MIRA INFORM REPORT

Report Date :

24.09.2008

IDENTIFICATION DETAILS

Name :	VEECO ASIA PTE LTD

Registered Office :	11 Biopolis Way, #10-05/08, Helios, ¹³⁸⁶⁶⁷

Country :	Singapore

Financials (as on) :	31.12.2007

Date of Incorporation :	^30.04.1999

Com. Reg. No.:	^199902255R

Legal Form :	^{Pte Ltd}

Line of Business :	Provision of Sale, Marketing and Service of a Broad Line of Equipment for Nonscale Applications in the Date Storage, High Brightness-Led/Wireless, Semiconductor and Scientific Research Markets^.

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Moderate

Payment Behaviour :	Regular

Litigation :	Clear

Subject Company

VEECO ASIA PTE LTD

Line Of Business

^{PROVISION
OF SALE, MARKETING AND SERVICE OF A BROAD LINE OF EQUIPMENT FOR NONSCALE
APPLICATIONS IN THE DATE STORAGE, HIGH BRIGHTNESS-LED/WIRELESS, SEMICONDUCTOR
AND SCIENTIFIC RESEARCH MARKETS.}

Parent Company

^{VEECO INSTRUMENTS,
INC.}

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2007

COMPANY

Sales : US$56,677,427

Networth : US$ 3,459,340

Paid-Up Capital : US$ 60,024

Net result : US$ 1,727,214

Net Margin(%) : 3.05

Return on Equity(%) : 49.93

Leverage Ratio : 4.05

COMPANY IDENTIFICATION

^{Subject
Company : VEECO ASIA PTE
LTD}

^{Former
Name :}

^{Business
Address : 11 BIOPOLIS WAY}

^#10-05/08

^HELIOS

^{Town : SINGAPORE}

^{Postcode : 138667}

^{County :}

^{Country : Singapore}

^{Telephone : 6773 9661}

^{Fax :
6773 9662}

^{ROC
Number : 199902255R}

^{Reg.
Town :}

SUMMARY

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

^{Legal Form :}^{Pte Ltd}

^{Date Inc. :}^30/04/1999

^{Previous Legal Form : -}

^{Summary year :}^31/12/2007

^{Sales :}^56,677,427

^{Networth :}^3,459,340

^{Capital :
-}

^{Paid-Up Capital :}^60,024

^{Employees :}²⁰

^{Net result :}^1,727,214

^{Share value : -}

^{Auditor :}^{ERNST & YOUNG LLP}

^{BASED
ON ACRA'S RECORD}

^{NO OF SHARES CURRENCY AMOUNT}

^{ISSUED
ORDINARY 100,000 SGD 100,000.00}

^{PAID-UP
ORDINARY - SGD
100,000.00}

REFERENCES

^{Litigation : No}

^{Company
status : TRADING}

^{Started
:
30/04/1999}

PRINCIPAL(S)

^{RICHARD
DAVID BRUNS
P219165057 Managing Director}

DIRECTOR(S)

^{JOHN
F REIN, JR
111600967 Director}

^{Appointed
on : 15/09/1999}

^{Street
: 8 WRIGHT RD, ROCKVILLE
CTR}

^{NY 11570}

^{Town: NEW YORK}

^Postcode:

^{Country: United States}

^{JOHN
RUPP PEELER
P017161355 Director}

^{Appointed
on : 01/08/2007}

^{Street
: 24310 BURNT HILL ROAD}

^{CLARKSBURG, MD 20871}

^Town:

^Postcode:

^{Country: United States}

^{RICHARD
DAVID BRUNS
P219165057 Director}

^{Appointed
on : 01/08/2007}

^{Street
: 369 HOLLAND ROAD}

^#07-04

^{ALLSWORTH PARK}

^{Town: SINGAPORE}

^{Postcode: 278640}

^{Country: Singapore}

^{RICHARD
DAVID BRUNS
P219165057 Managing Director}

^{Appointed
on : 01/08/2007}

^{Street
: 369 HOLLAND ROAD}

^#07-04

^{ALLSWORTH PARK}

^{Town: SINGAPORE}

^{Postcode: 278640}

^{Country: Singapore}

^{TOON
CHOI FAN
S2681354I Company Secretary}

^{Appointed
on : 15/05/2006}

^{Street
: 770 CHOA CHU KANG STREET
54}

^#02-11

^{Town: SINGAPORE}

^{Postcode: 680770}

^{Country: Singapore}

^{LIM
CHOI HWEE
S7330244G Company Secretary}

^{Appointed
on : 31/12/2004}

^{Street
: 200B SENGKANG EAST ROAD}

^#02-24

^{Town: SINGAPORE}

^{Postcode: 542200}

^{Country: Singapore}

ACTIVITY(IES)

