MIRA INFORM REPORT

Report Date :

19.06.2008

IDENTIFICATION DETAILS

Name :	PERSTORP SINGAPORE PTE. LTD.

Formerly Known As :	^{LONZA SINGAPORE PTE LTD}

Registered Office :	^{12 Sakra Road Jurong Island, 627892}

Country :	Singapore

Financials (as on) :	31.12.2006

Date of Incorporation :	^31.10.1996

Com. Reg. No.:	^199607827W

Legal Form :	^{Pte Ltd}

Line of Business :	^{The Manufacture and Sale of Purified Isophthalic Acid and Metaxylene.}

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate

Payment Behaviour :	Regular

Litigation :	Exists

Subject Company

PERSTORP SINGAPORE PTE. LTD.

Line Of Business

^{THE MANUFACTURE
AND SALE OF PURIFIED ISOPHTHALIC ACID AND
METAXYLENE.}

Parent Company

^{PLS HOLDING PTE. LTD.}

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2006

COMPANY

Sales : US$ 97,951,732

Networth : US$-15,151,046

Paid-Up Capital : US$100,737,290

Net result : US$ 4,960,281

Net Margin(%) : 5.06

Return on Equity(%) : -32.74

Leverage Ratio : - 6.85

COMPANY IDENTIFICATION

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

^{Former
Name : LONZA SINGAPORE PTE LTD}

^{Business
Address : 12 SAKRA ROAD}

^{JURONG ISLAND}

^{Town : SINGAPORE}

^{Postcode : 627892}

^{County :}

^{Country : Singapore}

^{Telephone : 6867 6393}

^{Fax : 6867 6204}

^{ROC
Number :
199607827W}

^{Reg.
Town :}

PREVIOUS IDENTIFICATION

^{LONZA
SINGAPORE PTE LTD DATE OF CHANGE OF NAME: 20/11/2007}

SUMMARY

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

^{Legal Form :}^{Pte Ltd}

^{Date Inc. :}^31/10/1996

^{Previous Legal Form : -}

^{Summary year :}^31/12/2006

^{Sales :}^97,951,732

^{Networth :}^-15,151,046

^{Capital :
-}

^{Paid-Up Capital :}^100,737,290

^{Employees : 100}

^{Net result :}^4,960,281

^{Share value : -}

^{Auditor :}^{PRICEWATERHOUSECOOPERS}

^{BASED
ON ACRA'S RECORD}

^{NO.OF SHARES CURRENCY AMOUNT}

^{ISSUED
ORDINARY 45,500,000 SGD 45,500,000.00}

^{ISSUED
ORDINARY 675,000 USD 69,549,975.00}

^{PAID-UP
ORDINARY - SGD 45,500,000.00}

^{PAID-UP
ORDINARY - USD 69,549,975.00}

REFERENCES

^{Litigation : YES}

^{Company
status : TRADING}

^{Started
:
31/10/1996}

PRINCIPAL(S)

^{DOMENICO
PEDRETTI
F5640917M Director}

DIRECTOR(S)

^{DOMENICO
PEDRETTI F5640917M Director}

^{Appointed
on : 11/06/2000}

^{Street
: 11 ORCHARD TURN}

^#15-08

^{Town: SINGAPORE}

^{Postcode: 238800}

^{Country: Singapore}

^{HO
WUI MEE MARIAN
S1787009B Company Secretary}

^{Appointed
on : 01/12/2006}

^{Street
: 16 SHAN ROAD}

^#02-02

^{PINNACLE 16}

^{Town: SINGAPORE}

^{Postcode: 328107}

^{Country: Singapore}

^{BENGT
ANDERS LENNART SALLMEN
34693184 Director}

^{Appointed
on : 19/11/2007}

^{Street
: BOVETEVAGEN 16, SE-260 40 VIKEN}

^{Town: SWEDEN}

^Postcode:

^{Country: Sweden}

^{LARS
PER OLOV MORIN
45840520 Director}

^{Appointed
on : 19/11/2007}

^{Street
: NORRA KYRKOGATAN 8 252 23}

^HELSINGBORG

^{Town: SWEDEN}

^Postcode:

^{Country: Sweden}

^{BO
GUSTAV LENNART HAGELQVIST
56070740 Director}

^{Appointed
on : 19/11/2007}

^{Street
: SVANELUNDSVAGEN 20, 263
91 HOGANAS}

^{Town: SWEDEN}

^Postcode:

^{Country: Sweden}

^{BENGT
ANDERS LENNART SALLMEN
34693184 Managing Director}

^{Appointed
on : 01/01/2008}

^{Street
: BOVETEVAGEN 16, SE-260 40
VIKEN}

^{Town: SWEDEN}

^Postcode:

^{Country: Sweden}

FORMER DIRECTOR(S)

^{TAN
SUAN SWEE
S1163924J}

^{KONG
YIM PUI SUSAN
S1471708J}

^{SEOW
MAY LING CARRIE
S1516073Z}

^{GIANCARLO
ANGARONI
F5532968X}

^{LIEW
SEOW NGOW S1373970F}

^{LAU
JO YEN S7277962B}

^{PETER
KALANTZIS
5823074}

^{ANDREA
DE VIRGILLIIS
707175A}

^{URS
PETER FISCHER 6210168}

^{HUGH
DAVID MARKEY
BC043641}

^{SERGIO
MARCHIONNE
BC103643}

^{BEAT
IN-ALBON 6115584}

^{ROLAND
MICHAEL WAIBEL
7579953}

^{MARKUS
GEMUND
J00 17587}

^{TONG
MIN LEE S1175101F}

^{M.
SIVAANANTHAN S0181790F}

^{LIM
I-AN CHRISTOPHER JR
S7107421H}

^{TORALF
HAAG 132112765}

^{LUKAS
UTIGER F0021363}

^{DOMENICO
PEDRETTI
F5640917M}

^{CHEW
BEE LENG S7036104C}

ACTIVITY(IES)

^{CHEMICALS
Code:3970}

^{BASED
ON ACRA'S RECORD}

^{1)
MANUFACTURE OF BASIC INDUSTRIAL ACIDS AND ALKALIS}

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

CHARGES

^{Date: 01/12/2007}

^{Comments
: CHARGE NO: C200710631}

^{CHARGEE:
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED}

^{AMOUNT
SECURED: 0.00 AND ALL MONIES OWNING}

PREMISES/PROPERTY INFORMATIONS

^{Date: 26/06/2007}

^{Estimated
Value :
Tax rate: 10}

^{Site
Address : 12 SAKRA ROAD}

^{JURONG ISLAND}

^{Town: SINGAPORE}

^County:

^{Postcode: 627892}

^{Country: Singapore}

^{Annual
Value: 2,333,000}

* 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
HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED}

SHAREHOLDERS(S)

^{PLS
HOLDING PTE. LTD.
46,175,000 Company}

^{Street
: 1 MARINA BOULEVARD}

^#28-00

^{ONE MARINA BOULEVARD}

^{Town: SINGAPORE}

^{Postcode: 018989}

^{Country: Singapore}

FORMER SHAREHOLDER(S)

^{EDB
INVESTMENTS PTE LTD
9,100,000}

^{LONZA
A G 36,400,000}

^{LONZA
HOLDING SINGAPORE PTE LTD
46,175,000}

HOLDING COMPANY

^{PLS
HOLDING PTE. LTD.
200717627E % : 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)

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

^{Case
Number: DCS002426/2002}

Defendant PERSTORP SINGAPORE PTE. LTD. ROC # : 199607827W

FINANCIAL ELEMENTS

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

^{Audit
Qualification:        "MILD"
UNCERTAINTIES       "MILD"
UNCERTAINTIES}  ^{Date Account Lodged:                 26/07/2007}

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

^{Number of
weeks:
52 52}

^{Consolidation
Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Intangible Fixed
Assets: 2,099,624 2,261,133}

