MIRA INFORM REPORT

Report Date :

29.04.2008

IDENTIFICATION DETAILS

Name :	LYONDELL SOUTH ASIA PTE LTD

Registered Office :	^{250 North Bridge Road} ^#14-03/04 ^{Raffles City Tower}

Country :	Singapore

Financials (as on) :	31.12.2006

Date of Incorporation :	^26.02.2000

Com. Reg. No.:	^200001565W

Legal Form :	^{Pte Ltd}

Line of Business :	Trading and Supply of Chemicals for Industrial use and Providing Administrative Services to its related Corporations

RATING & COMMENTS

MIRA’s Rating :

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 :	Very Good

Payment Behaviour :	Regular

Litigation :	Clear

Subject Company

LYONDELL SOUTH ASIA PTE LTD

Line Of Business

TRADING AND SUPPLY OF CHEMICALS FOR INDUSTRIAL USE AND PROVIDING ADMINISTRATIVE SERVICES TO ITS RELATED CORPORATIONS

Parent Company

N.A.

Financial Elements

FY 2006

COMPANY

Sales : US$169,085,979

Networth : US$ 8,652,533

Paid-Up Capital : US$ 60,734

Net result : US$ 2,387,161

Net Margin(%) : 1.41

Return on Equity(%) : 27.59

Leverage Ratio : 4.18

COMPANY IDENTIFICATION

^{Subject Company : LYONDELL SOUTH ASIA PTE LTD}

^{Former Name :
-}

^{Business Address : 250 NORTH BRIDGE ROAD}

^#14-03/04

^{RAFFLES CITY TOWER}

^{Town :
SINGAPORE}

^{Postcode :
179101}

^{County :
-}

^{Country :
Singapore}

^{Telephone : 6880 2345}

^{Fax :
6880 2377 /6880 2378}

^{ROC Number :
200001565W}

^{Reg. Town :
-}

SUMMARY

^{Legal Form : Pte Ltd}

^{Date Inc. : 26/02/2000}

^{Previous Legal Form : -}

^{Summary year :
31/12/2006}

^{Sales :
169,085,979}

^{Networth : 8,652,533}

^{Capital :
-}

^{Paid-Up Capital : 60,734}

^{Employees : 20}

^{Net result : 2,387,161}

^{Share value :
1}

^{Auditor :
PRICEWATERHOUSECOOPERS}

REFERENCES

^{Litigation :
No}

^{Company status : TRADING}

^{Started :
26/02/2000}

PRINCIPAL(S)

^{KHOO TONY S1173512F Director}

DIRECTOR(S)

^{ADRIAN CHAN PENGEE S1658599H Company Secretary}

^{Appointed on : 01/04/2000}

^{Street : 700 LORONG 1 TOA PAYOH}

^#08-02

^{TRELLIS TOWERS}

^{Town: SINGAPORE}

^{Postcode: 319773}

^{Country: Singapore}

^{KHOO TONY S1173512F Director}

^{Appointed on : 26/02/2000}

^{Street : 12 STIRLING ROAD}

^#38-12

^QUEENS

^{Town: SINGAPORE}

^{Postcode: 148955}

^{Country: Singapore}

^{LUN CHEE LEONG S7003795E Company Secretary}

^{Appointed on : 30/09/2004}

^{Street : 60 LORONG 4 TOA PAYOH}

^#23-117

^{Town: SINGAPORE}

^{Postcode: 310060}

^{Country: Singapore}

^{CHARLES WAYNE
GRAHAM 426993766 Director}

^{Appointed on : 01/03/2007}

^{Street : SUITE 4937, FOUR SEASONS PLACE}

^{NO. 8 FINANCE STREET}

^CENTRAL

^Town:

^Postcode:

^{Country: Hong Kong}

^{SIO TAT LONG S0038448H Director}

^{Appointed on : 18/03/2008}

^{Street : 110 HOLLAND ROAD}

^#04-03

^{Town: SINGAPORE}

^{Postcode: 278553}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{YANG CHEN-CHEN
CHARLES 710073487}

