 Company}

^{Street : LINO BUILDING, 2-1-1 UCHISAIWAI-CH}

^OCHIYODA-KU

^{Town : TOKYO}

^{Postcode : 100-0011}

^{Country : Japan}

HOLDING COMPANY

^{CHUGOKU MARINE PAINTS LTD UF03450K % : 100}

SUBSIDIARY (IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality : AVERAGE}

Liquidity : ABUNDANT

^{Payments : REGULAR}

^{Trend : UPWARD}

^{Financial Situation : GOOD}

LITIGATION(S)

No Litigation In Our Database

FINANCIAL ELEMENTS

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

^{Audit Qualification: UNQUALIFIED UNQUALIFIED UNQUALIFIED}

^{(CLEAN) (CLEAN) (CLEAN)}

^{Date Account Lodged: 05/05/2006}

^{Balance Sheet Date: 31/12/2005 31/12/2004 31/12/2003}

^{Number of weeks: 52 52 52}

^{Consolidation Code: COMPANY COMPANY COMPANY}

^{--- ASSETS ---}

^{Preliminary Exp 48,320 9,948 23,956}

^{Tangible Fixed Assets: 8,576,335 9,374,505 9,972,202}

^{Investments 427,475 362,475 381,206}

^{Total Fixed Assets: 9,052,130 9,746,928 10,377,364}

^{Inventories: 15,196,435 13,813,818 11,078,616}

^{Receivables: 18,024,842 22,507,386 21,960,737}

^{Cash,Banks, Securities: 12,034,637 13,482,082 13,427,332}

^{Other current assets: 1,868,153 2,782,179 459,966}

^{Total Current Assets: 47,124,067 52,585,465 46,926,651}

^{TOTAL ASSETS: 56,176,197 62,332,393 57,304,015}

^{--- LIABILITIES ---}

^{Equity capital: 36,516,000 36,516,000 36,516,000}

^{Reserves: -28,097 0 0}

^{Profit & loss Account: 8,311,835 7,470,882 5,538,968}

^{Total Equity: 44,799,738 43,986,882 42,054,968}

^{L/T deferred taxes: 617,700 624,673 811,795}

^{Other long term Liab.: 4,667 10,267 15,867}

^{Total L/T Liabilities: 622,367 634,940 827,662}

^{Trade Creditors: 8,060,807 14,643,096 11,239,606}

^{Short term liabilities: 5,600 10,600 5,600}

^{Due to Bank: 285,619 0}

^{Provisions: 965,061 1,010,249 581,663}

^{Other Short term Liab.: 407,976 492,094 2,594,516}

^{Prepay. & Def. charges: 1,314,648 1,268,913 NA}

^{Total short term Liab.: 10,754,092 17,710,571 14,421,385}

^{TOTAL LIABILITIES: 11,376,459 18,345,511 15,249,047}

PROFIT & LOSS ACCOUNT

^{Net Sales 108,471,129 97,965,616 78,679,730}

^{Purchases,Sces & Other Goods: 95,929,921 85,626,980 68,536,744}

^{Gross Profit: 12,541,208 12,338,636 10,142,986}

^{NET RESULT BEFORE TAX: 3,929,564 3,780,402 1,420,617}

^{Tax : 876,708 728,488 499,625}

^{Net income/loss year: 3,052,856 3,051,914 920,992}

^{Interest Paid: 19,429 10,683 1,212}

^{Depreciation: 912,445 991,661 1,149,327}

^{Dividends: 2,240,000 1,120,000 0}

^{Directors Emoluments: 180,782 192,885 254,819}

^{Wages and Salaries: 3,642,556 3,664,866 3,468,024}

^{Financial Income: 244,683 99,940 59,956}

RATIOS

^{31/12/2005 31/12/2004 31/12/2003}

^{Net result / Turnover(%): 0.03 0.03 0.01}

^{Stock / Turnover(%): 0.14 0.14 0.14}

^{Net Margin(%): 2.81 3.12 1.17}

^{Return on Equity(%): 6.81 6.94 2.19}

^{Return on Assets(%): 5.43 4.90 1.61}

^{Dividends Coverage: 1.36 2.72 2.72}

^{Net Working capital: 36369975.00 34874894.00 32505266.00}

^{Cash Ratio: 1.12 0.76 0.93}

^{Quick Ratio: 2.80 2.03 2.45}

^{Current ratio: 4.38 2.97 3.25}

^{Receivables Turnover: 59.82 82.71 100.48}

^{Leverage Ratio: 0.25 0.42 0.36}

^{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 STABLE IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCESHEET WAS CONSIDERED STRONG WITH TOTAL EQUITY REGISTERING HIGHER BY 1.85%, AMOUNTING TO S$44,799,738 (2004: S$43,986,882). THIS WAS CONTRIBUTED BY HIGHER RETAINED EARNINGS OF S$8,311,835 (2004: S$7,470,882), INCREASING BY 11.26%.}