^{Tangible Fixed
Assets: 69,551,979 71,729,293}

^{Total
Fixed Assets:
71,651,603
73,990,426}

^{Inventories: 14,772,166 10,210,277}

^{Receivable: 14,495,875 15,315,438}

^{Cash,Banks,
Securitis: 1,703,873 2,255,082}

^{Other current
assets: 436,495 1,314,163}

^{Total
Current Assets:
31,408,409 29,094,960}

^{TOTAL
ASSETS:
103,060,012
103,085,386}

^{--- LIABILITIES ---}

^{Equity capital: 100,737,290 31,862,315}

^Reserves: ^{Profit & lost Account: -115,888,336 -120,848,617}

^{Surplus
equity: 68,874,975}

^{Total
Equity:
-15,151,046
-20,111,327}

^{Long Term
Loans:
90,000,000
90,000,000}

^{Total
L/T Liabilities: 90,000,000 90,000,000}

^{Trade
Creditors:
6,921,265
7,949,185}

^{Prepay. & Def.
charges: 5,171,344 3,512,264}

^{Due to Bank: 6,610,000 10,530,000}

^{Provisions: 3,577}

^{Other Short term
Liab.: 9,504,872 11,205,264}

^{Total
short term Liab.:
28,211,058
33,196,713}

^{TOTAL
LIABILITIES:
118,211,058
123,196,713}

^{--- PROFIT & LOSS ACCOUNT
---}

^{Net Sales 97,951,732 78,359,472}

^{Result of ordinary
operations 6,132,314 -3,094,792}

^{NET RESULT BEFORE
TAX: 4,963,926 -3,980,666}

^{Tax :
3,645}

^{Net income/loss
year: 4,960,281 -3,980,666}

^{Interest Paid: 1,168,388 885,874}

^{Depreciation: 5,624,815 5,571,978}

^{Directors
Emoluments:
358,344
322,079}

^{wages and
Salaries:
5,669,220
4,678,321}

^{Financial
Income: 43,861 18,031}

RATIOS

                                    ^{31/12/2006                  31/12/2005}  ^{Turnover per employee:                        979517.32                  783594.72}  ^{Net result /
Turnover(%):                       0.05                       -0.05}  ^{Fin. Charges / Turnover(%):                    0.01                       0.01}  ^{Stock / Turnover(%):                                    0.15                       0.13}  ^{Net
Margin(%):                                   5.06                       -5.08}  ^{Return on Equity(%):                       -32.74                     19.79}  ^{Return on Assets(%):
                     4.81                       -3.86}  ^{Net
Working capital:                 3197351.00                 -4101753.00}  ^{Cash Ratio:                                     0.06                       0.07}  ^{Quick Ratio:                                    0.57                       0.53}  ^{Current
ratio:                                   1.11                       0.88}  ^{Receivables Turnover:                       53.28                      70.36}  ^{Leverage Ratio:
                -6.85                                -5.51}

^{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}

^{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 LIMITED IN} ^{VIEW OF THE
FOLLOWING:}

^{NET WORTH:}

^{THE
BALANCE SHEET WAS CONSIDERED INADEQUATE WITH NET WORTH REMAINING} ^{IN NEGATIVE
REGION, BUT NARROWING BY 24.66% FROM USD20,111,327 TO} ^{USD15,151,046}

^{THIS
WAS DUE TO LOWER ACCUMULATED LOSSES OF USD115,888,336} ^{(2005:
ACCUMULATED LOSSES OF USD120,848,617); A FALL OF 4.10% FROM} ^{THE
PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{TRADE
CREDITORS FELL BY 12.93% TO USD6,921,265 (2005: USD7,949,185),}

^{AND
CONSIST OF THE FOLLOWING:}

^{*
TRADE PAYABLES - 2006: USD6,777,990 (2005: USD7,155,932)}

^{*
RELATED CORPORATIONS - 2006: USD143,275 (2005: USD793,253)}

^{AMOUNTS
DUE TO BANKS, WHICH CONSISTS OF SECURED SHORT TERM BANK LOANS,} ^{FELL BY
37.23% TO USD6,610,000 (2005: USD10,530,000).}

^{SUBJECT'S
LONG TERM LIABILITY REMAINED AT USD90,000,000 DURING THE} ^{FINANCIAL
YEAR.}

^{IN
ALL, LEVERAGE RATIO REMAINED IN NEGATIVE REGION AND WORSENED FROM} ^{5.51 TIMES
TO 6.85 TIMES AS A RESULT OF THE RELATIVE NARROWING OF} ^{SUBJECT'S
TOTAL EQUITY.}

^LIQUIDITY:

^{IN
GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM} ^{THE RISE IN
NET WORKING CAPITAL INTO POSITIVE REGION OF USD3,197,351,} ^{AS
COMPARED TO THE NEGATIVE NET WORKING CAPITAL OF USD4,101,753 IN} ^2005.

