MIRA INFORM REPORT

Report Date :

08.10.2007

IDENTIFICATION DETAILS

Name :	ISK SINGAPORE PTE. LTD.
Registered Office :	^39^Tuas West Drive, Singapore^– 638406
Country :	Singapore
Financials (as on) :	31.12.2006
Date of Incorporation :	^23/08/1986
Com. Reg. No.:	^198601766Z
Legal Form :	^Pte Ltd
Line of Business :	Manufacture and Sale of Titanium Dioxide Pigments and related Products

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

ISK SINGAPORE PTE. LTD.

Line Of Business 

MANUFACTURE AND SALE OF TITANIUM DIOXIDE PIGMENTS AND RELATED PRODUCTS

Parent Company

ISHIHARA SANGYO KAISHA LTD

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2006

COMPANY

Sales : S$155,247,000

Networth : S$179,845,000

Paid-Up Capital : S$150,000,000

Net result : S$-2,328,000

Net Margin(%) : -1.50

Return on Equity(%) : -1.29

Leverage Ratio : 0.46

COMPANY IDENTIFICATION

^{Subject Company: ISK SINGAPORE PTE. LTD.}

^{Former Name: -}

^{Business Address: 39 TUAS WEST DRIVE}

^{Town: SINGAPORE}

^{Postcode: 638406}

^{County: -}

^{Country: Singapore}

^{Telephone: 6861 2077}

^{Fax: 6861 3566}

^{ROC Number: 198601766Z}

^{Reg. Town: -}

SUMMARY

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

^{Legal Form: Pte Ltd}

^{Date Inc.: 23/08/1986}

^{Previous Legal Form: -}

^{Summary year: 31/12/2006}

^{Sales: 155,247,000}

^{Net worth: 179,845,000}

^{Capital: -}

^{Paid-Up Capital: 150,000,000}

^{Employees: Not available}

^{Net result: -2,328,000}

^{Share value: -}

^{Auditor: ERNST & YOUNG}

REFERENCES

^{Litigation: No}

^{Company status: TRADING}

^{Started: 23/08/1986}

PRINCIPAL(S)

^{KENSUKE KIMURA F5515101Q Director}

DIRECTOR(S)

^{KENSUKE KIMURA F5515101Q Director}

^{Appointed on: 03/06/2005}

^{Street: 177B RIVER VALLEY ROAD}

^#24-03

^{LIANG COURT}

^{Town: SINGAPORE}

^{Postcode: 179032}

^{Country: Singapore}

^{KENZO ODA TE1760991 Director}

^{Appointed on: 01/02/2003}

^{Street: 688-5, HABUCHO, KISHIWADA-SHI}

^{Town: OSAKA}

^{Postcode: 596-0825}

^{Country: Japan}

^{YASUO SUMINO TF8670910 Director}

^{Appointed on: 15/05/2006}

^{Street: 1-6-4 AOBADAI, IZUMI-SHI}

^{Town: OSAKA}

^{Postcode: -}

^{Country: Japan}

^{LOW GEOK ENG SUSIE S0167313J Company Secretary}

^{Appointed on: 01/10/2006}

^{Street: 201 BISHAN STREET 23}

^#08-469

^{Town: SINGAPORE}

^{Postcode: 570201}

^{Country: Singapore}

^{NAOKI OGUSHI G5959947Q Alternate Director}

^{Appointed on: 15/03/2007}

^{Street: 177B RIVER VALLEY ROAD}

^#08-04

^{LIANG COURT}

^{Town: SINGAPORE}

^{Postcode: 179032}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{LIM KENG SAN SHIRLEY S0004555A}

^{YOSHIDA KAZUHIKO SG4863372}

^{DOHI AKIHARU SG8819024}

^{YAMASHIRO AKINOBU H2392660}

^{AKIZAWA TAKASHI K4457846}

^{KANEHIRA MICHINOSUKE M8124943}

^{ONISHI YOSHIO M1914157}

^{ISHIKAWA TSUNEO SN4007967}

^{MATSUNAGA MAMORU SN9147870}

^{SAKAMAKI TAMIO SN9148465}

^{KUBO HIDEO SN9149351}

^{YAMAMOTO TASUYUKI P0645703}

^{KENSUKE KIMURA F5515101Q}

^{TAKAO WATANABE F5541397P}

^{SHINTARO SEKIGUCHI MN0416502}

^{YASUYUKI YAMAMOTO MP0645703}

^{HISAO HATADA TE8021433}

^{AKIRA KOBAYASHI F5669002Q}

^{MAMORU FUJIMURA G5543202W}

^{KATSU FUJITA TE5600598}

^{FUJIO TAMURA TE5460440}

^{KEN KAWAGUCHI G5742400T}

^{HIROSHI KIMURA G5651350M}

^{TOH LEI MUI S7130996G}

ACTIVITY(IES)

