Coface Report
SUMMARY SHEET Subject Company
: SAMPLE REPORT SINGAPORE PTE LTD
Line Of Business
: MANUFACTURE OF SEMICONDUCTOR DEVICES AUTOMOTIVE MODULES, SYSTEMS & COMPONENTS
Parent Company
: SAMPLE REPORT (HOLDING)INC. (PERCENTAGE OF SHAREHOLDING: 100%)
Financial Elements FY 2007 COMPANY Sales Networth Paid-Up Capital Net result
: : : :
USD USD USD USD
250,010,000 381,465,000 239,659,000 306,703,000
Net Margin(%) : 122.68 Return on Equity(%): 80.40 Leverage Ratio : 0.17
BUSINESS INFORMATION REPORT COMPANY IDENTIFICATION Subject Company :
SAMPLE REPORT SINGAPOREPTE LTD
Former Name :
SAMPLE REPORT SINGAPORE PTE LTDDATE OF CHANGE:01/10/1998
Business Address:
123456 STREET
Town:
SINGAPORE
Postcode:
569621
Country:
Singapore
Telephone:
123456
Fax:
123456
ROC Number:
123456
1
PREVIOUS IDENTIFICATION SAMPLE REPORT SINGAPORE PTE LTDDATE OF CHANGE:01/10/1998
SUMMARY Legal Form:
Pte Ltd
Date Inc.:
07/07/1978
Summary year :
31/12/2007
All amounts in this report are in :
USD
Sales:
250,010,000
Networth :
381,465,000
Capital:
-
Paid-Up Capital:
239,659,000
Employees:
1,500
Net result :
306,703,000
Share value:
-
AUDITOR: ERNST & YOUNG LLP BASED ON ACRA'S RECORD AS AT 14/01/2009 NO OF SHARE CURRENCY ISSUED ORDINARY 12,731,528 SGD PAID-UP ORDINARY SGD
AMOUNT 417,375,702.65 417,375,702.65
REFERENCES Litigation:
No
Company status :
TRADING
Started :
07/07/1978
PRINCIPAL(S) SAMPLE HUAT
Managing Director
2
DIRECTOR(S) SAMPLE LAM
Company Secretary
Appointed on :
22/09/1993
Country:
Singapore
SAMPLE JIAN
Director
Appointed on :
08/02/2001
Country:
Singapore
SAMPLE ALSAGOFF
Director
Appointed on :
08/02/2001
Country:
Singapore
SAMPLE HUAT
Director
Appointed on :
11/01/1994
Country:
Singapore
SAMPLE HUAT
Managing Director
Appointed on :
11/01/1994
Country:
Singapore
FORMER DIRECTOR(S) SAMPLE JOHN SAMPLE EPPOLITO
ACTIVITY(IES) Activity Code:
1260
AUTOMATION SYSTEMS And EQUIPMENT
Activity Code:
19130
SEMICONDUCTOR DEVICES
BASED ON ACRA'S RECORD AS AT 14/01/2009 1) MANUFACTURE OF SEMICONDUCTOR DEVICES NEC, AUTOMOTIVE MODULES, SYSTEMS & COMPONENTS
CHARGES AVAILABLE Date:
26/10/2005
3
Amount:
5,040,000
Comments :
CHARGE NO:123456 AMOUNT SECURED: S$5,040,000.00 AND ALL MONIES OWING CHARGEE(S): TEAMLIFE INVESTMENT PTE LTD NOT AVAILABLE
Date:
21/10/2005
Amount:
0
Comments :
CHARGE NO: 123456(DISCHARGED) AMOUNT SECURED: 0.00 AND ALL MONIES OWING CHARGEE(S): CITIBANK INTERNATIONAL PLC
BANKERS CITIBANK N.A.
ASSOCIATED COMPANY(IES) SAMPLE WUXI ELECTRONICS CO.LTD
China
SHAREHOLDERS(S) SAMPLE AUTOMOTIVE SYSTEMS (HOLDING)INC. Street :
12345 STREET
Town:
WILMINGTON
County:
DE
Postcode:
19801
Country:
United States
12,731,528
Company
FORMER SHAREHOLDER(S) SAMPLE MOTORS CORPORATION
5,321,000
SAMPLE ELECTRONICS CORPORATION
6,704,740
HOLDING COMPANY SAMPLE AUTOMOTIVE SYSTEMS (HOLDING)INC.
100%
4
SUBSIDIARY(IES) AUTOMOTIVE SYSTEMS SINGAPOREINVESTMENTS PTE LTD ELECTRONCS SYSTEMS SUZHOU CO LTD SHANGHAI DYNAMICS AND PROPULSION SYSTEMS CO LTD AUTOMOTIVE SYSTEM (THAILAND)LTD ELECTRONICS SUZHOU CO., LTD PACKARD ELECTRIC SYSTEMS CO., LTD CHINA TECHNICAL CENTER CO.LTD COOLING SYSTEM
PAYMENT HISTORY AND EXPERIENCES Trade Morality:
AVERAGE
Liquidity :
SUFFICIANT
Payments :
REGULAR
Trend :
UPWARD
Financial Situation:
AVERAGE
FINANCIAL ELEMENTS All amounts in this report are in : Audit Qualification:
USD
UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN) OPINION OPINION OPINION
Date Account Lodged:
17/10/2008
Balance Sheet Date:
31/12/2007
31/12/2006
31/12/2005
52
52
52
COMPANY
COMPANY
COMPANY
Number of weeks: Consolidation Code:
5
--- ASSETS Preliminary Exp
2,588,000
2,050,000
-
-
-
-
25,578,000
30,278,000
40,178,000
Investments
201,221,000
152,256,000
115,212,000
Total Fixed Assets:
229,387,000
184,584,000
155,390,000
Inventories:
7,925,000
8,661,000
6,368,000
Receivables:
54,998,000
46,569,000
72,410,000
Cash,Banks, Securitis:
51,477,000
109,357,000
72,528,000
Other current assets:
103,827,000
142,691,000
157,860,000
Total Current Assets:
218,227,000
307,278,000
309,166,000
TOTAL ASSETS:
447,614,000
491,862,000
464,556,000
Equity capital:
239,659,000
239,659,000
6,766,000
Profit & lost Account:
141,806,000
200,110,000
128,307,000
-
-
232,893,000
381,465,000
439,769,000
367,966,000
Long Term Loans:
2,206,000
2,257,000
1,416,000
L/T deffered taxes:
3,357,000
4,607,000
5,284,000
Total L/T Liabilities:
5,563,000
6,864,000
6,700,000
Trade Creditors:
23,179,000
33,086,000
39,852,000
Prepay. & Def. charges:
20,833,000
7,490,000
6,956,000
190,000
171,000
114,000
5,412,000
4,471,000
5,354,000
Other Short term Liab.:
10,972,000
11,000
37,614,000
Total short term Liab.:
60,586,000
45,229,000
89,890,000
TOTAL LIABILITIES:
66,149,000
52,093,000
96,590,000
Intangible Fixed Assets: Tangible Fixed Assets:
--- LIABILITIES
Surplus equity: Total Equity:
Due to Bank: Provisions:
--- PROFIT & LOSS ACCOUNT
6
--- ASSETS Net Sales
250,010,000
242,475,000
240,031,000
Purchases,Sces & Other Goods:
212,302,000
215,706,000
211,942,000
37,708,000
26,769,000
28,089,000
309,189,000
73,452,000
89,568,000
2,486,000
1,677,000
1,002,000
306,703,000
71,775,000
88,566,000
10,442,000
12,889,000
14,569,000
Dividends:
365,000
-
-
Directors Emoluments:
870,000
816,000
652,000
35,608,000
32,359,000
32,182,000
7,351,000
5,369,000
8,796,000
Gross Profit: NET RESULT BEFORE TAX: Tax : Net income/loss year: Depreciation:
Wages and Salaries: Financial Income:
RATIOS Date Account Lodged:
31/12/2007
31/12/2006
31/12/2005
Turnover per employee:
166,673.33
161,650
160,020.67
Net result / Turnover(%):
1.23
0.3
0.37
Stock / Turnover(%):
0.03
0.04
0.03
122.68
29.6
36.9
Return on Equity(%):
80.4
16.32
24.07
Return on Assets(%):
68.52
14.59
19.06
840.28
-
-
157,641,000
262,049,000
219,276,000
Cash Ratio:
0.85
2.42
0.81
Quick Ratio:
1.76
3.45
1.61
3.6
6.79
3.44
79.19
69.14
108.6
0.17
0.12
0.26
Net Margin(%):
Dividends Coverage: Net Working capital:
Current ratio: Receivables Turnover: Leverage Ratio:
7
Net Margin Return on Equity Return on Assets Dividends Coverage Net Working capital Cash Ratio Quick Ratio
: : : : : : :
Current ratio Inventory Turnover Receivables Turnover Leverage Ratio
: : : :
(100*Net income loss year)/Net sales (100*Net income loss year)/Total equity (100*Net income loss year)/Total fixed assets Net income loss year/Dividends Total current assets - Total short term liabilities Cash Bank securities/Total short term liabilities (Cash Bank securities+Receivables)/Total Short term liabilities Total current assets/Total short term liabilities (360*Inventories)/Net sales (Receivable*360)/Net sales Total liabilities/(Total equity-Intangible assets)
FINANCIAL COMMENTS THE FINANCIAL CONDITION OF THE COMPANY WAS SEEN TO BE FAIR IN VIEW OF THE FOLLOWING: NET WORTH: THE BALANCE SHEET WAS CONSIDERED PASSABLE EVEN THOUGH NET WORTH DECREASED BY 13.26% FROM US$439,769,000 IN FY 2006 TO US$381,465,000 IN FY 2007. THIS WAS DUE TO LOWER RESERVES OF US$141,806,000 (2006: US$200,110,000); A DECLINE OF 29.14% FROM THE PRIOR FINANCIAL YEAR.
LEVERAGE: IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 38.26% (2006: 73.15%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$23,179,000 (2006: US$33,086,000). THE BREAKDOWN IS AS FOLLOWS: * TRADE PAYABLES - 2007: US$8,353,000 (2006: US$20,649,000) * TRADE PAYABLES TO RELATED COMPANIES - 2007: US$14,826,000 (2006: US$12,437,000) IN THE LONG-TERM, SUBJECT WAS LARGELY FINANCED BY LONG TERM DEFERRED TAXES WHICH MADE UP 60.35% (2006: 67.12%) OF THE TOTAL LONG TERM LIABILITIES AND AMOUNTED TO US$3,357,000 (2006: US$4,607,000). IN ALL, LEVERAGE RATIO ROSE FROM 0.12 TIMES TO 0.17 TIMES AS A RESULT OF A DECLINE IN TOTAL EQUITY AND A RISE IN TOTAL LIABILITIES.
LIQUIDITY: IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE NET WORKING CAPITAL AND LIQUIDITY RATIOS. CURRENT RATIO FELL TO 3.60 TIMES, DOWN FROM 6.79 TIMES AND QUICK RATIO FELL TO 1.76 TIMES FROM 3.45 TIMES IN FY 2006. NET WORKING CAPITAL DECREASED BY 39.84% FROM US$262,049,000 IN FY 2006 TO US$157,641,000.
CASH AND CASH EQUIVALENTS COMPRISE OF: * CASH AT BANK - 2007: US$1,001,000 (2006: US$408,000) * SHORT TERM DEPOSITS - 2007: US$40,476,000 (2006: US$98,949,000) * FIXED DEPOSITS PLEDGED AS SECURITIES - 2007: US$10,000,000 (2006: US$10,000,000)
PROFITABILITY: REVENUE POSTED AN INCREASE OF 3.11% FROM US$242,475,000 IN FY 2006 TO US$250,010,000 AND NET PROFIT ROSE BY 3.27 TIMES TO US$306,703,000 (2006: US$71,775,000). HENCE, NET MARGIN ROSE TO 122.68% (2006: 29.60%).
DEBT SERVICING: DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING.
8
AVERAGE COLLECTION PERIOD HAS INCREASED FROM 69.14 DAYS TO 79.19 DAYS. A HIGHER AVERAGE COLLECTION PERIOD POSES GREATER RISK OF TURNING INTO BAD DEBTS. HOWEVER, IT IS STILL WORTH NOTING THAT DEBT SERVICING ABILITY MAY NOT BE AFFECTED IF TRADE RECEIVABLES ARE FORTHCOMING.
NON-CURRENT ASSETS: THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY: * LOAN TO RELATED COMPANY - 2007: US$2,588,000 (2006: US$2,050,000)
NOTES TO THE FINANCIAL STATEMENTS: TERM LOAN
CURRENT: TERM LOAN NON-CURRENT: TERM LOAN
2007 US$'000
2006 US$'000
190
171
2,206 2,396
2,257 2,428
THE LONG TERM DEBT ARISES FROM THE DEVELOPMENT OF PROPERTY AT THE COMPANY'S PREMISES. THIS ARRANGEMENT WAS ENTERED ON 6 OCTOBER 2005 WITH THE DEVELOPER AND IS SECURED BY THE ABOVEMENTIONED PROPERTY. THE LONG-TERM DEBT IS REPAYABLE OVER THE REMAINING 123 (2006: 135) EQUAL INSTALMENT OF US$24,138, INCLUSIVE OF INTEREST OF 4.375% PER ANNUM, OVER A PERIOD OF 11 (2006: 11) YEARS. THE FAIR VALUE OF THE COMPANY'S LONG TERM DEBT APPROXIMATE ITS CARRYING AMOUNT. THE TERM LOAN IS DENOMINATED IN SINGAPORE DOLLAR.
COMMITMENTS AND CONTINGENCIES CAPITAL COMMITMENTS * ESTIMATED AMOUNTS COMMITTED FOR FUTURE INVESTMENT AND CAPITAL EXPENDITURE BUT NOT PROVIDED FOR IN THE FINANCIAL STATEMENT - 2007: US$5,307,000 (2006: US$982,000)
CONTINGENT LIABILITIES THE COMPANY HAS THE FOLLOWING CONTINGENT LIABILITIES AS AT 31 DECEMBER 2007: * GUARANTEES (FIXED DEPOSITS PLEDGED AS SECURITY) - 2007: US $10,000,000 (2006: US$10,000,000) * CORPORATE GUARANTEES FOR CONSTRUCTION OF FACTORY BY A SUBSIDIARY - 2007: US$6,196,000 (2006: -) * BANKER GUARANTEES WITH CITIBANK - 2007: US$575,000 (2006: US $561,000)
EVENTS OCCURING AFTER THE BALANCE SHEET DATE ON 10 JULY 2008, THE COMPANY ENTERED INTO EQUITY INTEREST TRANSFER AGREEMENT WITH DAESUNG ELECTRIC CO., LTD TO TRANSFER ITS ENTIRE INTEREST IN THE REGISTERED CAPITAL OF SAMPLE DAESUNG WUXI ELECTRONICS CO., LTD, AN ASSOCIATED COMPANY, AT A CONSIDERATION OF US$1,800,000. IN 2008, THE COMPANY DECLARED AND PAID AN INTERIM EXEMPT ONE-TIER DIVIDEND OF TOTAL AMOUNT OF US$128,950,000, PAYABLE OUT OF THE ACCUMULATED DISTRIBUTABLE PROFITS OF THE COMPANY IN RESPECT OF THE FINANCIAL YEAR ENDING 31 DECEMBER 2007.
9
BACKGROUND/OPERATION THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 07/07/1978 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER THE NAMESTYLE OF "SINGAPORE PTE. LTD." ON 21/03/1995, SUBJECT CHANGED ITS NAMESTYLE TO "SAMPLE ELECTRONICS SINGAPORE PTE LTD". SUBSEQUENTLY ON 01/10/1998, SUBJECT CHANGED TO ITS PRESENT NAMESTYLE OF "SAMPLE AUTOMOTIVE SYSTEMS SINGAPORE PTE LTD". AS AT 14/01/2009, THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 12,731,528 SHARES, OF A VALUE OF S$417,375,702.65.
PRINCIPAL ACTIVITIES: SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY AUTHORITY (ACRA) BE PRINCIPALLY ENGAGED IN THE BUSINESS OF: (1) MANUFACTURE OF SEMICONDUCTOR DEVICES AUTOMOTIVE MODULES, SYSTEMS & COMPONENTS DURING THE FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL ACTIVITIES ARE TO MANUFACTURE AND ASSEMBLE ELECTRONIC DEVICES AND AUTOMOTIVE PRODUCTS, WHICH ARE SEMICONDUCTORS, ENGINE CONTROL MODULES AND MICROELECTRONICS PRODUCTS. THE COMPANY IS ALSO IN THE BUSINESS OF TRADING IN AUTOMOTIVE SYSTEM COMPONENTS AND THE PROVISION OF SERVICES TO RELATED COMPANIES AS A REGIONAL HEADQUARTER FOR ASIA PACIFIC REGION. ON OCTOBER 2005, THE COMPANY'S ULTIMATE HOLDING COMPANY, SAMPLE CORPORATION ("SAMPLE"), FILED A VOLUNTARY PETITION FOR REORGANISATION RELIEF UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE. SAMPLE WILL CONTINUE TO OPERATE ITS BUSINESS AS A DEBTOR-IN-POSSESSION UNDER THE JURISDICTION OF THE COURT AND IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE AND ORDERS OF THE COURT. SAMPLE'S NON-US SUBSIDIARIES WERE NOT INCLUDED IN THE FILINGS AND WILL CONTINUE THEIR BUSINESS OPERATIONS WITHOUT SUPERVISION FROM THE UNITED STATES COURTS AND WILL NOT SUBJECT TO THE REQUIREMENTS OF THE BANKRUPTCY CODE. SAMPLE'S FILING UNDER CHAPTER 11 HAS NOT HAD ANY MATERIAL IMPACT ON THE COMPANY'S OPERATIONS AND IT IS MANAGEMENT'S VIEW THAT THIS WILL REMAIN SO IN THE FORESEEABLE FUTURE. THE COMPANY IS LISTED IN THE SINGAPORE LOCAL DIRECTORIES UNDER THE CLASSIFICATION OF: CAR PARTS & SUPPLIES-RETAIL
FROM THE RESEARCH DONE, THE FOLLOWING INFORMATION WAS GATHERED: ABOUT SAMPLE: SAMPLE IS A LEADING GLOBAL SUPPLIER OF MOBILE ELECTRONICS AND TRANSPORTATION SYSTEMS, INCLUDING POWERTRAIN, SAFETY, STEERING, THERMAL, AND CONTROLS & SECURITY SYSTEMS, ELECTRICAL/ELECTRONIC ARCHITECTURE, AND IN-CAR ENTERTAINMENT TECHNOLOGIES. ENGINEERED TO MEET AND EXCEED THE RIGOROUS STANDARDS OF THE AUTOMOTIVE INDUSTRY, SAMPLE TECHNOLOGY IS ALSO FOUND IN COMPUTING, COMMUNICATIONS, CONSUMER ELECTRONICS, ENERGY AND MEDICAL APPLICATIONS. SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES: * MANUFACTURING OF AUDIO COMMUNICATION SYSTEMS PRODUCTS,VEHICLE SYSTEMS ELECTRONICS,HYBRID ELECTRONICS AND INTEGRATED CIRCUIT PRODUCTS PRODUCTS DEALINGS: * COMPLEX ELECTRONIC COMPONENTS. PASSIVE MICROSTRUCTURES - MICROCIRCUITS, HYBRID
10
* MICROCIRCUITS, HYBRID - INTEGRATED CIRCUITS (ICS) TO CUSTOMER SPECIFICATION * AUTOMOTIVE PARTS * AUTOMOTIVE SYSTEMS * CAR EQUIPMENT ACCESSORIES PARTS & SERVICES NUMBER OF EMPLOYEES: * 1500 (AS OF 2007)
NO OTHER TRADE INFORMATION IS AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED BY SUBJECT'S PERSONNEL ON 16/01/2009.
THE IMMEDIATE HOLDING COMPANY AND ULTIMATE HOLDINGS COMPANY ARE SAMPLE AUTOMOTIVE SYSTEMS (HOLDING) INC. AND SAMPLE CORPORATION RESPECTIVELY, WHICH IS INCORPORATED IN UNITED STATES OF AMERICA.
NUMBER OF EMPLOYEES (31 DECEMBER): * COMPANY - 2005: NOT AVAILABLE (2004: 1,377; 2003 : 1,396) * GROUP - 2005: - (2004: - )
REGISTERED ADDRESS: 123456 STREET SINGAPORE 048620 DATE OF CHANGE OF ADDRESS: 01/01/2002 BUSINESS ADDRESS: 123456 STREET SINGAPORE 569621 WEBSITE: http://www.sampleauto.com
MANAGEMENT THE DIRECTORS AT THE TIME OF THIS REPORT ARE: 1) SAMPLE JIAN, A SINGAPOREAN - HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE. 2) SAMPLE ALSAGOFF, A SINGAPOREAN - HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE. 3) SAMPLE HUAT, A SINGAPORE PERMANENT RESIDENT - HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE.
GENERAL COMMENTS SINGAPORE’S COUNTRY RATING 2008 RATING: A1 INVESTMENT GRADE IN SINGAPORE, THE POLITICAL AND ECONOMIC SITUATION IS VERY GOOD. A QUALITY BUSINESS ENVIRONMENT HAS A POSITIVE INFLUENCE ON CORPORATE PAYMENT BEHAVIOUR. CORPORATE DEFAULT PROBABILITY IS VERY LOW ON AVERAGE. ECONOMIC GROWTH REMAINED STRONG IN 2007 AND IN Q1 2008 (6.7%) THANKS TO A SHARP INCREASE IN CONSUMPTION SPURRED BY A BRIGHT EMPLOYMENT PICTURE, RISING REAL WAGES, AND A POSITIVE WEALTH EFFECT PRODUCED BY RISING PROPERTY PRICES. IN THIS CONTEXT, BANKRUPTCIES CONTINUE TO DECLINE, AS REFLECTED BY THE FAVOURABLE COFACE PAYMENT INCIDENT INDEX TREND. SINGAPORE MOREOVER BOASTS THE BEST GOVERNANCE IN ASIA THANKS TO AN EFFECTIVE LEGAL SYSTEM AND A GOOD LEVEL OF FINANCIAL TRANSPARENCY.
11
HOWEVER, A GROWTH SLOWDOWN IS EXPECTED FOR 2008 (4.5%) AMID WEAKER DEMAND GROWTH IN THE UNITED STATES, SINGAPORE'S NUMBER TWO TRADING PARTNER. THE FOREIGN TRADE CONTRIBUTION TO GROWTH WILL THUS DECLINE ESPECIALLY WITH EXPORTS REPRESENTING 210 PER CENT OF GDP. INFLATION ACCELERATED IN 2007 AND REACHED 7.5% IN MAY 2008 BECAUSE OF RISING RAW MATERIAL PRICES. INDEED, SINGAPORE IMPORTS ALMOST ALL ITS ENERGY AND FOOD. HOWEVER, FOR THE ENTIRE YEAR, INFLATION SHOULD MODERATE AND REACH 2.8%. THE FINANCIAL SITUATION HAS REMAINED ROBUST AS THE EQUILIBRIUM OF PUBLIC SECTOR FINANCES AND THE SOLIDITY OF A BANKING SYSTEM POISED TO ADOPT BASEL II PRUDENTIAL STANDARDS ATTEST. EXTERNAL ACCOUNTS CONTINUE MOREOVER TO SHOW LARGE SURPLUSES THANKS TO GOOD PERFORMANCE IN A RANGE OF SECTORS INCLUDING ELECTRONICS, TRANSPORT, CONSTRUCTION, TOURISM, AND FINANCIAL SERVICES. THE DECLINE EXPECTED IN THE CURRENT ACCOUNT SURPLUS IN 2008 SHOULD NOT JEOPARDISE SINGAPORE'S EXCEPTIONAL FINANCIAL SOLIDITY. UNDERPINNED BY SUBSTANTIAL FISCAL RESERVES AND A LARGE MAJORITY IN PARLIAMENT, THE PEOPLE'S ACTION PARTY OF PRIME MINISTER LEE HSIEN LOONG HAS SOUGHT AT ONCE TO MAKE THE CITY-STATE MORE ATTRACTIVE TO FOREIGN INVESTORS AND TO BOLSTER THE SPECIALISATION IN HIGH-VALUE ADDED SECTORS TO MEET THE GROWING COMPETITION FROM LOW-COST ASIAN ECONOMIES. BESIDES REDUCTIONS IN CORPORATE INCOME TAX AND TAX INCENTIVES FOR COMPANIES SETTING UP OPERATIONS IN SINGAPORE, THE GOVERNMENT CONTINUES TO PURSUE ITS INFRASTRUCTURE AND R&D INVESTMENT POLICY. ASSETS • THE COUNTRY HAS BEEN PURSUING AMBITIOUS DIVERSIFICATION STRATEGY, ESPECIALLY TO HIGH VALUE-ADDED SECTORS LIKE CHEMICALS, PHARMACEUTICALS, AND FINANCE. • IT IS AMONG THE MOST ADVANCED COUNTRIES OF ASIA IN QUALITY COMPETITIVENESS TERMS. • SINGAPORE HAS BECOME A MAJOR EXPORTER OF CAPITAL IN ASIA IN MANY ECONOMIC SECTORS -SUCH AS FINANCE, TELECOMMUNICATIONS, TRANSPORT - NOTABLY VIA THE STATE-OWNED TEMASEK HOLDING COMPANY • THE ECONOMY HAS BENEFITED FROM THE COUNTRY'S POLITICAL STABILITY AND EXCELLENT BUSINESS CLIMATE. WEAKNESSES • SKILLED LABOUR IS IN SHORT SUPPLY IN THE SECTORS THE COUNTRY WISHES TO DEVELOP. • THE AGEING POPULATION COULD ULTIMATELY UNDERMINE ECONOMIC PERFORMANCE. • GROWING INEQUALITY AND THE EMERGENCE OF LONG-TERM UNEMPLOYMENT AMONG THE LEAST SKILLED COULD GENERATE SOCIAL TENSIONS. • THE VERY OPEN ECONOMY IS VULNERABLE TO A WORLD ECONOMIC DOWNTURN.
SOURCES: COFACE COPYRIGHT. ALL RIGHTS RESERVED. @RATING COUNTRY RATING DEFINITION INVESTMENT GRADE A1 THE STEADY POLITICAL AND ECONOMIC ENVIRONMENT HAS POSITIVE EFFECTS ON AN ALREADY GOOD PAYMENT RECORD OF COMPANIES. VERY WEAK DEFAULT PROBABILITY. A2 DEFAULT PROBABILITY IS STILL WEAK EVEN IN THE CASE WHEN ONE COUNTRY'S POLITICAL AND ECONOMIC ENVIRONMENT OR THE PAYMENT RECORD OF COMPANIES IS NOT AS GOOD AS IN A1-RATED COUNTRIES. A3 ADVERSE POLITICAL OR ECONOMIC CIRCUMSTANCES MAY LEAD TO A WORSENING PAYMENT RECORD THAT IS ALREADY LOWER THAN THE PREVIOUS CATEGORIES, ALTHOUGH THE PROBABILITY OF A PAYMENT DEFAULT IS STILL LOW. A4 AN ALREADY PATCHY PAYMENT RECORD COULD BE FURTHER WORSENED BY A DETERIORATING POLITICAL AND ECONOMIC ENVIRONMENT. NEVERTHELESS, THE PROBABILITY OF A DEFAULT IS STILL ACCEPTABLE. SPECULATIVE GRADE B
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AN UNSTEADY POLITICAL AND ECONOMIC ENVIRONMENT IS LIKELY TO AFFECT FURTHER AN ALREADY POOR PAYMENT RECORD. C AN VERY UNSTEADY POLITICAL AND ECONOMIC ENVIRONMENT COULD DETERIORATE AN ALREADY BAD PAYMENT RECORD. D THE HIGH RISK PROFILE OF A COUNTRY'S ECONOMIC AND POLITICAL ENVIRONMENT WILL FURTHER WORSEN A GENERALLY VERY BAD PAYMENT RECORD.
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OVERVIEW OF SINGAPORE PAST PERFORMANCE THE SINGAPORE ECONOMY GREW AT A MODERATE PACE OF 2.1% IN 2Q 2008. ON AN ANNUALISED QUARTER-ON-QUARTER BASIS, GROWTH FELL BY 6.0%, IN CONTRAST TO THE 15.7% GROWTH IN THE PREVIOUS QUARTER. THE MANUFACTURING SECTOR FELL BY 5.2% IN 2Q 2008, COMPARED TO 2Q 2007. THE DECLINE WAS MAINLY DRIVEN BY THE BIOMEDICAL MANUFACTURING CLUSTER WHICH FELL BY 28.0%. THE FINANCIAL SERVICES SECTOR ROSE BY A SMALLER 10.2% IN 1Q 2008, FOLLOWING A 13% GAIN IN 1Q 2008. GROWTH WAS ACROSS THE BOARD, SUPPORTED BY ROBUST EXPANSIONS IN BOTH THE DOMESTIC AND OFFSHORE BANKING SEGMENTS. THE CONSTRUCTION SECTOR RECORDED HIGH GROWTH, RISING BY 17.4%, FOLLOWING THE ROBUST 15% GROWTH IN 1Q 2008. THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.0% IN 2Q 2008, FASTER THAN THE 5.5% GROWTH IN 1Q 2008. NON-OIL RE-EXPORTS GREW BY 14.0% IN 1Q 2008, HIGHER THAN THE 11.0% GROWTH IN 1Q 2008. EXCLUDING MOTOR VEHICLES, RETAIL SALES FELL BY 1.4% IN 2Q 2008, COMPARED TO 1Q 2008. THE TRANSPORT AND STORAGE SECTOR ROSE BY 5.7% IN 2Q 2008, MARGINALLY HIGHER THAN 5.4% IN 1Q 2008. THIS WAS ATTRIBUTED TO THE DOUBLE-DIGIT GROWTH FOR CONTAINER THROUGHPUT. THE HOTELS AND RESTAURANTS SECTOR GREW BY A SLIGHTLY SMALLER 2.1% IN 2Q 2008, FOLLOWING THE 2.4% GROWTH IN 1Q 2008. THE INFORMATION AND COMMUNICATIONS SECTOR ROSE 7.6% IN 2Q 2008, HIGHER THAN THE 6.8% IN 1Q 2008. THE BUSINESS SERVICES SECTOR EXPANDED BY 7.5%, SLOWER THAN THE 8.3% GAIN IN 1Q 2008. NEWS IT'S RECESSION WATCH 2009 THE GLOOM WAS NOT JUST IN THE OFFICIAL NEWS - THAT SINGAPORE HAS SLIPPED INTO TECHNICAL RECESSION, THE FIRST TIME SINCE 2002, AND THAT THIS YEAR'S ECONOMIC GROWTH MIGHT ONLY HIT 3.0%. IT WAS EVEN MORE VISIBLE IN THE OPINION OF SEVERAL ECONOMISTS: NEXT YEAR COULD BE WORSE. CITIGROUP ECONOMIST KIT WEI ZHENG EXPECTS 2009 GROWTH TO BE "SLOWER, OR EVEN NEGATIVE". THE LAST TIME SINGAPORE EXPERIENCED A FULL-SCALE RECESSION WAS IN 2001, WHEN THE ECONOMY CONTRACTED BY 2.4% DURING THE YEAR. IN FACT, SOME ECONOMISTS FELT THE CURRRENT CRISIS COULD SURPASS THE 1997 ASIAN FINANCIAL CRISIS, ECLIPSING THE POST-911 AND SARS SLUMPS IN RECENT YEARS. OR EVEN THE RECESSIONS TRIGGERED BY THE 1985 PAN ELECTRIC COLLAPSE AND 1973 OIL SHOCK. AND HOW QUICKLY SINGAPORE - THE FIRST ASIAN ECONOMY TO SLIP INTO RECESSION RECOVERS HINGES ON WHETHER WESTERN GOVERNMENTS AND CENTRAL BANKS CAN RESOLVE THE CREDIT CRISIS IN THE COMING MONTHS. "IN THE WORST-CASE SCENARIOS, IT WILL BE FAR WORSE THAN ANYTHING WE'VE SEEN BEFORE BECAUSE WE ARE TALKING ABOUT JOB LOSSES WHICH WILL CUT ACROSS ALL
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INDUSTRIES," SAID CIMB-GK REGIONAL ECONOMIST SONG SENG WUN. AND WHILE THE GOVERNMENT IS EXPECTED TO DIP INTO ITS COFFERS, THE ABILITY TO STIMULATE THE ECONOMY COULD BE HINDERED BY THE RESOURCE CRUNCH IN THE CONSTRUCTION SECTOR. SAID SINGAPORE MANAGEMENT UNIVERSITY ECONOMICS PROFESSOR DAVIN CHOR:"THE CONSTRUCTION SECTOR HAS RELATIVELY LIMITED CAPACITY TO EXPAND IN THE SHORT TERM." BUT MR SONG ARGUED THAT THE CONSTRUCTION CRUNCH COULD BE A BLESSING IN DISGUISE, GIVEN THAT BUILDING COSTS WOULD "TUMBLE QUICKLY" BY THE FIRST QUARTER OF NEXT YEAR. SAID MR SONG: "PROJECTS, WHICH HAVE BEEN PUT ON THE BACKBURNER, CAN BE BROUGHT FORWARD." AND WHILE MUCH HOPES ARE PINNED ON THE UPCOMING MARINA BAY SANDS INTEGRATED RESORT - SLATED TO OPEN ITS DOORS NEXT YEAR - EXPERTS ARE CAUTIOUS ABOUT ITS IMPACT, ESPECIALLY LAS VEGAS SANDS - WHICH CLINCHED THE LICENCE TO BUILD THE IR - HAS SEEN GAMING EARNINGS FALL IN ITS CHIEF MARKETS IN THE US AND MACAU. SAID FORECAST ECONOMIST VISHNU VARATHAN: "FROM THE OPERATORS' POINT OF VIEW, THEY MAY BE FACING THEIR OWN FINANCIAL DIFFICULTIES. AND A SLOWING ECONOMY MEANS FEWER VISITORS, LESS SPENDING POWER." WHEN CONTACTED, MARINA BAY SANDS GENERAL MANAGER GEORGE TANASIJEVICH SAID THE GROUP "REMAINS 100% COMMITTED TO SINGAPORE AND TO HELPING SINGAPORE ACHIEVE ITS TOURISM GOALS". PRIME MINISTER LEE HSIEN LOONG REITERATED ON FRIDAY THAT SINGAPORE IS WELLPLACED TO RIDE THROUGH THE "FINANCIAL STORM", BUOYED BY THE MOMENTUM FROM PROJECTS SUCH AS THE RECENT SINGAPORE GRAND PRIX. SAID MR LEE:"OUR FINANCIAL SYSTEM IS SOUND, AND OUR ECONOMY REMAINS COMPETITIVE. "OVER THE LAST FEW YEARS, WHEN CONDITIONS WERE GOOD, WE HAD CONSCIOUSLY DECIDED TO MAKE THE BEST OF THE GOOD TIMES AND PRESSED ON WITH UPGRADING AND DIVERSIFYING OUR ECONOMY. THIS WILL MEAN NEW AND BETTER JOBS, EVEN IF SOME OLD ONES ARE LOST." MR VARATHAN EXPECTS THE ECONOMY TO GROW 3.0% NEXT YEAR - MATCHING THE OFFICIAL FORECAST FOR GROWTH THIS YEAR. UOB ECONOMIST HO WOEI CHEN FEELS THAT THE WORST IS YET TO COME. SAID MD HO: "THE BANKS ARE THE ONES WHO HAVE BEEN HURT… WE WILL SEE THE CRISIS TRANSLATING INTO THE REAL SECTORS OF THE ECONOMY." MANUFACTURING WILL CONTINUE TO BE A DRAG ON THE ECONOMY, WITH THE RETAIL AND SERVICES INDUSTRY POISED FOR A HIT. BUT SINGAPORE, WHERE THE BANKING SCENE IS DOMINATED BY PRIVATE BANKING, WOULD LIKELY BE HURT LESS THAN ITS RIVAL HONG KONG, ASIA'S CENTRE FOR INVESTMENT BANKING, SAID MS HO. MR VARATHAN EXPECTS INDUSTRIES DEALING IN ENERGY, FOOD AND WATER - WHICH ARE NOT KEY DRIVERS OF SINGAPORE'S ECONOMY - TO BE SHIELDED FROM THE DOWNTURN. OUTLOOK THE COMPOSITE LEADING INDEX (CLI) ROSE MARGINALLY BY 0.5% IN 2Q 2008, FOLLOWING THE 2.8% DECLINE IN 1Q 2008. OF THE NINE COMPONENTS WITHIN THE INDEX, THREE COMPONENTS RECORDED DECLINES WHILE THE REMAINING SIX COMPONENTS ROSE MARGINALLY. THE SIX INDICATORS THAT REGISTERED IMPROVEMENTS ARE THE MONEY SUPPLY, NON-OIL SEA CARGO HANDLED, STOCK PRICE, US PURCHASING MANAGER'S INDEX, STOCK OF FINISHED GOODS AND DOMESTIC LIQUIDITY. OVERALL, THE SINGAPORE ECONOMY REMAINED RESILENT IN 1ST HALF OF 2008, DESPITE THE SLOWDOWNS IN MAJOR EXTERNAL ECONOMIES AND GLOBAL INFLATION CONCERNS. THE ECONOMY GREW BY 4.5% IN 1ST HALF OF 2008. LOOKING AHEAD, THE GLOBAL ECONOMIC ENVIRONMENT WILL REMAIN WEAK FOR THE REST OF THE YEAR AND WELL INTO 2009. THE DEVELOPED ECONOMIES ARE EXPERIENCING A BROAD SLOWDOWN IN ECONOMIC ACTIVITY. SLUGGISH GROWTH IS EXPECTED OVER THE NEXT SIX TO TWELVE MONTHS, AS THE EFFECTS OF THE US FINANCIAL AND HOUSING SLUMPS RIPPLE ITS EFFECT THROUGHOUT THE WORLD. THESE WILL HAVE AN ADVERSE IMPACT ON EMPLOYMENT,
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BUSINESS CONFIDENCE, CONSUMER SPENDING AND OVERALL DEMAND. EMERGING ECONOMIES PARTICULARY THOSE IN ASIA, HAVE CONTINUED TO GROW, PROVIDING SOME SUPPORT TO GLOBAL DEMAND AND GROWTH. HOWEVER, THE US AND EUROPE SLOWDOWN WILL HAVE A DOWNSIDE IMPACT ON THE ASIAN ECONOMIES. AT THE SAME TIME, INFLATION CONTINUES TO PERSIST AND POSES A CHALLENGES FOR POLICY MAKERS IN COUNTRIES SUCH AS CHINA, INDIA, INDONESIA AND VIETNAM. THE PACE OF GROWTH OF SINGAPORE'S ECONOMY HAS SLOWED DOWN, ATTRIBUTED MAINLY TO WEAKNESSES IN DOMESTIC AND EXTERNAL DEMAND. WHILE THE COMPOSITE LEADING INDICATOR POINTS TOWARDS A SLIGHT PICKUP, BUSINESS PERFORMANCE OF PERFORMANCE ACROSS THE SECTORS ARE MIXED. IN VIEW OF THE OUTLOOK FOR THE MAJOR SECTORS AND A SLOWDOWN IN THE GLOBAL ECONOMIC ENVIRONMENT, THE MINISTRY OF TRADE AND INDUSTRY LOWERED THE 2008 GDP GROWTH FORECAST FROM 4.0-6.0% IN THE LAST QUARTER, TO 4.0-5.0%. IN THE FINANCIAL SERVICES INDUSTRY, MAJORITY OF THE BANKS AND FINANCE COMPANIES FORECAST BUSINESS OUTLOOK TO REMAIN THE SAME FOR THE 2ND HALF OF 2008 OVER THE 1ST HALF OF 2008. BANKS AND FINANCE COMPANIES ARE MORE OPTIMISTIC WHILE STOCK, SHARE AND BOND BROKERS, FUND MANAGERS AND INSURANCE COMPANIES FORECAST SLOWER BUSINESS ACTIVITY IN THE COMING MONTHS, MAINLY DUE TO UNCERTAINTY IN THE INVESTMENT CLIMATE AND GLOBAL ECONOMY. IN THE REAL ESTATE INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS PREDICTS A SLOWER BUSINESS CLIMATE FOR THE COMING MONTHS. IN THE SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 24% OF FIRMS, EXPECT BUSINESS TO BE BRISK FOR THE COMING MONTHS WHILE A WEIGHTED 22% OF FIRMS PROJECTS LESS FAVOURABLE BUSINESS CONDITIONS. MAJORITY OF THE FIRMS (A WEIGHTED 54%) EXPECT BUSINESS ACTIVITIES TO REMAIN STABLE FOR THE COMING MONTHS. THIS RESULTS IN A NET WEIGHTED BALANCE OF 2% OF FIRMS EXPECTING A POSITIVE BUSINESS OUTLOOK. THIS MAGNITUDE IS SMALLER THAN THE NET WEIGHTED BALANCE OF 28% REGISTERED IN THE SAME PERIOD FOR 2007 (IE JUL - DEC 2007) AND COMPARABLE TO THE NET WEIGHTED BALANCE OF 3% RECORDED FOR APR-SEP 2008 IN THE PREVIOUS QUARTER. GENERALLY, THE MAJORITY OF WHOLESALERS, WITH A NET WEIGHTED BALANCE OF 55% OF FIRMS, FORECASTS BUSINESS ACTIVITIES IN THE COMING MONTHS, TO REMAIN AT SIMILAR LEVELS. FOR THE REMAINING WHOLESALE FIRMS, A WEIGHTED 22% OF THEM EXPECTS BETTER BUSINESS CONDITIONS TO IMPROVE. THESE FIRMS ARE MAINLY IN THE BUSINESS OF WHOLESALE TRADE OF INDUSTRIAL MACHINERY AND EQUIPMENT, ELECTRONIC COMPONENTS, AND COMPUTER AND ACCESSORIES. ON THE OTHER HAND, A WEIGHTED 23% OF WHOLESALERS, MAINLY FROM FOOD AND BEVERAGES, AND PETROLEUM AND PETROLEUM PRODUCTS, FORECAST BUSINESS CONDITIONS TO DETERIORATE IN THE COMING MONTHS. ON THE WHOLE, A NET WEIGHTED BALANCE OF 1% OF FIRMS EXPECTS GENERAL BUSINESS OUTLOOK TO REMAIN LESS FAVOURABLE. A NET WEIGHTED BALANCE OF 20% OF RETAILERS PREDICTS LESS FAVOURABLE BUSINESS CONDITIONS FOR THE PERIOD ENDING DECEMBER 2008. MOTOR VEHICLES RETAILERS, AND JEWWELLERY AND WATCHES CONTINUE TO PREDICT SLOWER SALES IN THE MONTHS AHEAD. IN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 8% OF FIRMS FORECASTS BETTER FAVOURABLE BUSINESS CONDITIONS FOR THE COMING MONTHS. THE SEGMENTS EXPECTING HIGHER BUSINESS ACTIVITIES ARE LAND TRANSPORT AND SHIPPING LINES.
HOTELIERS REMAIN CONFIDENT ABOUT THE BUSINESS CLIMATE IN THE MONTHS AHEAD, WITH A NET WEIGHTED BALANCE OF 37% OF HOTELIERS EXPECTING THEIR BUSINESSES TO IMPROVE. IN THE CATERING TRADE INDUSTRY, BUSINESS CONDITIONS ARE EXPECTED TO BE LESS OPTIMISTIC. IN PARTICULAR, CONVENTIONAL RESTAURANTS AND FOOD CATERERS MENTIONED HIGH OPERATING COSTS AS THE REASON FOR THE LESS POSITIVE OUTLOOK. IN THE INFORMATION AND COMMUNICATIONS INDUSTRY, A NET WEIGHTED BALANCE OF 12% OF FIRMS PREDICTS BETTER BUSINESS. IN THE BUSINESS SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS PREDICTS POSITIVE SENTIMENTS. THESE INCLUDE THOSE ENGAGED IN ENGINEERING, INDUSTRIAL DESIGN, TECHNICAL TESTING AND ANALYSIS, AND INVESTIGATION AND SECURITY ACTIVITIES. EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE SINGAPORE DEPARTMENT OF STATISTICS TODAY
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