^{CURRENT
RATIO ROSE TO 1.11 TIMES, UP FROM 0.88 TIMES AND QUICK RATIO} ^{IMPROVED TO
0.57 TIMES FROM 0.53 TIMES IN 2005.}

^{PROFITABILITY:}

^{REVENUE
POSTED AN INCREASE OF 25.00% FROM USD78,359,472 IN 2005 TO} ^{USD97,951,732
AND SUBJECT ACHIEVED A NET PROFIT OF USD4,960,281 IN} ^{2006, AS
COMPARED TO THE NET LOSS OF USD3,980,666 IN 2005.}

^{HENCE,
NET MARGIN ROSE INTO POSITIVE REGION OF 5.06% (2005: -5.08%).}

^{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 AS SHOWN BY ITS INTEREST} ^{COVERAGE
RATIO OF 5.25 TIMES (2005: -3.49 TIMES).}

^{NOTES
TO THE FINANCIAL STATEMENTS:}

^{GOING
CONCERN}

^{THE COMPANY HAS A
NET DEFICIENCY OF US$15,151,046 AS AT 31 DECEMBER} ^{2006. NOTWITHSTANDING
THESE, THE FINANCIAL STATEMENTS OF THE COMPANY} ^{HAVE BEEN PREPARED ON
A GOING CONCERN BASIS, AS THE ULTIMATE HOLDING} ^{COMPANY HAS
UNDERTAKEN TO PROVIDE CONTINUING FINANCIAL SUPPORT TO} ^{ENABLE THE
COMPANY TO CONTINUE TO OPERATE AS A GOING CONCERN IN THE} ^{FORSEEABLE
FUTURE.}

^{SHORT
TERM BANK LOANS (SECURED)}

^{THE SHORT TERM
BANK LOANS BEARS INTEREST AT RATES RANGING FROM 6.02%} ^{TO 6.05%
(2005: 5.02% TO 5.24%) PER ANNUM, AND ARE SECURED BY LETTERS} ^{OF
COMFORT FROM THE ULTIMATE HOLDING COMPANY. INTEREST RATES REPRICE} ^{WITHIN
1 YEAR.}

BACKGROUND/OPERATION

^{THE
COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON} ^{31/10/1996
AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS} ^{PRESENT
NAMESTYLE AS "LONZA SINGAPORE PTE LTD".}

^{THE
COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF} ^{45,500,000
ORDINARY SHARES, OF A VALUE OF S$45,500,000, AND 675,000} ^{ORDINARY
SHARES, OF A VALUE OF USD69,549,975.}

^{PRINCIPAL
ACTIVITIES:}

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

^{1)
MANUFACTURE OF BASIC INDUSTRIAL ACIDS AND ALKALIS}

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

^{THE
COMPANY WAS LISTED IN THE SINGAPORE LOCAL DIRECTORIES UNDER THE} ^{CLASSIFICATION
OF: CHEMICALS}

^{DURING
THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES} ^{OF THE
COMPANY ARE THOSE RELATING TO THE MANUFACTURE AND SALE OF} ^{PURIFIED
ISOPHTHALIC ACID AND METAXYLENE.}

^{FROM THE RESEARCH
DONE, SUBJECT IS A MANUFACTURER OF CHEMICALS} ^{(PURIFIED,
ISOPHTHALIC ACID AND METAXYLENE). THE CONSTRUCTION OF THE} ^{PLANT
STARTED IN YEAR 1997 AND SUBSEQUENTLY PRODUCTION STARTED IN} ^{YEAR
1999. THE PLANT PROVIDES PURE ISOPHTHALIC ACID (PIA) AND ITS} ^{RAW
MATERIAL METAXYLENE.}

^EXPORT
TO:

^{*
WORLDWIDE, ESPECIALLY ASIAN MARKET}

^{TARGET
MARKETS:}

^{*
ASIA AND ASEAN COUNTRIES}

^SUPPLIER:

^{*
SOXAL (SINGAPORE OXYGEN AIR LIQUIDE PTE LTD)}

^{INDUSTRIES
SERVED:}

^{*
PURE ISOPHTHALIC ACID IS PRIMARILY USED IN MAKING UNSATURATED}

^{POLYESTER
RESINS, WATER-BASED ENVIRONMENT-FRIENDLY PAINTS AND}

^{VARNISHES
CONTAINING NO SOLVENTS, AND AS AN ADDITIVE FOR THE}

^{TEREPHTHALATE
(PET) FROM WHICH PLASTIC BOTTLES ARE MADE.}

^AWARDS:

^{*
SCIC RESPONSIBLE CARE AWARD 2002 (RESPONSIBLE CARE MANAGEMENT} ^{PRACTICE:
POLLUTION PREVENTION - SILVER AWARD}

^{QUALITY
ASSESSMENT:}

^{*
ISO 14001}

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

^{*
SINGAPORE CHEMICAL INDUSTRY COUNCIL}

^{*
SWISS BUSINESS ASSOCIATION}

^{*
SINGAPORE MANUFACTURERS' FEDERATION}

^{*
SINGAPORE CHINESE CHAMBER OF COMMERCE & INDUSTRY}

^{*
ITALIAN CHAMBER OF COMMERCE (SINGAPORE)}

^{NO
OTHER TRADE INFORMATION WAS AVAILABLE AS TELE-INTERVIEW WAS NOT} ^{GRANTED BY
SUBJECT'S PERSONNEL}

^{THE
IMMEDIATE AND UTLIMATE HOLDING COMPANIES ARE LONZA HOLDING} ^{SINGAPORE PTE
LTD, A COMPANY INCORPORATED IN SINGAPORE AND LONZA} ^{GROUP LTD, A
COMPANY INCORPORATED IN SWITZERLAND, RESPECTIVELY.}

^{NUMBER
OF EMPLOYEES (31 DECEMBER):}

^{*
COMPANY - 2006: 100; (2005: NOT AVAILABLE; 2004: 91; 2003: 91;}

^{2002:
97; 2001: 94)}

^{REGISTERED
AND BUSINESS ADDRESS:}

^{12
SAKRA ROAD}

^{JURONG
ISLAND}

^{SINGAPORE
627892}

^{DATE
OF CHANGE OF ADDRESS: 18/01/2002}

^{-
OWNED PREMISE}

^{WEBSITE:
www.lonza.com}

^{EMAIL : contact.sg@lonza.it}

^{domenico.pedretti@lonza.com}

MANAGEMENT

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

^{1)
BENGT ANDERS LENNART SALLMEN, A SWEDISH}

^{-
BASED IN SWEDEN}

^{2)
LARS PER OLOV MORIN, A SWEDISH}

^{-
BASED IN SWEDEN}

^{3)
BO GUSTAV LENNART HAGELQVIST, A SWEDISH}

^{-
BASED IN SWEDEN}

^{4)
DOMENICO PEDRETTI, AN ITALIAN}

^{-
BASED IN SINGAPORE}

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 ROSE BY 0.2% IN 4Q 2007, SLOWER THAN THE 11.0% IN 3Q 2007. THE SMALL GROWTH WAS ATTRIBUTED TO A 28.0% CONTRACTION IN THE BIOMEDICAL MANUFACTURING CLUSTER. ON THE OTHER HAND, ELECTRONICS, CHEMICALS, PRECISION ENGINEERING AND TRANSPORT ENGINEERING CLUSTER PERFORMED BETTER. THE GENERAL MANUFACTURING INDUSTRIES CLUSTER SAW A MORE MODERATE PERFORMANCE.

