ASIA will replace the United States as the largest source of new economic demand next year, making it the world’s biggest growth driver.

That means US demand will be less important as a growth source, said DBS Bank managing director of economic and currency research David Carbon.

Other economists have warned that a slower- growing US means a slower-growing Asia. But with more new demand coming from the region to fuel industrial production and exports in countries like Singapore, Asia should be able to grow rapidly – perhaps even faster than expected – next year, even if the US economy remains weak.

‘This is the biggest structural change in the global economy today,’ Mr Carbon said. In numbers, it means that Asia will generate US$1.02 (S$1.42) worth of new demand for every dollar generated by the US.

In 1990, the US put out twice as much new demand as Asia. But over time Asia, driven by China, has increased its role.

Next year ‘is the cross-over year…Asia puts out more new demand than the US does. And by doing that it, by definition, becomes the biggest driver of global growth in the world’, Mr Carbon said. He expects Asia to grow 6 per cent next year, with China leading the way with 9.6 per cent. Singapore is projected to grow 6 per cent.

However, the V-shaped recovery is likely to level out at the top, giving way to a ‘square root’ shape, he said.

This shift to Asia in demand will have other effects, with money flowing to Asia out of the slower-growing US and European economies and more investments from businesses going to Asia, which will serve to narrow the current account surpluses in Asia and spur further growth.

‘Instead of global imbalances slowing Asia’s growth, Asia is going to grow more quickly and that will help to narrow these global imbalances.’

Mr Carbon said worries that a removal of policy stimulus will derail the recovery are exaggerated. China’s recovery has been largely independent of its 4 trillion yuan (S$815.6 billion) stimulus package.

The increased Asian demand is also being driven by private spending rather than the government dollar, he said. But he added that China needs to find a better balance between its investments and private consumption in driving demand.

Click here to go back to Main  Page

CB Richard Ellis (CBRE) predicted yesterday that as many as 14,500 new homes may be sold once the final tally is in for this year – second only to 2007′s record take-up of 14,811 units. 

But caveats lodged from Jan 1 to Dec 11 showed that the total value of property sales this year is running at only 58 per cent of that in 2007, said CBRE. 

It said this was because mass market and mid-tier homes dominated the market this year, unlike in 2007 when high-end homes stole the limelight. 

Also noteworthy: the fast-rising popularity of small-format apartments of 500 sq ft and below. So far this year, 540 of these apartments have been sold, more than double the 221 units sold in 2007. 

Most projects with small units were sold out within a few days of their launch as each unit was ‘very affordable’ at between $300,000 and $600,000. 

‘As developers whet the appetites of enthusiastic home buyers by supplying nearly 12,000 new homes for sale in the first nine months of the year, they ran short of supply of mass market projects by the fourth quarter,’ said CBRE. 

In the fourth quarter, most launches were prime ones, pricing out buyers with smaller budgets. The Government’s warning that the recovery might not be sustainable also cooled buying fever, CBRE said. 

With a fortnight left in the year, CBRE estimates total fourth quarter sales of new private homes at 1,700 units, putting combined sales for November and December at 889 units as October sales were 811 units, down from the 1,143 sold in September. 

With no major launches to drive up November and December sales, this period was always expected to be slower. 

Earlier, some consultants had tipped a new record this year. This now looks unlikely as the market has slowed markedly in the fourth quarter, said Knight Frank’s executive director for residential, Mr Peter Ow. ‘We may not breach 2007′s record but it is still a spectacular number as the sales were achieved mostly in a seven- month period from March to September.’ 

Nevertheless, there is growing market confidence, particularly with next year’s opening of the two integrated resorts, experts said. 

The first half of next year will see a wider spread of project launches, from the mass market ones to the city-fringe projects and prime ones, said CBRE executive director for residential Joseph Tan. 

‘For mass market and city-fringe 99-year leasehold projects, prices are likely to cross the $1,000 psf barrier because of their near-city location or if they are near an MRT station.’ 

Prime projects in the pipeline include Ardmore 3 and those on collective sale sites of Grangeford and Hillcourt, said CBRE. It expects 8,000 to 10,000 sales, with prices rising by 5 per cent to 10 per cent. 

Click here to go back to Main  Page

Abu Dhabi, the oil-rich capital of the United Arab Emirates (UAE), swooped in with the lifeline just as Dubai’s state-owned property developer Nakheel was due to repay a US$3.52 billion bond that matured yesterday. 

Bondholders and investors cheered the news that Dubai will not default on its debt, sending shares from Asia to Europe up after almost three weeks of uncertainty over the health of the emirate’s finances. In Dubai, stocks jumped 10.4 per cent yesterday after tumbling more than 20 per cent since Nov 25. 

On that day, Dubai abruptly announced that its flagship government entity Dubai World would need more time to repay some US$59 billion in debt. 

Global financial markets were shaken as investors worried that heavy government debts would derail the fragile global economic recovery. These concerns worsened after Greece and Spain had their debt ratings downgraded last week. 

But Dubai at least seems to be in the clear for now. Of the US$10 billion handout, US$4.1 billion is meant to pay the bond obligations of Nakheel, which created the iconic palm-shaped islands that symbolised Dubai’s building boom. 

The rest will cater to Dubai World’s needs until the end of April. 

‘We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices,’ said the chairman of Dubai’s supreme fiscal committee, Sheikh Ahmed Saeed Al Maktoum, in a statement yesterday. 

‘Our best days are yet to come.’ 

Dubai and Abu Dhabi are the two largest emirates in the UAE, the country they co-founded in 1971. But while resource-poor Dubai borrowed heavily and spent lavishly to build itself up as a financial hub and luxury playground, Abu Dhabi used its abundant oil revenues to turn itself into a well-run state – the richest of the UAE’s seven emirates. 

Analysts were mostly upbeat about the Dubai bailout yesterday. ‘Abu Dhabi stepped in to the rescue once again and this is something that we can now expect on an ongoing basis. This is big news,’ said Mr Haissam Arabi, chief executive of Gulfmena Alternative Investments in Dubai, in a Bloomberg Television interview. 

In Singapore, Action Economics’ economist David Cohen said the news provided ‘reassurance that Dubai will get on with cleaning up the mess without triggering another global financial crisis’. 

Asian markets were down early yesterday but most rebounded on the news. Hong Kong’s Hang Seng Index recovered from a 1.6 per cent loss to finish up 0.8 per cent. China’s Shanghai Composite Index closed up 1.7 per cent and Singapore’s Straits Times Index was mostly flat. 

Markets in Europe opened higher. HSBC and Standard Chartered, said to be among Dubai World’s main creditors, jumped more than 2 per cent each. 

Mr Fahd Iqbal, a Dubai-based analyst at Middle East investment bank EFG-Hermes, said the rally was to be expected but he urged caution. ‘This announcement constitutes a specific bailout of Nakheel, suggesting that as an entity (it) was deemed to be ‘too big to fail’,’ he told the Associated Press. ‘It does not, however, constitute a bailout of Dubai Inc or Dubai World as a whole and this is important to highlight.’ 

A Dubai government source yesterday said the money comes with ‘no conditions’, Reuters reported. The source also said the rescue was due to ‘exceptional credit circumstances’ at Dubai World and should not be taken as an indication of how the debt of government-related entities will be handled in general. 

Yesterday, Dubai said UAE’s Abu Dhabi-based central bank is prepared to support its local banks. Dubai will also unveil a new bankruptcy law based on global standards that Dubai World may use to restructure US$26 billion of debt. 

Click here to go back to Main  Page

However, he assured young couples that the Government will help them to own their first flats. 

The Housing Board will also keep building affordable homes ‘so that each generation of Singaporeans will continue to have a stake in the nation’, he added. 

Mr Lee gave the assurance when he visited the newly-completed crown jewel of Singapore’s public housing, which he said is symbolic of the spectacular transformation of the country. 

The Pinnacle@Duxton, rising 50 storeys high, stands on a plot that was occupied by the first rental blocks in Tanjong Pagar constituency, of which Mr Lee has been the MP for 54 years. 

Yesterday, he recalled how he used the two Duxton Plain blocks then under construction in his 1963 election campaign, when the leftists were determined to win his seat. 

‘I said: ‘If you vote for me, these will be completed and will be yours’. If not, the Barisan Sosialis will win and you will have a bleak future.’ 

Such blocks were built in the 1960s as a quick fix for Singapore’s rapidly-growing population who were ‘living in overcrowded shophouses or squatter huts’. 

‘People were poor and life was hard. No running water, no modern toilets, no expectation of a better future,’ said Mr Lee in a speech that traced the ‘breathtaking’ transformation of Singapore’s housing landscape since the 1960s. 

Later, he told reporters that the direction of HDB home prices depends on the people. 

If they have confidence in the country and support the Government, then prices ‘must go up’ as they have every year since 1965, he said, in response to reporters asking what he would say to young couples lamenting the sharp price increases in recent years. 

The alternative, Mr Lee said, is grim. 

‘They’ve got to decide if the country is going to go up or go down. If the country is going to go down, then the economy will go down, people’s incomes will be down, unemployment will be up and property values will go down.’ 

In the last 45 years, HDB home prices have soared. For instance, a three-room flat in Queenstown in 1964 cost $6,200, but would fetch at least $200,000 today. 

However, much of the increase in prices has taken place in the past few years. 

In his speech, Mr Lee also dwelt on the many benefits of a home-owning society, which had its roots in the policy introduced in 1964. 

It gave a community of immigrants a sense of rootedness in Singapore, he said, adding: ‘It is the foundation upon which nationhood was forged.’ 

Owning their homes also gives people a pride that is critical in preventing housing estates ‘from turning into slums, which is often the fate of public housing estates in other countries’, he said. 

But the key advantage is that the policy gives people ‘a tangible stake in worth’ and motivates them to work hard. 

‘If Singapore prospers, their flat values will appreciate and they share in the growth,’ he said. 

He added: ‘If all the 900,000 HDB flats built over the past 50 years were rental flats… We would not have the stability, progress and prosperity that a stake in home ownership of a growing asset has made possible.’ 

As assets, HDB homes have become more valuable partly because their prices have moved in tandem with the economy, thus allowing citizens to share in the fruits of growth, said Mr Lee. 

This can be seen in the high demand for the flats at the Pinnacle@Duxton, he said. 

It has 1,848 flats. At the first launch in 2004, its four-room flats cost an average $335,000 and the five-room flats, 395,000. This year, the HDB priced these same-sized flats at an average of $486,000 and $590,000 respectively. 

Mr Lee described the building of the Pinnacle as ‘a strong testament to our tenacity and capabilities as a people’. 

‘I see more and more of these old blocks being demolished, and new blocks like the Pinnacle being built,’ he added. 

zakirh@sph.com.sg 

‘We could easily have sold (the Duxton plot) and then a condominium would have stood in its place. 

‘But it would not have the same effect because here, we have kept the HDB residents in place, so we are sharing the growth of the city with the people who are of that class who built the city. We could have maximised the value by selling it off, and then a condo would have been built. We didn’t do that.’ 

MM Lee on the Pinnacle@Duxton’s special location in the city centre.  

Click here to go back to Main  Page

We applied again for exemption after our second appointment with the HDB. This time we gave details of our Prudential policy in our online application. We were rejected again. This time the reason was that the policy term was shorter than the loan term and would not be enough to cover the loan amount.

However, the board has made a mistake because the loan term is the same as the policy term and the policy coverage is the same as the loan amount. We have verified this by checking our documents and checking with our insurance adviser. Each time we were rejected, the board just sent us a computer-generated e-mail with no contact details of an officer we could turn to for help.

We have wasted much time calling the CPF Board and being put on hold for a considerable time before a customer service executive attends to us. Even when the call goes through, we are advised to do what we have already done, that is, submit our policy details in our online application. We have even offered to visit the board’s office to show our policy and loan documents, but were told it would be useless. What then should we do?

Why does the CPF Board make it so difficult for people to apply for an exemption? If it is trying to discourage home buyers from buying private home insurance, it should be explicit instead of making things difficult for everyone and wasting our time.

My husband and I are Internet-savvy. I dread to think what would happen to those who are not and face the same problems.

Elizabeth Ng (Mrs)

Click here to go back to Main Page

The old record of US$1,030 set in March last year was surpassed in early October and prices have continued to climb. 

To put that in perspective, gold was just US$254 an ounce back in 1999, a 20-year low. 

‘Gold is going up,’ said Singapore-based investor Jim Rogers, who tips the precious metal to top US$2,000 an ounce in the next decade. ‘I’m bullish on all commodities until the bull market comes to an end,’ he told The Sunday Times. 

Mr Rogers, who predicted the rally in commodities back in 1999, is not the only bull out there. 

Goldman Sachs raised its 12-month gold forecast to US$1,350 an ounce this month from a previous estimate of US$960, while Barclays Capital has said that ‘prospects for a run at US$1,500 should not be underestimated’ next year. 

Gold’s glister has been fuelled by the persistent weakness in the American dollar and news that central banks in India, Russia and elsewhere have increased their holdings of the metal. 

Speculation that governments, the biggest bullion holders, will make even more purchases is merely adding to the mood music. 

Can the trend go further? According to Channel Islands-based GoldMoney.com founder James Turk, ‘gold is going to be at US$8,000 by 2013′ due to the historical relationship between the metal and the Dow Jones Industrial Average. 

He was quoted by Bloomberg as saying that gold and the Dow were at around the same level during the Great Depression and the early 1980s. 

In January 1980, they were both slightly below the US$1,000 mark, but while the Dow is up 10-fold since then, gold’s ascent has not been as spectacular, he argued. 

But others in the industry do not expect gold to soar that high. 

‘US$2,000 or US$3,000 an ounce levels make sense only if the US dollar drops by another 30 per cent on a broad basis and United States inflation moves to 10 per cent, which we do not expect,’ said UBS Wealth Management’s head of commodities research, Mr Dominic Schnider. 

However, should Mr Turk be correct, it will not be long before we all start melting down our wedding rings. 

Why invest in gold?  

There are fears that the massive monetary and fiscal policy stimulus plans that have been pumped into the global economy will generate inflation. 

Gold acts as a hedge against such an eventuality. 

Dr Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, said gold is seen as a good alternative to paper money. 

‘While there are fears about the future of the US dollar, the outlook for other major currencies is not much better,’ he said. 

‘Europe’s economy looks worse than the US, the strong yen looks unsustainable given the damage it has already caused the Japanese economy and the (Chinese yuan) is not really an option as it’s not convertible.’ 

A convertible currency is one that can be quickly and easily bought and sold for other currencies. 

Diversification advantage  

Many studies show that gold prices generally move in the opposite direction from stock prices: Gold soars when stocks tank. 

‘Portfolios that contain even a small allocation of gold are proven to be generally more robust and better able to cope with market uncertainties than those that do not, showing improved stability and predictability of returns,’ said Mr Albert Cheng, managing director of World Gold Council for the Far East region. 

He said the optimum investment in gold for any long- term institutional investment portfolio ranges from 4 per cent to 10 per cent. 

Rarity factor 

Governments can print as much money as they like – to pay off their debts – but they cannot create gold, which is limited in supply. 

‘In all of history, only 161,000 tonnes of gold have been mined. This is barely enough to fill two Olympic-sized swimming pools, and of this amount, more than half was extracted in the recent 50 years,’ said IPP Financial Advisers investment director Albert Lam. 

Outlook for gold  

Despite the risk of prices reversing in the short term, financial experts say investors should add gold to their portfolios if they have not already done so. 

‘Worrying too much about a short-term pullback risks missing the bigger medium-term picture which remains very positive for gold,’ Dr Oliver said. 

One key reason for gold’s rise is that central banks in emerging countries such as China and India are becoming buyers as part of a strategy to reduce the exposure of their foreign exchange reserves to paper currencies. 

In the past, central banks focused on accumulating paper money such as the greenback, but they now want to hold more gold for diversification purposes. 

‘Over the past five years, central banks and governments have sold around 440 tonnes of gold every year,’ Mr Schnider said. 

‘In the coming years, central bank gold sales should come to a halt. In fact, we actually foresee that central banks may become net buyers.’ 

But experts also caution that investing in gold is highly speculative and prices can be volatile. After rising to new highs in 1974, gold prices plunged, falling to about US$100 in mid-1976 from about US$200 at the start of 1975. 

‘Animal spirits can play a huge role in the determination of the gold price. This can make for a volatile ride over time and suggests that gold should not dominate an investor’s portfolio,’ Dr Oliver said. 

Animal spirits – a term coined by the late British economist John Maynard Keynes – refers to a particular sort of confidence, or ‘naive optimism’. 

Rather than dabble in gold alone, Dr Oliver suggested that investors have exposure to a broad basket of commodities. 

Mr Shrikant Bhat, Citibank Singapore’s head of wealth management, urged investors to understand the factors driving the gold price movement and then take a view on whether those factors will continue to drive the demand.

There are a variety of ways you can give your portfolio a gilt edge.

Bars and coins

United Overseas Bank (UOB) sells physical gold that can be bought from and sold back to the bank at its daily buy-sell market rate. Gold bars come in a range of sizes, from small wafers to cast kilobars. Coins range from one-twentieth of an ounce to one ounce.

‘This is one of the best forms of gold investment as you can keep the coins and bars in safe deposit boxes, and there is a variety of sizes to choose from,’ said IPP Financial Advisers investment director Albert Lam.

A cast gold bar is made when melted gold is poured into a mould to achieve the desired shape and weight.

Gold bars and coins are subject to goods and services tax (GST) so an investor will lose 7 per cent of his investment up front.

Certificates

At UOB, a gold certificate is sold in kilobars, which are kilogram bars of gold.

In a single certificate, you can buy up to 30 kilobars.

UOB sold one kilobar for $55,416 last week.

The certificates have no expiry date and can be exchanged for physical gold or cash whenever the need arises.

A flat $5 charge for each certificate and an administrative fee of $30 a kilobar per year apply.

Gold savings account

At UOB, consumers can, through a passbook, buy and sell gold at prevailing market prices and transact any time during banking hours.

Teacher Arfiah Arshad, 39, sank $5,000 into a UOB Gold savings account last December and $5,000 into UOB Gold and General unit trust in February.

Both accounts are up by 50 per cent.

She invested in gold after her adviser at Financial Alliance, Mr Sani Hamid, suggested she do so in order to diversify her portfolio.

‘When I went to open a gold savings account at UOB, the relationship manager tried to persuade me to invest in an Asia infrastructure unit trust because she said few people were investing in gold then,’ said Madam Arfiah, who did not heed the banker’s advice.

‘I’m glad I stuck to investing in gold,’ she said.

Citibank also offers retail customers the chance to trade in gold via its Citibank Gold Account.

To establish this account, you just need to buy a minimum of 30 ounces of gold, said Mr Shrikant Bhat, Citibank Singapore’s head of wealth management.

The price of gold hit a record of US$1,226.10 an ounce last week.

Gold jewellery

Perhaps the easiest way to buy physical gold is to walk into a goldsmith and buy 22-karat or 24-karat jewellery.

But Mr Lam cautioned: ‘Design and workmanship costs are priced into the jewellery and hence if consumers are buying for investment purposes, they end up paying a premium.’

Funds and ETFs

One fund that gives exposure to gold is the Schroder Alternative Solutions Gold and Metals Fund.

The fund’s gold exposure varies between 25 per cent and 75 per cent. The rest comprises industrial metals such as copper and aluminium.

Exchange traded funds (ETFs) are another alternative. They allow people to gain exposure to gold prices without taking delivery of the metal itself.

They trade like stocks on the exchange, so you can buy and sell them at market prices throughout the trading day.

Gold ETFs include SPDR gold shares, which are listed on the Singapore Exchange.

Click here to go back to Main  Page

 

I bought my first life insurance policy when I was just 19 years old.

I wasn’t quite sure how it worked. All I knew was that I was about to take up a government scholarship to study overseas. My parents were my guarantors, which meant that should anything happen to me, they might have to pay back whatever the Government had spent on my education.

My parents and I felt we had to insure ourselves against this possibility. There was also a general feeling that I might as well start buying insurance when I was young, since the premiums would be lower.

My dad had a friend who recommended his agent. We met her and, in the end, she sold me what I believe is called a whole life policy with a term rider.

The bulk of the premiums went into the whole life policy even though it covered me for just $30,000.

The great thing, the agent explained, was that the policy would ‘break even’ in a number of years, meaning that the policy would accumulate enough value to pay for itself. And in 20 or 30 years, I could even withdraw money from it.

The rest of the premiums went into the rider, which is jargon for an extra bit of coverage that attaches to the main policy. This would cover me for $250,000 – more than enough to repay the Government – for five years.

My parents initially paid the premiums, but I took over when I started working.

It was only years later, covering banking and finance news in The Straits Times, that I was finally in a position to make a good assessment of what I had bought.

I realised that the $250,000 rider was the portion of the policy that I actually needed.

The $30,000 whole life policy, which I still have, does not provide much cover at all. And it is probably cover of the wrong sort, for there is no one whom I need to provide for in the event of my death.

What I do need cover for is medical bills for when I’m still alive. But since I did not buy a critical illness rider, I am not covered for that.

I also finally understood that in these traditional whole life plans, the relatively high premiums are partially used to provide the cover, but the rest are invested in a fund that pays returns. This is why the policy eventually breaks even and later has a cash value that you can take out.

So what I really bought all those years ago was something more akin to a savings plan, with a small insurance element.

I’m not so sure that this was the best way that I could have invested all the premiums I poured over the years into the policy.

What I am certain about is that I did not need it all those years ago. I could have just bought a term policy for $250,000 for five years for a fraction of the cost.

I don’t blame the agent, who I think genuinely believed she was selling me something that I would need later in life – assuming, of course, that (a) I would eventually raise a family I needed to support and (b) that I would want a hassle-free way to invest my money.

In fact, my life could still change in a way that would make the policy more useful and relevant.

But I could not have foreseen any of this. The problem was that I was too young to have formed a clear view of where I was headed in life, and what I therefore needed from a life insurance policy.

People complain so much about insurance agents pushing products that they don’t need.

But much less is said about customers who haven’t really thought about what they want and buy policies for the wrong reasons.

So here is my own list of reasons not to buy an insurance policy, cobbled together from my own life experiences and those of my friends and colleagues.

At the top of my list: Don’t buy a policy just because your parents, relatives and the rest of the world all seem to have one.

People who do this are taking the easy way out. They don’t want to think through the complexities of life insurance and believe there must be ‘safety in numbers’.

When I finally went through a proper assessment of my insurance needs, it took more than an hour. My financial adviser asked such probing questions about my personal life, and my expectations of what I would require should I fall sick, that I felt like I was telling my life story to a psychiatrist.

Remember also that although there are broad categories of life insurance products, every company makes unique variants tailored to an individual’s unique circumstances.

If you are single, you need to ask whether you need to be covered for death. Do you have certain medical conditions that require special cover? Do you need insurance that pays for the mortgage of your house, and should that be a reducing cover that shrinks with the size of your loan?

Just ‘going with the flow’ assumes you have the same sort of life as everyone else and makes it an easy sale for your agent. Remember that he hasn’t missold you a policy if you did not tell him what you need.

The next rule: Don’t buy simply because you are young.

I have so many friends who bought policies that they couldn’t really afford to start with, and now don’t even need. And all because they were under the impression that it was cheaper if they started young.

Yes, it is true that you lock in lower premiums when you buy a policy in your 20s.

But for many people, a true understanding of their needs in life doesn’t come until they are more mature.

Is it worth that discount to get locked into a policy that may not suit you? Or is it better to wait a few years until you have a clearer view of yourself, your investment skills and the products on offer before you commit?

Finally, my last rule: Don’t buy from anyone towards whom you feel an obligation.

I understand that when insurance agents start work, they are told that the first people they should tap for business are their family and friends.

There is a simple reason for this: When an agent sells to someone he knows personally, he sets up the impression that he will help you and won’t give you bad advice.

The buyer believes this and is therefore less likely to question the advice he is given. In fact, he tries not to ask too many questions because he thinks it is rather rude. He ‘goes with the flow’, so the sale goes on more smoothly than usual.

That is all well and good if the advice is the best one to start with. But that won’t always be true, even with the noblest intentions on both sides.

Don’t get me wrong. Life insurance is an important product that everyone should probably buy. Whole life policies will be suitable for some customers, and cheaper term policies or obscure variants just won’t work for others.

But these are long-term products that need to be serviced for years, and often decades. And it would be tragic to chalk up these costly commitments for the wrong reasons.

Click here to go back to Main  Page

 

Upbeat is the word. The outlook on the job and compensation front for Singapore next year looks promising. 

More jobs will be available and pay packages will improve marginally, several human resource consultancies report, offering a ray of hope even as they add a few words of caution. 

Much of the optimism stems from an improved forecast for the Singapore economy, though bud- get constraints and conservative projections for global economic growth suggest that the recovery, while firm, is still in its early stages. 

The official forecast is that the Republic will grow by 3 per cent to 5 per cent next year. Private-sector economists are more upbeat. They expect growth to hit 5.5 per cent next year, after contracting by 2 per cent this year, according to the median expectations of 20 economists released by the Monetary Authority of Singapore last week. 

Improved prospects in regional markets, among them China, India, Malaysia and Thailand, add to confidence levels in Singapore, regional human resource observers say. 

Mr Mike Game, CEO – Asia for global recruitment firm Hudson, which counts many Fortune 1000 companies among its clients, told The Sunday Times that employers in Asia are becoming optimistic about business expectations for next year and beyond. 

On the job and compensation front, ‘Singapore and Asia are receiving even more focus than pre-recession as multinational companies perceive limited growth opportunities in the developed markets of Europe, the United Kingdom and the United States. 

‘Specifically in the first quarter, we see hiring sentiment increasing sharply post-Chinese New Year although some employers are starting hiring assignments now, knowing talent will be harder to find as 2010 progresses,’ he said. 

The process builds on a trend that became noticeable in the second half of this year. 

The Singapore office of Manpower Inc, a global human resource consultancy, said the net employment outlook for the first quarter of next year is 26 per cent, nine percentage points higher than this year’s fourth-quarter outlook. 

The net employment outlook measures the difference between expectations of recruitment and reduction of jobs. The positive outlook for hirings in the next three months will mark the third quarter of positive hirings. 

Surveys show that many opportunities will exist in the banking and finance sector. 

Ambition, a recruitment firm specialising in accounting, banking and financial sectors, said in a statement last week that its survey of 940 executives in Singapore and Hong Kong showed that nearly 67 per cent were upbeat about business prospects in the first quarter of next year. Nearly 48 per cent said they had been actively hiring in the last quarter of the year, while another 23.5 per cent said they would hire by the middle of next year. 

However, among those polled, 44 per cent showed a preference for contract or temporary staff, pointing out that maintaining headcount was still a priority consideration. 

‘The Republic is benefiting from the continuing trend in the finance industry to locate back-office and middle-office operations to the city state to take advantage of the educated English-speaking talent pool and excellent infrastructure,’ said Hudson’s Mr Game. 

Prospects are looking promising for real estate, health care and pharmaceuticals. The information technology sector has also been aggressively looking for experienced developers and business development professionals. 

Manpower Inc reports better employment prospects for those in public administration and education as well, but it sees hiring sentiments in transport, utilities and wholesale and retail sectors as still somewhat conservative. Projections on the compensation front are also conservative. 

According to human resource consulting firm Hewitt Associates, this year’s pay hikes in Singapore – at 1.8 per cent – were the slowest since 2000. 

Hewitt’s Mr Samir Bedi told The Sunday Times that employers in Singapore are set to raise salaries by a respectable 2.6 per cent next year. His findings are based on a survey of 153 companies polled in July and August this year. 

‘Our projections indicate that it will take time to rebound to the highs of a 5.3 per cent salary increase witnessed in Singapore in 2008,’ he said. 

The good news is that the pay hike freeze is being lifted, with the survey showing that the incidence of salary freeze will be down to 12.8 per cent of organisations next year, compared to a high of 60.3 per cent this year. 

According to Mr Game, attention is increasingly focused on critical staff, and the issue of retention is coming back into focus. 

‘Employees in many organisations are feeling bruised by the downturn and the reaction of their employers to compensation, benefits and job role. These employees are vulnerable to turnover even as the hiring activity continues to improve,’ he noted. 

Meanwhile, some employers are concerned that they will not be able to find people to fill job vacancies. 

Several respondents polled by the Singapore Chinese Chamber of Commerce and Industry have called for an easing of restrictions on employing foreign workers. 

shefali@sph.com.sg 

HIRING, HIRING, HIRING… 

Get your resumes ready  

According to Mr Mike Game, CEO Asia for global recruitment firm Hudson, ‘we see hiring sentiment increasing sharply post-Chinese New Year’. He noted that some employers are already hiring now, knowing that talent will be harder to tap as 2010 progresses. 

Where you’re likely to report for duty  

Surveys indicate that you can bank on many openings in the banking and finance sector. 

If you are eyeing jobs in real estate, health care and pharmaceuticals, prospects are bright, too. The information technology sector is also clicking into higher gear. 

Job options in public administration and education look promising, too. 

But don’t expect a flood of openings in the transport, utilities and wholesale and retail sectors. 

Will the position be a permanent one?  

A poll by one recruitment firm of 940 executives in Singapore and Hong Kong indicated that 44 per cent had a preference for contract or temporary staff. It seems that the need to keep a lean headcount is still critical. 

What will the pay be like?  

HR consulting firm Hewitt Associates says employers here are set to raise salaries by 2.6 per cent next year. The figure is based on a survey of 153 firms polled in July and August. 

Click here to go back to Main  Page

Where do you see this?

Most often in news articles, usually involving some billion-dollar investment deal.

What does it mean?

SWFs, or sovereign wealth funds, are government-owned investment funds that invest their country’s savings or reserves in international assets such as stocks and bonds.

Singapore’s Temasek Holdings and Government of Singapore Investment Corporation (GIC) are well-known examples of SWFs, as are the Kuwait Investment Authority, the Abu Dhabi Investment Authority and Norway’s Government Pension Fund.

Why is it important?

Some of them have received negative publicity in recent years, either because their foreign investments have raised political hackles in their target countries or because the big stakes they bought in Western banks became near-worthless during the financial crisis. But GIC deputy chairman and executive director Tony Tan said last month that SWFs will be important to the global economic recovery as they are long-term investors whose capital will help emerging markets develop.

So you want to use the term. Just say…

‘Some investor just bought the Empire State Building entirely in cash! Must be an SWF.’

Fiona Chan

Click here to go back to Main  Page