^{SCIENTIFIC
APPARATUS And INSTRUMENTS
Code:19027}

^{BASED
ON ACRA'S RECORD}

^{1)
WHOLESALE OF PROFESSIONAL, SCIENTIFIC AND PRECISION EQUIPMENT;}

^{SALE
OF VEECO METROLOGY AND PROCESS EQUIPMENT PRODUCTS}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

SHAREHOLDERS(S)

^{VEECO
INSTRUMENTS, INC. 100,000 Company}

^{Street
: TERMINAL DRIVE, PLAINVIEW}

^{NY 11803}

^{Town: NEW YORK}

^Postcode:

^{Country: United States}

HOLDING COMPANY

^{VEECO
INSTRUMENTS, INC.
UF24878N % : 100}

SUBSIDIARY(IES)

^{VEECO
MALAYSIA SDN BHD}

PAYMENT HISTORY AND EXPERIENCES

^{Trade
Morality :
AVERAGE}

^{Liquidity
:
SUFFICIENT}

^{Payments
: REGULAR}

^{Trend
:
DOWNWARD}

^{Financial
Situation : AVERAGE}

FINANCIAL ELEMENTS

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

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

^{Date
Account Lodged:
04/07/2008}

^{Balance
Sheet Date:
31/12/2007
31/12/2006}

^{Number
of weeks: 52 52}

^{Consolidation
Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Preliminary
Exp 86,991 143,379}

^{Tangible
Fixed Assets:
202,467
302,523}

^{Investments 29,537}

^{Total Fixed Assets: 318,995 445,902}

^{Receivables: 16,541,614 17,009,692}

^{Cash,Banks,
Securitis: 282,909 242,970}

^{Other
current assets:
332,750
206,947}

^{Total Current Assets: 17,157,273 17,459,609}

^{TOTAL ASSETS: 17,476,268 17,905,511}

^{--- LIABILITIES ---}

^{Equity capital: 60,024 60,024}

^{Profit
& lost Account: 3,399,316 9,172,102}

^{Total Equity: 3,459,340 9,232,126}

^{Trade
Creditors:
12,163,174
3,363,824}

^{Prepay.
& Def. charges:
515,847
2,714,308}

^{Advanced payments: 70,000 48,838}

^{Provisions: 974,886 2,227,635}

^{Other
Short term Liab.:
293,021
318,780}

^{Total short term Liab.: 14,016,928 8,673,385}

^{TOTAL LIABILITIES: 14,016,928 8,673,385}

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

^{Net
Sales
56,677,427
96,031,979}

^{Purchases,Sces
& Other Goods:
50,197,415
84,935,711}

^{Gross Profit: 6,480,012 11,096,268}

^{Result
of ordinary operations
1,997,566
5,644,852}

^{NET
RESULT BEFORE TAX: 2,113,050 5,825,773}

^{Tax
:
385,836
1,150,287}

^{Net
income/loss year:
1,727,214 4,675,486}

^{Depreciation: 120,709 130,100}

^{Dividends: 7,500,000 6,800,000}

^{Directors
Emoluments:
219,899
479,921}

^{Wages
and Salaries:
2,815,570
2,747,488}

^{Financial
Income: 115,484 180,921}

RATIOS

^{31/12/2007 31/12/2006}

^{Turnover per
employee:    2833871.35                 4801598.95}  ^{Net result / Turnover(%):                0.03                       0.05}  ^{Net Margin(%):
3.05
4.87}  ^{Return on Equity(%):                    49.93                      50.64}  ^{Return on Assets(%):
            9.88                       26.11}  ^{Dividends Coverage:
           0.23                       0.69}  ^{Net Working capital:
3140345.00
8786224.00}  ^{Cash Ratio:                0.02                       0.03}  ^{Quick Ratio:
1.20
1.99}  ^{Current ratio:              1.22                       2.01}  ^{Receivables Turnover:
105.07
63.77}  ^{Leverage Ratio:                       4.05                                     0.94}