OVERALL, THE MANUFACTURING SECTOR POSTED A 5.8% GROWTH IN 2007, DOWN FROM 12.0% IN 2006. THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO GROW AT A ROBUST PACE WHILE THE ELECTRONICS, CHEMICALS AND GENERAL MANUFACTURING INDUSTRIES CLUSTERS REGISTERED MORE MODEST INCREASES. HOWEVER, THE BIOMEDICAL MANUFACTURING CLUSTER RECORDED A MARGINAL DECLINE.

THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO RECORD STRONG GROWTH OF 24.0% IN 2007 COMPARED TO 32.0% IN 2006. WITHIN THE SECTOR, THE MARINE AND OFFSHORE ENGINEERING SEGMENT GREW SUBSTANTIALLY BY 32.0% AS CONTRACTS INCREASED FOR SHIP BUILDING, SHIP CONVERSION, SHIP REPAIRING AND OIL RIG FABRICATION. THE AEROSPACE SEGMENT GREW BY 9.6% WHICH IS ATTRIBUTED TO A HIGHER VOLUME IN REPAIRS OF COMMERCIAL AIRCRAFT FUELLED BY THE BOOM IN LOW COST AIR TRAVEL. THE LAND TRANSPORT SEGMENT GREW 19.0% ON THE BACK OF HIGHER EXPORT ORDERS.

THE ELECTRONICS CLUSTER ROSE BY 4.0%, DOWN FROM 4.5% IN 2006. THE PRODUCTION OF

SEMICONDUCTORS GREW 16.0% WITH INCREASED PRODUCTION OF NAND FLASH AND DRAMS WHILE THE PRODUCTION OF ELECTRONIC MODULES AND COMPONENTS GREW 7.0% AS COMPARED TO 2006.

ON THE OTHER HAND, LOWER OUTPUT WERE SEEN IN THE COMPUTER PERIPHERALS (-20.0%), INFOCOMMS AND CONSUMER ELECTRONICS (-7.7%) AND DATA STORAGE SEGMENTS (-1.6%). THE DECLINE IN THE DATA STORAGE SEGMENT MODERATED AS THE HIGHER OUTPUT OF DISK MEDIA OFFSET THE FALL IN DISK DRIVES PRODUCTION.

THE CHEMICALS CLUSTER EXPANDED BY 3.3% IN 2007, HIGHER THAN THE 1.7% IN 2006. THE PETROCHEMICALS AND SPECIALTY CHEMICALS SEGMENT ROSE BY 5.4% AND 6.5% RESPECTIVELY.

HOWEVER, THESE EXPANSIONS WERE MODERATED BY A 0.2% DIP IN OUTPUT OF REFINED PETROLEUM PRODUCTS, DUE TO SOME REFINERY PLANT MAINTENANCE SHUTDOWNS DURING THE YEAR.

THE PRECISION ENGINEERING CLUSTER REGISTERED FLAT OUTPUT GROWTH IN 2007. THE 6.5% GROWTH IN THE MACHINERY AND SYSTEMS SEGMENT WAS OFFSET BY A 4.3% DECLINE IN THE PRECISION MODULES AND COMPONENTS SEGMENT. PRODUCTION OF PRECISION COMPONENTS, SPRINGS, METAL STAMPINGS, DIES AND MOULDS FELL WHILE OUTPUT OF MACHINERY – SUCH AS HOISTS, LIFTING MACHINERY, REFRIGERATING MACHINERY, INDUSTRIAL PROCESS CONTROL EQUIPMENT, SWITCHGEAR AND SWITCHBOARDS ROSE.

THE BIOMEDICAL MANUFACTURING CLUSTER FELL BY 0.6%. ALTHOUGH THE MEDICAL TECHNOLOGY SEGMENT ROSE 15.0%, THE CLUSTER WAS DRAGGED DOWN BY A 2.5% DECLINE IN THE PHARMACEUTICALS SEGMENT. PLANT MAINTENANCE SHUTDOWNS AND CHANGES IN PRODUCT MIX RESULTED IN A SIGNIFICANT DECLINE IN ACTIVE PHARMACEUTICAL INGREDIENTS PRODUCTION IN 4Q 2007.

