MIRA INFORM REPORT

Report Date :

08.10.2007

IDENTIFICATION DETAILS

Name :	^{KOHLER CO}

Registered Office :	⁷^{Jurong Pier Road, Singapore}⁶¹⁹¹⁵⁹

Country :	Singapore

Financials (as on) :	31.12.2005

Date of Incorporation :	^30/03/1978

Com. Reg. No.:	^{F 02703G}

Legal Form :	^{Foreign Company}

Line of Business :	Manufacture, Sales and Distribution of Generators and related parts

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Moderate

Payment Behaviour :	Unknown

Litigation :	--

Subject Company

KOHLER CO

Line Of Business

MANUFACTURE, SALES AND DISTRIBUTION OF GENERATORS AND RELATED PARTS DESIGNED TO MEET THE SPECIFICATIONS OF THE ASIA PACIFIC, EUROPEAN, MIDDLE EASTERN AND AFRICAN REGIONS.

Parent Company

Financial Elements

FY2005

BRANCH

Sales : US$29,822,865

Networth : -US$23,634,846

Paid-Up Capital : NA

Net result : US$ 1,942,856

Net Margin(%) : 6.51

Return on Equity(%) : -8.22

Leverage Ratio : -1.77 TIMES

Rating

Credit Rating : Up to Sing $ 1000

COMPANY IDENTIFICATION

^{Subject Company : KOHLER CO}

^{Former Name :
-}

^{Business Address : 7
JURONG PIER ROAD}

^{Town :
SINGAPORE}

^{Postcode :
619159}

^{County :
-}

^{Country :
Singapore}

^{Telephone :
6264 6422}

^{Fax :
6264 6455}

^{ROC Number :
F 02703G}

^Reg.^Town ^{: -}

SUMMARY

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

^{Legal Form :
Foreign Company}

^{Date Inc. :
30/03/1978}

^{Previous Legal Form : -}

^{Summary year :
31/12/2005}

^{Sales :
29,822,865}

^{Net Worth :
-23,634,846}

^{Paid-Up Capital :
64,211,277}

^{Employees :
60}

^{Net Result :
1,942,856}

^{Auditor :
NIL}

REFERENCES

^{Litigation :
No}

^{Company status : TRADING}

^{Started :
30/03/1978}

PRINCIPAL(S)

No principals recorded in our Database

DIRECTOR(S)