^{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}

^{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 ALTHOUGH NET WORTH DROPPED} ^{BY 62.53% TO
US$3,459,340 (2006: US$9,232,126). THIS WAS ATTRIBUTED TO} ^{A FALL IN
ACCUMULATED PROFITS BY 62.94% TO US$3,399,316 IN FY 2007} ^{FROM
US$9,172,102 IN FY 2006.}

^LEVERAGE:

^{IN
THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS} ^{WHICH MADE UP
86.77% (2006: 38.78%) OF THE TOTAL CURRENT LIABILITIES} ^{AND AMOUNTED
TO US$12,163,174 (2006: US$3,363,824). TRADE CREDITORS} ^{CONSISTED OF
THE FOLLOWING:}

^{* TRADE PAYABLES - 2007: US$108,324 (2006:
US$81,911)}

^{* AMOUNTS DUE TO RELATED COMPANIES (TRADE) - 2007:
US$11,870,763}

^{(2006:
US$3,281,913)}

^{* AMOUNT DUE TO A SUBSIDIARY (TRADE) - 2007:
US$184,087 (2006: NIL)}

^{IN ALL, LEVERAGE
RATIO ROSE FROM 0.94 TIMES IN FY 2006 TO 4.05 TIMES} ^{IN FY 2007
INDICATING THAT THE COMPANY'S LIABILITIES WERE MORE} ^{SUBSTANTIAL IN
RELATION TO ITS TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL,
SUBJECT'S LIQUIDITY SITUATION WAS CONSIDERED PASSABLE} ^{ALTHOUGH NET
WORKING CAPITAL DROPPED BY 64.26% TO US$3,140,345 (2006:} ^{US$8,786,224).}

^{ON THE OTHER HAND,
BOTH CURRENT AND QUICK RATIOS POSTED LOWER BUT WERE} ^{SUFFICIENT
TO 1.22 TIMES (2006: 2.01 TIMES) AND 1.20 TIMES (2006: 1.99} ^{TIMES)
RESPECTIVELY.}

^{CASH AND CASH
EQUIVALENTS ROSE BY 16.44% FROM US$242,970 IN FY 2006 TO} ^{US$282,909
IN FY 2007.}

^{PROFITABILITY:}

^{SUBJECT POSTED A
DECREASE IN REVENUE OF 40.98% WHICH AMOUNTED TO} ^{US$56,677,427
(2006: US$96,031,979). SIMILARLY, NET
PROFIT DROPPED BY} ^{63.06% WHICH AMOUNTED TO US$1,727,214 (2006:
US$4,675,486). AS A} ^{RESULT, NET MARGIN FELL TO 3.05% (2006: 4.87%).}

^{DEBT SERVICING}^:

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

^{CAN
BE IMPROVED AND PAYMENTS BY TRADE DEBTORS ARE FORTHCOMING.}

^{IT
WAS NOTED THAT AVERAGE COLLECTION PERIOD HAS LENGTHENED TO 105 DAYS}

^{(2006:
64 DAYS).}

^{NON-CURRENT ASSETS:}

^{* DEFERRED TAX ASSETS OF US$86,991 (2006:
US$143,379) WERE CLASSIFIED}

^{UNDER
PRELIMINARY.}

BACKGROUND/OPERATION

^{THE
COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON} ^{30/04/1999
AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS} ^{PRESENT
NAMESTYLE AS "VEECO ASIA PTE LTD".}

^{THE
COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF} ^{100,000
SHARES, OF A VALUE OF S$100,000.}

^{PRINCIPAL
ACTIVITIES:}

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

^{1)
WHOLESALE OF PROFESSIONAL, SCIENTIFIC AND PRECISION EQUIPMENT;}

^{SALE
OF VEECO METROLOGY AND PROCESS EQUIPMENT PRODUCTS}

^{2)
OTHER SERVICE ACTIVITIES;}

^{SERVICE
OF VEECO METROLOGY AND PROCESS EQUIPMENT PRODUCTS}

^{THE
COMPANY WAS LISTED IN THE SINGAPORE LOCAL DIRECTORIES UNDER THE} ^{CLASSIFICATION
OF: SCIENTIFIC APPARATUS & INSTRUMENTS-MFRS & WHSLE}

^{DURING THE
FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL} ^{ACTIVITIES
ARE THE PROVISION OF SALE, MARKETING AND SERVICE OF A BROAD} ^{LINE OF
EQUIPMENT FOR NONSCALE APPLICATIONS IN THE DATE STORAGE, HIGH} ^{BRIGHTNESS-LED/WIRELESS,
SEMICONDUCTOR AND SCIENTIFIC RESEARCH} ^MARKETS.