THE GENERAL MANUFACTURING INDUSTRIES GREW BY 6.3%, SIMILAR TO 2006. THE FOOD, BEVERAGES AND TOBACCO SEGMENT REGISTERED A STRONG 11% INCREASE IN OUTPUT, WHILE THE PRINTING SEGMENT GREW BY A MORE MODEST 2.4% OVER THE YEAR.

NEWS

SINGAPORE DRAWS S$3 BILLION OF MANUFACTURING INVESTMENTS

DESPITE CURRENT GLOBAL ECONOMIC JITTERS, INVESTMENT INFLOWS HERE REMAIN STRONG. IN THE FIRST FEW MONTHS OF 2008, SINGAPORE HAS ALREADY ATTRACTED MORE THAN S$3 BILLION OF MANUFACTURING INVESTMENTS.

ADDING A WHIFF OF FRESH AIR TO THE LIFESTYLE PRODUCTS AND SERVICES AREA – ANOTHER NEW CLUSTER SINGAPORE IS TRYING TO GROW – US CONSUMER GOODS GIANT PROCTER & GAMBLE HAS JUST OPENED ITS FIRST PERFUME PLANT IN ASIA AT TUAS, WHERE IT IS CAPITALISING ON THE HEIGHTENED “NOSES” OF ITS SINGAPORE TALENT TO HELP TAILOR-MAKE “ASIANISED” PRODUCTS.

EDB MANAGING DIRECTOR KO KHENG HWA SAID THAT SOME OF THE PROJECTS INJECT NEW CAPABILITIES AND STRENGTHEN THEIR EXISTING CLUSTERS – SUCH AS ROLLS-ROYCE’S AIRCRAFT ENGINE MANUFACTURING FACILITY, P&G’S SPECIALTY PERFUME PLANT AND LANXESS’S ADVANCED RUBBER FACILITY. OTHERS BUILD NEW GROWTH ENGINES FOR THE FUTURE – SUCH AS NORSUN’S HIGH-END SOLAR WAFER PLANT, UBISOFT’S 300-STRONG GAMES DEVELOPMENT STUDIO AND NESTE OIL’S NEXT-GENERATION BIODIESEL PLANT. THE NEW GROWTH SECTORS WILL ALSO DIVERSIFY SINGAPORE’S INDUSTRIAL BASE AND INCREASE SINGAPORE’S RESILIENCY TO WEATHER BUSINESS CYCLES.

LOOKING AHEAD, MR KO SAID THAT EDB IS ALSO MOUNTING A NEW INITIATIVE CALLED “FUTURE.SINGAPORE” TO BUILD ACTIVITY WITHIN SELECTED BUSINESS THEMES WHERE SINGAPORE WANTS GOOD SOLUTIONS. THESE THEMES INCLUDE URBAN SOLUTIONS,

WELLNESS, AGEING, AND HEALTHCARE AND LIFESTYLE PRODUCTS.

OUTLOOK

THE MANUFACTURING SECTOR IS CAUTIOUS ABOUT BUSINESS CONDITIONS FOR THE PERIOD ENDING JUNE 2008. A NET WEIGHTED BALANCE OF 2% OF MANUFACTURERS FORECAST BETTER BUSINESS, LOWER THAN THE 7% REGISTERED IN THE SAME PERIOD LAST YEAR AND THE 25% RECORDED IN THE PREVIOUS QUARTER.

IN THE TRANSPORT ENGINEERING CLUSTER, A NET WEIGHTED BALANCE OF 11.0% OF FIRMS EXPECTS THE BUSINESS CLIMATE TO IMPROVE IN THE MONTHS ENDING JUNE 2008, LOWER THAN THE 33.0% OBSERVED IN THE PRECEDING QUARTER. THE MARINE AND OFFSHORE ENGINEERING SEGMENT FORESEES SUBSTAINED DEMAND FOR SHIPYARD AND CONVERSION SERVICES, AND A STRONG BACKLOG OF ORDERS. THE AEROSPACE SEGMENT FORECASTS MORE REPAIR AND SERVICING JOBS IN 1Q 2007 AS AIRLINES SEND IN THEIR PLANES FOR MAINTENANCE FOLLOWING THE PEAK TRAVELLING PERIOD IN DECEMBER.