^{ANG RU-LIN S7442282I}

ACTIVITY(IES)

^{CHEMICALS
Code:
3970}

^{TRADING COMPANIES Code: 22190}

^{BASED ON ACRA'S RECORD}

^{1) WHOLESALE OF CHEMICALS
AND CHEMICALS PRODUCTS;}

^{TRADING OF CHEMICAL
PRODUCTS}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

SHAREHOLDERS(S)

^{BASELL INTERNATIONAL HOLDINGS
B.V. 300,000 Company}

^{Street : HOEKSTEEN 66, 2132 MS}

^{Town: HOOFDDORP}

^Postcode:

^{Country: Netherlands}

FORMER SHAREHOLDER(S)

^{LYONDELL ASIA PACIFIC
LTD 100,000}

^{YANG CHEN-CHEN
CHARLES
1}

^{KHOO TONY 1}

SUBSIDIARY(IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity : SUFFICIENT}

^{Payments : REGULAR}

^{Trend : UPWARD}

^{Financial Situation: AVERAGE}

FINANCIAL ELEMENTS

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

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

^{Date Account Lodged: 23/07/2007}

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

^{Number of weeks: 52 52}

^{Consolidation Code: COMPANY COMPANY}

^{---
ASSETS ---}

^{Preliminary Exp 45,719 77,380}

^{Tangible Fixed
Assets: 173,540 252,732}

^{Total Fixed Assets: 219,259 330,112}

^{Inventories: 8,152,406 11,110,542}

^{Receivables: 31,745,157 25,002,857}

^{Cash,Banks,
Securitis: 4,391,691 566,053}

^{Other current assets: 277,412 182,480}

^{Total Current Assets: 44,566,666 36,861,932}

^{TOTAL ASSETS: 44,785,925 37,192,044}

^{---
LIABILITIES ---}

^{Equity capital: 60,734 60,734}

^{Profit & lost Account: 8,591,799 6,204,638}

^{Total Equity: 8,652,533 6,265,372}

^{L/T deffered taxes:
4,530}

^{Total L/T Liabilities: 4,530}

^{Trade Creditors: 34,141,805 28,436,484}

^{Prepay. & Def.
charges: 1,149,181 1,552,272}

^{Provisions: 839,155 933,386}

^{Other Short term
Liab.: 3,251}

^{Total short term Liab.: 36,133,392 30,922,142}

^{TOTAL LIABILITIES: 36,133,392 30,926,672}

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

^{Net Sales 169,085,979 133,809,426}

^{Purchases,Sces & Other
Goods: 160,330,572 124,407,446}

^{Gross Profit: 8,755,407 9,401,980}

^{NET RESULT BEFORE
TAX: 2,932,343 3,073,751}

^{Tax :
545,182
698,553}

^{Net income/loss year: 2,387,161 2,375,198}

^{Depreciation: 105,852 73,113}

^{Directors Emoluments: 256,867 238,671}

^{Wages and Salaries: 1,521,388 1,455,218}

^{Financial Income: 103,715 57,290}

RATIOS

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

^{Turnover per
employee: 8454298.95 6690471.30}

^{Net result /
Turnover(%): 0.01 0.02}

^{Stock / Turnover(%): 0.05 0.08}

^{Net Margin(%): 1.41 1.78}

^{Return on Equity(%): 27.59 37.91}

^{Return on Assets(%): 5.33 6.39}

^{Net Working capital: 8433274.00 5939790.00}

^{Cash Ratio: 0.12 0.02}

^{Quick Ratio: 1.00 0.83}

^{Current ratio: 1.23 1.19}

^{Receivables Turnover: 67.59 67.27}

^{Leverage Ratio:}^{4.18 4.94}

^{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)/1000}

^{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
PASSABLE WITH NET WORTH IMPROVED BY 38.10% FROM} ^{US$6,265,372 IN 2005 TO US$8,652,533 IN
2006. THIS WAS DUE TO HIGHER} ^{RETAINED EARNINGS OF US$8,591,799
(2005: US$6,204,638); A RISE OF} ^{38.47% FROM THE PRIOR YEAR.}

