MIRA INFORM REPORT

Report Date :

12.05.2007

IDENTIFICATION DETAILS

Name :	HALLIBURTON FAR EAST PTE LTD
Registered Office :	^6^Tuas Lane, Singapore^– 638615
Country :	Singapore
Financials (as on) :	31.12.2005
Date of Incorporation :	^29/03/1990
Com. Reg. No.:	^199001491D
Legal Form :	^Pte Ltd
Line of Business :	Engineering, Project Development, Project Management, Procurement, Construction and Maintenance Services relating to the Oil and Gas Industry

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 :	Exists

Subject Company

HALLIBURTON FAR EAST PTE LTD

Line Of Business 

ENGINEERING, PROJECT DEVELOPMENT, PROJECT MANAGEMENT, PROCUREMENT, CONSTRUCTION AND MAINTENANCE SERVICES RELATING TO THE OIL AND GAS INDUSTRY

Parent Company

HALLIBURTON AFFILIATES LLC

(PERCENTAGE OF SHAREHOLDING: 100%)

Financial Elements

FY 2005

COMPANY

Sales : US$134,595,308

Networth : US$34,854,133

Paid-Up Capital : US$14,616

Net result : US$17,750,769

Net Margin(%) : 13.19

Return on Equity(%) : 50.93

Leverage Ratio : 1.79

COMPANY IDENTIFICATION

^{Subject Company : HALLIBURTON FAR EAST PTE LTD}

^{Former Name : BROWN & ROOT FAR EAST ENGINEERS PTE}

^{Business Address: 6 TUAS LANE}

^{Town: SINGAPORE}

^{Postcode: 638615}

^{County: -}

^{Country: Singapore}

^{Telephone: 6511 2000}

^{Fax: 6863 3085}

^{ROC Number: 199001491D}

^{Reg. Town: -}

PREVIOUS IDENTIFICATION

^{BROWN & ROOT FAR EAST ENGINEERS PTE LTD}

^{DATE OF CHANGE OF NAME: 02/05/2000}

ROCKWATER OFFSHORE CONTRACTORS PTE LTD

^{DATE OF CHANGE OF NAME: 31/01//1994}

SUMMARY

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

^{Legal Form: Pte Ltd}

^{Date Inc.: 29/03/1990}

^{Previous Legal Form: -}

^{Summary year : 31/12/2005}

^{Sales: 134,595,308}

^{Networth : 34,854,133}

^{Capital: 14,616}

^{Paid-Up Capital: 14,616}

^{Employees: 500}

^{Net result : 17,750,769}

^{Share value: -}

^{AUDITOR: KPMG}

^{BASED ON ACRA'S RECORD AS AT 08/05/2007}

^{NO. OF SHARES CURRENCY AMOUNT}

^{ISSUED ORDINARY : 25,000 SGD 25,000.00}

^{PAID-UP ORDINARY : - SGD 25,000.00}

REFERENCES

^{Litigation: Yes}

^{Company status : TRADING}

^{Started : 29/03/1990}

PRINCIPAL(S)

^{LO KOAK YEE PHILIP S0002445G Director}

DIRECTOR(S)

^{TAN CHAU YEE S6874779A Company Secretary}

^{Appointed on : 02/11/1999}

^{Street : 19 JOO SENG ROAD}

^#19-122

^{Town: SINGAPORE}

^{Postcode: 360019}

^{Country: Singapore}

^{LO KOAK YEE PHILIP S0002445G Director}

^{Appointed on : 18/06/2004}

^{Street : 341 UPPER BUKIT TIMAH ROAD}

^#04-06

^{THE HILLSIDE}

^{Town: SINGAPORE}

^{Postcode: 588195}

^{Country: Singapore}

^{QUEK KWANG CHYE WILLIAM S0042553B Director}

^{Appointed on : 18/06/2004}

^{Street : 22 JALAN DATOH}

^#06-01

^{DE ANGELO}

^{Town: SINGAPORE}

^{Postcode: 329417}

^{Country: Singapore}

^{PRASAD SREEDHARAN S0005084I Director}

^{Appointed on : 01/02/2006}

^{Street : 93 RIVERINA VIEW}

^{THE RIVERINA}

^{Town: SINGAPORE}

^{Postcode: 518442}

^{Country: Singapore}

^{JENNIFER NG SHI WEI S7834593D Company Secretary}

^{Appointed on : 17/04/2006}

^{Street : 80 KIM SENG ROAD}

^#11-08

^{Town: SINGAPORE}

^{Postcode: 239426}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{SIM SU LIN SK3228235}