^{CHEMICALS Code:3970}

^{BASED ON ACRA'S RECORD AS AT 03/10/2007}

^{1) MANUFACTURE OF PETROLEUM PRODUCTS NEC; MANUF BASIC INDUSTRIAL CHEMICALS}

CHARGES

^{Date: 18/01/1999}

^{Comments: CHARGE NO: 199900221}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE SAKURA BANK LIMITED}

^{Date: 09/12/1999}

^{Comments: CHARGE NO: 199905431}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE SAKURA BANK LIMITED}

^{Date: 14/12/2000}

^{Comments: CHARGE NO(S): 200006109, 200006110, 200006111}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE SAKURA BANK LIMITED}

PREMISES/PROPERTY INFORMATIONS

^{Date: 16/12/2004 Tax rate: 10}

^{Site Address: 39 TUAS WEST DRIVE}

^{Town: SINGAPORE}

^{County: - Postcode: 638406}

^{Country: Singapore}

^{Annual Value: 4,063,000}

*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% (IE 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

^{SAKURA BANK LTD}

^{SUMITOMO MITSUI BANKING CORPORATION}

ASSOCIATED COMPANY(IES)

^{NANYANG MARITIME (S'PORE) PTE LTD}

^{39 TUAS WEST DRIVE}

^{SINGAPORE Singapore}

SHAREHOLDERS(S)

^{ISHIHARA SANGYO KAISHA LTD 150,000,000 Company}

^{Street: 3-15 EDOBORI, 1 CHOME}

^NISHI-KU

^{Town: OSAKA}

^{Postcode: 550}

^{Country: Japan}

FORMER SHAREHOLDER(S)

^{ISHIHARA SANGYO KAISHA LTD 120,000,000}

HOLDING COMPANY

^{ISHIHARA SANGYO KAISHA LTD UF01682G %: 100}

SUBSIDIARY(IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity: SUFFICIENT}

^{Payments: REGULAR}

^{Trend: UPWARD}

^{Financial Situation: AVERAGE}

LITIGATION(S)