^LEVERAGE:

^{THE LEVERAGE RATIO WAS CONSERVATIVE AT 0.25 TIMES (2004: 0.42 TIMES). THIS INDICATED THAT THE LIABILITIES WERE NON-SUBSTANTIAL IN RELATION TO ITS TOTAL EQUITY.}

^{IN THE SHORT-TERM, TRADE CREDITORS TOTALLED S$8,060,807 (2004: S$14,643,096), DOWN NOTABLY BY 44.95%. OTHER SHORT-TERM LIABILITIES OF S$407,976 (2004: S$492,094) COMPRISED OF:}

^{* DUE TO HOLDING CORPORATION (NON-TRADE) OF S$73,125 (2004: S$113,458)}

^{* DUE TO AN ASSOCIATED CORPORATION (NON-TRADE) OF NIL (2004: S$48,856)}

^{* DUE TO AN RELATED CORPORATIONS (NON-TRADE) OF S$240,447 (2004: S$72,207)}

^{* DUE TO AN RELATED PARTIES (NON-TRADE) OF S$2,679 (2004: S$3,876)}

^{* OTHER PAYABLES OF S$91,725 (2004: S$253,697)}

^{OTHER LONG-TERM LIABILITIES OF S$4,667 (2004: S$10,267) REFERRED TO FINANCE LEASE LIABILITIES.}

^LIQUIDITY:

^{THE OVERALL LIQUIDITY SITUATION OF THE COMPANY WAS HEALTHY AND IMPROVING. BOTH QUICK AND CURRENT RATIOS WERE ADEQUATE AT 2.80 TIMES (2004: 2.03 TIMES) AND 4.38 TIMES (2004: 2.97 TIMES) RESPECTIVELY.}

^{THIS WAS IN TANDEM WITH THE NET WORKING CAPITAL, WHICH ALSO POSTED HIGHER BY 4.29%, TOTALLING S$36,369,975 (2004: S$34,874,894). CASH AND CASH EQUIVALENTS WERE ALSO ADEQUATE AT S$12,034,637 (2004: S$13,482,082).}

^{PROFITABILITY:}

^{REVENUE WAS ROBUST AT S$108,471,129 (2004: S$97,965,616), UP BY 10.72%. OVERALL NET PROFIT ALSO REGISTERED FAVOURABLY AT S$3,052,856 (2004: S$3,051,914). THIS COULD BE DUE TO A DROP IN OTHER OPERATING EXPENSES OF S$124,612 (2004: S$244,810).}

^{AS A RESULT, NET MARGIN POSTED AT 2.81% (2004: 3.12%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS WERE NOT ANTICIPATED IN VIEW OF THE HEALTHY LIQUIDITY STATUS OF THE COMPANY AND IF TRADE RECEIVABLES WERE FORTHCOMING. IN ADDITION, INTEREST COVERAGE RATIO WAS HEALTHY AT 203.25 TIMES (2004: 354.87 TIMES).}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{OTHER CURRENT ASSETS:}

^{THIS COMPONENT OF S$1,868,153 (2004: S$2,782,179) REFERRED TO: * DUE FROM RELATED CORPORATIONS (NON-TRADE) OF S$295,316 (2004: S$274,074)}

^{* LOAN TO AN ASSOCIATED CORPORATION OF NIL (2004: S$5,270)}

^{* LOAN TO AN RELATED CORPORATION OF S$1,264,000 (2004: S$2,164,000)}

^{* OTHER ASSETS OF S$308,837 (2004: S$338,835)}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 10/03/1980 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "CHUGOKU MARINE PAINTS (SINGAPORE) PTE LTD".}

^{AS AT 05/01/2007, SUBJECT HAS AN ISSUED AND PAID-UP CAPITAL OF 26,516,000 SHARES OF A VALUE OF S$26,516,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) WHOLESALE OF PAINTS (INCLUDING VARNISHES AND SUPPLIES);}

^{MANUFACTURE & MERCHANDISING OF MARINE PAINTS}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY ARE THE MANUFACTURE AND MERCHANDISING OF MARINE PAINTS}