^LEVERAGE:

^{IN THE SHORT TERM,
SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS} ^{WHICH MADE UP 94.49% (2005: 91.96%) OF
THE TOTAL CURRENT LIABILITIES} ^{AND AMOUNTED TO US$34,141,805 (2005:
US$28,436,484). THE BREAKDOWN IS}

^{AS FOLLOWS:}

^{* TRADE PAYABLES - 2006:
US$9,609,702}

^{(2005: US$557,854)}

^{* AMOUNTS PAYABLE TO
ULTIMATE HOLDING COMPANY - 2006: US$9,269,130}

^{(2005: US$12,409,176)}

^{* AMOUNTS PAYABLE TO
RELATED CORPORATIONS - 2006: US$15,262,973}

^{(2005: US$15,469,454)}

^{IN ALL, LEVERAGE RATIO
FELL FROM 4.94 TIMES TO 4.18 TIMES DESPITE A} ^{GREATER RISE IN TOTAL LIABILITIES TO
TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS
PASSABLE AS SEEN FROM} ^{THE RISE IN NET WORKING CAPITAL AND LIQUIDITY RATIOS. CURRENT
RATIO} ^{ROSE TO 1.23 TIMES, UP FROM 1.19 TIMES AND QUICK RATIO
IMPROVED FROM} ^{0.83 TIMES TO 1.00 TIMES. SIMILARLY, NET WORKING
CAPITAL IMPROVED BY} ^{41.98% FROM US$5,939,790 IN 2005 TO US$8,433,274
IN 2006.}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 26.36% FROM
US$133,809,426 IN 2005 TO} ^{US$169,085,979 IN 2006. HOWEVER, THE RISE OF NET PROFIT WAS ONLY A} ^{SLIGHT INCREASE OF 0.50% TO US$2,387,161 (2005: US$2,375,198). THIS} ^{COULD
BE DUE TO HIGHER COST OF GOODS SOLD OF US$160,330,572 (2005:}

^{US$124,407,446). HENCE, NET MARGIN FELL FROM
1.78 TIMES IN 2005 TO} ^{1.41 TIMES IN 2006.}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED
IF REVENUE AND EARNINGS}

^{CAN BE MAINTAINED AND PAYMENT BY TRADE
DEBTORS ARE FORTHCOMING.}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEMS ARE
CLASSIFIED UNDER PRELIMINARY:}

^{* DEFERRED
EXPENDITURE - 2006: US$25,793
(2005: US$77,380)}

^{* DEFERRED INCOME TAX
ASSETS - 2006: US$19,926 (2005: NIL)}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC
OF SINGAPORE ON} ^{26/02/2000
AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS} ^{PRESENT
NAMESTYLE AS "LYONDELL SOUTH ASIA PTE LTD".}

^{THE COMPANY HAS A ISSUED AND PAID-UP CAPITAL
OF} ^{300,000
SHARES, OF A VALUE OF S$300,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED
WITH THE ACCOUNTING AND CORPORATE REGULATORY}

^{AUTHORITY (ACRA) BE
PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) WHOLESALE OF
CHEMICALS AND CHEMICALS PRODUCTS;}

^{TRADING OF CHEMICAL
PRODUCTS}

^{DURING THE FINANCIAL
YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF} ^{THE COMPANY CONSIST OF THE TRADING AND
SUPPLY OF CHEMICALS FOR}

^{INDUSTRIAL USE AND
PROVIDING ADMINISTRATIVE SERVICES TO ITS RELATED} ^{CORPORATIONS.}

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

^{SUBJECT ENGAGES IN THE FOLLOWING
ACTIVITIES:}

^{* MANUFACTURER AND
SELLER OF PROPYLENE OXIDE, PROPYLENE GLYCOL,} ^{ETHYLENE, PROPYLENE AND POLYETHYLENE.
SUBJECT IMPORTS AND EXPORTS} ^{CHEMICAL PRODUCTS AS WELL AS
TRANSPORTING CHEMICAL PRODUCTS TO} ^OVERSEAS.