No Litigation In Our Database

FINANCIAL ELEMENTS

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

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

^{Date Account Lodged: 24/04/2006}

^{Balance Sheet Date: 31/12/2006 31/12/2005 31/12/2004}

^{Number of weeks: 52 52 52}

^{Consolidation Code: COMPANY COMPANY COMPANY}

^{--- ASSETS}

^{Preliminary Exp 27,816,000 27,816,000 106,000}

^{Intangible Fixed Assets: 61,044,000 63,611,000 66,202,000}

^{Tangible Fixed Assets: 77,004,000 75,891,000 78,516,000}

^{Investments 359,000 377,000 291,000}

^{Total Fixed Assets: 166,223,000 167,695,000 145,115,000}

^{Inventories: 38,093,000 50,086,000 45,541,000}

^{Receivables: 14,427,000 14,647,000 11,225,000}

^{Cash,Banks,Securities: 15,524,000 21,601,000 23,019,000}

^{Other current assets: 693,000 857,000 1,104,000}

^{Total Current Assets: 68,737,000 87,191,000 80,889,000}

^{TOTAL ASSETS: 234,960,000 254,886,000 226,004,000}

^{--- LIABILITIES}

^{Equity capital: 150,000,000 150,000,000 150,000,000}

^{Profit & loss Account: 29,845,000 32,173,000 -2,126,000}

^{Total Equity: 179,845,000 182,173,000 147,874,000}

^{Long Term Loans: - 11,900,000 23,800,000}

^{Other long term Liab.: 11,878,000 5,828,000 5,666,000}

^{Total L/T Liabilities: 11,878,000 17,728,000 29,466,000}

^{Trade Creditors: 26,906,000 39,561,000 33,063,000}

^{Short term liabilities: 4,231,000 3,259,000 3,388,000}

^{Due to Bank: 12,100,000 12,165,000 12,213,000}

^{Total short term Liab.: 43,237,000 54,985,000 48,664,000}

^{TOTAL LIABILITIES: 55,115,000 72,713,000 78,130,000}

^{PROFIT & LOSS ACCOUNT}

^{Net Sales 155,247,000 150,915,000 122,820,000}

^{NET RESULT BEFORE TAX: -2,328,000 6,637,000 3,420,000}

^{Tax: - -27,662,000 -}

^{Net income/loss year: -2,328,000 34,299,000 3,420,000}

^{Interest Paid: 1,236,000 779,000 896,000}

^{Depreciation: 13,804,000 13,177,000 12,674,000}

^{Wages and Salaries: 10,798,000 11,758,000 11,161,000}

^{Financial Income: 556,000 282,000 183,000}

RATIOS

^{31/12/2006 31/12/2005 31/12/2004}

^{Net result / Turnover(%): -0.01 0.23 0.03}

^{Fin. Charges / Turnover(%): 0.01 0.01 0.01}

^{Stock / Turnover(%): 0.25 0.33 0.37}

^{Net Margin(%): -1.50 22.73 2.78}

^{Return on Equity(%): -1.29 18.83 2.31}

^{Return on Assets(%): -0.99 13.46 1.51}

^{Net Working capital: 25500000.00 32206000.00 32225000.00}

^{Cash Ratio: 0.36 0.39 0.47}

^{Quick Ratio: 0.69 0.66 0.70}

^{Current ratio: 1.59 1.59 1.66}

^{Receivables Turnover: 33.45 34.94 32.90}

^{Leverage Ratio: 0.46 0.61 0.96}

^{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}

^{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 EVEN THOUGH NET WORTH DECREASED BY 1.28% FROM S$182,173,000 IN 2005 TO S$179,845,000 IN 2006.}

^{THIS WAS DUE TO LOWER ACCUMULATED PROFITS OF S$29,845,000 (2005: S$32,173,000); A FALL OF 7.24% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 62.23% (2005: 71.95%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$26,906,000 (2005: S$39,561,000). THE BREAKDOWN IS AS FOLLOWS:}

^{-HOLDING COMPANY - 2006: S$18,921,000 (2005: S$29,982,000)}

^{-ASSOCIATED COMPANY - 2006: S$775,000 (2005: S$903,000)}

^{-AMOUNTS DUE TO RELATED PARTIES - 2006: S$34,000 (2005: S$32,000)}

^{-THIRD PARTIES - 2006: S$7,176,000 (2005: S$8,644,000)}

^{AMOUNTS DUE TO BANKS, WHICH CONSIST OF A SECURED BANK LOAN, REMAINED AT S$11,900,000.}

^{SUBJECT'S LONG TERM LIABILITIES FELL BY 33.00% TO S$11,878,000 (2005: S$17,728,000), AND CONSIST OF THE FOLLOWING:}

^{-BANK LOAN (SECURED) - 2006: - (2005: S$11,900,000)}

^{-HIRE PURCHASE CREDITORS - 2006: S$11,878,000 (2005: S$5,828,000)}

^{IN ALL, LEVERAGE RATIO FELL FROM 0.61 TIMES TO 0.46 TIMES AS A RESULT OF A FALL IN TOTAL LIABILITIES.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE EVEN THOUGH NET WORKING CAPITAL FELL BY 26.30% TO S$25,500,000 (2005: S$32,206,000).}

^{CURRENT RATIO REMAINED AT 1.59 TIMES WHILE QUICK RATIO IMPROVED TO 0.69 TIMES FROM 0.66 TIMES IN 2005.}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 2.87% FROM S$150,915,000 IN 2005 TO S$155,247,000 BUT SUBJECT SUFFERED A NET LOSS OF S$2,328,000 IN 2006, AS COMPARED TO THE NET PROFIT OF S$34,299,000 IN 2005.}

^{HENCE, NET MARGIN FELL INTO NEGATIVE REGION OF 1.50% (2005: 22.73%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT BE EXPECTED IF REVENUE AND EARNINGS CANNOT BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE NOT FORTHCOMING. IN ADDITION, ITS INTEREST COVERAGE WAS INADEQUATE AS SHOWN BY ITS NEGATIVE INTEREST COVERAGE RATIO OF 0.88 TIMES (2005: 9.52 TIMES).}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:}