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

^BACKGROUND:

^{VEECO IS A LEADING
PROVIDER OF METROLOGY AND PROCESS EQUIPMENT} ^{SOLUTIONS USED BY MANUFACTURERS IN THE
DATA STORAGE, SEMICONDUCTOR,} ^{WIRELESS, LIGHTING AND SOLAR
INDUSTRIES. THESE INDUSTRIES HELP CREATE} ^{A WIDE RANGE OF INFORMATION
AGE TECHNOLOGY AND PRODUCTS, SUCH AS} ^{PORTABLE MUSIC PLAYERS, CELL
PHONES, PDAS, DIGITAL VIDEO RECORDERS,} ^{BACKLIGHTING FOR COMPUTERS
AND TVS, ARCHITECTURAL AND AUTOMOTIVE} ^{LIGHTING, SOLAR CELLS AND MUCH
MORE. OUR PRODUCTS ARE ALSO CRITICAL} ^{ENABLING INSTRUMENTS USED IN
THE ADVANCEMENT OF SCIENTIFIC RESEARCH,} ^{LIFE SCIENCES AND
NANOTECHNOLOGY. VEECO'S METROLOGY TOOLS ARE USED TO} ^{MEASURE AT THE
NANOSCALE AND OUR PROCESS EQUIPMENT TOOLS HELP CREATE} ^{NANOSCALE
DEVICES. VEECO PARTNERS WITH OUR GLOBAL CUSTOMERS TO DELIVER} ^{THE
ENABLING TECHNOLOGY, EXPERIENCE AND SUPPORT THEY NEED TO SUCCEED} ^{AROUND
THE WORLD AND AROUND THE CLOCK.}

^{IN KEEPING WITH
ITS COMMITMENT TO TECHNOLOGICAL PRODUCT LEADERSHIP AND} ^{GROWTH IN
EACH OF ITS PRODUCT LINES, VEECO CONTINUALLY INTRODUCES NEW} ^{PRODUCTS
DESIGNED TO PROVIDE LONG-TERM BENEFITS FOR ITS CUSTOMERS,} ^{SUCH AS
INCREASED MANUFACTURING YIELD, ENHANCED PRODUCTIVITY, IMPROVE} ^{QUALITY
AND REDUCED COST-OF-OWNERSHIP. WE SERVE OUR CUSTOMERS FROM} ^{STRATEGICALLY
LOCATED FACILITIES IN THE U.S., EUROPE, JAPAN AND ASIA-} ^PACIFIC.

^{PRODUCTS
OR SERVICES:}

^{* AUTOMATED INSPECTION SYSTEMS}

^{* MEASURING INSTRUMENTS}

^{* MEASURING MACHINES: SURFACE TEXTURE}

^{* COATING THICKNESS MEASURING INSTRUMENTS}

^{* MEASURING INSTRUMENTS: COATING THICKNESS}

^{* SCIENTIFIC APPARATUS & INSTRUMENTS -
MANUFACTURERS & WHOLESALERS}

^{* COATINGS: DIAMOND-LIKE CARBON}

^{* MEASURING MACHINES: OPTICAL}

^{* SURFACE TEXTURE MEASURING MACHINES}

^{MARKETS
SERVED:}

^{* HARD DISK DRIVE: DATA STORAGE:}

^{NEW AND BETTER
CONSUMER ELECTRONICS ARE EMERGING EVERYDAY AS THE} ^{DRIVER OF
GROWTH FOR THE HDD INDUSTRY. IN CELL PHONES, LAPTOPS, PDAS,} ^{GPS
SYSTEMS AND MORE, VEECO IS THE WORLD'S LEADING PROVIDER OF PROCESS} ^{EQUIPMENT
AND METROLOGY TOOLS FOR THE MANUFACTURE OF THIN FILM} ^{MAGNETIC HEADS,
A CRITICAL COMPONENT OF HDDS. VEECO'S PRODUCTS INCLUDE} ^{ION BEAM ETCH
AND DEPOSITION, PHYSICAL VAPOR DEPOSITION, OPTICAL AND} ^{ATOMIC FORCE
METROLOGY, LAPPING AND SLICING/DICING EQUIPMENT.}