IN THE CHEMICALS CLUSTER, MAJORITY OF FIRMS IN THE CHEMICALS CLUSTER EXPECT BUSINESS CONDITIONS TO REMAIN THE SAME FOR THE FIRST HALF OF 2008, COMPARED WITH THE PREVIOUS QUARTER. A NET WEIGHTED BALANCE OF 6.0% OF FIRMS EXPECTS THE BUSINESS CLIMATE TO IMPROVE, COMPARED WITH 22% RECORDED IN THE PRECEDING QUARTER. THE SPECIALTIES AND OTHER CHEMICALS SEGMENTS EXPECT OUTPUT TO RISE IN 1Q 2008 OVER THE PREVIOUS QUARTER, DUE TO AN EXPECTED RISE IN EXPORTS AND ORDERS. REFINERIES AND PETROCHEMICAL MANUFACTURERS EXPECT THROUGHPUT IN 1Q 2008 TO STAY AT LEVELS SIMILAR TO THOSE IN 4Q 2007.

THE ELECTRONICS CLUSTER IS MUTED WITH A NET WEIGHTED BALANCE OF 1.0% OF FIRMS EXPECTING BETTER BUSINESS AHEAD, SIGNIFICANTLY LOWER THAN THE 33.0% RECORDED IN THE PRECEDING QUARTER. SEASONAL DEMAND FOR ELECTRONIC GOODS IS EXPECTED TO SOFTEN AFTER THE YEAR END FESTIVE PEAK, AND A GENERAL DECELERATION IS NOT EXPECTED ALTHOUGH FIRMS FORECAST GLOBAL DYNAMICS TO CONTINUE EXERTING COMPETITIVE PRESSURES ON THE CLUSTER. NEVERTHELESS, A NET WEIGHTED BALANCE OF 5.0% OF FIRMS EXPECT PRODUCTION TO RISE IN 1Q 2008, OVER THE PREVIOUS QUARTER, IN TANDEM WITH THEIR FORECASTS FOR DIRECT EXPORTS AND ORDERS.

THE BIOMEDICAL MANUFACTURING CLUSTER IS EXPECTING BUSINESS OUTLOOK TO REMAIN THE SAME. A NET WEIGHTED BALANCE OF 0.0% OF FIRMS EXPECT BUSINESS TO IMPROVE IN THE COMING MONTHS, COMPARED TO 22.0% A QUARTER AGO. IN THE PHARMACEUTICALS SEGMENT,

OUTPUT IS FORECASTED TO RISE IN 1Q 2008, AFTER A LULL IN THE PREVIOUS QUARTER.

ACCORDINGLY, FINISHED GOODS STOCKS ARE EXPECTED TO RISE IN THE SAME PERIOD, FOR EXPORT LATER IN THE YEAR.

IN THE PRECISION ENGINEERING CLUSTER, A NET WEIGHTED BALANCE OF 8.0% OF FIRMS FORECASTS BUSINESS CONDITIONS TO DETERIORATE IN THE FIRST HALF OF 2008, COMPARED TO THE 11.0% PREDICTING BETTER BUSINESS CONDITIONS IN THE PRECEDING QUARTER.

THIS IS ATTRIBUTED TO A SEASONAL SLOWDOWN, AS WELL AS RISING PRODUCTION AND RAW MATERIAL COSTS AND FLUCTUATIONS IN THE US DOLLAR. WHILE THE OUTPUT OF THE CLUSTER IS EXPECTED TO DECLINE ON A QUARTER-TO-QUARTER BASIS, A NET WEIGHTED BALANCE OF 5.0% OF FIRMS IN THE MACHINERY AND SYSTEMS SEGMENT EXPECTS HIGHER PRODUCTION ON THE BACK OF A FORECASTED RISE IN EXPORT ORDERS AND SHIPMENTS.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

THE BUSINESS TIMES

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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