^{-OTHER DEBTORS - 2006: S$154,000 (2005: S$154,000)}

^{-DEFERRED TAX ASSET - 2005: S$27,662,000 (2005: S$27,662,000)}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{BANK LOAN (SECURED)}

^{THE COMPANY'S LONG TERM BANK LOAN IS SECURED BY MORTGAGE ON THE COMPANY'S PROPERTIES, ASSETS, EARNINGS, ASSIGMENT OF ITS INSURANCE OF PROPERTIES, AND GUARANTEES FROM THE HOLDING COMPANY.}

^{CONTINGENT LIABILITIES}

^{AS AT 31 DECEMBER 2006, THE COMPANY HAS OBLIGATIONS TO BANK FOR LETTERS OF GUARANTEES ISSUED BY THE BANK ON BEHALF OF THE COMPANY AMOUNTING TO $3,161,157 (2005: $2,763,475).}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 23/08/1986 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "ISK SINGAPORE PTE. LTD.".}

^{AS AT 03/10/2007, THE COMPANY HAS ISSUED AND PAID-UP CAPITAL OF 150,000,000 SHARES OF A VALUE OF S$150,000,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) MANUFACTURE OF PETROCHEMICAL PRODUCTS MANUFACTURE BASIC INDUSTRIAL CHEMICALS}

^{2) WHOLESALE OF BASIC INDUSTRIAL CHEMICALS EXCEPT FERTILIZERS}

^{DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF THE MANUFACTURE AND SALE OF TITANIUM DIOXIDE PIGMENTS AND RELATED PRODUCTS.}

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

^{BACKGROUND OF THE SUBJECT:}

^{MAIN BUSINESS AREAS OF ISK GROUP}

^{* TIO2, BEST WHITE PIGMENT IN PAINTS, INK, PAPER, RUBBER AND PLASTICS.}

^{* TIO2 AS A FUNCTIONAL MATERIAL IN ELECTRONICS, COSMETICS, ULTRA-VIOLET ABSORBER,}

^{CATALYST AND NEW APPLICATIONS}

^{* MAGNETIC IRON OXIDE MATERIAL IN HIGH QUALITY AUDIO AND VIDEO TAPES.}

^{* AGROCHEMICALS AND ORGANIC INTERMEDIATES USED IN HERBICIDES, INSECTICIDES AND}

^FUNGICIDES.

^{* BIOSCIENCES, RESEARCH AND DEVELOPMENT OF BIO-INDUSTRIAL AND BIOMEDICAL PRODUCTS.}

^{THE PLANT IN TUAS, USING THE MORE ENVIRONMENTAL FRIENDLY CHLORIDE PROCESS, WAS OFFICIALLY OPENED IN FEBRUARY 1989.}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* MANUFACTURER OF SODIUM HYDROXIDE, SODIUM HYPOCHLORIDE AND TITANIUM DIOXIDE}

^{PRODUCTS DEALINGS:}

^{* TITANIUM DIOXIDE - WHITE PIGMENT}

^BRANDS:

^{* TIPAQUE}

^APPLICATIONS

^{* PLASTICS APPLICATION}

^{* PAINT APPLICATION}

^{EXPORT COUNTRIES:}

^{* ASEAN}

^{* JAPAN}

^{* UNITED STATES OF AMERICA}

^{* EUROPE}

^{TERMS OF PAYMENT:}

^{* TRADE AND OTHER RECEIVABLES: 30-60 DAYS TERM}

^{* TRADE AND OTHER PAYABLES : 30-90 DAYS TERM}

^AWARDS:

^{* ISO : 9002 BY PSB IN 1994}

^{* 9001:2000 BY PSB IN 2002}

^{* ISO: 14001 BY PSB IN 1999}

^{* 14001:2004 BY PSB IN 2006}

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

^{* SINGAPORE MANUFACTURERS' FEDERATION}

^{* JAPANESE CHAMBER OF COMMERCE & INDUSTRY}

^{* SINGAPORE INTERNATIONAL CHAMBERS OF COMMERCE}

^{FROM THE EARLIER TELE-INTERVIEW CONDUCTED ON 16/10/2006, THE FOLLOWING WAS GATHERED:}

^{IMPORT COUNTRIES:}

^{* JAPAN (HEADQUARTER)}

^{THE SUBJECT DOES EXPORTS AND DOES NOT SELL LOCALLY.}

^{NO OTHER TRADE INFORMATION IS AVAILABLE AT THE TIME OF THIS REPORT.}

^{THE COMPANY IS A WHOLLY-OWNED SUBSIDIARY OF ISHIHARA SANGYO KAISHA LTD, INCORPORATED IN JAPAN, WHICH IS ALSO THE COMPANY'S ULTIMATE HOLDING COMPANY.}

^{NUMBER OF EMPLOYEES (31 DECEMBER):}

^{* COMPANY - 2006/05: NOT AVAILABLE (2004: 233; 2003: 229, 2002: 236)}

^{* GROUP - 2006/05: - (2004: -)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{39 TUAS WEST DRIVE}

^{SINGAPORE 638406}

^{- OWNED PREMISE}

^{- DATE OF CHANGE OF ADDRESS: 10/09/1988}

^{- PLANT AREA: 192,000 SQUARE METRES}

^{- PRODUCTION CAPACITY: 54,000 TONS/YEAR}

^WEBSITE:

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

^EMAIL:

^{genaffairs@isktuas.com}

MANAGEMENT

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

^{1) KENSUKE KIMURA, A JAPANESE}

^{- BASED IN SINGAPORE}

^{2) KENZO ODA, A JAPANESE}

^{- BASED IN JAPAN.}

^{3) YASUO SUMINO, A JAPANESE}

^{- BASED IN JAPAN.}

SINGAPORE’S COUNTRY RATING 2007

^{INVESTMENT GRADE}

^{IN SINGAPORE, THE POLITICAL SITUATION REMAINS STABLE.}

^{SINGAPORE BOASTS THE BEST GOVERNANCE IN ASIA, WITH AN EFFECTIVE LEGAL SYSTEM FACILITATING DEBT COLLECTION AND TO A HIGH DEGREE OF FINANCIAL TRANSPARENCY.}

^{EXTERNAL ACCOUNTS HAVE REMAINED SUBSTANTIALLY IN SURPLUS, CONTRIBUTED TO THE DYNAMISM OF THE ELECTRONICS AND PHARMACEUTICALS SECTORS AND TO REPATRIATION OF PROFITS FROM SINGAPORE INVESTMENTS. THE FINANCIAL AND TOURISM SECTORS HAVE ALSO CONTRIBUTED TO THE LARGE CURRENT ACCOUNT SURPLUS.}

^{SINGAPORE CONTINUES TO KEENLY WELCOME FOREIGN INVESTMENT AND OFFERS A VERY OPEN AND WELL-PLANNED ECONOMIC AND POLITICAL ENVIRONMENT. IT HAS BEEN IMPLEMENTING AMBITIOUS DIVERSIFICATION STRATEGY, FOCUSED PARTICULARLY ON THE CHEMICALS AND PHARMACEUTICAL SECTORS.}

^{THE GOVERNMENT USES FOREIGN DIRECT INVESTMENT TO DEVELOP PRIORITY SECTORS (ELECTRONICS, CHEMICALS, BIOTECHNOLOGY). THE AIM IS TO ENCOURAGE THE GROWTH OF HIGH ADDED-VALUE ACTIVITIES AND TURN SINGAPORE INTO A REGIONAL HUB FOR FOREIGN INVESTORS INTERESTED IN ASIA.}

^{CERTAIN SECTORS (MEDIA, LEGAL AND FINANCIAL SERVICES) ARE HOWEVER ONLY PARTIALLY OPEN TO FOREIGN INVESTMENT. THESE SECTORS ARE SLOWLY OPENING UP, BUT THE PROGRESS IS SLOW. AFTER HIGH GROWTH IN 2006, BUOYED BY THE DYNAMISM OF BOTH EXPORTS AND HOUSEHOLD CONSUMPTION, A SLOWDOWN IS EXPECTED IN 2007.}

^ASSETS

^{" MAJOR EXPORTER OF CAPITAL IN ASIA, NOTABLY VIA THE STATE-OWNED TEMASEK HOLDING}

^COMPANY.

^{" HIGH QUALITY COMPETITIVENESS IN ASIA}

^{" EXCELLENT BUSINESS CLIMATE}

^{" POLITICAL STABILITY.}

^WEAKNESSES

^{" SKILLED MANPOWER HAS BEEN LACKING IN THE SECTORS TARGETED FOR DEVELOPMENT.}

^{" AN AGEING POPULATION COULD, ULTIMATELY, AFFECT ECONOMIC PERFORMANCE.}

^{" GROWING INEQUALITY AND THE EMERGENCE OF LONG-TERM UNEMPLOYMENT AMONG THE LEAST}

^{SKILLED COULD GENERATE SOCIAL TENSIONS.}

^{" BEING THE WORLD'S MOST OPEN ECONOMY, IT HAS BEEN VULNERABLE TO WORLD ECONOMIC}

^DOWNTURNS.

MANUFACTURING SECTOR

PAST PERFORMANCE

THE MANUFACTURING SECTOR GREW BY 18.8% COMPARED TO Q2 OF 2006, RIDING ON STRONG GROWTH FROM THE BIOMEDICAL MANUFACTURING AND TRANSPORT ENGINEERING CLUSTERS. TOTAL MANUFACTURING OUTPUT GREW BY 7.8% COMPARED TO OUTPUT IN THE SAME PERIOD LAST YEAR.

BIOMEDICAL MANUFACTURING CLUSTER REBOUNDED FROM ITS CONTRACTION IN MARCH. SPEARHEADING THE JUMP OF 98.5% IN APRIL’S OUTPUT OVER APRIL LAST YEAR WAS THE PHARMACEUTICALS SEGMENT. THE PRODUCTION OF ACTIVE PHARMACEUTICAL INGREDIENTS SHOT UP BY 120.5% THIS APRIL DUE TO THE VERY LOW OUTPUT LEVEL LAST APRIL. THE MEDICAL TECHNOLOGY SEGMENT CONTINUED TO EXPAND ITS OUTPUT OF MEDICAL DEVICES AND APPLIANCES BY 16.1%. THE GROWTH OF BOTH SEGMENTS PUSHED CUMULATIVE OUTPUT OF THE WHOLE CLUSTER UP BY 10.5% IN THE FIRST FOUR MONTHS OF THIS YEAR COMPARED TO THE SAME PERIOD IN 2006.

TRANSPORT ENGINEERING CLUSTER RECORDED ITS FOURTH CONSECUTIVE MONTHLY YEAR-ON-YEAR GROWTH IN 2007. Q2 GROWTH OF 24.4% WAS CONTRIBUTED BY ALL THREE SEGMENTS. THE MARINE & OFFSHORE SEGMENT GREW 32.0% AS SHIPYARDS QUICKENED THEIR PACE OF SHIPBUILDING, SHIP CONVERSION AND SHIP REPAIRING. THE AEROSPACE SEGMENT GREW 13.5% WITH MORE REPAIRS COMPLETED FOR COMMERCIAL AIRCRAFTS. THE LAND TRANSPORT SEGMENT GREW 38.0% WITH HIGHER PRODUCTION OF LAND VEHICLE EQUIPMENT TO MEET LOCAL AND OVERSEAS ORDERS. CUMULATIVELY, THE CLUSTER GREW 23.9% IN THE FIRST FOUR MONTHS OF 2007 COMPARED TO THE SAME PERIOD LAST YEAR.

THE ELECTRONICS CLUSTER’S OUTPUT IN Q2 INCREASED BY 7.4% COMPARED TO Q2 OF 2006, BOOSTED MAINLY BY THE 18.0% INCREASE IN THE PRODUCTION OF SEMICONDUCTORS. THE ELECTRONIC MODULES AND COMPONENTS SEGMENT GREW 5.5%. ON THE OTHER HAND, CONTRACTIONS WERE SEEN IN THE OUTPUT OF INFOCOMMS & CONSUMER ELECTRONICS (-10.1%), DATA STORAGE (-2.8%) AND COMPUTER PERIPHERALS (-0.2%). FOR THE FIRST FOUR MONTHS OF THIS YEAR, THE ELECTRONICS CLUSTER GREW CUMULATIVELY BY 3.9% COMPARED TO THE SAME PERIOD IN 2006.

THE CHEMICALS CLUSTER GREW 4.1% IN Q2 COMPARED TO LAST YEAR'S SECOND QUARTER. THE OUTPUT OF PETROLEUM ROSE 21.7% FROM A YEAR AGO WHEN OUTPUT WAS LOW ARISING FROM MAINTENANCE SHUTDOWNS IN SOME REFINERY PLANTS. THE PRODUCTION OF PETROCHEMICALS FELL SLIGHTLY BY 0.6%. THE OUTPUT OF SPECIALTY CHEMICALS SHRANK 9.6% ON ACCOUNT OF LESS OUTPUT OF EPOXY COMPOUNDS, MINERAL OIL ADDITIVES AND CHEMICAL CATALYSTS. THE CLUSTER RECORDED A CUMULATIVE GROWTH OF 1.8% IN THE FIRST FOUR MONTHS OF 2007 COMPARED TO THE SAME PERIOD LAST YEAR.

OUTPUT OF THE PRECISION ENGINEERING CLUSTER FELL BY 2.5% IN Q2 2007. THIS CAME FROM THE CONTRACTIONS OF 1.4% AND 3.2% FOR THE MACHINERY & SYSTEMS SEGMENT AND PRECISION MODULES & COMPONENTS SEGMENT RESPECTIVELY. CUMULATIVELY, THE FIRST FOUR MONTHS’ OUTPUT THIS YEAR WAS 0.9% LESS THAN THE OUTPUT IN THE SAME PERIOD OF 2006.

THE GENERAL MANUFACTURING INDUSTRIES GREW 11.3% YEAR-ON-YEAR IN Q2 2007. THE FOOD, BEVERAGES AND TOBACCO INDUSTRIES CONTRIBUTED LARGELY TO THE GROWTH WITH OUTPUT INCREASES OF 18.3%. THE MISCELLANEOUS INDUSTRIES ALSO GREW 14.9%. CUMULATIVE OUTPUT FOR THIS GROUP OF INDUSTRIES GREW 9.8% IN THE FIRST FOUR MONTHS OF THIS YEAR COMPARED TO THE SAME PERIOD IN 2006.

OUTLOOK

THE MANUFACTURING SECTOR IS MORE OPTIMISTIC IN THE NEXT SIX MONTHS ENDING SEPTEMBER 2007, COMPARED TO THE FIRST QUARTER OF THE YEAR. OVERALL, A WEIGHTED 30% OF MANUFACTURERS FORESEE AN IMPROVED OUTLOOK, WHILE 4% PREDICT DETERIORATION. THIS RESULTS IN A NET WEIGHTED BALANCE OF 26% OF MANUFACTURERS EXPECTING BUSINESS CONDITIONS TO IMPROVE, WHICH IS HIGHER THAN THE 7% RECORDED A QUARTER AGO. THE POSITIVE BUSINESS SENTIMENT IS LED BY THE ELECTRONICS CLUSTER.

BUSINESS OUTLOOK IN THE BIOMEDICAL MANUFACTURING CLUSTER REMAINS RELATIVELY STABLE FOR THE NEXT SIX MONTHS ENDING SEPTEMBER 2007, COMPARED TO THE FIRST QUARTER OF THE YEAR. IN BOTH THE PHARMACEUTICAL AND MEDICAL TECHNOLOGY SEGMENTS, OUTPUT FORECAST IS ANTICIPATED TO BE HIGHER IN THE SECOND QUARTER OF 2007, COMPARED TO THE FIRST QUARTER, IN PREPARATION FOR ORDERS AND DELIVERIES TO BE MADE IN THE SAME PERIOD.

THE TRANSPORT ENGINEERING CLUSTER REMAINS POSITIVE ABOUT BUSINESS PROSPECTS IN THE NEXT SIX MONTHS ENDING SEPTEMBER 2007, COMPARED TO LAST QUARTER. THE MARINE & OFFSHORE ENGINEERING SEGMENT REMAINS ROBUST, WITH THE MAJORITY OF SHIPYARDS ANTICIPATING HIGHER LEVELS OF REPAIRING AND CONVERSION ACTIVITIES IN SECOND QUARTER OF 2007, COMPARED WITH THE FIRST QUARTER OF THE YEAR. STRONGER PERFORMANCE IS ALSO ANTICIPATED IN THE AEROSPACE SEGMENT ON A QUARTER TO QUARTER BASIS, AS AIRCRAFT REPAIR AND SERVICING ACTIVITIES INCREASE IN LINE WITH MORE OVERSEAS ORDERS AND EXPORTS. OUTPUT IN THE LAND TRANSPORT SEGMENT IS ALSO EXPECTED TO RISE IN THE SECOND QUARTER OF THE YEAR, COMPARED WITH A QUARTER AGO, IN FULFILLMENT OF CONTRACTUAL ORDERS.