^{BUSINESS PARTNER:}

^{* SAIPER CHEMICALS
PRIVATE LIMITED}

^{FROM THE TELE-INTERVIEW
CONDUCTED, SUBJECT CONFIRMED IT} ^{ADDRESS AND CONTACTS. HOWEVER, QUESTIONS REGARDING ITS IMPORT AND} ^{EXPORT COUNTRIES WERE REJECTED. THE FOLLOWING WAS GATHERED:}

^{NUMBER OF EMPLOYEES:}

^{* 20}

^{NO OTHER TRADE
INFORMATION IS AVAILABLE}

^{NUMBER OF EMPLOYEES (31
DECEMBER):}

^{* COMPANY - 2006: NOT
AVAILABLE (2005: NOT AVAILABLE; 2004: 13;}

^{2003: 14)}

^{REGISTERED AND BUSINESS
ADDRESS:}

^{250 NORTH BRIDGE ROAD}

^#14-03/04

^{RAFFLES CITY TOWER}

^{SINGAPORE 179101}

^{DATE OF CHANGE OF
ADDRESS: 09/05/2005}

^{- PROPERTY RECORD WAS
NOT AVAILABLE}

^{YOUR PROVIDED ADDRESS:}

^{250 NORTH BRIDGE ROAD}

^#114-03/04

^{RAFFLES CITY TOWER}

^{SINGAPORE 179101}

^{- INCORRECT}

^{YOUR PROVIDED CONTACTS:}

^{TEL NO.: 6880 7345}

^{FAX NO.: 6880 7377}

^{- INCORRECT}

^{WEBSITE : http://www.lyondell.com}

^{EMAIL :
-}

MANAGEMENT

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

^{1) CHARLES WAYNE GRAHAM,
AN AMERICAN}

^{- BASED IN HONG KONG.}

^{2) SIO TAT LONG, A
SINGAPOREAN}

^{- HOLDS NO OTHER
DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

^{3) KHOO TONY, A
SINGAPOREAN}

^{- HOLDS NO OTHER
DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

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.

WHOLESALE AND RETAIL TRADE SECTOR

PAST PERFORMANCE

THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.0% IN 4Q 2007, SLOWER THAN THE 6.8% GROWTH IN 3Q 2007. RETAIL SALES FELL BY 2.5%, FOLLOWING A 1.5% GROWTH IN 3Q 2007.

DOMESTIC WHOLESALE TRADE INDEX

THE OVERALL DOMESTIC WHOLESALE TRADE ROSE BY 22.2% IN 4Q 2007 OVER 4Q 2006.

EXCLUDING PETROLEUM, DOMESTIC SALES GREW BY 4.8%.

THE RISE IN THE OVERALL INDEX WAS MAINLY DUE TO HIGHER SALES OF PETROLEUM AND PETROLEUM PRODUCTS (47.3%), TIMBER, PAINTS AND CONSTRUCTION MATERIALS (29.8%). OTHER WHOLESALE SEGMENTS THAT REPORTED DOUBLE-DIGIT GROWTH WERE WHOLESALING OF GENERAL WHOLESALE TRADE, HOUSEHOLD EQUIPMENT AND FURNITURE AND CHEMICALS AND CHEMICAL PRODUCTS.

ON THE OTHER HAND, WHOLESALE SEGMENT THAT REPORTED LOWER SALES WERE ELECTRONIC COMPONENTS (-35.8%).

AT CONSTANT PRICES, THE OVERALL DOMESTIC WHOLESALE TRADE ROSE BY 1.6% IN 4Q 2007 OVER 4Q 2006. EXCLUDING PETROLEUM, DOMESTIC SALES ROSE SLIGHTLY BY 0.2%.

ON A QUARTER-OVER-QUARTER BASIS, THE OVERALL DOMESTIC WHOLESALE TRADE IN 4Q 2007 ROSE BY 7.1% OVER 3Q 2007. EXCLUDING PETROLEUM, DOMESTIC SALES CONTRACTED BY 2.9%.