^{* COMPOUND SEMICONDUCTOR: HB-LED, WIRELESS AND
SOLAR:}

^{VEECO'S METAL
ORGANIC CHEMICAL VAPOR DEPOSITION, MOLECULAR BEAM} ^{EPITAXY, WEB
COATING SYSTEMS AND THERMAL DEPOSITION SOURCES ENABLE THE} ^{CREATION
OF A BROAD RANGE OF COMPOUND SEMICONDUCTOR BASED DEVICES SUCH} ^{AS
HIGH-BRIGHTNESS LEDS, POWER AMPLIFIERS, LASER DIODES, AND HIGH} ^{EFFICIENCY
SOLAR CELLS. VEECO ALSO PROVIDES A
BROAD RANGE OF} ^{METROLOGY TOOLS FOR THIN FILM PRODUCTION CONTROL FOR
THESE AND OTHER} ^{APPLICATIONS.}

^{* SEMICONDUCTOR:}

^{AS LEADING-EDGE
SEMICONDUCTOR DEVICE FEATURE SIZES SHRINK BELOW THE} ^{45NM
THRESHOLD, VEECO HAS SUCCESSFULLY PENETRATED FABS WORLDWIDE WITH} ^{OUR
PROVEN AUTOMATED ATOMIC FORCE MICROSCOPE SOLUTIONS. OUR INNOVATIVE} ^{BREADTH
OF NON-DESTRUCTIVE 3D AFM METROLOGY SOLUTIONS IS UNPARALLELED} ^{IN THE
SEMICONDUCTOR INDUSTRY, PROVIDING UNMATCHED SPEED WITH GREAT} ^{PRECISION
AND ACCURACY. VEECO ALSO SELLS OPTICAL METROLOGY SYSTEMS AN} ^{SPECIFIC
TYPES OF DEPOSITION SYSTEMS TO THE SEMICONDUCTOR INDUSTRY.}

^{* SCIENTIFIC RESEARCH:}

^{VEECO HAS LONG
BEEN A PIONEER IN ENABLING NANOSCIENCE RESEARCH AS WE} ^{REMAIN AT
THE LEADING EDGE OF THIS EMERGING OPPORTUNITY BY AIDING} ^{SCIENTISTS,
VERIFYING THEORIES AND EXPANDING THE FRONTIERS OF} ^{KNOWLEDGE. OUR
ATOMIC FORCE MICROSCOPES HAVE BECOME THE "INDUSTRY}

^{STANDARDS"
FOR ATOMIC IMAGING AND MOLECULAR MEASUREMENTS. WITH THE} ^{LARGEST
INSTALLED BASE OF SYSTEMS, WE SELL OUR INSTRUMENTS TO NEARLY} ^{EVERY
MAJOR SCIENTIFIC OR RESEARCH ORGANIZATION WORLDWIDE. WE ALSO} ^{SELL A
BROAD ARRAY OF OTHER METROLOGY AND PROCESS EQUIPMENT SOLUTIONS} ^{TO
RESEARCH ORGANIZATIONS AND INDUSTRIAL APPLICATIONS WORLDWIDE.}

^{TERMS
OF PAYMENT:}

^{* TRADE AND OTHER RECEIVABLES: 45-60 DAYS TERM}

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

^{FROM THE
TELE-INTERVIEW CONDUCTED, SUBJECT CONFIRMED ITS} ^{BUSINESS
ADDRESS AND CONTACT NUMBERS. FURTHER ENQUIRIES WERE REJECTED.} ^{NO
OTHER TRADE INFORMATION WAS AVAILABLE}

^{THE
IMMEDIATE AND ULTIMATE HOLDING COMPANY IS VEECO INSTRUMENTS INC.,} ^{INCORPORATED
IN THE UNITED STATES OF AMERICA.}

^{NUMBER
OF EMPLOYEES:}

^{* 20 - AS OF 2006}

^{REGISTERED
AND BUSINESS ADDRESS:}

^{11
BIOPOLIS WAY}

^#10-05/08

^HELIOS

^{SINGAPORE
138667}

^{DATE
OF CHANGE OF ADDRESS: 15/10/2004}

^{-
PROPERTY RECORD WAS NOT AVAILABLE}

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

^{EMAIL : sales@veecoasia.com}

MANAGEMENT

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

^{1)
JOHN F REIN, JR, AN AMERICAN}

^{-
BASED IN NEW YORK}

^{2)
JOHN RUPP PEELER, AN AMERICAN}

^{-
BASED IN MARYLAND}

^{3)
RICHARD DAVID BRUNS, AN AMERICAN}

^{-
BASED IN SINGAPORE}

S

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 5.2% IN 1Q 2008, SLOWER THAN THE 6.0% GROWTH IN 4Q 2007. NON-OIL RE-EXPORTS GREW BY 2.0% IN 1Q 2008, IN CONTRAST TO THE 1.2% DECLINE IN 4Q 2007. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY A MODERATE 1.4% IN 1Q 2008, FOLLOWING A HIGHER 9.9% GROWTH IN 4Q 2007.

DOMESTIC WHOLESALE TRADE INDEX

THE OVERALL DOMESTIC WHOLESALE TRADE FELL BY 7.1% IN 1Q 2008 OVER 4Q 2007.

EXCLUDING PETROLEUM, DOMESTIC SALES FELL BY 6.5%.

AFTER SEASONAL ADJUSTMENT, DOMESTIC SALES ROSE BY 4.4% IN 1Q 2008 OVER 4Q 2007.

EXCLUDING PETROLEUM, DOMESTIC SALES ROSE BY 2.7%.

ON A YEAR-ON-YEAR BASIS, THE OVERALL DOMESTIC WHOLESALE TRADE GREW BY 26.5% OVER THE PREVIOUS YEAR. EXCLUDING PETROLEUM, DOMESTIC SALES ROSE BY 12.2%. AFTER REMOVING PRICE EFFECT, THE OVERALL DOMESTIC WHOLESALE TRADE GREW BY 2.8% IN 1Q 2008 OVER 1Q 2007.

ON A QUARTER-OVER-QUARTER BASIS, MOST WHOLESALE SECTORS REPORTED LOWER DOMESTIC SALES AFTER RECORDING BRISK BUSINESS IN THE PREVIOUS QUARTER.

GENERAL WHOLESALE TRADE FELL BY 24.6% IN 1Q 2008, AFTER RECORDING HIGHER SALES OF 26.8% IN 4Q 2007. THE SALES OF TELECOMMUNICATIONS AND COMPUTERS, INDUSTRIAL AND CONSTRUCTION MACHINERY, AND HOUSEHOLD EQUIPMENT AND FURNITURE REPORTED LOWER SALES BY 13.3% 15.3% IN 1Q 2008.

DOMESTIC SALES OF PETROLEUM AND PETROLEUM PRODUCTS FELL BY 7.7% IN 1Q 2008 OVER 4Q 2007. AFTER ADJUSTING FOR PRICE CHANGES, SALES DECLINED BY 12.4%.

ON THE OTHER HAND, SHIP CHANDLERS AND BUNKERING, FOOD, BEVERAGES AND TOBACCO RECORDED HIGHER TURNOVER OF 8.8% AND 0.8% OVER THE PREVIOUS QUARTER RESPECTIVELY.

MAJORITY OF THE WHOLESALE SECTORS RECORDED HIGHER DOMESTIC SALES IN 1Q 2008 OVER 1Q 2007.

THE GROWTH IN THE OVERALL DOMESTIC SALES WAS MAINLY CONTRIBUTED BY PETROLEUM AND

PETROLEUM PRODUCTS, SHIP CHANDLERS AND BUNKERING, AND GENERAL WHOLESALE TRADE, WHICH REPORTED HIGHER SALES OF 42.9% TO 47.4%. AFTER ADJUSTING FOR PRICE CHANGES, THE TRADING VOLUME CHANGED MARGINALLY FOR PETROLEUM AND PETROLEUM PRODUCTS, SHIP CHANDLERS AND BUNKERING WHILE THE SALE VOLUME ROSE BY 27.8% FOR GENERAL WHOLESALERS.

OTHER SECTORS THAT RECORDED BETTER SALES INCLUDE TIMBER, PAINTS AND CONSTRUCTION MATERIALS (20.3%) CHEMICALS AND CHEMICAL PRODUCTS (8.7%) INDUSTRIAL AND CONSTRUCTION MACHINERY (7.6%) TRANSPORT EQUIPMENT (7.2%) AND FOOD, BEVERAGES AND TOBACCO (0.7%).

CONVERSELY, DOMESTIC SALES OF ELECTRONIC COMPONENTS FELL BY 10.9%, THE FIFTH CONSECUTIVE QUARTER OF DECLINE SINCE 1Q 2007. AFTER REMOVING PRICE CHANGES, SALES OF ELECTRONIC COMPONENTS FELL BY 3.6%. WHOLESALE VALUES OF TELECOMMUNICATIONS AND COMPUTERS, AND HOUSEHOLD EQUIPMENT AND FURNITURE ALSO DECLINED MARGINALLY IN 1Q 2008. AFTER REMOVING PRICE CHANGES, SALES OF THE TWO SECTORS ROSE COMPARED TO A YEAR AGO.

FOREIGN WHOLESALE TRADE INDEX

FOREIGN WHOLESALE TRADE SALES FELL MARGINALLY BY 0.6% IN 1Q 2008 OVER 4Q 2007.

EXCLUDING PETROLEUM, SALES FELL BY 2.4%.

AFTER SEASONAL ADJUSTMENT, FOREIGN SALES ROSE BY 5.6% OVER 4Q 2007. EXCLUDING PETROLEUM, SALES ROSE BY 5.2%.

ON A YEAR-ON-YEAR BASIS, FOREIGN WHOLESALE SALES ROSE BY 31.4% OVER 1Q 2007.

EXCLUDING PETROLEUM, SALES ROSE BY 18.3%. AFTER REMOVING PRICE EFFECT, OVERSEAS SALES ROSE BY 6.7% OVER 1Q 2007.

COMPARED TO 4Q 2007, THERE WAS MIXED PERFORMANCE IN FOREIGN SALES AMONG THE WHOLESALE SECTORS IN 1Q 2008.

FOOD, BEVERAGES AND TOBACCO WHOLESALERS REPORTED HIGHER OVERSEAS SALES OF 16.0% IN 1Q 2008 OVER 4Q 2007, THE LARGEST INCREASE AMONG ALL SECTORS. IT WAS FOLLOWED BY GENERAL WHOLESALE TRADE (9.4%) SHIP CHANDLERS AND BUNKERING (4.7%) AND WHOLESALING OF CHEMICALS AND CHEMICAL PRODUCTS (2.2%).

SALES OF PETROLEUM AND PETROLEUM PRODUCTS ROSE SLIGHTLY BY 1.3% IN 1Q 2008 OVER 4Q 2007. HOWEVER, AFTER ADJUSTING FOR PRICE CHANGES, THE SALES VOLUME FELL BY 3.8%.

CONVERSELY, FOREIGN SALES OF HOUSEHOLD EQUIPMENT AND FURNITURE, TELECOMMUNICATIONS AND COMPUTERS, TIMBER, PAINTS AND CONSTRUCTION MATERIALS, TRANSPORT EQUIPMENT, INDUSTRIAL AND CONSTRUCTION MACHINERY AND ELECTRONIC COMPONENTS FELL IN 1Q 2008 OVER 4Q 2007.

COMPARED TO A YEAR AGO, SOME WHOLESALE SECTORS REPORTED DOUBLE-DIGIT GROWTHS IN FOREIGN SALES IN 1Q 2008 WHILE OTHERS FELL.

WHOLESALING OF FOOD, BEVERAGES AND TOBACCO CONTINUED TO RECORD HIGH GROWTH RATES IN FOREIGN SALES, WITH HIGHER TURNOVER OF 89.0% IN 1Q 2008 OVER A YEAR AGO. AFTER ADJUSTING FOR PRICES, SALES VOLUME ROSE BY 72.9% OVER A YEAR AGO.

WITH HIGHER FUEL PRICES. WHOLESALE SECTORS OF PETROLEUM AND PETROLEUM PRODUCTS, SHIP CHANDLERS AND BUNKERINH REPORTED HIGHER FOREIGN SALES OF 49.2% AND 46.3% RESPECTIVELY OVER A YEAR AGO. AFTER REMOVING PRICE EFFECT, THE SALES VOLUME OF

PETROLEUM AND PETROLEUM PRODUCTS FELL BY 3.1% WHILE SALES VOLUME OF SHIP CHANDLERS AND BUNKERING HELD ITS LEVEL.

GENERAL WHOLESALE TRADE, CHEMICALS AND CHEMICAL PRODUCTS, TRANSPORT EQUIPMENT, AND

INDUSTRIAL AND CONSTRUCTION MACHINERY ALSO REGISTERED STRONG SALES GROWTHS BETWEEN 10.5% TO 47.4%.

CONVERSELY, FOREIGN SALES DECLINED IN 1Q 2008 FOR HOUSEHOLD EQUIPMENT AND FURNITURE, TIMBER, PAINTS AND CONSTRUCTION MATERIALS, ELECTRONIC COMPONENTS, AND

TELECOMMUNICATIONS AND COMPUTERS. THE SALES FELL BY 4.3% TO 8.7% FOR THESE SECTORS COMPARED TO 1Q 2007.

NEWS

MARCH RETAIL GROWTH FUELLED BY PETROL PRICES

THE VALUE OF PETROL SALES IN MARCH SOARED 39%, AS A RESULT OF RISING CRUDE OIL PRICES, EVEN THOUGH THE ACTUAL VOLUME WAS ONLY MARGINALLY HIGHER.

PETROL STATION SALES POSTED THE FASTEST GROWTH OF ALL RETAIL SEGMENTS IN MARCH, ACCORDING TO FIGURES THE DEPARTMENT OF STATISTICS RELEASED YESTERDAY.

PETROL SALES ROSE 28.2% IN FEBRUARY.

MOST RETAIL SEGMENTS POSTED HIGHER GROWTH MARCH AFTER A WEAKER SHOWING IN FEBRUARY FOR THE COMPUTERS, FURNITURE, OPTICAL GOODS AND BOOKS SEGMENTS. BUT MOTOR VEHICLES FELL 8.1% FROM MARCH 2007 AS A RESULT OF THE ESCALATING PETROL PRICES. CRUDE OIL HIT ALMOST US$127 A BARREL RECENTLY.

THE SUPERMARKET AND FOOD AND BEVERAGE SEGMENTS ALSO REPORTED LOWER SALES ACTIVITY THAN IN FEBRUARY, WITH FALLS OF 4.7% AND 11.9%, RESPECTIVELY.

OVERALL RETAIL SALES ROSE BY 5.6% COMPARED TO MARCH 2007. EXCLUDING MOTOR VEHICLES, SALES VOLUME ROSE BY 12.5%.

OCBC ECONOMIST SELENA LING NOTED THE RETAIL NUMBERS INDICATED RELATIVELY HEALTHY CONSUMER SPENDING. “THIS IS A TESTIMONY TO THE FACT THAT THE SINGAPOREAN ECONOMY IS STILL ENJOYING BROAD-BASED GROWTH DESPITE THE GLOBAL SLOWDOWN,” SHE SAID.

THE TOTAL VALUE OF RETAIL SALES IN MARCH WAS ESTIMATED AT S$2.89 BILLION, COMPARED WITH S$2.59 BILLION IN FEBRUARY.

OUTLOOK

GENERALLY, WHOLESALERS ARE POSITIVE ABOUT THEIR BUSINESS PROSPECTS IN THE COMING MONTHS, WITH A NET WEIGHTED BALANCE OF 9% OF FIRMS EXPRESSING POSITIVE BUSINESS SENTIMENTS. THOSE DEALING IN TROPICAL PRODUCE, WEARING APPAREL AND FOOTWEAR, AND INDUSTRIAL MACHINERY AND EQUIPMENT ARE THE ONES EXPRESSING OPTIMISM.

A NET WEIGHTED BALANCE OF 29% OF RETAILERS PREDICTS LESS FAVOURABLE BUSINESS CONDITIONS FOR THE PERIOD ENDING SEPTEMBER 2008. SUPERMARKETS AND RETAILERS OF JEWWELLERY AND WATCHES EXPECT SLOWER BUSINESS AFTER THE FESTIVE PERIOD. 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

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.83
UK Pound	1	Rs.84.90
Euro	1	Rs.67.26

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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