THE ELECTRONICS CLUSTER IS SIGNIFICANTLY MORE OPTIMISTIC COMPARED TO THE FIRST QUARTER OF THE YEAR. A NET WEIGHTED BALANCE OF 38% OF MANUFACTURERS EXPECTS BUSINESS CONDITIONS TO IMPROVE IN THE NEXT SIX MONTHS ENDING SEPTEMBER 2007, COMPARED TO A NET WEIGHTED BALANCE OF -1% RECORDED IN THE FIRST QUARTER. IN PARTICULAR, MANUFACTURERS IN THE COMPUTER PERIPHERALS AND INFOCOMMS AND CONSUMER ELECTRONICS SEGMENTS ARE MORE BULLISH DUE TO NEW PRODUCT INTRODUCTIONS AND AN EXPECTED PICK UP IN MARKET DEMAND FOLLOWING THE FIRST QUARTER SEASONAL LULL. CHIP MAKERS ALSO PREDICT SUSTAINED GLOBAL DEMAND OVER THE SECOND AND THIRD QUARTERS OF THE YEAR, AS EVIDENCED BY AN EXPECTED INCREASE IN EXPORT ORDERS AND SALES. PRODUCTION IN ALL SEGMENTS OF THE CLUSTER IS EXPECTED TO RISE IN THE SECOND QUARTER, OVER THE LOW LEVELS IN THE FIRST QUARTER OF 2007. IN TERMS OF EMPLOYMENT OUTLOOK, A NET WEIGHTED 24% OF THE ELECTRONICS CLUSTER IS EXPECTED TO HIRE MORE WORKERS IN THE SECOND QUARTER OF 2007, AS PRODUCTION AND SALES INCREASE.

IN THE CHEMICALS CLUSTER, A NET WEIGHTED 10% OF MANUFACTURERS EXPECT THE BUSINESS ENVIRONMENT IN THE SECTOR TO IMPROVE IN THE NEXT SIX MONTHS ENDING SEPTEMBER 2007. FIRMS IN THE SPECIALTIES AND OTHER CHEMICALS SEGMENTS ARE MORE OPTIMISTIC AS THE TREND OF SALES LEVEL DURING THE APRIL TO SEPTEMBER PERIOD IS EXPECTED TO RISE, FOLLOWING SEASONAL WEAKNESS IN THE FIRST THREE MONTHS OF 2007. OUTPUT IN ALL SEGMENTS OF THE CLUSTER IS PROJECTED TO INCREASE IN THE SECOND QUARTER OF THE YEAR, AS COMPARED TO THE FIRST. THE ONLY EXCEPTION IS IN THE PETROLEUM REFINERY SEGMENT, WHERE SOME MAINTENANCE DOWNTIME IS PLANNED DURING THIS PERIOD.

A NET WEIGHTED BALANCE OF 24% OF THE PRECISION ENGINEERING CLUSTER EXPECT AN IMPROVEMENT IN THE OPERATING ENVIRONMENT IN THE NEXT SIX MONTHS ENDING SEPTEMBER 2007, AS COMPARED TO ONLY 4% RECORDED A QUARTER AGO. ON THE PRODUCTION FRONT, A TURNAROUND FROM THE SEASONALLY WEAK FIRST QUARTER IS ALSO EXPECTED. THE MACHINERY & SYSTEMS SEGMENT FORECAST AN INCREASE IN THE OUTPUT OF INDUSTRIAL PROCESS CONTROL EQUIPMENT AND SEMICONDUCTOR ASSEMBLY AND TESTING EQUIPMENT, IN VIEW OF HIGHER ORDERS AND DELIVERIES ANTICIPATED IN THE SECOND QUARTER OF 2007. MANUFACTURERS IN THE PRECISION MODULES & COMPONENTS SEGMENT EXPECT AN INCREASE IN PRODUCTION DUE TO THE INTRODUCTION OF SOME NEW PRODUCT LINES, AND IN RESPONSE TO HIGHER ORDER LEVELS. MOREOVER, SINGAPORE'S PRECISION ENGINEERING SECTOR IS GROWING AND INCREASING ITS OUTPUT ANNUALLY AND IS EXPECTED TO GENERATE S$28 BILLION BY 2010.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

economic development board

CONTACT SINGAPORE

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.	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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