^{SUBJECT'S IMMEDIATE AND ULTIMATE HOLDING CORPORATION IS CHUGOKU MARINE PAINTS, LTD, INCORPORATED IN JAPAN.}

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

^{SUBJECT IS LISTED IN THE SINGAPORE LOCAL DIRECTORY UNDER THE CLASSIFICATION OF: PAINT - WHOLESALERS & MANUFACTURERS.}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITY:}

^{* MANUFACTURER AND SUPPLY OF MARINE, INDUSTRIAL AND CONTAINER COATINGS FOR WORLDWIDE SERVICES}

^{PRODUCTS OR SERVICES:}

^{* MANUFACTURER OF PAINTS FOR MARINE, CONTAINER, WOOD & HEAVY DUTY INDUSTRIAL APPLICATION}

^{* PAINTS FOR WORLDWIDE SERVICES}

^{* MARINE COATINGS}

^{TRADE NAMES:}

^{* CHUGOKU, PAINT}

^{MAJOR CLIENTS:}

^{* KEPPEL SHIPYARD LTD}

^{* SEMBAWANG SHIPYARD PTE LTD}

^{* JURONG SHIPYARD PTE LTD}

^{* HITACHI ZOSEN}

^{SUBJECT IS A MEMBER OF FOLLOWING ENTITIES:}

^{* SINGAPORE MANUFACTURERS' FEDERATION}

^{* JAPANESE CHAMBER OF COMMERCE & INDUSTRY}

^{* ASSOCIATION OF SINGAPORE MARITIME INDUSTRIES}

^{QUALITY ASSESSMENT:}

^{* ISO 9002}

^{FROM THE TELE-INTERVIEW CONDUCTED ON 10/01/2007, THE FOLLOWING INFORMATION WAS REVEALED:}

^IMPORTS:

^{* EUROPE}

^{* UNITED STATES OF AMERICA}

^EXPORTS:

^{* ASIA COUNTRIES}

^{NO OTHER UPDATED INFORMATION WAS GATHERED VIA THE TELE-INTERVIEW CONDUCTED.}

^{FROM THE PRIOR TELE-INTERVIEW CONDUCTED IN 2005, THE FOLLOWING INFORMATION WAS REVEALED:}

^PURCHASES:

^{* TERMS OF IMPORT: 90 DAYS TERMS, ETC}

^{* IMPORT COUNTRIES: JAPAN, UNITED STATES, ETC}

^MARKETS:

^{* LOCAL (%): NOT PROVIDED}

^{* TERMS SALES: 90 DAYS TERMS, ETC}

^{* EXPORT(%): NOT PROVIDED}

^{* TERMS OF EXPORT: 90 DAYS TERMS, ETC}

^{* EXPORT COUNTRIES: MALAYSIA, CHINA, THAILAND, ETC.}

^{* TARGET MARKETS: VIETNAM, MYANMAR}

^{NO OTHER INFORMATION WAS GATHERED VIA THE PRIOR TELE-INTERVIEW CONDUCTED.}

^{NO. OF EMPLOYEES (31 DECEMBER):}

^{* COMPANY - 2005: NOT AVAILABLE (2004: 81; 2003: 80)}

^{REGISTERED & BUSINESS ADDRESSES:}

^{21 TUAS STREET}

^{SINGAPORE 638458}

^{DATE OF CHANGE OF ADDRESS: 15/12/1986}

^{-- OWNED PREMISE}

^{-- FACTORY}

^{OTHER BUSINESS ADDRESSES:}

^{19 TUAS STREET}

^{SINGAPORE 638458}

^{-- FINANCIAL DEPARTMENT}

^{-- OWNED PREMISE}

^{22 TUAS STREET}

^{SINGAPORE 638459}

^{-- SALES & PURCHASING DEPARTMENT}

^{-- OWNED PREMISE}

^WEBSITE:

^{* http://www.cmp.co.jp}

^E-MAIL:

^{* sales_marine@cmpsin.com.sg}

^{* sam@cmpsin.com.sg}

^TELEX:

^{* RS 21854 CHUGOKU}

MANAGEMENT

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

^{1) MITSUAKI MIYAUCHI, A JAPANESE}

^{- BASED IN SINGAPORE}

^{2) KOJI OUE, A JAPANESE}

^{- BASED IN JAPAN}

^{3) TSUBOI MAKOTO, A JAPANESE}

^{- BASED IN JAPAN}

^{4) TETSUO YAMAZUMI, A JAPANESE}

^{- BASED IN JAPAN}

^{5) OSAMU SHIOTA, A JAPANESE}

^{- BASED IN JAPAN}

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

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