^{BARRY STEVEN KIHNEMAN F1719262X}

^{DAVID LEE ZIMMERMAN F2160028T}

^{MANOUCHEHR RAZNAHAN F2389320R}

^{DAVID JOHN LESAR 131086403}

^{TAN KAH HUAN S2643756C}

^{STEPHEN ROBERT PYWELL 740107099}

^{COLIN STRACHAN F1845952M}

^{MARK ALAN KRUTSINGER F2215857X}

^{PETER FRANCIS HEDGES F5510149M}

^{CHIN BENG KHOON 5012160750}

^{KIMBLE STEWART MATTHEWS AA767067}

^{CUTHBERT IGNATIOUS JEYARETNAM 500318396}

^{MICHAEL ANDREW WEBERPAL 130979163}

^{RICHARD VENTON HAWKINGS F5563815L}

^{RAMAN RAO BIN ABDULLAH 630827-05-}

^{ALAN JAMES REID G5615315U}

^{EDWIN GERALD SMART 740168296}

^{DANIEL MICHAEL NEWTON F5671171Q}

ACTIVITY(IES)

^{OIL And GAS INDUSTRIES - CONSULTANTS Code:15200}

^{OIL EXPLORATION EQUIPMENT And SUPPLIES Code:15260}

^{BASED ON ACRA'S RECORD AS AT 08/05/2007}

^{1) MIXED CONSTRUCTION ACTIVITIES}

^{2) MANUFACTURING AND REPAIR OF OTHER OILFIELD & GASFIELD MACHINERY}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{CITIBANK N.A.}

SHAREHOLDERS(S)

^{HALLIBURTON AFFILIATES LLC 25,000 Company}

^{Street : THE CORPORATION TRUST COMPANY}

^{1209 ORANGE STREET}

^{Town: WILMINGTON}

^{Postcode: 19801}

^{Country: United States}

FORMER SHAREHOLDER(S)

^{SMIT SEMI-SUB II C V 24,998}

^{CACKETT STEPHEN 1}

^{SIM SU LIN 1}

^{BROWN & ROOT HOLDINGS INC 25,000}

HOLDING COMPANY

^{HALLIBURTON AFFILIATES LLC UF24519E % : 100}

SUBSIDIARY(IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

Trade Morality: AVERAGE

Liquidity : SUFFICIANT

Payments : REGULAR

Trend : UPWARD

Financial Situation: AVERAGE

LITIGATION(S)