THE MAJORTIY OF THE WHOLESALE SECTORS RECORDED HIGHER DOMESTIC SALES IN 4Q 2007 OVER PREVIOUS QUARTER. PETROLEUM AND PETROLEUM PRODUCTS EXPANDED BY 20.0%. GENERAL WHOLESALE TRADE AND INDUSTRIAL AND CONSTRUCTION MACHINERY ALSO REGISTERED

DOUBLE-DIGIT GROWTH OVER PREVIOUS QUARTER.

ON THE OTHER HAND, SALES OF FOOD, BEVERAGES AND TOBACCO AND ELECTRONIC COMPONENTS FELL IN 4Q 2007 OVER 3Q 2007.

FOREIGN WHOLESALE TRADE INDEX

THE OVERALL FOREIGN WHOLESALE TRADE FOR 4Q 2007 ROSE BY 27.0%, IN COMPARISON TO 4Q 2006. EXCLUDING PETROLEUM, IT EXPANDED BY 15.3%

MOST OF THE SECTORS REPORTED HIGHER SALES. DOUBLE-DIGIT GROWTH RATES FOR OVERSEAS SALES WERE RECORDED BY FOOD, BEVERAGES AND TOBACCO (40.6%) PETROLEUM AND PETROLEUM PRODUCTS (39.9%) SHIP CHANDLERS AND BUNKERING (24.3%) INDUSTRIAL AND CONSTRUCTION MACHINERY (18.2%) CHEMICALS AND CHEMICAL PRODUCTS (16.4%) ELECTRONIC COMPONENTS (12.1%) TIMBER, PAINT AND CONSTRUCTION MATERIALS (11.1%).

ON THE OTHER HAND, OVERSEAS SALES OF TELECOMMUNICATIONS AND COMPUTERS FELL BY 2.8%

IN 4Q 2007 OVER 4Q 2006.

AT CONSTANT PRICES, THE OVERALL INDEX ROSE BY 11.5% IN 4Q 2007 OVER 4Q 2006.

EXCLUDING PETROLEUM, FOREIGN WHOLESALE TRADE GREW BY 15.1%.

ON A QUARTER-OVER-QUARTER BASIS, THE OVERALL FOREIGN WHOLESALE TRADE IN 4Q 2007 ROSE BY 11.7% OVER 3Q 2007. EXCLUDING PETROLEUM, IT GREW BY 6.0%.

ALL WHOLESALE SECTORS RECORDED BETTER BUSINESS IN 4Q 2007 WITH THE EXCEPTION OF THE ELECTRONIC COMPONENTS SECTOR. THOSE SECTORS THAT REGISTERED DOUBLE-DIGIT GROWTH WERE WHOLESALE SECTORS OF PETROLEUM AND PETROLEUM PRODUCTS, TELECOMMUNICATIONS AND COMPUTERS, INDUSTRIAL AND CONSTRUCTION MACHINERY AND CHEMICALS AND CHEMICAL PRODUCTS.

RETAIL TRADE

THE OVERALL RETAIL SALES CONTRACTED BY 2.5%, IN CONTRAST TO THE 1.5% GROWTH IN 3Q 2007. THE SECTOR THAT RECORDED THE LARGEST DECLINE WERE MOTOR VEHICLES, FOLLOWED BY PROVISION AND SUNDRY SHOPS, FOOD AND BEVERAGES, WATCHES AND JEWELLERY AND MEDICAL GOODS AND TOILETRIES. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY 5.2%, A DECLINE FROM THE 6.O% GROWTH IN 3Q 2007.

NEWS

SURPRISING DROP IN RETAIL SALES

RETAIL SALES FELL UNEXPECTEDLY IN FEBRUARY, THE FIRST TIME IN SEVEN MONTHS, AS INFLATION HIT 26 YEAR HIGHS AND WORRIES GREW ABOUT THE WORLD ECONOMY. SHOPS, SUPERMARKETS AND OTHER RETAILERS SAW REVENUES FELL 1.3% FROM A YEAR EARLIER, AS CAR SALES DECLINED 10.6% AND FOOD AND BEVERAGES SALES PLUNGED 21.8%.