^{LIM OON TEIK EUGENE S1301334I Agent}

^{Appointed on : 30/10/1996}

^{Street :
132 HILLCREST ROAD}

^{HILLCREST PARK}

^{Town :
SINGAPORE}

^{Postcode :
289002}

^{Country :
Singapore}

^{WILLIAM C. FOOTE 213417635 Director}

^{Appointed on : 24/04/2003}

^{Street :
1012 HAWTHORNE LANE}

^{GENEVA, IL 60134}

^{Town :
-}

^{Postcode :
-}

^{Country :
United States}

^{JEFFREY L. BLEUSTEIN 025723017 Director}

^{Appointed on : 24/04/2003}

^{Street :
7417 ORANGEWOOD LANE}

^{BOCA RATON, FL 33433}

^{Town :
-}

^{Postcode :
-}

^{Country :
United States}

^{LEE KHENG GUAN PATRICK S0143924C Agent}

^{Appointed on : 30/09/2003}

^{Street :
97 CASHEW ROAD}

^#09-06

^{CASHEW HEIGHTS
CONDOMINIUM}

^{Town :
SINGAPORE}

^{Postcode :
679668}

^{Country :
Singapore}

^{LAURA E. KOHLER 026045481 Director}

^{Appointed on : 29/04/1999}

^{Street :
722 TREEHOUSE LANE
KOHLER}

^{Town :
WI}

^{Postcode :
53044}

^{Country :
United States}

^{K. DAVID KOHLER 026073452 Director}

^{Appointed on : 29/04/1999}

^{Street :
1112 WEST RIVERSIDE DRIVE}

^{KOHLER, WI 53044}

^{Town :
-}

^{Postcode :
-}

^{Country :
United States}

^{JEFFREY A. JOERRES 027449346 Director}

^{Appointed on : 21/10/2005}

^{Street :
10295 NORTH RANGE LINE}

^{COURT MEQUON}

^{Town :
WI 53092}

^{Postcode :
-}

^{Country :
United States}

^{NATALIE A. BLACK 28519984 Director}

^{Appointed on : 24/04/1987}

^{Street :
9934 WEEKS LANE, OOSTBURG}

^{WI 53070}

^{Town :
WISCONSIN}

^{Postcode :
-}

^{Country :
United States}

^{EDWARD H. HARDISON 401267879 Director}

^{Appointed on : 29/04/1999}

^{Street :
1300 SCOTLAND AVE}

^CHARLOTTE

^{Town :
NC 28207}

^{Postcode :
-}

^{Country :
United States}

^{JOHN M KOHLER, JR 45102207 Director}

^{Appointed on : 01/03/1968}

^{Street :
104 FIRETHORN LANE}

^SPARTANBURG

^{Town :
SC29304}

^{Postcode :
-}

^{Country :
United States}

^{RACHEL D. KOHLER 26484257 Director}

^{Appointed on :
29/04/1999}

^{Street :
2614 NORTH MILDRED}

^{Town :
CHICAGO}

^{Postcode :
IL 60614}

^{Country :
United States}

^{HERBERT VOLLRATH KOHLER, JR 28128931 Director}

^{Appointed on : 01/03/1967}

^{Street :
441 GREEN TREE ROAD}

^{KOHLER WI 53044}

^{Town :
-}

^{Postcode :
-}

^{Country :
United States}

^{GLEN H. HINER 15520531 Director}

^{Appointed on : 23/02/2000}

^{Street :
3235 MACOMBER DRIVE}

^{P O BOX 1560, PEBBLE BEACH}

^{Town :
CALIFORNIA}

^{Postcode :
93953}

^{Country :
United States}

^{JEFFREY P. CHENEY 028461447 Director}

^{Appointed on : 04/05/2006}

^{Street :
N6315 NORTH 61ST STREET}

^{WI 53083}

^{Town :
SHEBOYGAN}

^{Postcode :
-}

^{Country :
United States}

FORMER DIRECTOR(S)

^{GERARD ANTHONY CORDEIRO S0194059G}

^{HENRY MOSLEY DYNE S0353103A}

^{WU CHANG SHENG S2120044A}

^{RICHARD A WELLS 394-34-886}

ACTIVITY (IES)

^{FOUNDRIES - IRON Code: 9580}

^{FOUNDRIES - STEEL Code: 9590}

^{JANITOR SERVICE Code: 12220}

^{BUSINESS SERVICES Code: 4}

^{BASED ON ACRA'S RECORD AS AT
11/01/2007}

^{1) IRON AND STEEL FOUNDARIES, BUSINESS
SERVICES}

^{2) BUILDING-CLEANING ACTIVITIES NEC (EG
JANITORIAL SERVICE);}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

^{Date :
15/01/2007}

^{Tax rate :
10%}

^{Site Address : 7 JURONG PIER ROAD}

^{Town :
SINGAPORE}

^{Postcode :
619159}

^{Country :
Singapore}

^{Annual Value :
SGD 620,000}

* 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

^{CITIBANK N.A.}

^{BANK OF AMERICA NATIONAL ASSOCIATION}

SHAREHOLDERS(S)

No Shareholders In Our Database

SUBSIDIARY (IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

Trade Morality : AVERAGE

Liquidity : LACKING

Payments : REGULAR

Trend : UPWARD

Financial Situation : BAD

LITIGATION(S)

No Litigation In Our Database

FINANCIAL ELEMENTS

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

^{Audit
Qualification: "MILD"
UNCERTAINTIES "MILD"
UNCERTAINTIES}

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

^{Number of
weeks:
52 52}

^{Consolidation
Code: BRANCH BRANCH}

^{--- ASSETS ---}

^{Tangible Fixed
Assets: 3,329,488 3,649,016}

^{Total Fixed
Assets}^{:
3,329,488
3,649,016}

^{Inventories: 4,868,720 5,269,308}

^{Receivables: 9,771,090 5,008,996}

^{Cash,Banks,
Securitis: 63,978 6,484}

^{Other current
assets: 81,106 37,228}

^{Total Current
Assets}^{:
14,784,894
10,322,016}

^{TOTAL ASSETS: 18,114,382 13,971,032}

^{--- LIABILITIES ---}

^{Profit & loss
Account: -23,634,846 -25,577,702}

^{Total Equity}^{: -23,634,846 -25,577,702}

^{Trade
Creditors:
12,337,528
3,460,618}

^{Due to Bank: 179,808 424,336}

^{Provisions: 210,000 48,354}

^{Other Short term
Liab.: 28,688,187 35,261,695}

^{Prepay. & Def.
charges: 333,705 353,731}

^{Total short term
Liab.}^{:
41,749,228
39,548,734}

^{TOTAL LIABILITIES: 41,749,228 39,548,734}

PROFIT & LOSS ACCOUNT

^{Net Sales 29,822,865 29,485,028}

^{Purchases,Sces
& Other Goods: 24,854,231 26,686,028}

^{Gross Profit: 4,968,634 2,799,000}

^{NET RESULT BEFORE
TAX: 1,942,856 1,438,166}

^{Net income/loss
year: 1,942,856 1,438,166}

^{Interest Paid: 1,406 162,230}

^{Depreciation: 350,341 381,608}

^{Wages and
Salaries:
2,711,998
2,753,593}

^{Financial Income: 201 169}

RATIOS

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

^{Turnover per
employee: 497047.75 491417.13}

^{Net result /
Turnover(%): 0.07 0.05}

^{Fin. Charges /
Turnover(%): 0.00 0.01}

^{Stock /
Turnover(%): 0.16 0.18}

^{Net Margin(%): 6.51 4.88}

^{Return on
Equity(%): -8.22 -5.62}

^{Return on
Assets(%): 10.73 10.29}

^{Net Working
capital: -26964334.00 -29226718.00}

^{Quick Ratio: 0.24 0.13}

^{Current ratio: 0.35 0.26}

^{Receivables
Turnover: 117.95 61.16}

^{Leverage
Ratio: -1.77 -1.55}

^{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)}

^{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 BRANCH WAS
DEEMED TO BE LIMITED IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS INADEQUATE WITH CAPITAL
DEFICIENCY OF USD23,634,846 (2004: -USD25,577,702) WHICH REPRESENTED THE
ACCUMULATED LOSSES BROUGHT FORWARD.}

^LEVERAGE:

^{THE LEVERAGE RATIO REMAINED UNFAVOURABLE AT
-1.77 TIMES (2004: -1.55 TIMES), INDICATING THAT THE BRANCH'S TOTAL LIABILITIES
WERE SUBSTANTIAL IN RELATION TO ITS TOTAL EQUITY.}

^{IN THE SHORT TERM, TRADE CREDITORS SURGED BY
2.57 TIMES TOTALLING USD12,337,528 (2004: USD3,460,618). OTHER CURRENT
LIABILITIES OF USD28,688,187 (2004: USD35,261,695) COMPRISED OF:}

^{* HEAD OFFICE - NON-TRADE OF USD28,436,563
(2004: USD35,227,033)}

^{* RELATED COMPANIES - NON-TRADE OF
USD251,624 (2004: USD34,662)}

^LIQUIDITY:

^{THE OVERALL LIQUIDITY OF THE BRANCH WAS
UNHEALTHY. BOTH THE QUICK AND CURRENT RATIOS WERE LACKING AT 0.24 TIMES (2004:
0.13 TIMES) AND 0.35 TIMES (2004: 0.26 TIMES) RESPECTIVELY.}

^{THIS WAS IN LINE WITH THE NET WORKING
CAPITAL, WHICH REGISTERED UNFAVOURABLY AT -USD26,964,334 (2004: -USD29,226,718)
AS WELL.}

^{PROFITABILITY:}

^{REVENUE FOR FY2005 IMPROVED SLIGHTLY BY 1.15%
TOTALLING USD29,822,865 (2004: USD29,485,028). NET INCOME ALSO ROSE BY 35.09%,
ACCOUNTING FOR USD1,942,856 (2004: USD1,438,166).}

^{AS A RESULT, NET MARGIN STOOD HIGHER AT
6.51% (2004: 4.88%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS WERE ANTICIPATED IN
VIEW OF THE CAPITAL DEFICIENCY, UNHEALTHY LIQUIDITY AND IF TRADE RECEIVABLES
WERE NON-FORTHCOMING.}

^{IN ADDITION, AVERAGE COLLECTION PERIOD HAD
LENGTHENED TO 118 DAYS (2004: 61 DAYS).}

^{NOTES TO THE FINANCIAL
STATEMENTS}^:

^GENERAL

^{THE BRANCH RELIES ON ITS HEAD OFFICE FOR
CONTINUING FINANCIAL SUPPORT WHICH WILL BE AVAILABLE AS AND WHEN REQUIRED.}

^COMMITMENTS

^{AS AT THE END OF THE YEAR, THE BRANCH HAS
THE FOLLOWING GUARANTEES GIVEN TO A BANK:}

^{* MAJOR EXPORTER SCHEME OF USD128,074 (2004:
USD130,505)}

^{* PERFORMANCE GUARANTEES IN RESPECT OF THE
BRANCH'S OPERATIONS OF USD353,672}

^{(2004: USD458,428)}

^{* OTHERS OF USD10,643 (2004: USD12,438)}

^{THESE PERFORMANCE GUARANTEES ARE UNSECURED.}

BACKGROUND/OPERATION

^{THE SUBJECT WAS REGISTERED IN THE REPUBLIC OF SINGAPORE ON 30/03/1978 AS A FOREIGN
BRANCH UNDER THE PRESENT NAMESTYLE OF "KOHLER CO".}

^{THE SINGAPORE
BRANCH IS A SEGMENT OF KOHLER COMPANY, A COMPANY INCORPORATED IN THE UNITED STATES OF AMERICA
AND IS NOT A SEPARATELY INCORPORATED LEGAL ENTITY.}

^{AS AT 11/01/2007, SUBJECT HAS AN AUTHORISED
CAPITAL OF US$200,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) IRON AND STEEL FOUNDARIES, BUSINESS
SERVICES}

^{2) BUILDING-CLEANING ACTIVITIES NEC (EG
JANITORIAL SERVICE); CONSTRUCTING,}

^{MANAGING & OPERATING OF EQUIPMENTS}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S
PRINCIPAL ACTIVITIES ARE THE MANUFACTURE, SALES AND DISTRIBUTION OF GENERATORS
AND RELATED PARTS DESIGNED TO MEET THE SPECIFICATIONS OF THE ASIA
PACIFIC, EUROPEAN, MIDDLE EASTERN AND AFRICAN REGIONS.}

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

^{SUBJECT IS LISTED IN THE SINGAPORE LOCAL DIRECTORY UNDER THE
CLASSIFICATION OF: UNINTERRUPTIBLE POWER SUPPLY.}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^ASIA^{PACIFIC HEADQUARTERS}

^{* MANUFACTURER OF INDUSTRIAL DIESEL
GENERATING SETS (4-2800KW), MARINE DIESEL}

^{GENERATING SETS (4-100KW), GAS/GASOLINE GENERATING SETS (4-800KW),
AUTOMATIC}

^{TRANSFER SWITCHES (30-4000AMPS) AND GASOLINE ENGINES (4-25HP)}

^{SUBJECT'S POWER SYSTEMS SOLUTIONS ARE:}

^{* INDUSTRIAL}

^{* MARINE}

^{* RESIDENTIAL}

^{SUBJECT HAS CUSTOMERS AND PARTNERS LOCATED
IN CHINA, INDONESIA, AND ELSEWHERE IN ASIA,
ENABLING US TO RESPOND VERY QUICKLY WHEN REQUIRED.}

^{TRADE NAMES:}

^{* KOHLER; INDUSTRIAL/MARINE DIESEL
GENERATORS,ETC}

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

^{* AMERICAN CHAMBER OF COMMERCE}

^{* SINGAPORE INTERNATIONAL CHAMBERS OF
COMMERCE}

^{QUALITY ASSESSMENT:}

^{* ISO 9001}

^{THERE ARE APPROXIMATELY 60 EMPLOYEES IN THE
COMPANY.}

^{REGISTERED AND BUSINESS ADDRESS :}

^{7 JURONG PIER ROAD}

^SINGAPORE⁶¹⁹¹⁵⁹

^{DATE OF CHANGE OF ADDRESS : 22/10/1996}

^{-- OWNED PREMISE (185,000 SQUARE FOOT)}

^{-- GENERATOR MANUFACTURING PLANT, DISTRIBUTION CENTER, CUSTOMER TRAINING}

^{FACILITIES, AND ONE OF THE BIGGEST ADVANCED TESTING FACILITIES IN ASIA
PACIFIC.}

^WEBSITE:

^{* http://www.kohler.com.sg}

^EMAIL:

^{* sales@kohler.com.sg}

^{* patrick.lee@kohler.com.sg (LOCAL AGENT -
LEE KHENG GUAN PATRICK)}

MANAGEMENT

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

^{1) JEFFREY L. BLEUSTEIN, AN AMERICAN}

^{-
BASED IN AMERICA}

^{2) LAURA E. KOHLER, AN AMERICAN}

^{-
BASED IN AMERICA}

^{3) K. DAVID KOHLER, AN AMERICAN}

^{-
BASED IN AMERICA}

^{4) JEFFREY A. JOERRES, AN AMERICAN}

^{-
BASED IN AMERICA}

^{5) JEFFREY P. CHENEY, AN AMERICAN}

^{-
BASED IN AMERICA}

^{6) GLEN H. HINER, AN AMERICAN}

^{-
BASED IN AMERICA}

^{7) WILLIAM C. FOOTE, AN AMERICAN}

^{-
BASED IN AMERICA}

^{8) RACHEL D. KOHLER, AN AMERICAN}

^{-
BASED IN AMERICA}

^{9) HERBERT VOLLRATH KOHLER, JR, AN AMERICAN}

^{-
BASED IN AMERICA}

^{10) NATALIE A. BLACK, AN AMERICAN}

^{- BASED
IN AMERICA}

^{11) EDWARD H. HARDISON, AN AMERICAN}

^{-
BASED IN AMERICA}

^{12) JOHN M KOHLER, JR, AN AMERICAN}

^{-
BASED IN AMERICA}

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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