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

^{Case Number: HWS02175/92}

Defendant HALLIBURTON FAR EAST PTE LTD ROC # : 199001491D

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

^{Case Number: HWS001569/99}

Defendant HALLIBURTON FAR EAST PTE LTD ROC # : 199001491D

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

^{Case Number: HWS02132/1997}

Defendant HALLIBURTON FAR EAST PTE LTD ROC # : 199001491D

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

^{Case Number: DCS01017/1996}

Defendant HALLIBURTON FAR EAST PTE LTD ROC # : 199001491D

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

^{Case Number: MCS16650/1996}

Defendant HALLIBURTON FAR EAST PTE LTD ROC # : 199001491D

FINANCIAL ELEMENTS

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

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

^{Date Account Lodged: 29/06/2006}

^{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 - - 250,000}

^{Tangible Fixed Assets: 8,212,840 6,996,773 5,250,324}

^{Total Fixed Assets: 8,212,840 6,996,773 5,500,324}

^{Inventories: 12,719,093 9,347,687 7,460,137}

^{Receivables: 26,556,672 30,233,947 57,183,559}

^{Cash,Banks, Securitis: 19,250,487 23,310,176 5,201,082}

^{Other current assets: 30,545,131 1,964,641 137,782,736}

^{Total Current Assets: 89,071,383 64,856,451 207,627,514}

^{TOTAL ASSETS: 97,284,223 71,853,224 213,127,838}

^{--- LIABILITIES}

^{Equity capital: 14,616 14,616 14,616}

^{Profit & loss Account: 34,839,517 17,088,748 12,101,740}

^{TOTAL EQUITY: 34,854,133 17,103,364 12,116,356}

^{Trade Creditors: 51,393,808 29,289,630 122,483,310}

^{Prepay. & Def. charges: 2,508,867 2,496,823 2,196,641}

^{Provisions: 3,807,377 7,715,104 7,010,320}

^{Other Short term Liab.: 4,720,038 15,248,303 69,321,211}

^{Total short term Liab.: 62,430,090 54,749,860 201,011,482}

^{TOTAL LIABILITIES: 62,430,090 54,749,860 201,011,482}

PROFIT & LOSS ACCOUNT

^{Net Sales 134,595,308 110,782,411 120,874,316}

^{Result of ordinary operations - - 21,053,812}

^{NET RESULT BEFORE TAX: 22,709,753 21,234,915 20,646,446}

^{Tax : 4,958,984 4,146,167 4,730,904}

^{Net income/loss year: 17,750,769 17,088,748 15,915,542}

^{Interest Paid: 182,776 301,294 407,366}

^{Depreciation: 1,052,909 575,935 527,048}

^{Dividends: - 12,101,740 -}

^{Wages and Salaries: 9,631,582 6,989,827 7,162,130}

^{Financial Income: 693,537 628,741 1,401,291}

RATIOS

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

^{Turnover per employee: 269190.62 221564.82 241748.63}

^{Net result / Turnover(%): 0.13 0.15 0.13}

^{Stock / Turnover(%): 0.09 0.08 0.06}

^{Net Margin(%): 13.19 15.43 13.17}

^{Return on Equity(%): 50.93 99.91 131.36}

^{Return on Assets(%): 18.25 23.78 7.47}

^{Dividends Coverage: 1.41 1.41}

^{Net Working capital: 26641293.00 10106591.00 6616032.00}

^{Cash Ratio: 0.31 0.43 0.03}

^{Quick Ratio: 0.73 0.98 0.31}

^{Current ratio: 1.43 1.18 1.03}

^{Receivables Turnover: 71.03 98.25 170.31}

^{Leverage Ratio: 1.79 3.20 16.59}

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

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE WITH NET WORTH IMPROVED BY 1.04 TIMES FROM US$17,103,364 IN FY 2004 TO US$34,854,133 IN FY 2005. THIS WAS DUE TO HIGHER ACCUMULATED PROFIT OF US$34,839,517 (2004: US$17,088,748); A RISE OF 1.04 TIMES FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 82.32% (2004: 53.49%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$51,393,808 (2004: US$29,289,630). THE BREAKDOWN IS AS FOLLOWS:}

^{-TRADE PAYABLES - 2005: US$7,468,232 (2004: US$5,368,084)}

^{-RELATED CORPORATIONS - 2005: US$43,925,576 (2004: US$23,921,546)}

^{IN ALL, LEVERAGE RATIO FELL FROM 3.20 TIMES TO 1.79 TIMES AS A RESULT OF A GREATER RISE IN TOTAL EQUITY THAN TOTAL LIABILITIES.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE CHANGES IN NET WORKING CAPITAL AND LIQUIDITY RATIOS. CURRENT RATIO ROSE TO 1.43 TIMES, UP FROM 1.18 TIMES AND QUICK RATIO FELL TO 0.73 TIMES FROM 0.98 TIMES IN FY 2004.}

^{NET WORKING CAPITAL IMPROVED BY 1.64 TIMES FROM US$10,106,591 IN FY 2004 TO US$26,641,293.}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 21.49% FROM US$110,782,411 IN FY 2004 TO US$134,595,308 AND NET PROFIT ROSE BY 3.87% TO US$17,750,769 (2004: US$17,088,748). HENCE, NET MARGIN FELL TO 13.19% (2004: 15.43%).}

^REVENUE:

^{-REVENUE EARNED FROM PROVIDING ENGINEERING AND OTHER SUPPORT SERVICES}

^{- 2005: US$24,508,279 (2004: US$27,530,888)}

^{-SALE OF GOODS - 2005: US$110,087,029 (2004: US$83,251,523)}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING. IN ADDITION, ITS INTEREST COVERAGE WAS HEALTHY CONSIDERING THAT ITS INTEREST EXPENSES WERE LOW AT US$182,776 IN FY 2005 (2004: US$301,294).}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 29/03/1990 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS NAMESTYLE AS "ROCKWATER OFFSHORE CONTRACTORS PTE LTD".}

^{SUBSEQUENTLY, ON 31/01/1994, THE COMPANY CHANGED TO ITS NAMESTYLE AS "BROWN & ROOT FAR EAST ENGINEERS PTE LTD".}

^{SUBSEQUENTLY, ON 02/05/2000, THE COMPANY CHANGED TO ITS PRESENT NAMESTYLE AS "HALLIBURTON FAR EAST PTE LTD".}

^{AS AT 08/05/2007, THE COMPANY HAS ISSUED AND PAID-UP CAPITAL OF 25,000 SHARES OF A VALUE OF S$25,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) MIXED CONSTRUCTION ACTIVITIES}

^{2) MANUFACTURING AND REPAIR OF OTHER OILFIELD AND GASFIELD MACHINERY AND EQUIPMENT (EG DERRICK)}

^{DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF THE TRADING OF OIL AND GAS EQUIPMENT AND TO PROVIDE ITS RELATED SERVICES FOR OIL AND GAS, MARINE AND SUBSEAS CONSTRUCTION AND OTHER ENGINEERING SERVICES, INCLUDING INDUSTRIAL AND MARINE ENGINEERING DESIGN AND CONSULTANCY SERVICES TO THIRD PARTIES A WELL AS ITS RELATED PARTIES.}

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

^{BACKGROUND OF HALLIBURTON GROUP:}

^{FOUNDED IN 1919, HALLIBURTON IS ONE OF THE WORLD'S LARGEST PROVIDERS OF PRODUCTS AND SERVICES TO THE OIL AND GAS INDUSTRIES. THE COMPANY ADDS VALUE THROUGH THE ENTIRE LIFECYCLE OF OIL AND GAS RESERVOIRS AND PROVIDES AND INTEGRATES PRODUCTS AND SERVICES, STARTING WITH EXPLORATION AND DEVELOPMENT, MOVING THROUGH PRODUCTION, OPERATIONS, MAINTENANCE, CONVERSION AND REFINING, TO INFRASTRUCTURE AND ABANDONMENT.}

^{HALLIBURTON'S ENERGY SERVICES GROUP CONSISTS OF FOUR BUSINESS SEGMENTS:}

^{* DRILLING AND FORMATION EVALUATION}

^{* FLUID SYSTEMS}

^{* PRODUCTION OPTIMIZATION}

^{* DIGITAL AND CONSULTING SOLUTIONS}

^{THESE SEGMENTS OFFER A BROAD ARRAY OF PRODUCTS AND SERVICES TO UPSTREAM OIL AND GAS CUSTOMERS WORLDWIDE, RANGING FROM THE MANUFACTURING OF DRILL BITS AND OTHER DOWNHOLE AND COMPLETION TOOLS TO PRESSURE PUMPING SERVICES.}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* ENGINEERING, PROJECT DEVELOPMENT, PROJECT MANAGEMENT, PROCUREMENT, CONSTRUCTION AND MAINTENANCE SERVICES RELATING TO THE OIL AND GAS INDUSTRY}

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

^{* SINGAPORE MANUFACTURERS' FEDERATION}

^{NEWS: HALLIBURTON COMPLETES SEPARATION OF KBR}

^{OILFIELD SERVICES COMPANY ANNOUNCES FINAL RESULTS OF KBR}

^{EXCHANGE OFFER}

^"EXTRACTS"

^{-SOURCE: HALLIBURTON WEBSITE}

^{DATE: 05/04/2007}

^{HOUSTON, TEXAS - HALLIBURTON COMPANY (NYSE: HAL) TODAY ANNOUNCED THAT IT HAS COMPLETED THE FINAL SEPARATION OF KBR INC. (NYSE: KBR). THE TWO COMPANIES NOW ARE SEPARATE AND INDEPENDENT OF EACH OTHER. "THIS IS A MAJOR EVENT FOR HALLIBURTON, ESPECIALLY ITS DEDICATED EMPLOYEES, LOYAL CUSTOMERS AND THE SHAREHOLDERS," SAID DAVE LESAR, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, HALLIBURTON. "AS A PURE OILFIELD SERVICES COMPANY, HALLIBURTON NOW CAN FOCUS ON THE GLOBAL GROWTH OPPORTUNITIES IN ITS CORE ENERGY SERVICES BUSINESS."}

^{HALLIBURTON ANNOUNCED ITS PLANS IN JANUARY 2005 TO ULTIMATELY SEPARATE THE KBR SUBSIDIARY. AN INITIAL PUBLIC OFFERING OF KBR COMMON STOCK WAS COMPLETED IN NOVEMBER 2006.}

^{"WE WISH KBR AND ITS EMPLOYEES WELL AS THEY MOVE FORWARD AS AN INDEPENDENT COMPANY," ADDED LESAR.}

^{ALL OF THE GOVERNMENT SERVICES AND ENGINEERING AND CONSTRUCTION BUSINESSES WILL REMAIN WITH KBR.}

^{THE EXCHANGE OFFER EXPIRED AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON APRIL 2, 2007. UNDER THE TERMS OF THE EXCHANGE OFFER, HALLIBURTON HA ACCEPTED 85,273,184 SHARES OF HALLIBURTON COMMON STOCK IN EXCHANGE FOR THE 135,627,000 SHARES OF KBR COMMON STOCK HELD BY HALLIBURTON. EACH SHARE OF HALLIBURTON COMMON STOCK ACCEPTED FOR EXCHANGE BY HALLIBURTON IS BEING EXCHANGED FOR 1.5905 SHARES OF KBR COMMON STOCK.}

^{FROM THE TELE-INTERVIEW CONDUCTED ON 23/10/2006, THE FOLLOWING WAS GATHERED:}

^{NUMBER OF EMPLOYEES:}

^{* COMPANY - 2006: 500+}

^{NO OTHER TRADE INFORMATION IS AVAILABLE ON 23/10/2006.}

^{THE IMMEDIATE AND ULTIMATE HOLDING COMPANIES DURING THE FINANCIAL YEAR ARE HALLIBURTON AFFILIATES, LLC AND HALLIBURTON COMPANY RESPECTIVELY, BOTH OF WHICH ARE INCORPORATED IN THE UNITED STATES OF AMERICA.}

^{NUMBER OF EMPLOYEES (31 DECEMBER):}

^{* COMPANY - 2005: NOT AVAILABLE (2004: 178; 2003: 176)}

^{* GROUP - 2004: - (2003: -)}

^{REGISTERED ADDRESS:}

^{9 RAFFLES PLACE}

^{#12-01 REPUBLIC PLAZA}

^{SINGAPORE 048619}

^{- DATE OF CHANGE OF ADDRESS: 01/07/2004}

^{BUSINESS ADDRESS:}

^{6 TUAS LANE}

^{SINGAPORE 638615}

^{- OFFICE}

^{- SECURITY DBS}

^{- TEL: 6511 2000}

^{- FAX: 6863 3085}

^{OTHER BUSINESS ADDRESS:}

^{1 GUL STREET 5}

^{SINGAPORE 629215}

^{- MANUFACTURING PLANT}

^{YOUR PROVIDED ADDRESS:}

^{1 GUL STREET #05}

^{SINGAPORE 629215}

^{- INCORRECT}

^{YOUR PROVIDED CONTACT NUMBERS:}

^{TEL: 6869 1534}

^{FAX: 6861 2044}

^{- CAN'T CONFIRM BOTH THE CONTACT NUMBERS}

^WEBSITE:

^{http://www.halliburton.com}

^EMAIL:

^-

MANAGEMENT

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

^{1) LO KOAK YEE PHILIP, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIP IN OUR DATABASE.}

^{2) PRASAD SREEDHARAN, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIP IN OUR DATABASE.}

^{3) QUEK KWANG CHYE WILLIAM, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIP 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

SINGAPORE’S ECONOMY GREW BY 6.6% IN 4Q 23006, AFTER A 7.0% GROWTH IN 3Q 2006. THE GROWTH MOMENTUM, ON AN ANNUALISED QUARTER-TO-QUARTER BASIS, DOUBLED TO 7.9% IN 4Q 2006, FROM 3.9% IN THE PREVIOUS QUARTER. THIS BROUGHT FULL-YEAR REAL GDP GROTH TO 7.9%, HIGHER THAN THE 6.6% GROWTH IN 2005.

THE MANUFACTURING SECTOR GREW AT A MORE MODEST PACE OF 7.7% IN 4Q 2006, AFTER A 9.5% EXPANSION IN 3Q 2006. THIS WAS DUE MAINLY TO A FALL IN THE OUTPUT OF THE ELECTRONICS AND CHEMICALS CLUSTERS, AND SLOWER GROWTH IN THE PRECISION ENGINEERING CLUSTER. GROWTH IN THE TRANSPORT ENGINEERING CLUSTER EASED BUT REMAINED STRONG. MEANWHILE, THE BIOMEDICAL MANUFACTURING CLUSTER ACCELERATED FROM A GROWTH OF 4.7% IN 3Q 2006 TO 27% IN 4Q 2006. FOR THE WHOLE YEAR, THE MANUFACTURING SECTOR GREW BY 12%, UP FROM 9.5% IN 2005, SUPPORTED BY STRONGER PERFORMANCES IN THE TRANSPORT ENGINEERING, BIOMEDICAL

MANUFACTURING AND PRECISION ENGINEERING CLUSTERS.

THE WHOLESALE AND RETAIL TRADE SECTOR EXPANDED 6.9% IN 4Q 2006, BUT ITS GROWTH MOMENTUM WAS DOWN BY 3.5%. THE WHOLESALE SEGMENT MODERATED, WITH GROWTH OF NON-OIL RE-EXPORTS HALVED FROM 13% IN 3Q 2006 TO 6.3% IN 4Q 2006. PERFORMANCE OF THE RETAIL SEGMENT IMPROVED FURTHER AS RETAIL SALES WENT UP 7.9% IN 4Q 2006, COMPARED TO 5.2% IN THE PREVIOUS QUARTER. OVER 2006, THE WHOLESALE AND RETAIL SECTOR EXPANDED STRONGLY BY 10%, UP FROM 9.6% IN 2005.

THE FINANCIAL SERVICES SECTOR EXPANDED BY 11% IN 4Q 2006, AFTER GROWING BY 7.4% FROM THE PREVIOUS QUARTER. THE EXPANSION WAS BROAD-BASED ACROSS MOST SEGMENTS. IN PARTICULAR, THE STOCK TRADING SEGMENT ENJOYED A SHARP INCREASE IN ACTIVITY DURING THE QUARTER. FUND MANAGEMENT, ASIAN CURRENCY UNITS, AND FOREX SEGMENTS ALSO REGISTERED STRONG GROWTH IN 4Q 2006. THE STRONG PERFORMANCE IN THE FINAL QUARTER BROUGHT THE SECTOR’S FULL-YEAR GROWTH TO 9.2%, HIGHER THAN THE 7.6% GAIN IN 2005.

THE CONSTRUCTION SECTOR CONTINUED TO EXPAND BY 4.7%, FOLLOWING 5.8% IN 3Q 2006. GROWTH MOMENTUM ON A SEASONALLY ADJUSTED QUARTER-ON-QUARTER BASIS REMAINED STRONG AT 12%. CERTIFIED PAYMENTS GREW SLIGHTLY BY 0.7%, DOWN FROM 9.8% IN 3Q 2006. CONTRACTS AWARDED DIPPED 8.0% IN 4Q 2006 AFTER A RISE IN GROWTH IN THE PREVIOUS QUARTER. FOR THE YEAR, THE SECTOR GREW BY 2.7%, UP FROM 0.7% IN 2005.

THE HOTELS AND RESTAURANTS SECTOR CONTINUED TO STRENGTHEN IN 4Q 2006 WITH A 6.1% INCREASE FOLLOWING A 4.4% GROWTH IN 3Q 2006. VISITOR ARRIVALS ROSE 8.4% COMPARED WITH 4.5% IN THE PREVIOUS QUARTER. THIS HELPED TO RAISE THE AVERAGE OCCUPANCY RATE OF HOTELS TO 88% IN 4Q 2006, COMPARED TO 85% A YEAR EARLIER. HOTEL ROOM REVENUES WENT UP 12% AFTER A 28% INCREASE IN 3Q 2006. FOR THE YEAR AS A WHOLE, THE SECTOR GREW BY 5.1%, UP FROM 4.3% IN 2005, ON THE BACK OF A RECORD 9.7 MILLION VISITOR ARRIVALS.

THE FINANCIAL SERVICES SECTOR EXPANDED BY 11% IN 4Q 2006, AFTER GROWING BY 7.4% A QUARTER EARLIER. THE EXPANSION WAS BROAD-BASED ACROSS MOST SEGMENTS. IN PARTICULAR, THE STOCK TRADING SEGMENT ENJOYED AN INCREASE IN ACTIVITY DURING THE QUARTER. FUND MANAGEMENT, ASIAN CURRENCY UNITS, AND FOREX SEGMENTS ALSO REGISTERED STRONG GROWTH IN 4Q 2006. THE STRONG PERFORMANCE IN THE FINAL QUARTER BROUGHT THE SECTOR’S FULL-YEAR GROWTH TO 9.2%, HIGHER THAN THE 7.6% GAIN IN 2005.

THE TRANSPORT AND STORAGE SECTOR INCREASE BY 4.0% IN 4Q 2006, SAME AS THE PREVIOUS QUARTER. WITHIN THE SECTOR, THE AIR TRANSPORT SEGMENT TURNED IN BETTER PERFORMANCE WHILE THE WATER TRANSPORT SEGMENT MODERATED. SLOWER GROWTH WAS SEEN IN BOTH SEA CARGO AND AIR CARGO HANDLED. MEANWHILE, GROWTH IN AIR PASSENGERSHANDLED AND CONTAINER THROUGHPUT IMPROVED COMPARED TO 3Q 2006. OVERALL, THE TRANSPORT AND STORAGE SECTOR EXPANDED 4.3% IN 2006, SIMILAR TO THE 4.2% IN 2005.

THE INFORMATION AND COMMUNICATIONS SECTOR POSTED A BETTER PERFORMANCE IN 4Q 2006 WITH A GROWTH OF 6.0%, FOLLOWING A 3.6% GAIN IN 3Q 2006. THE NUMBER OF BROADBAND SUBSCRIBERS CONTINUED TO REGISTER DOUBLE-DIGIT GROWTH IN THE QUARTER. INTERNATIONAL TELEPHONE CALL DURATION AND THE NUMBER OF MOBILE PHONE SUBSCRIBERS GREW AT A FASTER PACE COMPARED TO THE PREVIOUS QUARTER. THE SECTOR EXPANDED BY 4.6% DURING THE YEAR, COMPARED TO 5.5% IN 2005.

THE BUSINESS SERVICES SECTOR ROSE BY 5.4% IN 4Q 2006, FOLLOWING A 5.1% GAIN IN THE PREVIOUS QUARTER. THE EXPANSION IN THE SECTOR WAS DRIVEN BY ACTIVITIES IN THE CONSULTANCY, ARCHITECTURAL & ENGINEERING AND BUSINESS REPRESENTATIVE OFFICES AS WELL AS REAL ESTATE SEGMENT. FOR THE YEAR AS A WHOLE, THE BUSINESS SERVICES SECTOR INCREASED BY 5.8%, SIMILAR TO THE 5.9% GROWTH ACHIEVED IN 2005.

APART FROM WHOLESALE AND RETAIL TRADE, ALL SECTORS EXPERIENCED POSITIVE GROWTH MOMENTUM IN 4Q 2006. FOR 2006 AS A WHOLE, ALL SECTORS REGISTERED GROWTH, LED BY MANUFACTURING, WHOLESALE & RETAIL TRADE AND FINANCIAL SERVICES.

OUTLOOK

THE OUTLOOK FOR THE ECONOMY IS GENERALLY POSITIVE ALTHOUGH THERE ARE SOME DOWNSIDE RISKS. THE AVIAN FLU PANDEMIC TREAT HAS RESURFACED AS A GROWING NUMBER OF COUNTRIES REPORTED CASES OF INFECTION IN BIRDS IN RECENT WEEKS. OTHER UNCERTAINTIES INCLUDE THE DISORDERLY UNWINDING OF GLOBAL IMBALANCES, TERRORISM AND THE VULNERABILITY OF OIL PRICES TO SUPPLY SHOCKS. AS A RESULT, THE ECONOMIC GROWTH FORECAST FOR 2007 IS BEING RAISE FROM 4.0% TO 6.0% TO 4.5% TO 6.5%.

REAL ESTATE DEVELOPERS AND AGENTS AND 73% OF THE REAL ESTATE FIRMS ARE THE MOST OPTIMISTIC. THIS SECTOR IS EXPECTING TO DO WELL IN THE FIRST HALF OF 2007.

THE MANUFACTURING SECTOR IS CAUTIOUSLY OPTIMISTIC ABOUT BUSINESS SITUATIONS IN THE NEXT SIX MONTHS OF 2007.

WITHIN THE FINANCIAL SERVICES INDUSTRY, 46% OF THE FIRMS, INCLUDING COMPANIES ENGAGED IN BANKING AND FINANCE, STOCK, SHARE AND BOND BROKERAGE, FUND MANAGEMENT AND INSURANCE ACTIVITIES, ANTICIPATED HIGHER LEVELS OF BUSINESS ACTIVITIES IN THE FIRST 6 MONTHS.

IN THE BUSINESS SERVICES INDUSTRY, 27% OF THE FIRMS EXPECTS BUSINESS TO PICK UP DURING THE FIRST HALF OF THE YEAR. IN PARTICULAR, FIRMS ENGAGED IN ACCOUNTING, ARCHITECTURAL AND ENGINEERING, ADVERTISING AND SECURITY SERVICES AND THE RENTING OF CONSTRUCTION AND INDUSTRIAL MACHINERY FORESEE HIGHER DEMAND FOR THEIR SERVICES.

WITHIN THE CATERING TRADE INDUSTRY, 31% OF THE FIRM EXPRESSES POSITIVE BUSINESS SENTIMENTS. MOST HOTELIERS EXPECTS TO DO WELL IN THE FIRST HALF, IN ANTICIPATION OF HIGHER TOURIST ARRIVALS AND OCCUPANCY RATE.

RETAILERS, PARTICULARLY DEPARTMENT STORES OWNERS AND RETAILER OF FURNITURE AND FURNISHINGS, PREDICTS BUSINESS CONDITIONS TO IMPROVE IN THE NEXT SIX MONTHS.

WHOLESALERS ARE GENERALLY LESS OPTIMISTIC ABOUT THE BUSINESS ENVIRONMENT. IN PARTICULAR, DEALERS OF JEWELLERY AND WATCHES, INDUSTRIES MACHINERY AND EQUIPMENT, TELECOMMUNICATIONS EQUIPMENT AND ELECTRONIC COMPONENTS ARE THOSE WHO FORESEE SLOWER BUSINESS IN THE COMING MONTHS.

ALSO, TRANSPORT AND COMMUNICATIONS INDUSTRY IS LESS POSITIVE ABOUT THE BUSINESS OUTLOOK. SHIPPING LINES EXPECT SLOWER BUSINESS IN THE FIRST HALF DUE TO SEASONAL FACTORS. IN CONTRAST, FIRMS PROVIDING POST AND COURIER SERVICES FORESEE MORE FAVOURABLE CONDITIONS.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

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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