THE OVERALL CONTRACTION BY THE SECTOR WOULD HAVE BEEN BIGGER IF NOT FOR MUCH HIGHER PRICES THIS YEAR. IN CONSTANT PRICES TERMS, SALES FELL 5.7%. THIS IS THE WORST READING SINCE THE 5.0% DECLINE IN MARCH 2007, IF ONE WERE TO IGNORE THE 2.0% CONTRACTION IN JULY THAT WAS DUE TO THE HIKE IN THE GOODS AND SERVICES TAX,” SAID HSBC ECONOMIST PRAKRITI SOFAT.

ANALYSTS SAID RISING LIVING COSTS AND UNCERTAINTY ABOUT THE ECONOMY WOULD AFFECT SINGAPORE CONSUMER’S SPENDING THIS YEAR. MANY, HOWEVER, REMAIN LARGELY OPTIMISTIC ABOUT THE DOMESTIC RETAIL SCENE, SAYING THE POOR FEBRUARY SHOWING COULD BE A STATISTICAL BLIP.

DOMESTIC DEMAND CONDITIONS REMAIN POSITIVE, HELPED BY THE GOVERNMENT WHICH IS GIVING CASH FROM LAST YEAR’S SURPLUS TO THE WHOLE POPULATION AND ISSUING FOOD VOUCHERS TO THE POOR. “LOW INTEREST RATES AND A HEALHY JOBS MARKET SHOULD KEEP SPENDING FIRM,” SAID HSBC’S MS SOFAT. SHE ADDED THAT FEBRUARY’S DECLINE WAS DUE LARGELY TO A HIGH BASE SET THE PREVIOUS YEAR AND PREDICTED THAT MARCH SALES WOULD BOUNCE BACK WITH A 15.0% SURGE. ALSO, IF COMPARED WITH JANUARY, FEBRUARY SALES ROSE 8.8% AFTER ADJUSTING FOR SEASONAL EFFECTS. THIS WAS THE STRONGEST PERFORMANCE IN FOUR YEARS, SHE SAID.

CIMB-GK ECONOMIST SONG SENG WUN SAID MUCH OF THE POOR PERFORMANCE CAME ON THE BACK OF WEAKER CAR SALES. EXCLUDING THOSE, RETAIL SALES WOULD HAVE RISEN 2.9%. CAR SALES HAVE BEEN HURT SINCE OCTOBER BY RISING CERTIFICATE OF ENTITLEMENT PRICES, CAUSED BY AN EXPECTED CUT IN QUOTAS FROM NEXT MONTH AND SURGING PUMP PRICES.

OUTLOOK

GENERALLY, WHOLESALERS ARE POSITIVE ABOUT THEIR BUSINESS PROSPECTS IN THE COMING MONTHS, WITH A NET WEIGHTED BALANCE OF 4% OF FIRMS EXPRESSING POSITIVE BUSINESS SENTIMENTS. THE MAJORITY OF WHOLESALERS OF PETROLEUM AND PETROLEUM PRODUCTS, CHEMICALS AND CHEMICAL PRODUCTS, INDUSTRIAL MACHINERY AND EQUIPMENT AND COMPUTERS AND ACCESSORIES FORECAST BUSINESS OUTLOOK TO REMAIN THE SAME IN THE FIRST SIX MONTHS OF 2008 COMPARED WITH THE LAST SIX MONTHS IN 2007.

A NET WEIGHTED BALANCE OF 12% OF RETAILERS PREDICTS LESS FAVOURABLE BUSINESS CONDITIONS FOR THE PERIOD ENDING JUNE 2008. AS A RESULT OF THE REDUCED CERTIFICATE OF ENTITLEMENT (COE) QUOTA, MOTOR VEHICLES RETAILERS ARE ESPECIALLY CONCERNED WITH THE SALES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

THE STRAITS 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%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions