2003 Dec29 No95 Theedgespore

YOUR PERSONAL COPY
OTHER HIGHLIGHTS
The Edge wishes all our readers Merry Christmas

and a Happy New Year. There will be no publication
on Jan 5. The Edge will return on Jan 12, 2004
Mixed fortunes seen

in coming year
CITY&COUNTRY PG41
BUSINESS
MITA (P) No. 096/08/2003 PPS 1519/6/2004
SINGAPORE (INCLUSIVE OF GST) S$3.00
&
INVESTMENT
W E E K LY
THE WEEK OF DECEMBER 29, 2003 JANUARY 11, 2004
95
DESIGN BY CALVIN YUEN & LEE WAN YEE
YEAR-END
DOUBLE
ISSUE
NEW YEAR,
New hopes
INSIDE
Asias seven wise men give their forecasts

Singapores nouveau riche
Best stocks to give this season
Best & worst deals of 2003
The years movers & shakers
Tech in 2004
Singapore scorecard
Confidence in Asian currencies mounts
SPECIAL
The years top bonus buys

EXCLUSIVE
Wall chart: The year in review

S
88 885002 090004
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12/23/03, 2:41 AM
2 THEEDGE SINGAPORE
BEHIND THE STORIES
BUSINESS & INVESTMENT EVERY WEEK
95
T H E W E E K O F DECEMBER 29, 2003
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| DECEMBER 29, 2003
e see the light at the end of the

tunnel. Or is it the headlamp of
an oncoming train? For three
years since the bust on Wall Street
in 2000 that ended the Internet
rush (for Asian markets, the bust started earlier with the financial crisis of 1997), each
years annual forecast has seen a troop of
economists and analysts saying, This time,
its different; that this year would be the
year of real recovery. Well, it hasnt.
On the other hand, it is a fact that economic and business cycles do turn around,
and if they had not done so in the past several years, the probability of success for every
next year increases immeasurably.
For this year-end issue, The Edge Singapores team went out to gather the views of
not only Singapores wise men fund managers, but several of Asias renowned ones as
well: Hugh Young, Mark Faber and Mark
Mobius, among others. Increasingly, as markets open up under the string of FTAs and other
measures, it will be a case of local investor,
global investing. If the second half of 2003
showed Asias strength in shaking off the Severe Acute Respiratory Syndrome (SARS) crisis, can the run be sustained through next year?
Also, we celebrate the best and highlight
the worst deals and issues of the year. Who
emerged as the new rich and movers of 2003?
For value investors, we also identify the best
stocks and property investments for next year.
Finally, check out The Years Top Bonus
Buys guide, specially brought to you courtesy
of MasterCard.
Cutting-edge year
The events of 2003 also taught us a lot. This
was The Edge Singapores second year of
publishing and we were constantly challenged to be cutting-edge in covering issues
and events. In many areas, we were ahead,
providing themes, ideas and analyses which
were subsequently picked up by dailies and
broadcast networks.
There are two important lessons to be
learned from Singapores stock market and
corporate sector in 2003 that will probably
help investors navigate 2004 profitably and
safely. The first is that bullish sentiment
like life itself is a fragile thing, and it can
be wiped out in an instant in ways impossible to foresee or prevent. The second is that,
even when sentiment is strong, there are limits to how far grand plans and lofty ambitions
can drive a companys stock price in the absence of improved profitability and earnings.
The first lesson was tragically brought
home early in the year when Singapores
economy and stock market were hit by, not
one, but two events that were unexpected and
pretty much beyond its control the US invasion of Iraq and the outbreak of SARS. The
pounding that the market suffered as a result
wasnt due to irrational fear. On the contrary,
it was a reflection of the very real slump in
business activity and investment. The impact
was felt across the board, with the aviation,
land transport and tourism-related sectors like
retail most severely affected.
Suddenly, all the time and effort that Singapore had spent in the preceding months
dreaming up and implementing ways to remake its economy and top companies seemed
in vain. What was the point in swallowing
the bitter medicine of Central Provident Fund
changes and GST tax hikes in the face of collapsing global security and economic growth
[Issue 77]?
But the pall of gloom lifted almost as
quickly as it had enveloped Singapore. By the
middle of the year, it had become clear that
the global economy was not going to be defeated by SARS or terrorists. And, with interest rates at generational lows, there was plenty
of liquidity in global financial markets, which
quickly flowed back into stocks.
Better second half

In Singapore, that turn of events was reflected
as much in the Straits Times Index bouncing
from a year-low of 1,214 on March 10 all the
way to a 19-month high of 1,794 on Nov 4.
Small-cap stocks which are usually regarded as being riskier than the heavyweights
outperformed by a wide margin. That increased appetite for risk created an ideal environment for initial public offerings. In 2003,
58 new issues were launched, and many of
them saw massive over-subscription rates. For
instance, the IPO of Apex-Pal International,
which owns the Sakae Sushi food chain, was
oversubscribed by a record 915 times.
Winners and losers

However, the boom in the latter months of
2003 wasnt just a reflection of investors being less risk-averse. It also discriminated be-
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THEEDGE SINGAPORE | DECEMBER 29, 2003 3
BEHIND THE STORIES
The people behind The Edge Singapore: the editorial team (above) and the marketing and circulation staff (right)
tween companies that were convincingly

re-making themselves to cope with new
realities and the ones that havent yet found
their new selves, so to speak.
Keppel Land, for instance, was one of the
Top 10 best performing STI stocks in 2003,
largely because of the strong earnings growth
it generated with its conscious effort to move
into Chinas booming property market and
sidestep Singapores less exciting one.
On the other hand, ComfortDelGro and Singapore Press Holdings moves have been less
successful so far. Created in early 2003 through
the merger of taxi operator Comfort and bus
company DelGro, ComfortDelGro moved into
a new land transport business in the middle of
the year operating an MRT line.
Sm_2n3_S95.pmd
Meanwhile, Singapore Press Holdings continued its push from the print media business
into television broadcasting. It all makes logical sense, of course. But so far, these new ventures have been a significant drag on the companies profitability and there is some doubt
among analysts if they will ever contribute
much to their bottom lines [Issue 90].
For workers, however, the restructuring and
relocation of established industries were a
nightmare, with unemployment reaching a decade high this year. Even worse, outsourcing
had also spread to higher-wage service jobs, a
subject we discussed in September [Issue 79].
Cautious optimism in 2004

If anything, the market is likely to draw
even sharper distinctions between successful business manouevres and corporate missteps in 2004. If 2003 was liquidity-driven,
2004 needs to be backed by earnings. Still,
theres a lot to do. Take the current turmoil
in the air travel industry. A year ago, if Singapore Airlines (SIA) had a strategy to counter budget airlines, it certainly didnt reveal
it. Today, the whole sector is ready for a
shake-out.
We find Changis unparalleled aviationhub status is no longer guaranteed. Even SIAs
long-haul premium routes are threatened. SIA
CEO Chew Choon Seng recently said Emirates
Airline will be its biggest competitor in this
area. Emirates is based in Dubai, a place many
Singaporeans would not easily locate on a
12/23/03, 3:37 AM
map, and also a Changi hub rival, a development The Edge Singapore highlighted in midDecember [Issue 93].
Next year will witness, on the political
front, several major leadership succession
changes and elections in Asia, and in the runup to the US presidential election, George W
Bush will stoke the economic and political
engines to ensure re-election. Together with
Chinas coming-of-age leadership on both the
economic and international fronts, do not be
surprised if 2004 proves equally volatile for
the markets despite most predictions of a
better year.
Stay with us as The Edge Singapore helps
you to remain engaged with the market and
E
business and investing opportunities.
4 THEEDGE SINGAPORE
| DECEMBER 29, 2003
COVER
STORY
LIGHT
at the end
| BY KELVIN TAN |
the speculative runs in certain stocks. The

overly bullish forecasts such as from Thailands
Prime Minister Thaksin Shinawatra also suggest that some of the lessons that should have
been learned from the Asian financial crisis are
in danger of being forgotten.
Chua: I am most pleased that 2003 is a continuation of 2002, where we managed to
bring high absolute returns to the Japan
Macro Fund that we managed, and therefore fulfilled the trust investors placed in us
with their money. In 2002, we achieved
63.6% in returns and so far this year, our
net return is slightly above 70%.
The Edge Singapore: Looking back at 2003,

what were you most pleased with and what
disappointed you the most?
Young: We were most pleased with the continuing steady improvement in corporate governance and the increasing focus on shareholders returns by Asian companies. However,
what worried me most was the recent flurry of
new issues of generally indifferent quality and
CHU JUCK SENG/THE EDGE SINGAPORE
fter a gruelling three-year slump

in stocks worldwide, the longawaited rebound finally arrived
this year, and saw most stock markets turning in positive returns for
the first time in four years.
Asian stock markets, which were lagging
behind their Western counterparts in the first
five months of the year, started playing catchup and joined the global rally near the end of
the second quarter, when the SARS (Severe
Acute Respiratory Syndrome) outbreak started
fading away.
Southeast Asias top performing bourse this
year Thailands SET has almost doubled
its returns while Singapores Straits Times Index surged close to 30% for the year.
However, looking ahead to next year, the
two main questions on every investors
mind are: Will it be another positive year
for global equity markets? And which markets, sectors and asset classes are worth
betting on?
Our panel of experts consisted of Hugh

Young, managing director of Aberdeen Asset Management; Patrick Tan, DBS Asset
Management managing director; Franklin
Templeton Asset Management president of
emerging market funds Mark Mobius;
Marc Faber Ltd managing director Marc Dr
Doom Faber; Giordano Lombardo, the
global chief investment officer of Pioneer
Investments; Chua Soon Hock, founder and
strategist of Asia Genesis Asset Management; and Tim Swadling, associate director of fixed interest at Henderson Global
Investors.
ASIAS TOP
FUND
MANAGERS
ON
PROSPECTS,
STOCKS
AND 2004
Tan: I suppose like all other fund managers, I

am pleased that equities had a big positive return this year. After the past few challenging
years, this is a relief. Many of our big calls
turned out right. We were meaningfully underweight in Korean financials all year, and
overweight Taiwan instead. We also went back
early into Hong Kong properties which has
worked out well. Many of our mid-cap holdings gained popular acceptance and that was
indeed pleasing. Finally, our dark horse call
on Malaysia worked out marvellously. I cant
think of much that is particularly distressing
this year. We had been consistently and progressively confident of equities, and we have
executed well. We did miss some great opportunities like being too conservative in Thailand
after having been massively overweight in
2002. But we did make up for this elsewhere.
Mobius: Emerging markets have seen a substantial recovery this year, which was very
pleasing indeed. The risks faced by investors in emerging markets have decreased as
many companies are in a very healthy state
and generally, the economies in emerging
markets are back on the growth track,
outpacing the developed world by a wide
We were most pleased

with the improvement in
corporate governance
Young
margin. Volatility in stock market returns

has come down vis--vis the developed
world. Continuing reforms and ongoing
privatisations across all countries as well as
favourable fiscal policies [in these countries]
have supported the positive developments
of emerging markets.
We really cant say that anything disappointed us since we always consider problems as opportunities. In many emerging
countries, there are political and social
structural problems which make reform
such as privatisation of state enterprises difficult to implement. However, even in such
cases, patience is rewarded and investors
can benefit by looking ahead and assessing
the opportunities in government-owned
firms. In all countries, not only in emerging
markets, there is a need for better corporate governance and protection of minority
investors. However, even in that area,
there is considerable improvement. I recently attended the OECD (Organisation for
Economic Cooperaion and Development)
seminar on Asian corporate governance and
was pleased to see the many government
regulators showing a heightened interest in
this area.
Faber: As [someone] leaning towards the Austrian school of economics, the policies of [US
Federal Reserve Board chairman Alan]
Greenspan, [Fed governor Ben S] Bernanke and
company, and [US president George W] Bush
dismay me greatly as they are leading the
worlds economic system towards the abyss.
However, as a businessman engaged in fund
management and advisory services, I should
thank Greenspan and company for having created so much money. Thanks to them, the money under management in the world grows
much faster than real economic activity and my
management fees and advisory contracts keep
on growing... what better business could one
wish for?
Lombardo: I am pleased with the real
progress by companies to put themselves on
a sound and sustainable footing from which
a recovery could occur. That was the main
achievement this year. Cost cutting and sensible balance sheet repair contributed to a
substantial improvement in margins and
CONTINUES ON PAGE 5
Sm_4t8_S95.pmd
12/23/03, 3:14 AM
Tan: Next year should be another positive

return year but it will be tough to top this
years performance. The easy money has
been made this year, especially earlier when
most people were sceptical about economic
recovery and dwelled instead on deflationary concerns. What the US Federal Reserve
has done is effectively engineer a reflation
at all cost, and it is clear that they are gaining some traction now. I expect earnings to
continue to surprise positively into next
year. Meanwhile, valuations, especially of
FROM PAGE 4
laid the foundation for future improvements. If there was an upsetting development in 2003, it has to be the times when
the market was led by the so-called recovery stories where companies bounce back
from severe financial distress without a stable base for future growth.
EQUITIES
This year, equities around the world have
bounced back strongly into positive territories after the prolonged three-year bear
market of 2000-2002. Do you expect 2004 to
be another good year for equities?
Young: We have a mixed view for next year
and we remain very stock- and region-specific.
We think that the US market, in particular, is
expensive. There are structural imbalances in
the US, namely its twin deficits and low savings
ratio, so we believe that the US dollar will
weaken further. We are most comfortable with
Asia and emerging markets. We remain neutral
on Japan and Europe. Japan still has some political issues while Europe has some structural
issues that need to be sorted out but valuations
for these two regions are looking okay.
ABDUL GHANI ISMAIL/THE EDGE MALAYSIA
The potential for

another positive year
is clearly there
Mobius
CONTINUES ON PAGE 6
Chua: Based on my analysis, I reckon that

2004 is likely to be a tough year for equities
of developed nations. However, it should be
a good year for the huge emerging economies of China and India. Globally, there is
a relative shifting and redistribution of jobs
and opportunities due to the integration of
economies brought about by information
technology. Markets will likely reflect this
mobility and that will favour China and India. This development, however, will be
quite adverse for G7 nations. Generally,
next year will be more range trading rather
than the strong bull we have seen this
year. Diseases, earthquakes, terrorist attacks and other negative factors will cause
an occasional spike in volatility.
... I do like Malaysia...

I see lots of stockpicking opportunities
there Tan
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12/23/03, 3:15 AM
6 THEEDGE SINGAPORE
| DECEMBER 29, 2003
NG SOR LUAN/THE EDGE SINGAPORE
COVER
STORY
growth. This improving economic backdrop
is positive for equities.
Furthermore, corporate restructuring
which boosted earnings during the year has
contributed to a more solid overall position
from which a sustained recovery in profits can
occur. These factors, combined with equity
valuations, which are not excessive, and high
dividend yields in historical terms, will continue to support equity markets. In terms of
relative valuation to the bond market, equities are attractively valued.
The issue for next year will be whether the
pace of earnings growth can be sustained into
the second half. Following successful cost
cutting this year, companies will be more dependent on top-line growth to increase earnings per share. While excess capacity remains
relatively high, companies dont have pricing
power and this could mean that earnings
growth may be moderated.
Next year is likely to

be a tough one for
equities of developed
nations Chua
FROM PAGE 5
Asian stock markets, suggest there is more

upside than downside risks. I do, however,
expect greater volatility but there is a reasonable chance we will end next year in
positive territory.
Mobius: The potential for another positive

year is clearly there. Our portfolios still
have companies with good and growing
earnings and strong balance sheets. These
companies still have low price-earnings
ratios, low price-to-book-value ratios and rising dividend yields. Overall, valuations are
still quite far below the levels we have seen
in the past. Obviously, this is not all it takes
for another good year but the fundamentals
are more than intact. The question is whether

the governments are doing their homework
and setting the right environment for the
companies to flourish. We see particular opportunities in Asia, South America, Africa
and Eastern Europe.
Tan: I believe the Fed desires, rather than

fears, inflation at this juncture. They want to
insure the recovery and a decisive U-turn in
unemployment. On that basis, I expect the Fed
to raise rates later, rather than sooner. I do
recognise, however, that this is also the consensus view, which always make me a little
edgy, but not sufficiently so to change my
views as yet.
Mobius: With the current growth of the US
economy, we believe that interest rates could
rise but history shows that moderately higher
interest rates do not necessarily result in
slower economic growth or lower stock mar-
Many pundits are expecting the US Federal

Reserve to raise interest rates next year,
starting in the first half. Do you expect this
to happen? And would interest rate hikes
Chua: The interest rate picture in the US is a

tough call. You will continue to have manufactured goods deflation versus commodities
inflation, perplexing policy makers. On balance, I think it will be difficult for interest rates
to move higher from here. However, the inevitability of paper-money inflation is surely
but quietly sowed as the US continues to indulge in excessive luxurious consumption beyond its means.
Faber: The gravy is out of equity markets.

There is not much under-valuation to be
found. A year ago, the world was gloomy.
Today, we are back to the days of euphoria, which marked the peak in March 2000.
I am negative for equities going into next
year. It seems to me that in the US, the upside is 10% and the downside risk far
higher. So it is not a favourable risk/reward
ratio for me.
Lombardo: Next year looks promising for the
equity market. The global economic recovery
is underway. The US has experienced acceleration in economic growth and has demonstrated the capacity to lead a global recovery.
We are confident that the recovery is sustainable, underpinned by a resilient consumer, a
stabilising labour market and corporate profit
I should thank
Greenspan and Co for
creating so much
money Faber
negatively affect stocks next year?
Young: Given our scepticism over the real underlying strength of the US economy, we are
not expecting a major hike in interest rates.
However, the direction of any change in rates
will be up and investors should factor in the
best part of a full 1% hike in rates next year.
Having said that, I dont think rate hikes will
kill off the stock market. But it might well coincide with the recognition that there are more
structural issues to worry about, such as the
deficits and indebtedness, and that may be an
excuse for markets to pull back. For companies with decent valuations and promising
growth prospects, we would expect share
prices to rise again.
Govt bonds may

struggle a little in the
early part of the year
Swadling
kets. So far, the Fed has successfully moderated interest rates and will presumably continue to do so. The single biggest risk we are
concerned about is any government action
that would limit the free evolvement of capital markets.
Faber: I dont know what the Fed will do
but if the economy continues to strengthen
(which I doubt), rates will go up in the marketplace. Rising rates would contain a significant advance in equities.
Lombardo: I think the Federal Reserve is more
likely to risk letting the economy overheat
than to let it damage the recovery. Therefore,
I think a rate hike during the first half of the
year is unlikely. Geo-political events could
continue to represent a risk next year.
PICK OF MARKETS/COUNTRIES
Which markets and countries are you
most optimistic about and which are you
avoiding?
Young: Asias economic growth is still the
strongest in the world and the valuations of
Asian companies are still cheap. We expect
15% earnings growth from our regional
model portfolio in calendar 2004, which
places it on a price-earnings multiple of under 14 times. Importantly, this is backed by
a dividend yield of over 3% and strong balance sheets with average debt-to-equity ratio of a mere 18%.
CONTINUES ON PAGE 8
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12/23/03, 3:15 AM
8 THEEDGE SINGAPORE
| DECEMBER 29, 2003
COVER
STORY
FROM PAGE 6
Which Asian countries are we most optimistic about? Well, we are really driven by stocks
rather than by countries. But we are finding
good companies at attractive prices across Asia
from India to China. Our view of economic
prospects for a country might well differ from
our view of share prices of that countrys companies. For example, we think Singapores
economy generally still faces a tough future but
we are overweight in Singapore shares for their
value. In the Philippines, our economic and
stock view coincide but we only have one holding there for our regional funds.
Chua: The Hong Kong market is my favourite. The beneficial effects of being part of
DBS Asset Managements

favourite counters
DMX
Horizon
Total Automation
Aberdeen Asset
Managements
favourite counters
Singapore Post
SATS
Great Eastern Life
Venture Manufacturing
Keppel Corp
OCBC
Sm_4t8_S95.pmd
China, especially becoming the yuan offshore

centre, plus migration of European wealth to
East Asia will help the Hong Kong stock market strongly.
Tan: I will start with what I will avoid, which
is easier. First of all, I am not tempted to raise
my weightings in [South] Korea just yet. The
problems in the financial sector will take longer
to resolve than most expect, and while the
market is cheap, that is not a sufficient catalyst to go overweight in that market just yet.
For Thailand, I dont think it will end as the
best performing market again next year. The
market is not overpriced but I am not certain it
now represents the best prospect for risk-adjusted performance. However, I do like Malaysia, which has been overlooked. While the
market might not necessarily end next year as
the best regional market, I see lots of stockpicking opportunities there. With the elections
and a new prime minister come new themes,
new players and new companies. Past winners
will almost certainly not be future champions.
Mobius: We are searching all markets for bargains, and exclude no country from our radar
screen. We currently have more than 15,000
stocks in our master list and continue to expand research coverage. We will continue to
look out for those companies that not only
have good balance sheet and profit/loss fundamentals but also have strong positions in
the domestic markets as well as export exposure to China and India, which are experiencing increasing domestic demand.
Faber: I still like gold, and especially silver.
Greenspans suicidal economic policies will
Asia-Pacific equities
ex-Japan would be
one of my favourite
areas next year
Lombardo
ensure higher prices for gold and silver in
the long run. I also like oil and oil-related
stocks as prices will move higher in time, especially if Saudi Arabia blows up as I predict. I like higher dividend-paying stocks
you are paid while you wait. Lastly, I like
coffee, whose price has not moved up yet.
Lombardo: The US equity market should continue to benefit from accelerated economic
growth and favourable fiscal and monetary
policy. But ongoing weakness of the US dollar
may affect returns from the US equity market
for non-dollar-denominated investors. European equity markets should see some benefit
from a gradual pick-up in growth in continental Europe.
However, the pace of growth is likely to
remain more moderate than in the US. High
dividend yields are attractive in the European
markets and the euro is likely to continue to
appreciate against the dollar without killing
the recovery in the region.
Asian Pacific equities ex-Japan would be
one of my favourite areas for next year. Attractive valuation levels supported by the cyclical bias of markets, strong domestic fun-
12/23/03, 3:15 AM
damentals and intra-regional growth will all

stack up to make the region one of the most
attractive equity markets. The outlook for Japan is improving but the risk of further yen
appreciation damaging export growth increases the downside risk for Japan.
In terms of weighting, I would be overweight in the Pacific ex-Japan and in the US,
on the basis of the superior growth potential
of these regions. I would be neutral on Europe where dividend yield levels continue to
offer some support. In Japan, the improving
economic profile is tempered by the downside
risk from potential damage to exporters from
currency appreciation and the ongoing need
E
for substantial reform.
10 THEEDGE SINGAPORE
| DECEMBER 29, 2003
NOUVEAU RICHE
Singapores nouveau
riche
It may have been a tough year for the average Joe, but the bumper crop of IPOs has created
a new class of entrepreneurs with paper wealth in the millions
| STORIES BY SUNITA SUE LENG |
The STI and the year's biggest IPOS and high-end residential property sales
Sm_10n12_S95.pmd
10
Index
2000
5 LARGEST
IPOs IN
2003
1800
Full
Apex
Issue size S$195.7 mil

Listing
KXD
Digital
June 20
Fortune
REIT
Listing
Listing
Hi-P
International
Issue size S$205 mil
Oct 27
Listing
Issue size HK$1.04 bil
Singapore
Post
Dec 17
Aug 11
Issue size S$1.14 bil
Straits Times
Index
1600
May 13
Listing
Issue size S$160 mil
1400
1
1200
28 M Nassim
Road
Price
1000
Bin Tong
Park
Price
S$9.8 mil
Month
800
Jan
3 Victoria
Park Close
Price
Price
Month
600
S$10.3 mil
Month
41 Ridout
Road
S$8.8 mil
Month
March
March
S$25.5 mil
Aug
TOP 5
GOOD CLASS
BUNGALOW
SALES
IN 2003
Cluny
Hill
Price
S$8.5 mil
Month
Aug
400
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
SISV, CB RICHARD ELLIS GLOBAL RESEARCH AND CONSULTING, DTZ DEBENHAM TIE LEUNG
2200
BLOOMBERG
2400
Dec
TODAY
n the space of just four months, 30-yearold Lionel Lees wealth has soared. He is
now worth a cool S$33 million through
his 38 million shares in Ezra Holdings
the second-best performing IPO on the
Singapore Exchange this year. Shares in Ezra
have jumped 2.5 times since their August debut, eclipsing the near-30% rise in the widely
tracked Straits Times Index since January.
How does it feel to be worth so much so
early in life? Lee, who is managing director of
the marine-services firm that his father started
just over a decade ago, says life has not
changed much. Im still driving the same car
[a BMW X5], he tells The Edge Singapore.
And, hes still living in the same place along
Katongs Meyer Road, which he bought some
time ago.
Lee may not have splashed out on a whole
bunch of nice things (not yet, at least) but
hes the face of a new class of money. This
years nouveau riche are overwhelmingly entrepreneurs who took their companies public. In a year dogged by a deadly flu virus and
wobbly confidence in the economy, a staggering 55 companies listed as at Dec 19. Thats
easily one IPO a week and in total, the bumper
crop of IPOs raised some S$3.8 billion for companies and shareholders.
Naturally, much of this market-generated
wealth has not been realised. Majority shareholders in a new offering almost always face
a clamp on share sales for about six months
from its listing. More than that, however, most
are holding on because they built those very
companies from scratch. Few entertain plans
to cash out or even cede control, unless conditions are ripe.
However, every equity market run-up has
a plush lining. After all, some money would
have been taken off the table, even as the
market added S$80 billion to the capitalisation of the 550-plus companies on the
Mainboard and Sesdaq. A first avenue for that
money? Look no further than property, in particular, exclusive residential property.
In a year when just 5,000 to 5,500 private
home sales were struck, sales of good class
bungalows (GCBs) the pinnacle of private
residential property stood out. Over 30 such
multi-million dollar homes changed hands in
the year to date. Top of the list was the sale
of motor tycoon Peter Kwees Nassim Road
bungalow. The sprawling 39,383 sq ft site was
sold in August for a whopping S$25.5 million
to none other than Oei Siu Hua, sister of Oei
Hong Leong.
It may be pure coincidence, but back in
April, Indonesian-born Oei Hong Leong received about S$50 million in gross dividends
from his 29.99% stake in hotly contested
NatSteel Ltd. The tycoon subsequently pocketed a second dividend payout and a special
dividend from the company in September.
There may be little to link the Nassim Road
purchase to Oei Hong Leong directly, but
within corporate circles, not for nothing is the
man known for his ability to spot and strike
a good deal or two.
Sure, Oei may be more old money than
new, but such GCB sales are quite telling,
says Ong Choon Fah, regional head of research and consultancy at DTZ Debenham Tie
Leung. Besides signalling that money is moving into the top end of the spectrum, they are
an indication that the smart money sees value
What you could buy

with S$10 million
A detached house in exclusive Cluny Hill,
near the Botanic Gardens. Price: S$6
million to S$7 million.
The Pagani Zonda, a hand-built super
sports car with a 7.0 litre, 12-valve
engine. Only 10 such cars are made each
year in Italy. Price: S$2 million.
The most expensive timepiece sold by
Sincere Watch in 2003, a Franck Muller
watch costing S$1.58 million.
A 1999 Sunseeker Manhattan 80 yacht,
currently selling for 1.5 million (about
S$4.5 million)
Not for nothing is tycoon Oei known for his ability to spot and strike a good deal or two
in that very segment. At the peak of the market, you would have had to pay S$13 million
to S$14 million for such a property, Ong recalls. Now, GCBs are going for between S$6
million and S$7.5 million, she points out.
Thats a bargain by any standard, and who
better to leverage on that than someone whos
made money on the market?
Aside from exclusive homes, luxury car
sales were surprisingly resilient this year. According to the Motor Traders Association,
sales volumes shot up 69% in the first eight
months of the year for Lexus. Mercedes-Benz
chalked up sales growth of 58%; Volvo, 35%;
and Jaguar, 21% over the same time frame as
well. BMW, in contrast, is looking at a flat
year. People were still very tentative in the
first quarter of this year, notes David Chan,
marketing manager at Performance Motors
Ltd, which distributes the German auto make.
However, sentiment turned around in the
second half of the year. Reflecting this, sales
have gone through the roof for the new 5

Series that it brought in. In particular, the very
top end of its product range has been selling
well. Performance Motors has sold 100-odd 7
Series cars (for between S$265,000 and
S$390,000) each month, in the past few
months. Thats a lot, says Chan. During the
year, Performance Motors also brought in
three BMW M3 CSL cars high-performance
sporty coups that retail for a lofty S$420,000
each. They were snapped up by what Chan
describes as discerning car enthusiasts from
an entrepreneurial background.
In the second quarter, virtually all luxury
brands suffered, notes Catherine Ang, managing director of Montblanc Singapore Pte Ltd.
But sales started to come back quite strongly
in June. In fact, for the year, average customer
spending doubled in dollar-value terms for
Montblanc. Also, Ang has noticed a slight
change in the customer profile. This year, as
much as 30% of her customers are what she
12/23/03, 2:20 AM
calls the new rich. They tend to be CEOs or

senior executives in their thirties and early
forties, and they are more aggressive about
spending, she observes. One Indonesian
nouveau riche customer spent S$60,000 in less
than an hour on limited-edition pens and
watches, she adds.
Todays big-league spenders understand
what they are buying. Indeed, to many, bigticket items take the form of an investment.
Its reflective of the way they manage their
businesses, says Rose Tong, marketing manager at Cortina Watch. As long as those businesses keep prospering, and as long as the
markets keep creating new wealth, luxury
goods retailers and the exclusive segments of
the real estate market should have little fear
E
for their bottom lines.
SEE ALSO PAGE 12: LORDS
OF THE NEW LISTINGS
| DECEMBER 29, 2003
NOUVEAU RICHE
Lords of the new listings

BEST-PERFORMING IPO
IN 2003
PICTURES: CHU JUCK SENG AND NG SOR LUAN/THE EDGE SINGAPORE
Key corporate figures behind 2003s trail-blazing IPOs

NOT JUST PAPER WEALTH
Victor Tan
At just 31, Tan is managing director and
chief executive of Accord Customer
Care Solutions. The company provides
after-market services for hi-tech consumer products. Since its listing on
March 13, the shares have shot up
131% to close at S$0.625 on Dec 19.
That makes it one of the top 10 performers in the IPO league tables. In September, Tan, along with his brother Henry
(who is chairman) and other family
members, placed out 63 million shares
at S$0.61 to 2G Capital Pte Ltd and other
investors, netting them a cool S$38 million. The Tans currently have an estimated 218.5 million shares (a 35%
stake) worth about S$140 million.
Ang Kok Tian

Ang is chairman and managing director of ASL Marine Holdings. The company is in shipbuilding, ship repair and
ship chartering. It made its debut on the
Mainboard on March 14 at S$0.21. On
Dec 19, it closed at S$0.55. This 162%
spike in its share price made it the second-best performing new listing this
year. Together with other Ang family
members, 41-year-old Ang owns 148
million shares in ASL Marine, a 75%
stake that is worth S$81.4 million.
2ND-BEST PERFORMING
IPO IN 2003
2ND-LARGEST IPO IN
2003
Lionel Lee (left), with father

Lee Kian Soo
Yao Hsiao Tung

China-born Yao, now a Singapore citizen, is executive chairman and chief
executive of Hi-P International. The
company is a contract manufacturer of
electronics. Its Dec 17 IPO emerged as
the second-largest on the SGX this year,
after Singapore Posts. As at Dec 19, the
shares were up 23% to S$0.70. This
prices the 64-year-old Yaos 55.5%
shareholding (492.5 million shares) at
a staggering S$344.75 million. Very
likely the king of the heap, when it
comes to 2003s IPO nouveau riche.
The younger Lee, 30, is managing director of Ezra Holdings, while his father is executive chairman. The marine
and offshore support-services company
listed on Sesdaq on Aug 8 at S$0.34.
On Dec 19, it closed at S$0.875 for a
gain of 157%. This makes Ezra the IPO
with the best price returns in 2003.
Lionel holds 38.05 million shares or a
25.7% stake, which is worth around
S$33 million. His 58-year-old father
holds a 31.5% stake that is valued at
around S$41 million.
Enter the dragons
Lan Wei Guang
Chen Yixi (pictured with a model)

36-year-old Chen is executive chairman of
Hongguo International Holdings, a company
he founded in 1995. Hongguo manufactures
and retails footwear for the Chinese market. It listed on the Mainboard on June 4 at
S$0.20. On Dec 19, the shares closed at
S$0.28, up 40%. Chens stake is estimated
at 130.42 million shares or 36.1%, which is
worth some S$36.5 million.
Sm_10n12_S95.pmd
12
Lans company, Sinomem Technology, garnered much interest during its June 17 debut as one of the few listed players in the
water treatment industry. The stock has
risen 60% from its IPO price of S$0.44 to
close at S$0.705 on Dec 19. The 38-yearold managing director who hails from
China now resides in Singapore. Together
with his wife, he owns 300 million shares
or 75% of Sinomem a holding that pegs
their wealth at a sizeable S$211.5 million.
Forbes also named Lan the 75th richest person in China.
12/23/03, 2:20 AM
This years IPO boom had a distinct China-play theme. Among the companies with
operations in China that opted to list in Singapore, the following two stand out.
| DECEMBER 29, 2003
BEST STOCKS
Money wont
come easy in 2004

Its bottom-up analysis to separate the grain from the chaff
| BY GOOLA WARDEN |
f you think that a rising stock market makes an analysts job easier, think again. After the steep rise in the
Straits Times Index during the final eight months of
2003, the task of finding stocks that will make money
in 2004 is going to be difficult, say analysts. All the
easy gains have been made in the third quarter of 2003,
laments Christopher Gee, who focuses on market strategy
and real estate research at JP Morgan. As we wash into
2004, people will start to look at differentiating stock-specific issues and see if stocks are fairly valued, overvalued or
undervalued.
That task of comparing stock-specific issues is likely to
be complicated by a still uncertain macroeconomic outlook.
Talk of higher capital expenditure [capex] next year for tech
companies worries us, especially when pricing power is not
strong, says Dutch investment bank ING. Moreover, recent
land sales were done at aggressive bids and if pricing power
fails to materialise, developers will face thin margins, it
adds. The investment bank advises investors to treat capex
without pricing power as an event risk for tech companies
and property stocks.
Still, for the most part, analysts are betting that the STI
will trend sideways at worst, rather than fall. In a recent
strategy report, JP Morgan forecasts an STI level of 1,742
just a shade above where it is now by the end of 2004.
INGs 12-month target for the benchmark index is a little
more ambitious at 1,955. Meanwhile, Timothy Wong, senior director of research at DBS Vickers, expects a 20% upside at the top end of the range, which will put the STI at
about 2,100. His target of 2,100 for the STI translates into a
price-earnings ratio of 17 times.
Will we get back to the days when the Singapore market
traded at 20 times earnings multiples? Theres only a 5% to
10% chance well see those levels again, says DBS Vickers
Wong. And, thats only if the US economy defies the sceptics. He points out that one of the concerns is whether the
Sm_14n16_S95.pmd
14
12/23/03, 1:25 AM
momentum in the US economy will hold up in the second

half of the year. Right now, the feeling is things will look
good in the first half, but they may not be so robust come
the second half.
In this relatively less benign environment, a bottom-up
approach that is, stock picking will be the key to finding winners and avoiding losers. All the time youre looking at valuation, says Gee. His top picks among the big
caps include defensive issues such as ST Engineering and
Singapore Exchange (SGX).
SGX might seem an odd choice, given Gees sober prediction for where stock prices in general are headed. But the
company is attractive on valuations, he says. Even after its
enormous cash payout this year, SGX still has a lot of cash
on its balance sheet. Even if another big dividend is not in
the offing, its stock is still more attractively priced than the
Australian Exchange or Hong Kong Stock Exchange shares.
Gees other favourite, ST Engineering, used to be a highgrowth stock, but has been de-rated over the years and is
now regarded more as a dividend play. But it could make
the transition back to a growth company as it focuses on
becoming a global player in the aerospace maintenance and
repair overhaul sector. It still has a sizeable cash pile. Itll
continue to pay dividends but people would start to look
at it as a growth company, a global company. We should
start to look at it again, says Gee.
DBS Vickers Wong would not commit to stock picks for
the full year. We usually do things on a quarterly basis.
That partly reflects the fact that things can change quite
dramatically.
He believes the stocks that would outperform will be those
with a specific catalyst. We would be looking at alpha rather
than beta, he says. In this category, we have big caps like
Want Want, OCBC and Venture.
According to Wong, Want Wants earnings picture looks
quite strong over the next 12 months. OCBC is more a call
on the sector although it has the additional catalyst of unCONTINUES ON PAGE 16
| DECEMBER 29, 2003
FROM PAGE 14
locking value from divesting its non-core assets, he says.

Like DBS Vickers, ING favours bank stocks
where it sees positive earnings from loan
growth and rising net interest margins. Elsewhere in the market, advertising growth
would benefit media stock Singapore Press
Holdings (SPH). Of course, SPH has low-yielding assets such as the Paragon, which Gee
says it needs to get rid of. At the moment, he
estimates SPH has more than S$4 per share
worth of non-core assets.
The property sector is another area for significant consolidation, notes Gee, although he
is at pains to point out this may not be in the

form of a straightforward merger. Just think
of all those asset-heavy businesses which are
ripe for consolidation, he says.
The market heavily discounts the real values of property stocks. Why not push the asset into another instrument or entity that is
not trading at a discount or to which the market accords a better price, such as a real estate investment trust?
Theres going to be heck of a lot of rejigging, says Gee. Its very difficult for me
to say, Buy this particular stock. I cant at
this stage but its going to shape market reE
turns in 2004. So watch out.
BLOOMBERG
BEST STOCKS
After the steep rise in the STI in 2003, finding money-making stocks is going to be difficult, say analysts
Top picks for 2004

BIG CAPS
A-REIT, the real estate investment trust,
features quite prominently on JP Morgans
favourite stocks list. If the Straits Times Index upside is limited, A-REIT would probably be on investors radar screens. JP
Morgan finds a dividend yield of 7.2% appealing, compared with a total return of
15% on the market. We think thats quite
attractive, given the risks [of owning AREIT] arent all that great, says JP
Morgans Christopher Gee. A-REIT recently
bought three properties the Osim, Ghim
Li and Ultro buildings which raised rental
income by 9.6% and should lift the property trusts returns over the next six quarters. In addition, A-REIT may acquire more
high-yielding properties such as Infineon
Building in the third quarter of 2004, say
analysts.
Price: S$1.14
EPS (2004E): S$0.078
PER: 14.62 times
Dividend: S$0.082
Dividend yield: 7.2%
NTA: S$0.91
P/NTA: 1.25 times
Bloomberg poll: Seven buys, six
holds, one sell
DBS: Because of its purchase of Dao Heng
Bank, DBS is well leveraged into an Asian
recovery, says investment bank ING in its
2004 strategy paper. With rising inter-bank
rates, DBS will benefit from the higher return from its net free funds, it says. ING
sees every 1% increase in loan demand raising pre-tax profits by 0.5%. In the meantime, every 10-basis-point improvement in
margins raises profits by 5%. INGs forecast is premised on DBS tapping into the
HDB market, which is worth S$12 billion.
Indeed, there is much to look forward to.
DBS is on the acquisition trail, according to
the Thai finance minister. DBS could end
up with a substantial stake in Thai Military
Bank, one of the countrys largest banks
through a share swap. Although this means
DBS Thai Danu (Thailands second smallest bank) is folded into Thai Military Bank,
DBS would get a much larger slice of the
market.
Price: S$14.60
EPS (2004E): S$0.895
PER: 16.31 times
Dividend: S$0.14
NTA: S$9.78
P/NTA: 1.49 times
Bloomberg poll: Twelve buys, six
holds, three sells
NOL: Once a neglected stock and now a hot
favourite, its one of the top picks on both
JP Morgans and CLSAs elite stocks list for
2004. It is, after all, a proxy for rising freight
rates. The market is already looking at robust earnings growth for NOL. JP Morgan
Sm_14n16_S95.pmd
16
is forecasting earnings per share (EPS) growth

of 20% for fiscal 2004. If there is an earnings
surprise, it is likely to stem from higher-thanexpected freight rate increases next year. JP
Morgan is forecasting a 3.7% average rate increase in 2004. For every 1% increase in
freight rates, the earnings uplift is 10%. Few
analysts see a downturn at this point. Volumes
are still strong, and capacity tight on the transPacific route. If there is a downside risk, it
would be loss of pricing power for the main
liner operators.
Price: S$2.10
EPS (2004E): S$0.247
PER: 8.5 times
Dividend: Nil
Dividend yield: 0%
NTA: S$0.47
P/NTA: 4.47 times
Bloomberg poll: Ten buys, six holds, one
sell
Singapore Telecommunications: The iconic
telco still cant shrug off the Optus purchase,
and investors remain focused on its overseas
contributions. They shouldnt. JP Morgans
Gee points out that a large part of SingTels
business is domestic. Although this segment
is not growing, and revenues are declining,
costs are also coming down very quickly. In
fact, capital expenditure has slowed. Free cash
flow is rising because the business is very
cash-generative, says Gee. SingTel committed
to high dividend payouts when announcing
its first-half results, and strong cash flows
should ensure that it makes good on that commitment. An additional kicker could come
from the company structuring its domestic
operations as a business trust, which would
enable the market to better judge its value
from a cash-flow perspective. Its one of the
stocks to watch, says Gee.
Price: S$1.85
EPS (2004E): S$0.132
PER: 14.02 times
Dividend: S$0.055
NTA: S$0.87
P/NTA: 2.13 times
Bloomberg poll: Thirteen buys, six
holds, two sells
Venture remains a perennial favourite with
analysts and fund managers. DBS Vickers
Timothy Wong likes the stock for its organic
growth, which he sees coming through
strongly in 2004. In fact, the company seldom
fails to deliver, usually more than meeting
analysts double-digit growth forecasts. Dividends are meagre, but the company is well
managed and remains an institutional favourite. Indeed, if foreign funds come into the Singapore market looking for growth stories, Venture is likely to be one of their top picks, given
the liquidity of its shares and its managements proven track record.
Price: S$19.90
EPS (2004E): S$1.19
PER: 16.72 times

Dividend: S$0.0375
Dividend yield: 0.19 times
NTA: S$3.92
P/NTA: 5.08 times
Bloomberg poll: Twenty buys, three
holds, no sells
SMALL CAPS
Beyonics has been something of a laggard
since its merger with Flairis in the middle of
the year. But analysts say the company has
been busy realising synergies from the two
businesses and stripping out the inefficiencies.
JP Morgans Gee says, This is a billion-dollar revenue business. That means, even if
margins move up a tiny bit and there is no
revenue growth, youre going to see some
growth in profits year-on-year. Although
underperformance in one year is no guarantee of success in the next year, Beyonics is
seen as one of the biggest contract manufacturers after Venture, which is in a class of
its own.
Price: S$0.28
EPS (2004E): S$0.024
PER: 11.67 times
Dividend: S$0.004
NTA: S$0.16
P/NTA: 1.75 times
Bloomberg poll: Three buys, three
holds, no sells
CSE Global could be a big winner in 2004,
but it is not a stock for the faint-hearted. The
systems integrator and solutions provider to
the energy and petrochemical/chemical, oil
and gas, power and process utility industries,
was recently awarded two gas-related projects
in Syria and Libya. It is involved in other fields
as well, but its exposure to oil and gas makes
it a sort of indirect proxy for the sector. In
July, it acquired TransTel Engineering Pte Ltd,
a systems integrator providing network solutions to onshore and offshore oil and gas industries. DBS Vickers Wong likes it. He says
CSE is obviously benefiting from the higher
oil prices. An additional factor is rising fixed
capital investment in Asia.
Price: S$0.64
EPS (2004E): S$0.048
PER: 13.33 times
Dividend: S$0.005
NTA: S$0.12
P/NTA: 5.33 times
Bloomberg poll: Five buys
GES is moving out of standard contract manufacturing and into original design manufacturing (ODM) and original equipment manufacturing (OEM). Because of that, margins are
likely to expand from the present 3% to 4%
to the 7% to 8% ODMs generally earn. Gee
says, If revenue increases by 15%, margins
expansion will make sure that your net income goes up by far more. GES has gained
12/23/03, 1:25 AM
new customers within the last couple of

years. They include NCR, Mikros and NEC,
which is its first Asian customer for pointof-sales machines. New products and new
customers are both likely to drive business
revenues higher.
Price: S$0.64
EPS (2004E): S$0.044
PER: 14.55 times
Dividend: S$0.01
NTA: S$0.29
P/NTA: 2.21 times
Bloomberg poll: Two buys
Jaya Holdings has the largest offshore fleet
in Singapore. JP Morgans Gee says he likes
the companys business model. They have
a good mix of upstream anchor handling
tugs (AHT) building, as well as owning the
ships for charter, he says. Even after its
share price tripled in 2003, Gee says the
valuations arent all that stretched and we
have a fair value of S$1. Indeed, profit
growth is keeping pace with expectations.
A 95% surge in profits for the first quarter
of 2004 kept the companys cash flow
strong, and gearing ratio fell to 0.23 (0.34 in
FY2003) despite an ambitious new building
and expansion programme. Management is
still committed to having a high-dividend
payout, unusual for a growth stock.
Price: S$0.76
EPS (2004E): S$0.058
PER: 13.1 times
Dividend: S$0.02
NTA: S$0.25
P/NTA: 3.04 times
Bloomberg poll: Eight buys
Noble Group is not well followed. But its
position in the commodity markets attracted the attention of CLSA. In a Dec 15
report, CLSA head of research Jason Wee
says he expects commodity prices to rise,
peaking only at end-2004. Valuations and
momentum keep him optimistic on Noble
Group. While margins for the company are
generally low, because of its role in facilitating trading on global commodity markets, it recently acquired production capacity in various commodities, including coal
and beans. Noble Group hedges almost all
its price risks, except for steel, where no
futures market exists. Wee says the unhedged position in steel should provide an
earnings boost given the strong pricing. Its
forecast of a price-to-earnings ratio of 14.5
times for 2005 gives it a cumulative annual
growth rate (CAGR) of 17%.
Price: S$2.96
EPS (2004E): S$0.165
PER: 17.94 times
Dividend: S$0.02
NTA: S$0.38
P/NTA: 7.79 times
BEST AND WORST DEALS
Steals
&
a bum
deal
What were the years headline-grabbing transactions,

how were they clinched and what bearing do they have
on the future? Assif Shameen takes a look at several of them.
The biggest Singapore deal of 2003 was neither really big in dollar terms nor was it in Singapore. In December, ST Telemedia, the parent of StarHub, among others, won control of the onetime sub-sea cable giant Global Crossing for US$250 million. ST Telemedia had earlier teamed up
with Hong Kongs Hutchison Whampoa, but Hutchison backed out when it became clear that
billionaire boss Li Ka-shings ties with China were going to be scrutinised.
Global Crossing amassed US$20 billion worth of debts as it tried to wire up the globe hundreds
of times over with a network of high-bandwidth cables criss-crossing the earth. It went under two
years ago after accumulating losses of over US$25 billion amid a glut in capacity and a more than
90% plunge in bandwidth prices.
Yet the purchase of Global Crossing is seen as a steal. There may be a glut in capacity right now
and bandwidth might be given away for next to nothing, but Global Crossing still has incredible
infrastructure that someday will enhance value for a long-term strategic investor like ST Telemedia.
Little wonder, then, that Singapore lobbied the US hard
from the Pentagon, to the White
House, to congressional aides.
Whats the total cost for 61%
of Global Crossing? Add US$250
million to US$200 million in senior secured notes issued by the
company that ST Telemedia is
purchasing, and another US$100
million that ST Telemedia is
ready to inject to tide things
over, and it is still US$550 million. The cost of wiring up the
world that way might be several
billion dollars today.
BLOOMBERG
A steal for ST Telemedia
BIL International, as the legendary former New Zealand-based conglomerate

Brierley is now known in Singapore, got what it wanted and is laughing all
the way to the bank. Having sold Hong Kongs Dao Heng Bank to DBS for
S$10 billion or at a huge premium (3.2 times book value), Singapore-born
Malaysian billionaire Quek Leng Chan turned to Singapore-listed vehicle
BIL to deliver more value for him and the rest of the shareholders.
Quek is, if nothing, a master of timing. Just minutes before US forces
launched an attack on Iraq on March 20, BIL announced it was bidding to
acquire the half of London-listed Thistle Hotels that it did not own. Thistles CEO Ian Burke and some of its directors raised a big ruckus. Indeed,
the London media described the bid as cheeky, and one British tabloid
went as far as to say the deal was akin to daylight robbery. As the war
depressed stock prices and Severe Acute Respiratory Syndrome (SARS) took
a toll on hotels and air travel, Thistle shareholders including the Government of Singapore Investment Corp slowly started throwing
in the towel with some help from BIL, which increased its
offer from 115 pence to 130 pence (analysts say Thistle
was really worth nearly twice as much).
DEAL OF THE YEAR

BIL grabs Thistle in lightning raid
CONTINUES ON PAGE 19
Sm_17t19_S95.pmd
17
12/23/03, 2:52 AM
| DECEMBER 29, 2003
MOVERS & SHAKERS
Making
waves
The year, as any other, has seen its share of corporate

types who made a difference in their fields. But some
made more waves than others against expectations and
amid heavy criticism. Assif Shameen takes a look at four
of this years movers and shakers.
David Conner No pushover
When ex-Citibanker David Conner started

his tenure at the helm of OCBC more than
18 months ago, it sounded like he really was
clueless about how to position the No 3
lender in Singapore. Smart money in his first
12 months was that Conner was, at best, an
interim CEO preparing to auction OCBC off to
the highest bidder.
Now, the OCBC helmsman is probably widely
regarded as the banker who has done most in
the past year to enhance shareholder value under his watch. OCBC was, and still is, a distant
third among the local lenders, but no counterpart has done as much to create value this year.
Conner showed that being the smallest doesnt
mean you are necessarily a pushover. OCBC
worked at building its brand, aggressively pricing its products and services against those of rivals DBS and UOB even chasing market share
in mortgages in a benign interest rate environment, increasing dividends and gradually selling off more non-core assets, to the applause of
the market.
BLOOMBERG
Tony Fernandes Flight for all

He is not even Singaporean, and Tony Fernandes low-cost, no-frills carrier AirAsia
doesnt even fly to Singapore directly yet (it flies to and from Johor Barus Senai
Airport across the Causeway), but few people created more buzz in Singapore this
past year than this man. Fernandes beat the drum on cheap mass travel so hard that
by year-end, he looked like a Pied Piper ready to take teeming millions anywhere they
wanted to go for next to nothing.
So frantic was the low-cost carrier rush that just about everyone from premier
carrier Singapore Airlines (SIA), which was forced to launch its own cut-price Tiger
Airways; to SIAs own former chieftain Lim Chin Beng (also chairman of dominant
media powerhouse SPH), who pulled together as much as S$50 million in a matter of
weeks for his ValuAir carrier; all the way up to billionaire marketing whiz Sir Richard
Bransons Virgin group (fresh from the mega-IPO of its Australian carrier Virgin Blue)
was readying to take a plunge into the Asian low-cost carrier market. And most
analysts and industry insiders had pooh-poohed the
move when Fernandes launched his pioneering service two years ago.
Now, anyone who knows anything about the airline business wants to be part of the no-frills bandwagon, and those who were pouring cold water on
no-frills carriers are eating humble pie. Will the 38year-old Fernandes, a former music executive who
plays the drums in his spare time, have the last laugh?
For now, he is focused on getting permission to land
in Singapore so that he can take Singaporeans to
choice Asian destinations for not much more than
the price of a couple of Caramel Macchiato Grandes
at your nearest Starbucks outlet. Fernandes, who
wanted to be a drummer in a pop band as a kid, says
his favourite pastime these days is drinking with
friends. He has clearly revolutionised Southeast Asian
travel on short-haul routes. Cheers, mate!
Sm_18_S95.pmd
18
Choo Chee Kong IPO orchestrator

At the tail end of 2003, the man whose name has become synonymous with IPOs in
Singapore, Peter Choo Chee Kong, 44, had himself lodged a prospectus to list his boutique financial advisory firm, SBI E2-Capital. That means less time this Christmas for
reading, less quality time with his wife and two kids, and a buzzing mobile phone that
Choo leaves on even after midnight to take calls not just from clients but also from
lawyers and bankers.
In just over two years, Choo, the former head of equity capital markets at DBS Bank
who crossed Shenton Way to set up his own IPO outfit, has whipped not only his former
employer DBS but also other local IPO houses like UOB. SBI E2-Capital did more IPOs
over 30 in the past two years than any other house,
though most of the issues were small and Choo missed
out on larger deals like SingPost and MobileOne.
One reason he doesnt have the big Temaseklinked clients is because Choo is a David fighting
the Goliaths. For small- and medium-sized companies in Singapore that previously had to wait
months on end just to draw the attention of large
banks like DBS or UOB, Choos service-oriented
IPO boutique was a godsend during the slump
and the subsequent recent recovery.
In 2003, Choo brought half a dozen or so
mainland Chinese companies to market. In August, he launched what he described as his flagship deal NagaCorp, a Malaysian-owned,
Cambodia-based casino and hotel operator. But
the Monetary Authority of Singapore
turned down NagaCorps listing application, and a subsequent appeal failed as well.
The NagaCorp episode
was a big setback for Choo,
whose SBI faltered a bit and
was quiet on the IPO front
for weeks on end. But by
the end of the year, Choo
had the bull by the horns
and was sallying on.
Though the Goliaths
have, in recent months,
worked hard to regain
some lost ground,
Choo is still the man to
beat on the IPO street.
CORPORATE
Hsieh Fu Hua SGX stabiliser

Singapore Exchanges CEO, former investment banker Hsieh Fu Hua, who replaced Tom
Kloet in late February, may not be getting a fraction of the compensation that the New York
Stock Exchanges much-maligned Dick Grasso helped himself to, or even half of what his
predecessor Kloet bagged in his last year, but he still got a lot of criticism this past year
from stakeholders.
But 10 months after he took over as CEO, Hsieh had steadied the SGX ship and paid
shareholders a big dividend. He also had a plan in place for independent research and
indeed, was focused on priorities like launching equity
options on the SGX and increasing revenue flows
from its data and information services.
Though there was no shortage
of market players who grumbled that demutualisation had
made the SGX too greedy
and profit-oriented and
indeed, some small retail
SGX shareholders who complained about being unloved and uncared for at
shareholders meetings
the cool, calm, Hsieh stayed
on message.
Hsieh doesnt regard himself as a sporty person, nor
does he see himself as very
competitive, but if you ask him,
hell readily tell you that he is
fairly passionate about whatever he does.
The job at SGX is like doing a
big mural and it is irresistible, he
says. And Hsieh who lists taking
nature walks, drinking tea and jogging
as pastimes, and who no longer has a
lot of time to go boating these days is
loving the challenge. Dont look for the SGX
to buy equity stakes in other regional exchanges over the next few years. To
pool more liquidity in the market,
for now, it will continue to
build on its alliances that
help strengthen Singapores link to the regional marketplace.
12/23/03, 2:33 AM
FROM PAGE 17
BILs own shares have more than doubled in the past year to 82 cents near the
year-end. Quek keeps a 29.9% controlling
stake through his companies though Singapores legendary asset trader Oei Hong
Leong has in the past year built a tidy 6%
stake in BIL. If there is one person who
has taught Singapore how to buy low and
sell high, it has to be Quek. The cigarchomping, media-shy tycoon is now busy
realising value for another of his Singaporelisted firms, GuocoLand, which owns
34.5% of Benchmark Group plc, a British
company that owns a chunk of choice
properties in Londons West End.
BUM DEAL
Injection for Bonvests
Starbucks, Burger King, Dairy Queen, Orange Julius,
Boncafe, Sheraton Towers Singapore. What do all
these have in common? In Singapore, all these franchises are now part of Bonvests Holdings Ltd, a seldom-traded, tightly held, almost-opaque small-cap
company that got into all sorts of corporate governance messes earlier in 2003. One would think that
with big-name franchises plus property-development
and waste-management projects, added to fast-paced
growth in the food sector (which is as recession-proof
as it gets), the holding company would be at the apex
of a high-flying stock.
Bonvests, which also owns hotels in Tunisia and
Mauritius, is majority controlled by Henry Ngo and

his son. Six months ago, the Ngos injected their 70%owned Sheraton Towers Singapore hotel into Bonvests
in a share-swap deal at a discount. Bonvests was also
forced to assume its S$56.5 million debt. Sure,
Bonvests engaged a financial adviser as well as an
independent adviser for minority shareholders, but
there were still too many who just couldnt believe
what was happening. Still, in a good market, shareholders are a forgiving lot. After lagging for weeks,
Bonvestss stock has soared nearly 40% since the deal,
partly because the environment for hotels has improved now that the SARS scare has abated in Asia.
And you can bet they are selling many more lattes at
Starbucks and Whoppers at Burger King than they
were at the height of the SARS outbreak.
The Titanic also rises

About a year ago, Singapore shipping company Neptune Orient Lines (NOL) was in
the doghouse with over US$2.6 billion in
debts and shares hovering around 70 cents.
A big question last Christmas for NOL: Was
it headed for a titanic disaster or would it
just miss the iceberg?
What a difference a year makes. Rising
freight rates lifted all boats. On average, rates
in 2003 were 28% to 30% higher than they
were in 2002. On some routes, for example,
Europe, rates are up 40% or more on average. Growth in traffic was an additional bonus. Improvement in NOLs logistics division
was another plus. Moreover, the company
also sold non-core assets like American Eagle Tanker to Malaysian International Shipping Corp to drastically cut debts.
Still, NOL needed a big cash injection
to pare down debts further to steady the
ship. Thats what it did in October, when
it hired investment banking behemoth
Credit Suisse First Boston (CSFB) to do a
236 million-share rights issue for S$547.5
million. But CSFB suffered a fate similar
to that of its counterpart Merrill Lynch,
which did a disastrous rights issue 15
months earlier. At the time, Merrill had
gotten stuck with a huge chunk of Chartered Semiconductor Manufacturing stock,
which plummeted way below the heavily
discounted rights price.
While Merrill got out smelling like roses
because it held on tenaciously to Chartered
shares, making tens of millions of Singapore dollars (excluding holding costs),
CSFB decided to take a little hit on its own
7.4% accidental stake in NOL. Since then,
further improvement in freight rates has
lifted the stock price, but it is still way below the S$2.32 that CSFB needs to break
even. After the year-ends round of bonuses, dont be surprised if you find some
Merrill Lynch guys defecting to CSFB. Efficient as they are, the Swiss need them.
Sm_17t19_S95.pmd
19
12/23/03, 2:52 AM
PICTURES: BLOOMBERG
BEST AND WORST DEALS
| DECEMBER 29, 2003
TECH IN 2004
Mixed fortunes for tech sector

| BY PEK TIONG GEE |
peek into the crystal ball by IT research group Gartner Inc reveals a
mixed scenario for the Asia-Pacific
technology sector next year. While a
large-scale vendor consolidation is expected, IT spending is set to recover from the
trough experienced in the past several years.
Ian Bertram, vice-president at Gartner Asia
Pacific, expects half of the technology suppliers including those in software, hardware,
telecoms and IT services in the global marketplace to be wiped out. In addition, the fallout from the consolidation, which is expected
to stretch to 2005, will be widespread. We
now live in such a globalised world that consolidation, wherever it happens, will have effects around the world, he tells The Edge Singapore in an interview, pointing to the merger
of computer giants Hewlett-Packard and
Compaq Computer. The merger that took
place in 2002 saw computer distributors in
various regions, such as Singapore-listed ECS
Holdings, being hit hard.
There are more than 2,300 publiclytraded software companies in the world, and
thats 50% to 60% too many, Bertram asserts. Citing another example, he says there
are some 200 business intelligence and data
warehousing vendors worldwide. Can the industry sustain 200 vendors essentially offering the same applications and the same solutions to the marketplace? We are not convinced that they can.
Bertram further sees a slow but steady
PICTURES: CHU JUCK SENG/THE EDGE SINGAPORE
Half of vendors in global marketplace expected to be deleted but IT spending set to rise by about 6%
pick-up in IT spending, though this is expected
to remain prudent. There will be no heady
growth like the 30% increases seen in its heyday, as corporates have become more cautious
and expect quick returns on investment cycles, he says. A lot of IT capital spending will
come from the refreshing or replacement
and upgrading of technological investments
made in 1997-99 in preparation for Y2K. In
the case of Singapore, Bertram expects IT
spending to rise by about 6% next year, compared with the negative 2.3% seen in the prior
2002-2003 period. The corresponding figure
on a worldwide basis is projected at 4% to
5% for 2003-2004.
IT infrastructure
Another aspect that is a concern to businesses
is the way the so-called IT architecture, including the software and hardware layers, is
built. Unless they have the IT environment
beneath them supporting their new [business]
processes, when the processes change, they are
not going to be able to move forward, Bertram
says. He expects maturity in the area of IT
infrastructure, as well as the process changes
that ensue, to bring about the most fundamental change to business since the Internet.
The Severe Acute Respiratory Syndrome
outbreak earlier this year shows the importance of having the appropriate IT infrastructure, according to Bertram. All of a sudden,
we could not leave our homes, we still had to
do our day-to-day business. More videoconferencing and e-mailing had to be carried
out than before, putting pressure on the in-
There will be no
heady growth like
the 30% seen in its
heyday Bertram
frastructure, he notes. But some people
werent set up for that, some people werent
conducting business via their computers. If
they had architected their infrastructure correctly, they could have actually changed the
way they did business, he adds.
Fund managers take on technology

D
espite soaring to great heights
this year, the red-hot technology sector is still poised to
move higher next year, says Ian Link,
a technology portfolio manager at
Franklin Advisers. We view the outlook for the tech sector as very positive for next year there arent many
negative factors that would hold tech
back in 2004, Link says.
He believes that the tech sector
will be spurred by improved IT
spending by companies and enterprises going forward. We have seen
a few quarters of sequential financial results improvement of technology companies but we have yet to
see enterprise customers coming
back to replace their PCs or upgrade
their servers and mainframes, observes Link.
So we think that enterprise IT
spending is going to be the next
phase that would drive the tech
market higher and when enterprise demand starts to pick up, you
will really see some good results
from technology companies.
...successful
stocks that
revolutionised
the world...
were never
cheap Link
Sm_20_S95.pmd
20
The fund manager estimates that

the percentage of the total corporate
budget spent on IT will grow from
the 47% now to over 50% in a few
years time.
But the run-up in the prices of
many tech stocks this year with the
Nasdaq soaring over 40% is looking excessive to market observers
like Giordano Lombardo of Pioneer
Investments.
The broad rise in the technology sector last year looked rather
excessive the implied growth of
earnings is exceeding the growth in
the economy; this may be justifiable
for some companies that are able to
win market share, but it is unreasonable to expect all tech companies
to be winners, says Lombardo, the
global chief investment officer of
Pioneer Investments.
Link, however, disagrees that the
tech sector is overvalued. He reckons that this years tech rebound is
only halfway to the sectors longterm fair value. Tech stocks may
have higher valuations than their
non-tech counterparts but if these
counters can rapidly grow their
earnings annually, they are still
worth a bet, he says.
Link points out that he will only
invest in leading technology companies that have a sustainable com-
In a related area, business process outsourcing (BPO), Bertram expects the trend
to continue to accelerate for backroom IT
and IT-related business processes. He
projects that on a global basis, the number
of companies that strike up new outsourcing
relationships will rise 30% by 2005. One
noteworthy point is that even with the
much-talked-about trend of companies looking to countries like India as global BPO centres, the proportion of offshore BPO will remain small compared with the overall BPO
pie.
Gartner adds that even as the BPO market
grows to US$173 billion by 2007 from the
present US$130 billion, the offshore share is
expected to remain small at about 16%. For
Singapore companies, Bertram questions
whether the outsourcing trend has been adequately harnessed.
In telecommunications, even as mobilephone operators in Singapore and the AsiaPacific brace themselves for the rollout of 3G
services, Bertram predicts that 3G will fail to
achieve mainstream adoption in the region
next year. This is because the data transfer
rates are just as fast through the wireless networks, he explains.
Gartner expects companies to have 80%
more mobile applications by the end of next
year, with telecom devices becoming less expensive and more integrated. Bertram declares
that from notebooks to personal digital assistants, one will find it difficult to buy non-wireless-enabled telecommunication devices in 12
E
months time.
petitive edge in their business.

If you go back many years and
look at the successful stocks that
revolutionised the world such as
Cisco and Microsoft; you would
know that these stocks were never
cheap. If investors wait around for
the No 1 company or the best stocks
to get cheap, they will never own it,
Link reasons.
Sometimes you have to step up
and pay 75 or 100 times earnings
thats one of the hardest things
about tech investing. However, the
Frank-lin Adviser tech expert says
that he would only pay high prices
for companies that are likely to see
high earnings growth in the next
three to four years.
If you start with a [stock that
has a price-earnings ratio, or PER,
of] 100 and it doubles its earnings
for the next few years, then it will
have a PER of 50 for next year, 25
the next and 12.5 four years out,
Link points out. So thats the kind
of high-growth stocks we want to
look at and get into.
For next year, will the tech sector surge by another 40% to 50%?
My answer is no there is no
chance of that happening and moving up another 50% is just not realistic, says Link, who is advising
tech investors to have moderate ex-
12/23/03, 1:57 AM
pectations for next year.

He expects the tech sector and
the Nasdaq to grow by 15% in
2004. I will be happy if our technology fund can do 15% for next
year. If we get 15% every year, we
will retire very comfortably, he
adds.
Unlike Link, Lombardo remains
cautious about the tech sector, saying that visibility for an upturn in
demand for IT products remains
clouded. Overcapacity and a
high level of corporate leverage are
keeping capital expenditure low,
he adds. Lombardo believes that
signs of an earnings recovery in
the tech sector are partly driven by
the decline in the US dollar exchange rate versus the euro and
restocking efforts by companies.
He remains worried that profit
margins of firms may be squeezed
by over-capacity in the sector and
the greater standardisation of IT
products.
For his sector bet for next year,
Lombardo prefers the healthcare
sector, saying it looks attractively
valued with interesting growth potential. The defensive healthcare
sector, which has not kept pace in
terms of performance with the other
economic-sensitive sectors, has
E
been a laggard this year.
TECH IN 2004
Knowing when to cash in the chips

This year, Taiwan Semiconductor stock has
jumped 52% to a recent NT60 (US$1.76), but
still far short of the high of NT$102 hit in February 2000. (TSMCs American depositary receipts, each of which represents five ordinary
shares, changed hands last week at US$9.80,
against a 2000 high of US$32.) Thats partly
because both Taiwans government and
Philips decided to cash out part of their stakes.
| BY LESLIE P NORTON |
BLOOMBERG
t 1,676 ft, TAIPEI 101 symbolises the

outsized aspirations of Taiwan. The
soaring green glass pillar will be the
worlds tallest structure when its
completed next year, defying the
natural perils of earthquakes, the economic
dangers of excessive office space and the menacing missiles of China, the islands giant
neighbour across the sea. TAIPEI 101 is an
apt metaphor for Taiwan Semiconductor
Manufacturing, the countrys largest company
based on market value.
Like the skyscraper, whose claim to be No 1
will last only until an even taller building in
China is built later this decade, Taiwan Semiconductors glory will be short-lived. The key
to making a buck on it or any other cyclical
stock, especially one that sells a commodity
product is knowing when to get in... and out.
TSMC, as the company is often called, is a
formidable competitor. In the 25 years since
Morris Chang, an ex-Texas Instruments and
General Instrument executive, started it with
capital from Philips Electronics, TSMC has
become the worlds largest merchant mill for
semiconductors, responsible for 55% of the
revenue from foundries that make integrated circuits.
The company did this by supplementing
production for giants like Texas Instruments
and Philips, offering cut-rate pricing and then
outstanding customer service.
It built first-rate fabrication plants or fabs.
It jumped to do wafer runs of any size. And it
added costly capacity, to reassure customers
that their needs would always be met. Customers responded by ditching their own factories to concentrate on design.
TSMC weathered the rough patch created by
the collapse of the Internet and telecom bubbles. Now, it is benefiting as the global economy
heals and tech spending is snapping back.
Then, November sales fell short of investors

expectations raising fear that the recovery
wouldnt materialise, and that strong holiday
demand in the consumer market, bolstered by
the sinking price of notebook computers,
would evaporate by the first quarter.
On a recent sunny day, Chang was smoking a pipe in a relaxed way, in TSMCs satellite office hard by TAIPEI 101 and an hour
It costs US$30 million

to design and
siliconise a chip and
produce masks... and
then make a trial run
Chang
Sm_21n22n26_S95.pmd
21
12/23/03, 1:44 AM
from his chip-fabrication plants in the drab

industrial town of Hsinchu. Life is certainly
good for TSMC, and Chang is upbeat. Sales in
2003 are expected to be up 20%, to a record
US$5.8 billion. Profit margins arent as good
as they were, but many analysts expect peak
earnings in 2004.
Midway through the summer, TSMCs
| DECEMBER 29, 2003
TECH IN 2004
FROM PAGE 21
gross margin of nearly 40% is getting back to

respectable, Chang says with satisfaction; at
its 2000 peak, it was 44.5%. And capacity utilisation which measures factory usage has
zoomed to 98%.
Chang forecasts that semiconductor industry revenues will grow 12% to 15% next year,
versus 10% this year. Foundry industry growth
will be higher. And, traditionally, TSMC has always done better than its peers.
There is certainly room for the stock to expand over the near term. Needham & Co began
coverage of TSMC with a strong buy last week
and a price target of US$13 on the ADR some
30% over last weeks price. Bhavin Shah, JP
Morgans well-regarded chip analyst, believes
indications of strong growth momentum will materialise as soon as the next quarter, driven by
strong demand for chips for handsets, data networking and digital cameras. Analysts, on average, expect TSMC to earn NT$2.32 a share this
year, and NT$3.49 next year, exceeding the peak
earnings of NT$3.43 set in 2000. At 26 times earnings and 4.2 times book, the stock looks expensive. So, anybody betting on TSMC had best
be agile.
Chang himself has voiced caution. Since the
spring, hes been sharing his view that Moores
Law could be heading for a repeal. Named for
Gordon Moore, one of Intels founders, it says
the number of transistors that can be packed
into a defined area goes up 100% every 18
months, doubling capacity, even as prices fall.
But the rate of change is slowing markedly.
You can blame high fabrication and design
costs. Developing and making chips at the cutting edge of technology is mind-bogglingly expensive.
It costs US$30 million to design and
siliconise a chip and produce masks [the
photonegatives that imprint the circuitry patterns on the wafer] and then make a trial run,
Chang explains. And early runs often have poor
yields meaning many of the chips are defective making customers loath to commit to
bulk buying.
That means more expensive fabs and fewer
customers. The current cutting-edge technology
is 12-inch wide wafers, also known as 300mm
wafers. They contain chips with 0.13 micron
linewidths. Though this technology is in its second year of production, there are fewer customers committed to it than during the same point
of the cycle for the last generation.
Next-generation 0.09-micron technology,
which is being produced in limited amounts,
has met even greater resistance. A next-generation fabrication plant costs US$3 billion, on average. In contrast, TSMCs first fab, built in
1989, cost just US$200 million.
We see even greater problems in terms of
ramp-up, says Chang. The technical people
have made it happen, but it didnt take off.
TSMC is poised to introduce an intermediate, 0.11-micron line- width technology. Adds
Chang: The production cost of ever more complex chips will make it economically impractical for Moores Law to continue at the pace it
has. Instead of 18 months, I think were looking at three or four years for the next 10 years.
BLOOMBERG
Creating new chips an expensive business
TSMC workers engaged in the production of silicon wafers. A next-generation fabrication plant costs
US$3 billion, on average.
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www.businessweekasia.com
| DECEMBER 29, 2003
TECH IN 2004
FROM PAGE 22
This suggests that the industry is maturing, even as the use of chips proliferates in
daily life. That will make TSMC more cautious
about boosting capacity. The company isnt
alone rival United Microelectronics, the
worlds second-largest foundry, announced
this year that it would reduce its customer list.
In the past, foundries have added capacity
at breakneck speed, to reassure clients and gain
share. This year, TSMC probably spent just
under US$1.5 billion on factory and equipment,
privately reducing its forecasts twice. It hasnt
published forecasts for 2004, but its board recently approved the purchase of US$1.4 billion
in equipment through 2005. Restraint is unprecedented in this industry, but ought to boost
profitability. Chang wants to push return on
equity (ROE) back up to 20%. Our goal is to
retain market share and get to a 20% ROE,
says Chang. And he still expects TSMC to grow
at twice the industry rate.
However, such steps may not have much
effect on TSMCs financial strength. And even
though its costs are already quite low, it faces
formidable competition from companies on the
mainland, including Grace Semiconductor and
Semiconductor Manufacturing International
(SMIC). The latter plans to go public in April.
At the start of 2003, you could arguably say
it was a two-team race between UMC and
TSMC, says Len Jelinek, an analyst at iSuppli,
a California-based market research firm.
Thats changed. SMIC, for example, recently
announced a joint venture with European
chipmaker Infineon for memory chips and a sec-
Sm_21n22n26_S95.pmd
24
BLOOMBERG
Formidable competition from mainland players

still accounts for more than
ond fab for logic chips, aiming
two-thirds of TSMCs revenues.
at TSMCs market. Will we see
But isnt the greenbacks slide
300mm fabs in China at 90
a cause for concern? It hurts
nanometers in 2005? They have
us, but not much, says Chang,
the equipment ready to generate
because some three-quarters of
fine-line geometries, Jelinek says.
TSMCs costs are dollar-deTaiwan Semiconductor mainnominated; the rest is in dotains that national-security conmestic currency.
siderations make it difficult for
Ming Kai Cheng, a TaipeiChinese foundries to get the techbased semiconductor analyst
nology needed to tap the high
end of the market. Still, Jelinek
for CLSA Asia Pacific Markets,
says technology-transfer rethinks that prices may edge up
straints are difficult to enforce.
in the first quarter, given capacIn any case, TSMC plans to
ity constraints.
make only lagging-edge chips
The analyst, who once
in China, allowing it to expand
worked for UMC, is not conits customer base. A chipmaker
vinced that Changs new recould produce a great cell phone
straint on capacity growth will
with old 0.25 micron technology. Chartered Semiconductor recently signed a partnership agreement with IBM
work. Its imperative for a
Still, with lagging-edge technolosemiconductor company to grab
gies making up more than half of TSMCs viously confined itself to memory chips, is as much business as it can because its so cysales, the company cant afford to ignore the also said to be considering doing leading- clical, he declares. Still, he finds reasons to
threat that Chinese companies will soon be edge foundry work.
like the stock.
copying its products.
Says Ming: If you achieve 20% ROE for
For now, Chang is upbeat about TSMCs
Even more of a threat is IBM. Recently, prospects. Capacity utilisation is likely to stay for two to three years, its attractive. Its been
Chartered Semiconductor, the troubled Sin- high, so long as prices are competitive. Given growing rapidly. And five to six times book is
gapore foundry, signed a partnership agree- low utilisation rates at competitors, he isnt not inconceivable. At five times book value
ment with the US computer giant that gives planning to raise prices soon. Hes pleased of NT14.10, the stock would be at NT70.50;
it leading-edge technology. And after a tough with his 12-inch fabs and is ordering equip- at six times, NT84.
bout with the production of a new graphics ment. And he sees recovery in all TSMCs marIf hes right, TSMC could move up by at
chip last spring, TSMCs biggest customer, ket segments computers, communications least 18% from its current level and perhaps
Nvidia, took its business to IBM. Nvidia is and consumer uses. In particular, hes heart- by as much as 42%. But as the stock apsaid to account for one-tenth of TSMCs rev- ened by the fact that chips are showing up in proaches those levels, the wise investor might
enues, down from one-fifth. Samsung Elec- all kinds of consumer applications.
do well to keep his eye on the exit. 2003,
E
tronics, a big semiconductor maker that preAnd hes optimistic about the US, which Dow Jones & Co, Inc
12/23/03, 1:45 AM
| DECEMBER 29, 2003
The great numbers game

How our Little Dot
1 degree North of the
equator measured up
this year in terms of highs,
lows and in-betweens
Living in Sing
US$93.9 billion (S$161.8 billion) The
amount of Singapores foreign reserves assets
at the end of November, making Singaporeans
collectively US$10 billion richer this year, and
richer than weve ever been.
5.9% The seasonally adjusted unemployment rate in September a 17-year high
30% The percentage of HDB homeowners
who chose to refinance their mortgages after the
government announced the liberalisation of
home loans in January. The vast majority chose
not to, despite banks lower mortgage rates for
the first two years compared with HDBs subsidised one. Fears were that banks could repossess their homes if they defaulted on payments.
species. The shrinking broking industry is becoming more institutionalised and retailbased. Two more broking houses were swallowed this year by UOB Kay Hian. There were
33 broking houses five years ago.
916.03 times The remarkable subscription level for the initial public offering of Apex-Pal International, the Singapore-based company behind the
Sakae Sushi chain. Just shows how
popular machine-churned sushi is with
Singaporeans.
below) from the first bidding in December

the lowest since November 1998
S$312.3 million Singapore Airlines firstever loss for the three months ended June 30.
The airline then stunned everyone not least
its own employees who had to take pay cuts
with a profit of S$305.8 million in the three
months ended Sept 30.
Stock market milestones

S$31.2 billion The highest value of shares
traded per month reached in November
compared with the lowest of S$3.4 billion in
February. This means dealers and remisiers
are back in business after three lean years.
S$373.3 billion The market capitalisation
of the Singapore market, making it the largest
in Asean.
S$31.9 billion Singapore Telecoms

market cap, making it the largest company on the island. Its all around us: in
our homes, our workplace, everywhere.
S$9.2 million What Wong Ngit Liong,

the owner and CEO of Venture Corp
arguably, Singapores most successful
tech company paid himself for the
year. Wee Cho Yaw, the owner, chairman and CEO of UOB, Singapores second-biggest bank by assets, drew a more
modest S$6.7 million. Meanwhile, 80%
of Singaporeans were exempted from
paying taxes.
120km The total length of the rapid transit

system network in Singapore. This will increase to more than 150km by 2006, with the
Circle Line, to be completed in 2010, adding
another 33km.
SARS vs Sing
239 The total number of recorded
SARS cases in Singapore
4 The number of IPO-aspirants that managed to realise their dream to list this year.
Regulatory authorities said nay to Cambodian
casino operator NagaCorp, textile-fibre maker
FibreChem Technologies, environmental treatment firm BioTreat Technology and memorychip recycler EC-Asia International.
1,793.51 The Straits Times Indexs 19month high on Nov 4
S$786.6 million The highest amount raised
in an IPO in Singapore this year. Singapore Post
raised the amount in May. What is a lot of
money pales miserably compared with the
US$3.4 billion that China Life Insurance expects
to raise in what is touted to be the worlds biggest IPO this year.
+41.6% The percentage increase in DBSs earnings per

share next year predicted by
investment bank ING. If so,
it would be one of the fastest
growth stocks in the market.
13 The number of China IPOs
on the Singapore Exchange this
year, bringing the number of China
stocks on the SGX to 32.
More numbers to ponder over

S$24,401 The price of a
COE or Certificate of Eligibility for Category A
vehicles (1,600cc and
5,000 to 5,500 The number of new residential properties likely to be sold this year,
compared with 9,500 units last year, according to several consultants from major property companies in Singapore
1,267 The number of flights (operated by various airlines going to and

from Changi Airport) suspended as a
result of the SARS outbreak
+22% The increase in earnings

for the local market next year, according to investment bank ING
28
58 The number of IPOs on the SGX this

year. The number could have been a tad
higher if not for a few failed wannabes.
S$538 million The largest securitisation deal

of the year in which Metro Holdings sold its 27%
stake in Ngee Ann City to insurance giant Ergo
177,543 The number of visitor arrivals to Singapore in May an all-time

low caused by fears of SARS. Visitor arrivals bounced back to a monthly average of more than 570,000 between July
and October.
+38% The increase in earnings

for the local market this year
Sm_28_S95.pmd
S$379 billion The total market capitalisation of all the 546 stocks listed on the SGX as
at end-November. Of the 546 stocks, 429 are
Singapore-related; 42, Hong Kong; and 30,
China.
Property, property, property

33 The number of SARS-related
deaths in Singapore
his year, denizens of this island had

some serious calculations to do, whether on losses caused by the Severe
Acute Respiratory Syndrome (SARS)
outbreak or recovery profits in the third
quarter. At times sexy, sometimes sloppy, but
ending on a somewhat optimistic note going
into 2004, our numbers are telling. If a picture paints a thousand words, then our numbers could tell a thousand stories.
S$10
The daily rebate taxi drivers received
from taxi operators from April 11 to June
10 during the height of the SARS outbreak, upon the recommendation of the
Taxi Industry Task Force against SARS,
to help defray vehicle rentals of more
than S$90 a day. The daily rebate was
trimmed to S$7 from June 11 through
July 10, then to S$3.50 from July 11 to
Aug 10.
Money and the SGX

0 The number of banks merged this year,
compared with four major mergers in the five
years before. The number of local banks
stayed at three. But liberalisation, which
started five years ago, is here to stay. The folding of OCBC Finance into OCBC whittled the
number of finance companies to three, down
from 20 some five years ago.
9 The number of local stockbroking houses,
which are rapidly becoming an endangered
12/23/03, 2:03 AM
S$96,621 What the 3% CPF cut and reduction in salary ceiling for CPF contributions
by 2006 translates into. If your monthly salary of S$6,000 could service a S$750,000 loan
over 25 years entirely from your CPF contribution this year, by January 2006, that same
monthly salary would allow you to service
only a S$653,611 loan from your monthly CPF
contributions.
4.7 million sq ft The potential gross floor
area of the controversial Business and Financial
Centre (BFC) site at Marina Boulevard, Marina
Bay, thats expected to be launched next May.
The three-letter BFC word has caused Central
Business District office landlords many a restless night, for fear it will attack capital values of
existing offices in the CBD.
S$4.33 psf the average rental price per sq
ft of office space in the prime Raffles Place
area. These prices hit the lowest point in more
than a decade, paved the way for several businesses that had previously been relegated to
god-forsaken techno-parks to move into more
fashionable downtown offices. Compiled by
E
The Edge Singapore team
SINGAPORE SCORECARD
| DECEMBER 29, 2003
ECONOMIC WATCH
New year, new hopes
he world got up on New Years Day,

2003 with an unresolved nightmare.
Tensions over a possible war in Iraq got
so unbearable that many economists
and analysts wanted the war started
and finished as quickly as possible so that
the global economy can move again, they say.
The war in Iraq did materialise on March 20,
and Saddam Hussein was toppled in less than
three weeks. But by now, the world was grap-
pling with a medical problem Severe Acute

Respiratory Syndrome (SARS). For Singapore,
at least, it became a far worse problem than
Iraqs former leader could ever be.
By the time the World Health Organization
took Singapore off its list of SARS-affected nations on May 31, the killer virus had infected
238 people on the island, of whom 33 died.
The plunge in economic activity in April and
May was followed by an equally dramatic rebound. A defining example of the V-shaped
recovery is the countrys flag carrier, Singapore
Of SARS and terrorism
Airlines, which recorded a first-ever loss of

S$312.3 million for April to June, and then
bounced back with a S$305.8 million profit for
July to September.
In the Monetary Authority of Singapores
December 2003 survey of professional forecasters (conducted in November among 22
economists), the latter generally upgraded
their estimates for the countrys key macroeconomic indicators for both 2003 and 2004.
The downside risks are not minor, to be sure
(see table), but cautious optimism seems to
be the order of the day as 2004 nears.
GDP growth could hit 5.4% next year
Visitor arrivals to Singapore fell to an all-time low of 177,543 in May due to

fears of SARS, but rebounded to a monthly average of more than 570,000
between July and October. The Civil Aviation Authority of Singapore (CAAS)
announced on Dec 10 that 2.4 million passengers used Changi Airport in November. This represented a modest year-on-year increase of 2.3%, but more
importantly, Changi Airport is finally handling the kind of passenger traffic
it used to handle before SARS hit and as many as 1,267 flights were suspended. The CAAS is also doing what it can to make sure the airport stays
ahead in the changing aviation landscape, including building a new low-cost
terminal to accommodate penny-pinching no-frills carriers.
Among the risks to the 2004 growth forecasts highlighted by the economists
in the survey are the return of SARS and terrorist attacks. These are general
issues which, though important, are not specific to Singapore. Subsequent
market reaction also tends to be a bit more muted as new incidents of terrorist attacks and SARS are taken in stride.
At the beginning of the year, the government

had projected that the economy would grow
by 2% to 5% in 2003. The growth forecast was
revised downwards to just 0.5% to 2.5% at
the height of the SARS outbreak in April, low-
ered further to between 0% and 1% in August,

and then lifted slightly to 0.5% to 1% in November. According to the Ministry of Trade and
Industrys latest outlook report, the Singapore
economy is expected to grow 3% to 5% next
year. The 22 economists surveyed by the MAS
are a tad more optimistic, giving a median
growth forecast of 5.4% for 2004.
Singapores industrial production the
bulwark of the economy grew by 19.3% in
October, its largest increase since late-2002.
Much of the growth was centred on two sectors biomedical sciences (up 151%) and
electronics (up 12.7%). Pharmaceuticals,
which rose 209%, contributed to the surge in
biomedical sciences output. On a cumulative
basis, biomedical sciences output grew by
14.8% between January and October compared with the same period last year. Some
MAS
| STORIES BY NG MUN YEE |
MASs survey of professional forecasters median forecasts

of key macroeconomic indicators
4Q2003
5.4%
1.9%
Non-oil domestic exports

Manufacturing
2004
1%
1.6%
3.5%
16.3%
11.5%
Private consumption
2003
4.5%
Gross domestic output
15%
3.1%
10%
9.2%
US economy likely
to tire in 2H2004
W
ill the over-leveraged US consumer hold
out in 2004? According to market experts, he will remain in reasonable shape
for at least the first half of the year, helped along
by tax rebates in the first few months and interest rates that are expected to rise only in June.
Super-bulls at US bank JP Morgan Chase
argue that concerns over the US consumer sector are overdone and that the business sector
is becoming an engine of growth. To be sure,
third-quarter GDP growth of 8.2% was driven
by an 18.4% increase in business spending
on computers and software versus a smaller
6.4% increase in consumer spending. Nonetheless, JP Morgans own GDP estimates show
that the US business sector will still be overshadowed by what the consumers do.
Heres what the experts have to say
about the growth in the US economy and
the downside risks, the current surge in the
Dow Jones Industrial Average notwithstanding.
Dr Sailesh K Jha, senior regional economist, treasury and markets at DBS Bank:
Were looking at GDP growth of 4% to
4.5% in 2004, up from around 3.5% this
year. One of the risks to the US recovery is
Sm_30n32_S95.pmd
30
obviously the impact of the weakening US

dollar.
The bulls are saying that the current account deficit will correct as a result of the
weakening US dollar, but the evidence on that
is mixed. First of all, the US isnt like Norway
or Finland which faced similar problems in
the 1980s when they ran concurrently large
current account and fiscal deficits.
You cant have the US dollar go down by
another 20% because that will create havoc
in the US financial markets and destabilise the
global financial system.
Dr V Anantha-Nageswaran, director, global economics and asset allocation at Credit
Suisse
The consumer sector will have to slow
down the mortgage refinancing index in the
US has fallen and wage growth has come off
quite dramatically, too. Capital spending could
potentially offset the slack in domestic spending, but there is still excess capacity and the
outsour-cing of manufacturing activity. The
recovery momentum could thus fade away
after the second quarter and the US market
has probably priced in most of the good news
E
anyway.
6.3%
3.5%
5%
Construction
Consumer price index
-6.1%
0.6%
-9.5%
0.5%
-0.8%
1.2%
Unemployment (end-period, seasonally-adjusted)
5.5%
5.5%
4.5%
Exchange rate (US$/S$) (end-period)
When Singapore found a new SARS case in early September, the Straits Times
Index plunged more than 40 points, but quickly shrugged it off to climb even
higher. On Dec 16, the discovery of a new SARS case in Taiwan sparked
a sell-off in regional markets, but the reaction was noticeably milder this
time around. Of course, if an even more deadly virus appears or something
happens on the scale of the Sept 11 attacks, then all bets are off, say the
economists.
Financial services
1.72
1.72
1.69%
Risks to the 2004 forecasts

Another SARS outbreak
Escalation of terrorist attacks
Worsening Sino-US trade friction
Weaker growth in US and China
Extensive structural changes in the domestic manufacturing sector
Sluggish domestic labour market
Bruce Kasman, US chief economist at JP Morgan

2003 (%)
GDP growth
Contributed by:
Domestic final sales
Net exports
Inventories
Unemployment rate
2004 (%)
2005 (%)
4.5
3.6
3.3
-0.3
Nil
6
4.3
-0.2
0.4
5.9
3.4
0.2
Nil
5.6
The dramatic shift in the US economys fortune is a reminder of how quickly perceptions about performance change. Only a few
months ago, the absence of hiring and spending was commonly viewed as a structural problem that threatened to weigh on growth
for an extended period. But business caution and cost control were part of a healing process that has produced a substantial
improvement in balance sheets and allowed profit margins to rebound impressively as these developments have become
incorporated in equity and credit markets, the stage is set for a powerful snapback in business spending and hiring. A recovery in the
US corporate sector does not signal a full return to health the gap that has opened up between sticky compensation costs and low
inflation [is] a key obstacle to job creation nominal revenue growth (or essential growth rate) would have to reach about 4.75% to
allow enough hiring to stabilise the unemployment rate, roughly 3.5%, to cover the rising labour costs of existing workers, and
another 1.25% to absorb the normal increase in the labour force.
Julian Jessop, senior international economist at StanChart

2003 (%)
GDP
Inflation
Unemployment rate
Current account deficit (% of GDP)
Budget deficit (% of GDP)
2004 (%)
2005 (%)
3.1
2.4
6.2
5.3
6
4.5
2.2
5.5
4.8
4.5
2
2
5.3
4.5
4
keeping official rates low is not necessarily the best way to sustain a recovery, even in a heavily indebted economy. The longer
that the Fed waits in the face of strong data and a weaker dollar, the greater the risk that the bond market starts to worry about
future inflation. The result would be higher long-term interest rates. Our view is that something would have to go seriously wrong to
prevent rapid US growth next year. The corporate sector is in great shape, with cash flow and balance sheets both strong. But there
are valid concerns over the financial positions of both households and the public sector. The Federal deficit is likely to be nearly 5% of
GDP in 2003 or 6% for the total public sector, including state and local governments. These structural problems will inevitably result
in a period of weaker growth at some point we do not expect a recession soon, unless either the equity market or the housing
market collapses.
12/23/03, 2:17 AM
| DECEMBER 29, 2003
ECONOMIC WATCH
FROM PAGE 30
economists argue that the growth was not broadbased, while others point out that electronics and
biomedical sciences account for half of the nations
industrial production, so growth occurred where
it mattered.
Riding the global electronics upswing

There is a big-time recovery in global fixed investments a major turnaround for the first time since
the Nasdaq bubble burst in 2000. Youre seeing it
in the US, Germany, France and Japan. Its a global
phenomenon, not just a US phenomenon. Thats
generally accompanied by a pick-up in the IT sector which leads the investment cycle, at least in the
US, says Dr Sailesh Jha, senior regional economist
at DBS Bank.
Within the electronics sector, semiconductor
sales are powering ahead and Singapore is hitching a ride. According to the Semiconductor Industry Association, worldwide sales of semiconductors rose to US$15.4 billion in October representing a 6.8% month-on-month increase, a 23.3%
year-on-year increase and its strongest gain since
1990. Double-digit growth is expected for both
2003 (year-to-date revenue growth is already
16.4%) as well as 2004.
Some detractors argue that, despite the obvious
cyclical upturn in the electronics sector, the Singapore economy isnt picking up as strongly as anticipated. DBSs Jha acknowledges it, but points out
that Singapore isnt the only country with this problem. Even tech-heavy countries like South Korea
and Taiwan have had milder rebounds in successive cycles of the electronics sector since the early
1990s, he says.
Biggest challenge is to create new jobs

Part of the problem is Singapores competitiveness vis-a-vis its neighbours. To be sure, the nation is not losing its competitiveness in every manufacturing sub-sector. If you look at the big sectors,
for example, office and data processing which account for 35% to 40% of NODX [non-oil domestic
exports], theyre still quite competitive. In the
smaller sectors, theres a wide variation some
sectors are losing competitive advantage while others arent, Jha explains.
Looking ahead, he reckons that Singapores
NODX growth in 2004 will benefit from the return
of Japan as a growth driver for Asia. One of the
drivers of Japanese growth over the last six months
has been exports. Rising export growth in Japan is
going to be a boost to intra-regional trade, which
means Singapores trading partners are likely to import more parts and intermediate products from Singapore, he says.
Getting a grip on unemployment

According to economists, the most pressing problem for Singapore, going into 2004, is not manufacturing growth per se, but overall employment generation. The good news: The unemployment rate is
expected to fall from the current 17-year high of
5.9%. The bad news: Its expected to fall to only
4.5% by the end of 2004, which is still well above
the sub-3% that Singapore used to enjoy.
As Singapore moves away from lower valueadded manufacturing (in which it cant compete
with the likes of China) and aims for higher-value
manufacturing (which is becoming more capitalintensive), its unavoidable that the unemployment
rate will remain in the 4% to 4.5% region for some
E
time to come.
Jha: Rising export growth in Japan will boost intra-regional trade, benefiting Singapore
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12/23/03, 2:19 AM
Mirchi
| DECEMBER 29, 2003
CURRENCIES
Gaining new currency

| BY BEN PAUL |
f 2003 was the year in which the world

lost a significant measure of faith in the
US dollar, 2004 could be the year that
Asias currencies make a strong comeback in the confidence stakes.
For many people in Asia, that might sound
like wishful thinking. The 1998 crisis exposed
the underlying weaknesses in their economies
and ended their belief that the Asian miracle
was for real. And even though Asias economies have recovered since then, few people
are confident that their currencies ought to
be stronger than they are now.
Certainly, that sentiment seems to be
shared by their central banks, which have prevented their currencies from floating up on
the back of the large current account surpluses
that their export-oriented economies are generating. Instead, they have been steadily accumulating the US dollar proceeds and keeping their currencies from diverging too far
from the greenback. Its easy, of course, to
understand Asian countries reluctance to allow their currencies to appreciate too soon.
Stronger currencies would pressure their
export-oriented industries, which lifted their
economies out of the financial crisis slump
and kept growth on an even keel over the last
few years. Why test their economies resilience until it becomes absolutely necessary?
For the US, though, that has to be disconcerting. Running an enormous current account
deficit with just about every Asian country,
reducing what it owes them by steering the
greenback onto a path of depreciation is
clearly in its interest right now. And judging
from its tough rhetoric over the course of 2003
about unfair competition directed mostly
at China this is something it is determined
to achieve. Moreover, the US does not appear
to be alone in this campaign.
The G7 communique three months ago
emphasising that more flexibility in exchange
rates is desirable was widely taken as tacit
agreement on the part of other developed nations that the US dollar should be allowed to
weaken against a broader range of currencies.
The US dollars weakness has thus far been
reflected most in the euros strength.
However, the impact of these moves has

probably been more limited than the US
hoped. The Japanese yen has strengthened
significantly in the final quarter of 2003 but
any gains by other Asian currencies have been
much less significant. Still, while jawboning
hasnt produced results, developments within
their own economies might.
By at least partly tracking the US dollars
slide over the last two years, Asias economies
are starting to benefit from the positive effects
of inflation. Its perhaps most evident in countries that have maintained fixed exchange rates
to the US dollar. For example, Hong Kongs
economy appears to be reflating fast with rents
at shopping malls and commercial office properties reportedly being raised for the first time
in years. Some property specialists say that office rents could climb as much as 20% in 2004.
Hong Kongs domestic economy was among
the worst hit in Asia in the aftermath of the
financial crisis because of its pegged exchange
rate. Unable to let its currency depreciate like
the rest of Asia, domestic prices bore the full
brunt of the fallout with real-estate values dropping by as much as 60%. Not surprisingly, that
crushed domestic confidence and spending.
But with corporate landlords like Sun Hung Kai
Properties and Wharf Holdings experiencing
improved profitability and asset prices rising,
the process has now been thrown into reverse,
and confidence and domestic demand are on
the rise once more, say analysts.
To varying degrees, whats happening in
Hong Kong is unfolding elsewhere in Asia. No
doubt, growth across the region is unlikely to
match the high rates chalked up during the
mid-1990s. But there is more and more evidence that local businesses are returning to
health and their banking systems are on a
much stronger footing.
Indeed, 2003 may well turn out to have
marked the beginning of the end of an extended
period of macroeconomic underperformance in
Asia [including Japan], says David Fernandez,
head of economic and sovereign research for
emerging Asia at JP Morgan in a recent report.
Since the mid-1990s, the region has been
an important source of downward pressure
on global prices. Nominal growth rates in Asia
collapsed to less than one-third the previous
BLOOMBERG
Singapore dollar and Thai baht could be among the better performers in 2004
Although Asian economies have recovered from the 1997-98 financial crisis, few Asians are confident that
their currencies ought to be stronger than they are now
trend from 9% per annum to 2.5% while

the regions real effective exchange rate slid
roughly 25%.
On the JP Morgan forecast, the rise in
Asian nominal GDP growth to 5% in 2003
twice last years rate will be maintained over
the next several years. This revival in regional
real growth, combined with the end of outright
deflation, puts Asia at the centre of the global
reflation story.
If JP Morgans analysts are right, Asias central banks could soon have good reason to be
Strongest performers in 2003

0.75
USD per AUD
0.66
USD per NZD
1.25
USD per euro
0.64
0.70
1.20
0.62
0.60
0.65
1.15
0.58
0.60
1.10
0.56
0.54
0.55
1.05
0.52
0.50
0.50
Dec 20, 2002
Dec 19, 2003
1.00
Dec 20, 2002
Dec 20, 2002
Dec 19, 2003
Dec 19, 2003
The new favourites

1.80
SGD per USD
44
TWD per USD
THB per USD

35.0
1.78
43
34.8
1.76
42
34.6
1.74
41
34.4
1.72
40
34.2
39
34.0
1.70
1.68
33.8
38
1.66
33.6
37
1.64
1.62
1.60
33.4
36
35
Dec 20, 2002
Sm_34_S95.pmd
Dec 19, 2003
34
33.2
33.0
Dec 20, 2002
Dec 19, 2003
Dec 20, 2002
12/23/03, 1:13 AM
Dec 19, 2003
more confident that allowing their currencies

to appreciate wont pressure their economies
too much. In fact, it may be just a matter of
time before they have little choice in the matter if they still care about keeping a cap on inflation. Improving corporate profitability, rising asset prices and accelerating capital inflows,
which are all part of the reflation story, will
inevitably feed through to inflation. In the second quarter of 2003, Chinas CPI inflation was
running at just 0.7%; by October, it reached
1.8%, notes Fernandez in his report.
While it is true that agriculture prices are
behind the increase, China is the regions most
prominent example of the turn from isinflation
to inflation, he says. Going by JP Morgans
forecasts, regional inflation is likely to rise by
over a percentage point between 2003 and
2004, he adds.
That has important implications for local
investors seeking to profit from the US dollars continued slide. Over the last two years,
currencies like the euro, Australian dollar and
New Zealand dollar were the most attractive
plays. With the high interest rates they offered, they were magnets for money seeking
shelter from the risk of a steep depreciation
of the US dollar. Now that the US dollars slide
is gathering pace and Asia appears to be
reflating, it might make more sense to get back
into currencies nearer home.
Among the currencies that experts appear
to be most positive on are the Thai baht and
the Singapore dollar.
According to a recent report by Citigroup,
the Singapore dollar, Thai baht and Taiwan
dollar could hit exchange rates of 1.57, 37.20
and 30.55, respectively, against the US dollar
by 2005. And, by 2008, if one dares think that
far ahead, they could be trading at 1.36, 34
and 24.75 against the greenback. Talk about
E
a boost in confidence.
I D E A S I S S U E S D E B AT E
THEEDGE SINGAPORE | THE WEEK OF DECEMBER 29, 2003 JANUARY 11, 2004
Influx of liquidity to continue

The influx of liquidity into Asian assets is
likely to continue. Improving cyclical prospects for the global economy and Asias success in exploiting structural changes in global
business strengthen the prospects for out-performance in Asian economic growth as well
as earnings.
Second, risk aversion among global
investors appears to be declining as the
world economy improves and as they develop a more nuanced understanding of
Asian risks such as Severe Acute Respiratory Syndrome (SARS), terrorism and political change.
Third, expectations among global investors
for Asian currencies to appreciate are likely
to strengthen as well. These positives set the
stage for capital to flow into Asian bonds, equities and other assets in volumes not seen
since the early 1990s.
Currency landscape will change

Few analysts are bold enough to argue against
the consensus view that the US dollar (USD)
must depreciate. The latest data on purchases
of US securities explains why: The capital
flows that have so far prevented a rout of the
USD are reversing.
If not for the Bank of Japan (BoJ)s massive purchases of US Treasuries, there would
have been just a trickle of capital flowing into
the US to finance its large current account
deficit (running at close to 5% of GDP) in
October.
But, how long can the BoJ sustain this? Its
latest financial results show the BoJ making
its first loss in many years the capital loss
on its holdings of US assets would have been
one reason. There is also more evidence in
recent data that other Asian investors are
growing wary of raising their exposure to the
USD, while the Europeans have been wary for
some time. It does look as if the USD will fall
further and faster against the major currencies than it did in 2003.
Speculation over the Chinese renminbi
(RMB) and other Asian currencies will, therefore, rise, spurring ever greater speculative
flows into these economies. Such capital inflows will prompt Asian policymakers to take
more vigorous action against speculation.
But, as the USD weakens against the yen
and euro and threatens their exports, we can
expect the Japanese and Europeans to come
closer to the pain threshold. They will certainly press Asians to share some of the burden of USD weakening, pressure which the
Asians will find increasingly difficult to avoid.
Thus, the Chinese authorities will have
to bite the bullet and change their exchange
rate regime. Simply widening the RMBs
trading band, as many think, will not assuage the market nor will it deflect US and
Sm_36_S95.pmd
36
dia. In Taiwan, political change could actually be positive for the market since President
Chen Shui-bians opponent is likely to come
to an accommodation with China.
The real political shocks that threaten
markets could come where socio-economic
or other stresses are reaching the threshold
which crystallises a political disruption. For
instance, we had flagged in an earlier column, Keep an eye on North Korea (Issue
51, Feb 24), our concerns over the rising
risks of an implosion of the decaying North
Korean regime and the immense consequences that poses for the rest of Asia. Similarly, the issues in countries such as Indonesia and the Philippines are not so much
the electoral outcomes as the rising disenchantment with the entire political class and
the growing pool of disenchanted and underemployed youths who can be wooed by
insalubrious forces out to destabilise their
countries.
Japanese pressures.
signs of excesses in real-estate
More likely than not, China
speculation, fixed-asset investment and bank lending. The
will have to shift to a tradeloans/GDP ratio is now close
weighted basket system for
to the Thai and Malaysian levmanaging the RMB. That means
els of 1997. There are also
some degree of RMB appreciasimilarities in the accumulattion against the USD and
ing evidence of huge excess capressure on Asian currencies to
pacity affecting a wide range
appreciate further.
of sectors.
Watch for upward presSure, inflation and current
sures on Asian currencies, esaccount balances are in good
pecially those which barely
| BY MANU
shape, unlike in pre-crisis
appreciated compared with the
BHASKARAN |
Thailand and Malaysia. What
others this year the Korean
tripped up those countries was
won and the Singapore dollar
not inflation or current account
come to mind. The authorities
deficits but excessive investwill have to allow more appreciation against the USD. But
ment funded by bad lending
since they are unlikely to tolwhich is so evident in China
erate a sharp rise, they will also
today. We think that investors
have to tolerate the greater liquidity in their will become more and more nervous about
financial systems that will result from their such excesses. In the end, what could trigger
efforts to cap currency appreciation.
a burst of the bubble may not be excess capacity itself but a sudden reversal of capital
flows when, say, a financial or political change
Policy dilemmas raise risks for investors
Asian policymakers constantly balance undermines investors overly bullish expecbetween the conflicting objectives of pro- tations of China.
In fact, there are also major bubbles in the
viding enough monetary juice to support
growth and preventing monetary excesses real-estate sector in the UK, Australia, The
that could destabilise economies. Such Netherlands, Spain and some metropolitan
policy dilemmas are likely to become more areas in the US. As central banks begin tight-
my say
Economic outlook in 2004 A tale of

two halves?
All bubbles burst eventually, even in China.

The only question is timing. There are clear
excesses in real-estate speculation, fixed-asset
investment and bank lending... investors
will become more and more nervous about
such excesses...
BLOOMBERG
he approach of the new year is a good

time to think about the big themes that
could affect the investment climate in
2004. Sure, there is no crystal ball that
can tell us all that will happen but
thinking through the many complex forces at
work helps clarify the issues affecting financial markets. Indeed, we see several major
driving forces that will set the stage for markets next year.
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Investment themes in 2004
Appreciation of Asian currencies against the US dollar

AT JAN 1, 2003
AT DEC 12
% CHANGE
1.734
1,186.05
43.08
8950
47.99
1.710
1,185.05
39.65
8,490
45.53
1.4
0.1
8.0
5.1
5.1
Singapore dollar
Korean won
Thai baht
Indonesian rupiah
Indian rupee
acute in 2004, as a result of the capital flows

mentioned above, with Chinese leaders feeling the heat most.
Chinas central bankers have already
sounded the alarm about the excesses building in the Chinese economy. However, the
political leadership needs to maintain high
growth so as to absorb the rising tide of
job seekers. This will limit how far policy
tightening can go: We expect only sectorspecific measures that will probably not
resolve the excesses that threaten the
economy. Nevertheless, investors should expect these sector-specific moves to cause
damage in highly speculative areas such
as real estate.
2004: The year of bubbling dangerously

All bubbles burst eventually, even in China.
The only question is timing. There are clear
ening the monetary conditions that inflated

these bubbles, the risk of one or more of these
bubbles bursting will rise putting growth
in these economies at risk.
Political change in the air Lots of

elections to worry about
Politics will matter to investors however,
it will not be the election outcomes per se
that will affect markets but the events leading up to the elections.
After all, there is little reason to expect
these elections to produce radical changes.
In most cases, existing rulers will remain,
the only issue being the composition of
parliaments (for example, Malaysia and
Hong Kong).
In other elections, at worst, one set of elites
with similar policies will replace another
for example, Indonesia, the Philippines or In-
12/23/03, 1:14 AM
We think that the first half of 2004 will probably see business conditions improve at their
most dramatic pace since the bubble in 19992000. The lead indicators and surveys of
businesses tell us that there is so much
growth in the pipeline that a robust first half
is almost assured.
But global growth could well decelerate
in the second half. Beyond the final round of
tax rebates in the US in April, there is not
much that can keep the US economy surging
at its recent pace.
Indeed, the changes in the currency markets and in capital flows discussed above
suggest that US long-term interest rates are
likely to rise (so as to attract capital back to
the US) no matter what the Fed decides
to do with the short-term rates it sets.
Rising long-term rates will hit the housing
market and mortgage refinancing which provided US consumers with so much spending
power this year.
What is more, higher rates could prompt
households to slow spending in order to
rebuild savings, given rising US consumer debt levels.
A fall in house prices would reinforce the
consequent slowdown. If China slows as well,
then the two largest sources of global growth
would be compromised.
Some argue that the Bush administrations
desire for re-election will ensure that nothing
will go wrong in the US economy until after
the elections. This is a fallacy: Remember
what happened to President Bushs father in
1992 and to President Carter in 1980. The reality is that monetary policy is controlled by
the Fed and operates with very long lags while
Bush will find it difficult to employ fiscal
policy given the massive budget deficit that
has emerged in his term.
There is a lesson in all this the early
part of the year will afford investors tremendous opportunities to earn returns. But they
will have to be nimble and trade aggressively
E
if they are to keep their gains.
Manu Bhaskaran is a partner and member of
the board of Centennial Group Inc, an economics consultancy
OPINION
BLOOMBERG
Bubble re-enters investors lexicon

| BY WILLIAM PESEK JR |
ith Thailands stock market up

more than double in US dollar
terms in 2003, a troubling word
has re-entered investors lexicon:
bubble.
Its natural to wonder if Thailands economic fundamentals support that kind of rally.
The nations central role in the 1997 Asian
crisis only increases suspicions the market is
running ahead of improvements in Asias
ninth-biggest economy. It may very well be.
Thailands 6%-plus growth, fast-expanding middle class and success in freeing itself
from the trap of export dependence bode well
for Thai shares. Yet, does the market really
deserve to be up five times that of the US and
nearly four times Japans?
More likely, the buy Asia dynamic coursing through global markets in the year boosted
some equity markets more than economic
improvements warrant. As a result, Asia finds
itself in a put-up-or-shut-up position in 2004;
it must prove to investors that it really is a
worthy place to move capital.
In many ways, it is. The regions growth
potential, relatively low stock valuations and
favourable demographics make it more attractive than many Western markets. Many global investors, meanwhile, are underweight
Asian equities because of their small role in
indexes like the MSCI World Free Index.
Asia has come a long way since the late
1990s. It shored up banking systems, reduced
foreign debt, improved transparency, made
central banks more independent and privatised state-owned assets. Corporate balance
sheets are cleaner and political stability has
returned to many countries.

today, but what happens when
But some sobriety is in order
the economy slows? This is no
here. Theres no doubt asset valsmall risk when you consider
ues should be up, but do imThailands unimpressive proprovements in an unpredictable
gress in ridding banks of bad
economy like Indonesia warrant
loans. In July, Standard & Poors
a 64% stock rally? Should South
estimated bad loans in the finanKorean shares really be up 30%
cial system accounted for about
amid a raft of problems in that
30% of assets.
economy? What about the 35%
At the same time, trends in
jump in Philippine stocks amid
Thailand are a reminder of the
rising political uncertainty there?
disconnect between short- and
Higher equity values are a good
long-term investment. Theres
thing, of course. They create
plenty of hot money flowing
wealth, help companies raise
into Asian markets, but little forfunds and offer more chances to
eign direct investment. Just about
sell state-owned assets. They also
all of the long-term investment is
explain why Asia experienced an Foreign tourists arrive on Bangkoks famous Koasan Road on Dec 13. Thailands
going to China.
initial public offering boom in 6%-plus growth bodes well for its shares but does the market really deserve to
The point is this: If the recov2003. Still, another stock bubble be up five times that of the US and nearly four times Japans?
ery in Asias star equity performer
like that of 1997 that destabilised
turns out to be more fiction than
fact, investors may again begin withdrawing
the region, or even a smaller one, is the last one of Asias most vibrant.
thing Asia wants. The region may just have
The government raised its 2003 gross do- from the region.
Its important to note that think-tanks are
mestic product forecast to 6.3%; surging extoo much of a good thing on its hands.
Asian officials must avoid boom-and-bust ports and a recovery in tourism fuelled the urging Bangkok to monitor asset prices so that
cycles to reach that potential. If markets avoid fastest expansion in four years in the third the economy doesnt overheat. Thats what
overheating this time around, the good times quarter. The National Economic and Social happened in the 1990s, when Thailands ecocan last. If todays stock euphoria proves to Development Board, a think-tank, says growth nomic boom became a bubble. It burst in 1997
and set in motion a regional meltdown.
be irrational exuberance all over again, Asia could hit 7% or 8% in 2004.
We shouldnt just pay attention to ecoYet Thaksinomics may be little more than
can forget about attracting foreign capital for
old-fashioned pump-priming dressed as some- nomic growth, but the government should
a long, long while.
Here, Thailands experience will be key. thing new and revolutionary. At its core is take this opportunity of an upturn to mainTo many investors, it has become a model of cheap money: Credit has never been so afford- tain economic stability, says Chakramon
post-crisis reform, along with South Korea. able or accessible. The result has been a na- Phasukavanich, secretary-general of the NaThai Prime Minister Thaksin Shinawatras tional spending spree on cars, motorbikes, tional Economic and Social Development
recipe for prosperity, dubbed Thaksinomics, homes and cellular phones. The government Board. We should closely monitor it; we
has won kudos and converts around Asia. Its has also forced banks to lend to farmers and dont want to repeat history.
Thats not only true in Thailand, but throughfocus on boosting domestic demand along other rural Thais.
E
Thailands debt-driven boom looks fine out Asia. Bloomberg LP
with exports has made Thailands economy
The indices of the stock markets in several countries give rise to concern
Thailand's SET Index
4500000
Volume (000)
750
722.03
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Jan 2, 2003
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Jakarta Composite Index
Korea Stock Price Index
Dec 22, 2003
37
1200000
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850
804.54
1000000
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700
669.781
3000000
750
2000000
550
500
650
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450
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200000
1200
150000
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300
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| DECEMBER 29, 2003
OPINION
economy should gradually

see improvements in its job
market through the course
of 2004, thereby restraining
the intensity of the tendency
to blame the foreigner.
By the middle of next
year, inflation would likely
have returned to the front
pages as an issue for central bankers to deal with.
| BY P K BASU
However, this is likely to
occur in a paradoxical environment with most
manufactured-goods prices
continuing to deflate, while
the prices of commodities
and services drive the rise
in headline inflation. The relentless deflationary pressure in key industrial sectors
chemicals, semiconductors, textiles will
persist, with the continued surge in capacity
creation by China contributing significantly
to the persistence of downward pressure on
industrial prices.
Although the UK and Australia have already
raised rates, the first Asian central bank that will
be obliged to do so will be the Peoples Bank of
China after the likely failure of further attempts to rein in credit growth via an increase
in reserve requirements. The combination of
higher interest rates by the middle of the year
(brought on by a likely sharp increase in do-
mestic inflation) and administrative measures to rein in

property speculation should
begin to burst the property
bubble in parts of urban
China but the real reckoning for the bubble economy
is likely to come only in 2005.
By then, global liquidity
conditions would have
tightened sufficiently for in|
vestors to become more discerning about investment
choices. China equities are
likely to be a major casualty
in the second half of 2004,
but the countrys credit
growth and its import engine are only likely to weaken sharply in 2005
lagging the tightening in global liquidity.
Apart from the US election, there are key
elections in 2004 in India, Indonesia and Taiwan. In India, the feel-good factor of a broadbased economic recovery, and savvy electoral
alliances in key states, will likely enable the
ruling NDA coalition to retain power.
Despite a close challenge from PKB-endorsed Susilo Bambang Yudhoyono, President
Megawati is also likely to be returned to power
in Indonesia. She will likely use her heightened legitimacy to drive a stronger economic
recovery in the second half of the year, based
on a modus vivendi with the old tycoons who
have been shunned by Indonesias politicians
since 1997.
Taiwans incumbent Chen Shui-bian, however, appears likely to lose narrowly to the
powerful Lien Chan-James Soong ticket a
result that will be welcomed by China, and aid
a broad-based revival in business confidence.
The Asian economies to look out for in 2004
are likely to be India, South Korea and Malaysia. Thailand should remain a beacon of strong
6% GDP growth for a second consecutive year,
but will be joined by South Korea and Malaysia. The latter, driven by the reformist zeal of
Prime Minister Abdullah Ahmad Badawi, will
begin to see a recovery in foreign direct investment inflows and some of the early fruits of its
big oil/gas finds in 2003. The ringgit peg will
also continue to boost import-competing manufacturers (including Proton, which will likely
begin to demonstrate its resilience in a competitive environment).
South Koreas spectacular export perform-
global eye
BLOOMBERG
ll the signs are flashing green for a

spectacular performance by the global economy in the first half of 2004.
The Organisation for Economic Cooperation and Developments leading
indicator has strengthened, and the Institute
for Supply Management new orders (the best
six-month leading indicator of Asian exports
to the US) surged to a two-decade high in the
latest month suggesting that Asias exports
to the US should rise 20% to 25% year-onyear by the second quarter of 2004.
With the strong euro boosting import demand in the euro zone, and few signs of any
significant slowdown in Chinas soaring imports, Asias export engine should be firing
on all cylinders in 2004.
But 2004 is also an election year in the US,
and this will inevitably heighten the scope for
trade disputes between the US and some of
its key trading partners. Blaming the foreigner
is always easier than devising complex strategies to compete effectively with imports
especially in an election year.
China will remain under pressure to either
float the renminbi, deal more effectively with
its financial sector, or face anti-dumping and
other duties. And India will not be immune from
the heat: Outsourcing of services to the country
will remain another political hot potato.
However, fortunately for both the emerging factory and back-office of the world (China
and India respectively), the strengthening US
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A good year ahead for Asia
A bank teller handles a stack of Chinese renminbi over US bank notes. The Chinese currency is likely to have
strengthened at least 10% against the US dollar by the end of the year.
ance in 2003 will likely bring about a recovery

in machinery investment from the start of 2004
which, in turn, should boost productivity,
eventually boost wages with a lag, and so help
end the long consumption slump by the second half of the year. Its chaebols global brand
equity should continue to allow South Koreas
exports to perform admirably, taking real GDP
growth to a broad-based 6% or more.
Although the UK and

Australia have already
raised rates, the first
Asian central bank that
will be obliged to do so
will be the Peoples
Bank of China after
the likely failure of
further attempts to
rein in credit growth...
India which will start 2004 as a net
creditor to the world should achieve two
consecutive years of 7%-plus growth (in the
fiscal years ending March 2004 and 2005).
While business process outsourcing will add
perhaps 0.5 percentage points to its growth
rate, its emerging prowess in manufacturing
(medicines, cars, steel and aluminium) will
be the notable feature of its economic performance in 2004; and it will be best positioned to
gain from the nature of global inflation next
year driven, as it is likely to be, by commodities and services.
But one trend from 2003 is likely to endure
into 2004: the gradual grinding upward of Asian
currencies against the US dollar. By the end of
2004, not only will the Indian rupee, Korean
won and Thai baht be 5% to 7% stronger than
they now are against the greenback, but the Chinese renminbi is likely to have strengthened at
E
least 10% against it, too.
Prasenjit K Basu is founder and managing director of Robust Economic Analysis Pte Ltd,
Singapore
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Sm_38_S95.pmd
38
12/23/03, 3:11 AM
OPINION
Test for the new leadership

The coming soft landing will be nothing more than a bump in the road of Chinese prosperity
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12/23/03, 2:34 AM
comitant influx of displaced state workers.

As such, China cannot afford a growth
accident that might destabilise this process.
And the bigger the Chinese economy gets and
the further it goes down the road to reform,
the more the consequences of any such accident are magnified. The excesses of the credit
cycle, the risks of a new wave of NPLs, emerging inflationary pressures and selected property bubbles need to be seen in that context.
To the extent these developments raise the
risks of a hard landing, Chinese authorities can
be expected to take pre-emptive action to engineer a soft landing. The good news is thats
exactly what theyve done. The bad news is
that the rest of the world doesnt get it.
As is typically the case, the Western consensus can be expected to go from one extreme
to another in assessing prospects for the Chinese economy with euphoria over the boom
quickly giving way to fears of the coming bust.
None other than US Federal Reserve chairman Alan Greenspan has recently warned of
just such a possibility in voicing concerns over
Chinas currency peg underscoring the risk
of recession that would stem from the excess
domestic liquidity creation that defence of
such a currency regime implies.
His view only adds to the growing chorus
of Western sentiment arguing for China to
revalue the renminbi. The arguments, in
most cases, are thinly veiled efforts to get
China to temper the pressures that are bearing down elsewhere in the world. Japan
and Europe want China to share the burden of the dollars inevitable adjustment
a stance I believe is steeped in hypocrisy:
Two of the wealthiest regions of the world
that remain reluctant to reform are demanding assistance from a poor nation that
has been aggressive in embracing reforms.
A similar consideration has probably not
been lost on Greenspan as he does his best
to facilitate an orderly correction in the
greenback. And, of course, theres the political angle, led increasingly by a bipartisan coalition of protectionist politicians in
the US who would like nothing more than
to see China cave on the currency issue.
Ive seen this movie before. In the
minds of the West, the China hard landing is always the risk. Yet time and again,
China has proved the doubters wrong, especially in recent years. That was the case
during the Asian financial crisis of 199798, when fears of a Chinese currency devaluation were rampant.
It was also the case in the global recession
of 2001, when China was widely thought to be
at serious risk. And I suspect that could also
be the case today. Yet China is dealing with its
growth excesses on its own terms not on
terms that are politically expedient in the West.
For China, a revaluation of the renminbi
would pose serious risks to the requisite job
absorption in its thriving export sector. A currency-driven solution works best in a marketbased economy. For a command economy like
Chinas, credit allocation should work just
fine. The best news of all is thats exactly
whats now happening in China.
I am confident that the coming soft landing will be nothing more than a bump in the
road of Chinese prosperity. Yes, its an important test for Chinas new leadership but
one that I believe it will manage with extraordinary success. I wish I could say the same
E
for the rest of the world.
BLOOMBERG
USs. Should China now slow,

he world has discovered China. And competition continues to limit
as we suspect, the rest of Asia,
with good reason: I continue to believe pricing leverage even in aralong with Europe and the US,
that China is the greatest economic de- eas such as motor vehicles and
will not be spared.
velopment story of the 21st century. mobile phones, where demand
Interestingly enough, the early
But no economy is perfect. There are is expanding most rapidly.
warning signs of a slowing in
often bumps on the road to prosperity some Prices of transportation and telChinese import demand are now
minor and some serious that pose chal- ecommunications equipment
evident: The November trade stalenges to any growth strategy.
are down 2.2% in the first 11
tistics revealed a sharp deceleraChina is no exception, and in fact is fac- months of 2003.
tion of import growth to 28.4%
ing just such a challenge today. Chinese auHas the Chinese economy
y-o-y, still vigorous, to be sure,
thorities are now in the process of temper- overheated? The answer is no
ing some of the economys recent growth at least, not yet. But it certainly | BY STEPHEN ROACH | but well below the 40% pace over
the first 10 months of the year.
excesses. That suggests that the next China could if the authorities stood by
This could be the first hard
growth surprise is likely to be on the down- and did nothing. Precisely for that
side a development that could have im- reason, Chinas central bank has already taken indication of the coming slowdown in Chinese
portant implications for the global economy pre-emptive action to stem the excesses of this domestic demand. With China now qualifying
and world financial markets.
credit-induced inflation. As announced in late as an important engine of growth in a still slugThere are two ingredients to the China August and implemented in late September, the gish world, a slowdown in the Chinese
slowdown story an economy that must Peoples Bank of China raised reserve require- economy underscores the risk of a global
growth disappointment in the first half of 2004.
face up to both a credit bubble and inflation. ments on bank deposits from 6% to 7%.
This chain of events is very much consistent
Beginning in late 2002, Chinese bank lendReflecting the legacy effects of a centrally
ing accelerated dramatically; in the 12 controlled system, China does not yet have with the conclusions that my colleague Andy
months ended November 2003, the outstand- an instrument-based monetary transmission Xie and I have both been stressing for the past
ing volume of such loans was up 21.4% mechanism as we know it in the West. Banks, several months. Yet this remains very much an
nearly double the average gains of 11.9% especially the four dominant state-owned out-of-consensus view. Surging commodity
over the 1997-2002 period.
policy institutions, tend to take their cue from prices and shipping rates, together with a conIt quickly became evident that the accelera- the rhetoric of policy pronouncements and the stant outpouring of euphoric press reports on
tion was concentrated in the four state policy allocation of credit supply that stems from China, still have most observers convinced that
theres no stopping the Chinese economy or, for
banks, whose primary focus is to provide fund- such moral suasion.
ing for Chinas vast network of state-owned
enterprises (SOEs). Unfortunately, this segment of the Chinese economy is still the
shakiest. With excess lending flowing into
SOEs, there was a growing risk of a new
wave of non-performing loans (NPLs), precisely the opposite of what Chinese financial sector reform is attempting to achieve.
At the same time, there was mounting
evidence of a property bubble, especially
in the Shanghai area, but also in other
pockets of the relatively wealthy coastal
region. This, too, appears to have been
largely a by-product of excessive bank
lending that was funding increasingly
speculative property development projects. There have also been indications of
excess spending on infrastructure.
Meanwhile, there has been an important
shift in the Chinese inflation dynamic:
After 15 months of deflation, China transitioned back into positive inflation territory at the start of 2003. And slowly but
surely, the rate of inflation has begun to
accelerate. The just-released inflation report Chinese migrant workers wait at the train station in Beijing. The overarching imperative for the authorities is to
for November 2003 was mildly disturbing manage the reform process without disturbing the nations social stability.
a 3% year-on-year (y-o-y) increase,
which represents the sharpest rise in nearly
Whatever the transmission channel, the that matter, an increasingly China-centric Asian
seven years. The mix of Chinese inflation is medicine is working. Bank loan growth aver- economy.
important, but not for the reasons we stress in aged just 80 billion renminbi in October and
Theres a certain irony in all this: The
the industrial world.
November down sharply from average world has rushed to one side of the China boat
The recent surge is concentrated in food monthly gains of 275 billion renminbi in the at precisely the moment when the authorities
prices, where annualised inflation is now run- first three quarters of this year. The Chinese are putting the brakes on. As is all too often
ning at an 8.1% rate. Weather-related or not, credit cycle has turned precisely what China the case with respect to China, the West just
this is a big deal in a nation that still has about needs in order to temper its financial and eco- doesnt get it.
two-thirds of its population living at poverty lev- nomic excesses.
Missing in the outside worlds assessment
els. Unlike the West, where we strip out food in
That could have important global implica- of China, in my view, is the perspective from
an effort to come up with core inflation, the tions, in my view. The rest of Asia is especially the inside the overarching imperative to
Chinese have no such luxury. At the same time, vulnerable to a China slowdown. Chinas im- manage the Chinese reform process without
there are also indications of accelerating pricing port surge year-to-date gains of 39% has disturbing the nations social stability. Reelsewhere in the Chinese economy especially become an important source of external demand forms in China are proceeding at a pace that
for consumer essentials such as utilities (4.6%), elsewhere in the region. In the first nine months is almost impossible to fathom from the outmedical care (8.1%) and education (3.9%).
of 2003, China accounted for 66% of Japans side looking in.
The same can be said in the property sec- total export growth; for South Korea, the figure
A critical ingredient of this process is the
tor, where inflation in housing rents hit 3.7% was 40% and for Taiwan, an astonishing 97%; unrelenting restructuring of Chinas vast netin November; this reinforces sharply rising for the smaller and more diversified Asean work of SOEs, and the annual elimination of
prices in many construction materials such as economies, the China share of this years ex- some seven to nine million state-funded jobs
steel and cement, a development that has port growth is in the 20% to 30% range.
associated with this extraordinary transition.
caught the attention of Chinas central bank.
Nor is Asia alone in drawing sustenance Chinas reforms are all about creating a marAt the same time, Chinas manufacturing from Chinese demand. China accounted for ket-based alternative to its network of antisector remains in deflation as the confluence 56% of Germanys total export growth in the quated SOEs and sustaining a vigorous growth
of rapidly expanding capacity and intense first eight months of 2003 and 21% of the climate that is capable of absorbing the con-
Stephen Roach is chief economist at Morgan

Stanley Dean Witter based in New York
| DECEMBER 29, 2003
OPINION
Just hoping and wishing...
2.
3.
4.
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o Ive been asked to come up with a

wish list for next year. I know its the
end of the year, and we should all be
warm and cheerful and filled with
happy wishes for the year ahead.
But frankly, ever since I was four and discovered during a visit to Metro that Santa Claus
was some Ah Beng hired to put cotton wool
over his face, Ive gone over to the side of the
Grinch. And after how the Remaking Singapore
effort turned out to be a repeat of the damp squib
that was S21, Im not optimistic that any of my
wishes for Singapore are going to come true.
But its the season, and Ill try not to be
the guy who spoils the office party by vomiting in the punch bowl. Rather, I shall be like
Sandra Bullock in Miss Congeniality, who,
when asked what she wished for, smiled serenely and said, World peace without believing for a second it was possible.
So heres what Im wishing for Singapore
in 2004:
1. The Speak Good English movement to
cure its post-colonial hangover. Its simple. By all means encourage grammatical
English, but please stop advocating the
censorship of Singlish in films, plays, on
TV, et cetera. Singlish is our little islands
only authentic cultural product and its
also witty and genuinely cross-cultural.
If we want our arts industry to have any
credibility whatsoever, we need to be able
to depict naturalistic dialogue without the
Banana Police hovering over us. Our overseas partners will understand if our
grammar isnt always perfect (neither is
theirs, anyway), but theyll be disdainful
if we think tourist dollars rather than personal authenticity is the touchstone of
successful art. Oh, and

please stop encouraging
these expatriate literature
teachers (especially those
forming study centres)
whore going around saying, The only way to
learn proper English is to
emulate native speakers.
If that isnt self-serving, I
dont know what is.
Potong gaji. I have yet to
| BY COLIN GOH |
hear a convincing reason
for leaders continuing to
draw salaries higher than the president of
the US, especially when ordinary workers
are constantly being told theyre too expensive to be competitive. The old if you pay
peanuts, you get monkeys argument
doesnt hold water. As history has shown
us, all we do is keep breeding monkeys with
a growing dependency on very rich diets.
Somebody to explain why Singapore citizenship is still beneficial. I completely
understand the need to encourage foreigners to enlarge our talent pool. However, 6.
when they draw higher pay and get subsidised housing but dont have to serve national service, or when agencies work
harder to secure their jobs than ours, we
deserve some explanation why were not
getting the short end of the stick.
Give media competition a real chance.
Two GLCs competing with each other by
producing the same bland pap, engaging
in anti-competitive practices and racing
to attain lowest-common-denominator
goals is not real competition. What we
need is a good competition law, an out-
side player with a radical vision and loftier media aspirations than simple profits. Oh,
also less content regulation
by nanny.
5. A real strategy for digital
convergence. When it
comes to digital convergence, I feel like one of
those crazy men carrying
signs that say The end of
the world is nigh. Our
censorship regime, telecoms and media regulation practices, intellectual property law,
tech industry and competition policy
all of these are going to be in severe flux
soon, if theyre not already, because of
digital convergence. Yet we persist in having sector- or medium-specific approaches
rather than trying to distil broad, crossindustry principles to guide legislation or
practice codes. Things are too urgent to
just wait and see what the US comes up
with and then copy them.
Greater constitutional awareness. As a
corollary to the point above, the reason
why we cant just copy the US is that they
have a history of looking beyond the wording of legislation towards broader philosophical principles. We tend to have a very
follow-the-book approach, which while
making things efficient in the short run,
eventually leads to simplistic strategies.
We need to acquire more complex intellectual approaches now. Our schools need
to start teaching citizens our Constitution,
while our law school needs to incorporate
jurisprudence into every subject.
Oh, for a bagful of new dailies!

| BY SEAH CHIANG NEE |
ome 20 years ago, a senior government official told me something that rankled. Singapore is
a small place, he said. How different can you be from The Straits
Times?
I was editor of the Singapore
Monitor, an afternoon newspaper
that applied without success to be
allowed to go morning to compete
head-on with The Straits Times.
The official was trying to explain
the governments stand on media diversity: It wasnt feasible because
the local news flow just wasnt
enough to allow two rival papers to
be different.
I disagreed, of course, but had to
concede that he was not entirely
wrong, given the Singapore of the
time. Affluent and tightly regulated,
Singapore news-wise was often as
quiet as Vientiane. Too many stories
were at the time branded sensitive,
including AIDS. Singapore was just
one big economic story and politics happened here only once every
five years.
I hate to admit it, but frankly in
our office, the daily editorial meetings were often a snore a seminar
here, a press conference there; 80%
to 90% of the days news files
Sm_40_S95.pmd
40
jumped straight out of the news desk

diary, not the sort that made readers
rush to buy a newspaper.
There werent many unscheduled
news breaks like a bank robbery, a
lightning strike or a street demonstration that routinely happened elsewhere in Asia. Indeed, by about 4pm,
we all knew what the next days
newspaper would look like.
That was, of course, the Old
World. Things began to change dramatically in Singapore in the Nineties new technologies, Chinas
growth, corporate and economic restructuring and even loss of jobs
all enough to knock the countrys
once safe cocoon into orbit.
Adding to this was a new generation more educated, more demanding, more exposed to the larger world
and with more diverse viewpoints.
It got worse with the arrival of
Osama bin Laden, the Jemaah
Islamiah and SARS: All sorts of policies began changing so quickly that
many citizens were unable to keep
up with them.
Today, you can have two or three
competing newspapers all looking
different from one another, if theyre
allowed to run on their own. In an
active file, no two papers are alike.
Each has its own identity and its
own characteristics. Local journal-
ists today are far better educated,

trained and indeed responsible
enough to provide a balanced and
diverse coverage.
Thats important for Singaporeans.
To survive in an uncertain and challenging global economic climate, they
need to be well informed so they can
pick the right options in life. That requires informative newspapers with
articulate, knowledgeable journalists,
something that a monopoly simply
cannot provide.
So, for this reason alone, I have
a simple wish this Christmas: Id
like the chance to choose from more
than one newspaper to go with my
breakfast the same way that I can
choose my toothpaste.
Funny request? No, not after Senior Minister Lee Kuan Yews comment that Singapore may be too
small for two TV networks. Right
now, I can choose either The Straits
Times or Today, the MediaCorp
newspaper. Of course, there are a
number of other publications within
SPHs own fold but they dont compete for the same readers.
I just hope no paper gets closed.
Todays existence may not be much
but it spices up the lives of Singaporeans. And more than the government cares to admit, it also contributes to Singapores ambition to be-
7.
Real educational reform. Derail the

through train, abolish rankings and give
teachers more administrative support and
better pay. Year after year, when it comes
to education, we never seem to learn.
8. A Freedom of Information Act. Just like
in the US, any citizen, especially researchers, should be able to apply to inspect
government records, subject to narrowly
drawn exceptions. This helps the government avoid embarrassing situations like
when a team of NTU economists erroneously arrived at the conclusion that three
out of four jobs went to foreigners, because they were forced to rely on the incomplete information the government
had deigned to release.
9. A freer approach to research. Following
the point above, more independent research
should not just be allowed, it should be encouraged. And government agencies should
jettison their practice of insisting, prior to
permitting researchers to proceed, that they
be given the right to veto the eventual publication of findings. Respond robustly, by
all means. Censor, no.
10. Have a decent national football team.
OK, Im stretching things here, but no
harm in dreaming, right?
Happy New Year!
Colin Goh is a former attorney currently working in New York as a multimedia producer. He
is best known as the founder of Singapores
most popular satirical website TalkingCock.com
and as the editor of Singapores first comprehensive Singlish lexicon, The Coxford Singlish
Dictionary.
come an exciting global city like New

York, London, Hong Kong or Tokyo.
Giving tabloids away to train commuters is a western practice that
weve adopted but they are generally
considered a fun read as opposed to
the serious newspapers they complement in the marketplace.
There is a reason for it: Their priority is advertisers, advertisers and
then readers in that order. The current Streats-Today face-off is more an
advertising war than a journalistic one
fought over scoops, exclusives or reasoned writing. It is actually a business fight, whose outcome has no
impact on readers.
The existence of three mass-circulation papers (The Straits Times:
391,000 copies; Today: 300,000 and
Streats: 280,000) chasing after a weak
advertising dollar is shaking up everybodys bottom line, especially the
SPH group.
For The Straits Times, its new
child, Streats, is an unwanted baby
that will immediately disappear the
moment Today closes. It was created only to counter Todays business incursion but is now actually
cannibalising its own revenues.
The ad rates for the two tabloids
are lower than those charged by The
Straits Times, so they are luring revenue away from it. The revenue that
Streats (and, indeed, Today) rakes
in comes straight from the flagship
paper, transferring from the
SPHs point of view from a higher
12/23/03, 2:04 AM
to a lower value-added medium.

The Straits Times only consolation is that it is better to lose revenue
to Streats than to its rival, Today.
This has prompted a Streats
staffer to observe: Our fight is really not with Todays journalists. Its
with our own salesmen whod
rather have customers advertising in
ST than in Streats.
So fundamentally, competition is
not going well for SPH. For Today,
its no bed of roses, either.
It is greatly outgunned by the
vast network of SPHs resources
(nine newspapers with over a thousand journalists) and will find it
tough to be able to break out and
take on The Straits Times in the
morning market anytime soon.
For now, it seems it will be a long
time before I get my wish for a multitude of new newspapers in Singapore, and even then it wont be
numbers that matter.
Before he jumps down my chimney, I want to tell Mr Claus that Id
be very disappointed with his bagful of new newspapers if they are
mere replicas of one another
comments disallowed in their reports, all reading like the New Light
E
of Myanmar.
Veteran Singapore journalist and
commentator Seah Chiang Nee was
editor-in-chief of the now-defunct
Singapore Monitor. He now runs his
own website, littlespeck.com
DECEMBER 29, 2003
T
op
Bonus
Buys
THE
YEARS
PRESENTED TO YOU BY
Ssf_cover_S95.pmd
12/22/03, 11:38 PM
TOP
BONUSBUYS
The year of
SINGAPORE
EDGE
THE
2003
BY ERNEST WAN
DECEMBER
EDGE OF REASON
29,
F2
REMAKING
SINGAPORE
We take a look at the campaign that put the I
in Singapore this year, and ponder the outcome
of all our labours
his year will be remembered for many

big news events, such as war in the
Middle East, floods in China, and how
a giant robot from the future became
the governor of California.
But most of us here will remember 2003
as the year that was about Remaking Singapore. If it were a reality TV show, it would be
about how a dull, shapeless country became
a sexy, self-esteem-packing nation Singapores Extreme Makeover!
The fat of boringness was sucked from the
thighs of our nightlife. The droopy eyelids of
corporate complacency were lifted and sewn
into new heights of busy executive action. The
saggy, misshapen butt of non-entrepreneurship was lovingly molded into perky orbs of
regional go-get-em-ism. Feel the bounce!
Remaking Singapore? Were not sure about bar-top dancing since it has been allowed but it is remaking the bar scene.
But its important that in all this excitement,

we dont lose sight of problems plaguing this
country for a long time, like why my mums
dog cant stop licking his private parts.
Also, many of the ideas for turning Singapore into a more interesting place dont take
into account that most people living here are
Singaporeans, that is, people whose idea of a
good time is line-dancing.
To others on this planet, line-dancing looks
like a cry for help. Its a way of telling the
world that you dont know what to do with
yourself. As far as I can tell, to line-dance,
you need to follow these steps carefully: 1.
Put one foot in front of the other. 2. Repeat
with other foot. 3. Whoop. Of course, Im
over-simplifying it. Advanced dancers may
also holler.
To really tackle the problem of no fun in

Singapore, we should send study teams to
places where they have plenty of fun, such as
Brazil. If I were to be drafted into such a delegation, I would consider it my patriotic duty
to serve, even if it meant taking time off my
career for six, seven or 14 years.
According to several economic theorists,
Brazil is the worlds largest exporter of fun.
Fun-poor but uptight-rich nations such as
Singapore, Finland and Japan import vast
amounts of the precious resource. In return,
the Brazilians make us promise never to
show up at their beach parties, especially if
we are going to wear that dorky Hawaiian
shirt.
To help remake Singapore, all of us can
start by remaking ourselves, even if it means
throwing away the perfectly good easy-care

slacks we bought in the Robinsons sale of 87.
There will be the pain of readjusting our lives
to radical new concepts.
It wont be easy to remake ourselves for
2004, but there will be lots of news events
happening next year that we should prepare
ourselves for. For example, US judges may
release Michael Jackson after they find that
he is no longer the same person who committed the crimes all those years ago, as over 90%
of his body parts are new.
But whatever may come, know this: For
me, 2004 will go down as the year that BinE
gos bottom gets Saran-Wrap-ped.
Ernest Wan wishes you a happy new year, free
of inhibitions and filled with bar-top dancing
TREAT
YOURSELF
right
o youve spent the last few weeks days, for those of us who are less organised running around with a shopping list and slightly dishevelled hair, making sure everyone gets everything you planned to give them for Christmas.
Now its time, in the words of Tom Jones, to help yourself: to good food, a
getaway, or just about anything youve lusted for all year but never got around
to buying. Time to stop doing the math in your head, whip out that all-important
MasterCard, get emotional, and buy yourself some happiness.
With your just rewards for a years worth of hard work, stress and everything else
about your job they never stipulated in the contract, why not give yourself a pat on the
back and indulge? Well show you some of the best ways you can go about treating
yourself. From the most delectable timepieces and brightest accessories to the most
rejuvenating getaways and best places to feast, The Edge Singapore brings you the best
the year has to offer.
Were looking ahead. And you should, too.
Heres wishing you a happy new year, and a toast to the person who should be
E
enjoying your bonus the most: you.
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23/12/03, 1:00 AM
2003
29,
DECEMBER
SINGAPORE
YourWeekOut
If you do one thing this week...
THE
EDGE
WATCH School of Rock (opens Dec 31), a

hilarious romp starring Jack Black (Shallow Hal)
as Dewey Finn, a wannabe rock star who gets
kicked out of the band he started, and is about
to be kicked out of his apartment. Finn pretends
hes his roommate in order to take a job as a
substitute teacher. Arriving at an ultraconservative prep school, Finn discovers a handful of talented musicians and determines
to win the prize money at the local battle of the bands.
ENJOY a night of jazzy Christmas and classic jazz favourites by Singapores jazz man
pianist and crooner Jeremy Monteiro, and Malaysian jazz pianist Michael Veerapen. This little
post-Christmas party will feature heart-warmers such as White Christmas and Winter
Wonderland, and cool standards like I Hear a Rhapsody and On Green Dolphin Street as well
as original tunes Consequence and Soliloquy. Dec 27, 7.30pm, Esplanade Concert Hall.
Tickets at S$39 (complimentary slice of cake and drink) from Sistic*.
ATTEND a concert and do a good deed at the same time. Singer-actor Jimmy Lin,
Flying Fish Jeffrey Wang, award-winning pianist Ong Lip Tat, soprano Ho Shiang Fei,
tenor Lim Shieh Yih, opera singer Hu Shue Yi and 13-year-old Little Sister Tay Yi will
perform classical music, Broadway hits and evergreens. Proceeds go to charity. Dec 28,
7.30pm, Singapore Indoor Stadium. Tickets at S$31 to S$91 from Sistic*.
DONT MISS playwright Harold Pinters works. The Lover has actress Tan Kheng Hua and
actor Lim Yu-beng engaged in a game of sex and power. The Dumb Waiter stars Gerald
Chew and Lim Yu-beng as two hired killers waiting for orders at a deserted restaurant. Jan
8-18, 8pm (3pm on Jan 10, 11, 18), DBS Arts Centre, 20 Merbau Road. Tickets at S$30
(S$22 for matinee and 8pm on Jan 8) from Sistic*.
LISTEN to the Singapore Symphony Orchestras silver anniversary concert featuring homegrown musical talents. SSO associate leader Lynnette Seah performs Dvorks lyrical
Romance in F minor, the Tang Quartet takes on Elgars Introduction and Allegro while Lan
Shui conducts the orchestra in Brahms Fourth Symphony. Pre-concert talk at 6.30pm. Jan 9,
7.30pm, Esplanade Concert Hall. Tickets at S$12 to S$74.75 from Sistic*.
*Sistic hotline: 6348 5555
STYLE
Women arent the only ones wholl be preening for

countdown parties. Men, its time to spruce up for the
new year with Sangeetha Naidus recommendations.
Clinique
Post-Shave Healer
Try Cliniques solution to razor burns simply smooth
some of it onto freshly shaved skin. Retails at S$40
(75ml), or pick up Cliniques Global Skin Supply set
for men, which consists of the Post-Shave Healer, M
Shave Aloe Gel, Turnaround Lotion and Face Scrub,
for just S$58. Available at all Clinique counters, including Tangs (6733 0419) and Isetan Orchard (6235 3572).
Dermalogica
Mens Skincare Kit
Now, the men can get it, too. Dermalogicas range
which includes a soap cleanser called The Bar,
Multi-Active Toner and Active Moist lightweight
moisturiser is easy to use and comprehensive,
and it comes in a handy kit. The kit retails at S$130,
at all Leonard Drake Skin Care Centres and authorised dealers (call Ina Gails hotline at 6271 4733
for details).
Toni & Guy

TIGI Bed Head Stick
Packaged for maximum convenience, Bed Head styling wax
in a stick instantly brings out the movement and texture of
your do. Retails at S$35.36 from Toni & Guy salons, or call
Toni & Guy/TIGI stockists (6281 0913).
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BONUSBUYS
2003
F4
THE
EDGE
SINGAPORE
DECEMBER
29,
TRAVEL
The
You get to rub shoulders with the rich and famous at

The Palazzo Versace in Australias Gold Coast
PLEASURE PRINCIPALS
Business and pleasure should go hand in hand. Joan Koh lists her favourite places in the region to do both.
s there such a thing as best business and leisure hotel

one where essential-oil-scented air doesnt get into the
way of power meetings, where time out at the fairway or
even a spa counts as the inspiring carrot at usually dreary
annual staff retreats? We found eight places that manage
a harmonious blend of all of the above.
Alila Ubud Bali

Bali, Indonesia
Balis most photographed infinity pool perched above the
Ayung River must make one of the most compelling images
of the Isle of Gods. While you may spend an inordinate amount
of time there nursing a pina colada, the Kerry Hill-designed
resort formerly known as The Chedi has leisure concierges
who ensure youre out and about getting to know Bali intimately. Temple architecture tours, culinary journeys, visits to
a Balinese astrologer or a sunrise trek and breakfast at Mount
Agung can be arranged in between your time at Asias first
Mandara Spa and the boardroom (meeting facilities for up to
60 persons). The dramatically landscaped IMGmanaged Nirwana Bali Golf Club is less than an
hours drive away.
ing facilities include rooftop boardrooms and a garden amphitheatre (Ananda can accommodate up to 150 guests).
Deepak Chopra or your favorite swami may not be here, but
breathing exercises and yoga in between power meetings
arent an anomaly. Or head to the 21-room spa set in a restored Viceroys Palace. If wanderlust takes you further, river
dolphin sightings at the Ganges are common between January and March. What will take your breath away is the sixhole, three-par green by the majestic Himalayan range.
Published room rates start from US$300 a night. Meeting packages from US$20 per person. www.anandaspa.com.
Published room rates start from US$375 a night. Meeting packages from US$38 per person. www.fourseasons.com/chiangmai.
Four Seasons Resort Chiangmai

Chiangmai, Thailand
Just 20 minutes from the town centre and five minutes drive
from the 18-hole Chiang Mai Green Valley Country Club is
the lush Mae Rim Valley, where the Four Seasons Resort
Chiangmai (formerly known as The Regent Chiangmai) is
Published room rates start from US$250 a night.

Meeting packages from US$35 per person.
www.alilahotels.com/ubud.
Ananda In the Himalayas

Narendra Nagar, India
Youre forgiven for wondering if youve intruded into a sacred space. Thepilgrimage
starts the moment you take the two-hour flightcum car journey from New Delhi. At the foothills of the Himalayas some 3,500 feet above
sea level, the 74-room Ananda In the Himalayas is sited on a century-old Maharajas palace estate. One of the worlds best destination
spas, Ananda has palatial rooms overlooking the
Ganges river, Rishikesh valley or the Maharajas palace. Surely it cant feel like work if meet-
Ssf_4n5_S95.pmd
situated. The Lanna-style design is cleverly incorporated into

the resorts architecture, every shrub is teased and manicured to perfection by Bill Bensley and team, every villa is
sumptuously appointed and the staff walk and speak in
hushed tones. In addition, the Northern Thai cuisine is consistently excellent and the three-level spa is definitely among
the best in Asia, if not the world. And the newly launched
cooking school is a great place to get acquainted with Thai
cuisine and do some bonding with co-workers wielding the
mortar and pestle. For formal meetings, facilities accommodate up to 80 persons.
Banyan Tree Bintan

Bintan, Indonesia
Secluded Tanjong Said Bay may have a rocky coastline that
can deter swimmers but the 70 hillside Balinese-style villas
compensate for almost anything. After all, if
youre going to be at the Banyan Tree,
shouldnt you luxuriate in your own villa?
Work on your tan by your private pool and be
sure to arrange for in-villa massage and dining (we bet Olivia Newton John and The Corrs
did the same to escape prying eyes). Better
still, have the pampering Harmony Banyan
therapy at the new Garden Spa Pavilions. Even
the South China Sea-front meeting room (for a
maximum capacity of 25) is in line with the
meditative ambience of the resort. The Greg
Norman-designed 18-hole masterpiece is just
a short buggy ride away. The best thing is that
the splendid Banyan World is just 45 minutes
ferry ride from Singapore.
Published room rates start from US$470 a night.
Meeting packages from US$40 per person.
www.banyantree.com/bintan.
The Anandas facilities include rooftop boardrooms and a garden amphitheatre
23/12/03, 1:01 AM
2003
DECEMBER
29,
BUYRIGHT
Domestic spending
THE
EDGE
SINGAPORE
Youve shopped hard for festive gifts, but dont forget

one important person. Sangeetha Naidu shows you
some of the nice things to give yourself.
Cartiers Stylo pen with clock
Give your signature a flourish with
Cartiers Stylo pen, which comes with
a clock for you to mark your significant moments. This platinum-finish
limited edition of 2,000 is available at
all Cartier boutiques (Ngee Ann City,
6734 2427 or call Richemont Luxury,
6734 4986).
Bvlgaris B.zero1 bags

Get ready for the spring season with
Bvlgaris B.zero1 bags in pink, turquoise and mauve pigskin. From the
brands Spring 2004 Leather collection, theyre priced at S$1,300 and
up. Its enough motivation to hie
yourself to Bvlgaris boutique (Hilton
International Singapore, 6737 1652).
Round Topiary Ring from Piaget

Piagets offering is inspired by nature,
and certainly one to aspire towards.
This outstanding beauty makes a fabulous addition to your jewellery collection, with its 18-carat white gold and
89 brilliant-cut diamonds amounting
to 3.87 carats. From: S$42,350, at Piaget Boutique (#01-11 Ngee Ann City,
6732 6831).
Clou De Forge Silver from

Cufflinks Herms
This season, Herms has a range of
accessories for men that are guaranteed to raise eyebrows. Its Clou De
Forge Silver Cufflinks are beautiful
yet modern with their clean edges
and simple shape. From S$440 at
Herms (Liat Towers, 6734 1353).
Cabasse Xi
The new Xi system from Cabasse is a
harmony of colours and shapes that
will add style to any room. Cast from
aluminium, the Cabasse Xi comes in
Santorin blue, hibiscus red and grey.
Choose to have the speakers on a
shelf, wall-mounted or on floor stands
to make the most of your space. The
package costs S$3,888 (with Onkyo
AV receivers), and is available at Ambient Acoustics, 1 Coleman Street, The
Adelphi #02-10, tel: 6334 2568.
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TOP
BONUSBUYS
THE
EDGE
SINGAPORE
DECEMBER
29,
2003
F6
OFF THE EATEN TRACK
heres nothing quite as depressing as

overcooked noodle. Spaghetti that all
but dissolves at the twirl of a fork.
Ramen that floats lifeless in soup. Coils
of listless, tasteless cha-soba in bowls
of nondescript sauce on the conveyor belts of
cheap sushi restaurants. Its enough to make
you wish restaurants put Viagra in the cooking water.
Yes, years of ordering soba and receiving
baskets of lank twine had reduced me to near
despondency: Could that really be all there
was to a four-century-old noodle-making tradition? Fortunately, in a season already
blighted enough by economic uncertainty, flu
outbreaks, more Jackson court cases, and the
utter pointlessness of Matrix Reloaded and
Revolutions, my despair was alleviated by the
opening of a branch of Shimbashi Soba here
recently. Well-known for his restaurants in
Japan and Sydney, Shimbashis founder and
soba master, Yoshinori Shibazaki, has even
had his life story immortalised in a Japanese
comic book a good sign to any foodie fans
of Japan Hour.
The restaurant subscribes to the trinity of
conditions for excellence in soba known as
soba santate: hiki tate (promptly milled),
uchi tate (promptly kneaded and cut), and
yude tate (promptly cooked and
served). Out of the few thousand
soba restaurants across Japan, only
a paltry 100 are practitioners of
santate: Dont you feel fortunate that
we have one now?
Actually, some customers have instead felt short-changed, after paying
almost S$20 for a bowl of noodles. But
perhaps they were unaware of what
went into them. Lets spell it out.
Santate translates into the following
procedure: Organic Tasmanian buckwheat is first milled into flour in the
kitchen. The soba-maker mixes it with
a small amount of ordinary wheat
flour in a large bowl, then kneads
water into it in small increments, making the
dough accrete into larger and larger pebbles
that finally form a smooth, buff-coloured
ovoid.
After using three different rolling pins on
a marble work top and much concentrated
elbow grease, the dough is a thin sheet with a
silken surface. Folded up like a bolt of cloth,
it is shredded into fine soba with a lethal-looking noodle cleaver. It takes about 45 minutes
to make 25 bowls of soba, and is repeated as
many times a day as necessary no noodles
are kept till the following day.
Freshly cooked fresh soba has more meaning and integrity than all the Matrix films combined. The pale taupe noodles are springy and
succulent, a shade softer than al dente, their
subtle flavour uniquely combining hints of
wheat, popcorn and freshly laundered linen.
They are best eaten cold steaming soup
robs them of some liveliness with hot accompaniments such as tempura, or duck
breast slices in a rich broth, on the side.
Star buck
Soba judgement or why fresh is best as the alternative to this
years festive feasting. Story and pictures by Christopher Tan
Tan.
Deep fried crispy soba
When youve finished your seiro (soba-shop

slang for a single serving of noodles), bow to
tradition and ask for some vitamin-rich noodle-cooking water to pour into your dipping
sauce dregs to make a satisfying and surprisingly complex soup. (And healthy, too: Unique
among grains, buckwheat contains a bioflavonoid antioxidant called rutin, which strengthens blood vessels against conditions such as
varicose veins and high blood pressure.)
If you need any more encouragement,
among Shimbashi Sobas other must-tries are
warm golden wedges of rolled omelette, made
with air-flown Japanese eggs and far more delicious than the cold yellow erasers on cheap
sushi conveyor belts; oshiruko, a wonderfully
rustic homemade red bean soup with buckwheat flour dumplings; and deep-fried soba,
reddish-gold and as crispy as twigs in the
E
Mojave. So who needs Prozac?
Shimbashi Soba, #B1-41 Paragon, 290 Orchard Road, tel: 6735 9882
Sake tasting lesson

Dont know your junmai from your honjozo?
Think yamahai is a brand of piano? Then trip
along to Sake Bar for an object lesson in sake
appreciation. With over 50 sakes sourced from
all over Japan, and a handful more from the US
and Australia, and tasting sets on offer, this is
the place to improve your grasp of the rice wine
flask. And the sakana (sake-accompanying
snacks) are pretty good too try the fried
chicken, and the daikon, slow-braised for three
days. Kanpai!
Sake Bar, 23 Neil Road, tel: 6221 2803

Dough is shredded into fine soba with a cleaver
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2003
&
DECEMBER
29,
DINEOUT
THE
EDGE
SINGAPORE
Wine
dine
Sangeetha Naidu shows you the best places to feast as

the year draws to a close
Traditional Irish treats
Irish eyes will be smiling this year-end season as Father
Flanagans Irish Pub cooks up a storm with some good ol
Irish treats. From now till Jan 6, experience first-hand the
Christmas Season Set Menu that includes a main course choice
of either traditional roast turkey and Parma ham kebabs
served with gravy and cranberry sauce or pan-fried beef tenderloin with creamed potatoes, spinach, roast peppers and
asparagus, served with basil Hollandaise. The pub is also presenting a complimentary Polaroid picture of you and your
guests and a glass of its Christmas Cocktail or house wine.
Price: S$58+++ per person
Address/reservations: CHIJMES, 30 Victoria Street, 6333 1418
East meets West

Enjoy fusion food this festive season at Lei Garden. The restaurant has come up
with a creative menu such as Christmas Pudding, Steamed Half Lobster with
French Sauce, Sauted Fillet of Garoupa Hawaiian Style and Braised Sharks Fin
with Crab Meat and Roe. A complimentary bottle of red or white wine is included. Promotion is valid through Jan 1.
Price: S$888+++per table of 10 (to be pre-ordered two days in advance)
Address/reservations: Orchard Plaza, 150 Orchard Rd, 6738 2448
Vegetarian delights
Go veg after the turkey at LingZhi Vegetarian Restaurant.
From now till Jan 2, Chef Lam Chun Hing serves up dishes
like Braised Mushrooms Bisque with Vermicelli and Fried
Monkey Head Mushrooms with Sliced Ginger and Vegetables.
Price: S$23.80+++ per person
Address/reservations: Liat Towers, 541 Orchard Road,
6734 3788
Authentic Thai cuisine

Dine in Thai style at Paddyfields with newly appointed Executive Chef Rachanee
Chowlerlerts Spicy Soup with Coconut Milk and Thai Herbs with Seafood. The
set menu includes a dessert buffet that serves a variety of traditional Thai sweets.
Price: S$45+++ (without wine) per person; S$50+++ (with a glass of house
wine) per person.
Address/reservations: The Copperdome, Anchorpoint, 368 Alexandra Road,
6472 3833
Lavish Spanish buffet

Go for the buffet at Olive Tree Mediterranean Restaurant and youll be feasting on Traditional Roast
Turkey, Roast Prime Rib and fresh seafood including
king prawns, lobsters and oysters.
Price: S$36+++ (lunch) per person, S$45+++
(dinner) per person, Piper Heidsieck champagne
(S$55+++per bottle and S$11.50+++ per glass)
Address/reservations: InterContinental Singapore, 80 Middle Road, 6431 1061
Contemporary Japanese food

Head for Wasabi Bistro, which was recently voted by Cond
Nast Traveler as one of the Best New Restaurants in the
World. Highlights at this chic eatery include lobster salad, a
choice of special sashimi with tempura, and Kumis No 1
appetiser snapper with seaweed, wrapped around three
kinds of crabmeat (with secret sauce).
Price: New Years Eve set lunch (five courses), S$45+++
per person; New Years Eve set dinner (nine courses), S$100+++ per person
Address/reservations: The Oriental Singapore, 5 Raffles Avenue, 6885 3091
Liquid diet
Tis the season for toasting and celebrating, so why not do it
at the Martini Bar in Grand Hyatt Singapore? A whole range
of interesting concoctions awaits you, including the Lychee
Martini, Chocolate Martini and Grand Caribbean Martini.
Price: From S$15 to S$28
Address/reservations: Grand Hyatt Singapore, 10 Scotts
Road, 6416 7189
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BONUSBUYS
2003
F8
THE
EDGE
SINGAPORE
DECEMBER
29,
DRIVE
Tony Watts shifts into top gear

for the New Year, and toasts the
sexiest choices to tantalise you
in the coming months
BMWs X3 will arrive in Singapore in 2004
2004
of
Dream machines
n reality, most motor vehicles are often

treated as appliances to transport passengers from A to B, but more than any other
purchase except clothes, cars are chosen
as much to make a statement about their
owners as for practical purposes. In 2004,
theres no dearth of statements available. If you
want to be seen as anything except the standard sensible Singapore car buyer, read on
Alfa Romeo
This is one company that too often teases us
with show cars that never make it into production, but the inside tip is that the 8C
Competizione is on. Rumour suggests an Alfatweaked Maserati V8, complete with supercharger, meaning phenomenal performance
figures. Try less than five seconds to 100kph
and around 300kph for a top speed. Before
you start singing hallelujah, the probability is
left-hand drive production only. Maybe well
see one at the Singapore Motorshow at the
end of the year.
At a more realistic price point comes the

Alfa GT (above). The new sports coupe wears
a suit styled by Bertone, and is otherwise
based on 156 mechanicals. Theres nothing
wrong with that in our books, because it
means yet another application for Alfas
sensational 3.2-litre V6, though the highervolume units here will most likely be the 2.0litre four-cylinder variants. With any luck we
should see the cars in the first half of the year.
Ssf_8n9_S95.pmd
Audi
Audi is set for a busy year here, and first off

the rank is the stylish TT, which gets some
bite to match its bark with a 3.2-litre V6 under the hood. With 250bhp and a 0-100kph
time of 6.4 seconds, you stand very little
chance of being accused of driving a hairdressers car.
In the first quarter, Singapore Audi fans
say hello to the awesome 344bhp S4, and even
scarier 444bhp RS6. Both feature all-wheel
drive, both look like stylish but relatively
unassuming sedans, and both are likely to
scare the pants off your passengers. The S4,
with its V8 power, is good for 5.6 seconds to
100kph, while the twin-turbo RS6 manages
the same in 4.7 seconds. A cabrio version of
the S4 is due at the end of the year, but not
confirmed for Singapore yet.
the same time, the X3 baby brother to the X5

soft roader will arrive, too, and is sure to be
popular. M fans might want to wait for the
end of the year for the rumoured M5 and M6
which should feature a new 500bhp V10 up
front, and speed to spare.
Ferrari
Would it be a dream list without a new
Ferrari? The 612 Scaglietti is due for its worldwide launch in January, but buyers are going
to have to be patient. Not because the performance is lacking the 5.7-litre V12 makes
540bhp and gets the aluminium-bodied 612
to 100kph in 4.2 seconds and on to over
300kph. The problem is high worldwide demand means that even local buyers waving
the requisite million-plus folding notes will
have to wait until at least 2005 for delivery.
Bentley
Maserati has rejoined the sedan world after a

long and deserved absence. Frankly, the old
Maserati sedans were not much to write home
about. But things are set to change with the
launch of the Quattroporte. If the name (Italian for four doors) is not very imaginative,
certainly the Pininfarina-designed coachwork
is, and with the wicked 390bhp engine seen
in the rest of the range, performance is assured. The first cars arrive in April and could
be yours for S$400,000, excluding COE.
Mazda
Practical doesnt have to mean dull, as the
new Mazda 3 is set to prove. Sure, it offers all
the usual space and value you expect from a
small Japanese sedan, but it does it in a slick
set of clothes, and the promise of some driving enjoyment, too.
If it is driving enjoyment youre after, then
2004 looks like the last chance to pick up the
definitive small sports car of the last decade.
While the car has changed little in that time,
the Mazda MX-5 is still winning awards for
handling prowess. In all possibility, the turbo
version due in 2004 will be the sportsters
swansong.
Lamborghini
This premier maker has hardly made a secret

of its Continental GT (below), teasing us with
glimpses and updates for what seems like forever. Punters with the requisite S$800,000 or
so should breathe a sigh of relief: The car is
due here in the first quarter. In case youve
been living under a rock for the last 12
months, the cheapest Bentley features a 6.0litre, twin-turbo W12 engine that rockets the
all-wheel drive coupe to 100kph in 4.8 seconds and on to a 300kph top speed, all while
cosseting the occupants in traditional Bentley
luxury. Jolly good show, old chaps!
Maserati
If high-priced exclusivity is the name of your

game, then the 40th anniversary Lamborghini
Murcielago might just be the thing. Only 50 units
are being built in a special one-off colour, and
Singapore gets just one unit. It helps that it is
lucky number 8 off the production line. Of
course, if you miss out on that one, there is a
rumour that the 300-plus kph supercar will be
available as a barchetta later in the year. Be
warned: No roof at that speed means extra
strong glue is needed for that toupee.
Mercedes
Mercedes Benz is baiting us a little. We know
the SLK roadster is due for replacement in 2004,
but no official details or pictures have been released. The rumour mill is running rife, but it
is safe to assume the SLK will be based on CClass componentry, will borrow some technology from its bigger and more expensive SL
brother, and will probably start with a SLK200
Kompressor variant. One of our favourite SLK
rumours is an SLK55 AMG with 367bhp of V8
power. To that, we say, Yes please!
Strangely, the Vision CLS Coupe, an unusual E-class with coupe roofline but still four
doors, has been shown and slated for production, but is not confirmed for Singapore
next year.
BMW
No way is BMW spending 2004 resting on its
laurels. Early in the year, we can expect to
see the sleek new 6-Series coup, and at about
23/12/03, 1:05 AM
2003
29,
DECEMBER
Mitsubishi
THE
EDGE
SINGAPORE
Concerned about the environment and still want a car? Will

Mitsubishi trump major shareholder DaimlerChrysler to this
market with the i concept?
The small four-door city car
features a 1.0-litre 3-cylinder
engine that promises brilliant
fuel economy of 3.8litres/
100km, but will Mitsubishi get
it into production and on to
market before we see the similar Smart four-seater on sale here? Yet more teasing from the recent Tokyo
Motorshow came in the form of the CZ2 Cabriolet. Surely this is a Colt convertible, but no official word from Mitsubishi means we can only guess. On
the certain list is the Lancer Evolution VII MR. Those last two letters mean
more power, less weight and more performance. Expect it in the first half.
Peugeot
What the? Peugeot, it seems, is tired of being trumped by fellow French manufacturer
Renault with unusual design and has come
up with the 407. It might not be so avant
garde under the skin, but it is definitely on
the way here. But if its cute and cuter on the
shopping list, then you might want to wait
for the second quarter and the arrival of the
307CC (left), which promises to follow on the
topless popularity of the 206CC.
Porsche
Aspiring Porsche owners will have a new practical choice in the first quarter
with the launch of a V6 version of the Cayenne SUV. Expect the same handling
prowess as the bigger engine versions, just a little less speed. One hot tip is for
the 996 series 911 replacement to appear, possibly even by the end of the year,
but with no sneak peeks, or even spy shots doing the rounds, it is a difficult one
to confirm.
Renault
Renault is looking after the family man with
a new incarnation of the Scenic mini MPV,
and this time it rides on a platform all its
own, rather than borrowing from the sedan
parts bin. In the first half, we should also
see a topless version of the Megane, in the
shape of the Megane CC (right). But enthusiasts will not be happy to know that the
hot Megane Renaultsport 225 is not officially
on the way.
Subaru
In the past, Subaru Legacy buyers had to put up with quirky looks to match the
equally quirky engineering under the skin, but thats set to change with the imminent launch of the new and truly sleek Legacy. Never fear, though, the boxer engine and all-wheel drive chassis remain, and performance, too, in GT trim, thanks
to 242bhp of turbo-charged flat-four power.
Volkswagen
Volkswagen is moving upmarket really
upmarket with the impending arrival of
the Phaeton luxury sedan. The big sedan
carries over some design cues from the
Passat, but is obviously bigger and much
more luxurious. The top of the line model
has a 6.0-litre W12 with 415bhp, while most
local buyers will opt for the 3.2-litre V6 variant. The upper luxury sector just keeps getting more crowded.
Volvo
The baby in the Volvo range is due for replacement, and in this case it is smaller
than the car it replaces. The new S40 wears much slicker
sheet-metal, and while it is shorter than the car it replaces, a longer wheelbase promises more interior
E
room.
Ssf_8n9_S95.pmd
23/12/03, 1:05 AM
TOP
BONUSBUYS
2003
F10
BUYRIGHT
Timely investments
Youve waited all year and its time to put your money
where your wrist is. Sangeetha Naidu shows you all
the right movements.
Big screams
Linea Variations diamond-set steel

merges both the crafts of jewellery and
watchmaking into a form thats elegant,
yet tough enough for the contemporary
woman. Plain watch face (without diamonds) with three mobile diamond jewels (S$4,380); 12 diamonds on watch
bezel with three mobile diamond jewels
(S$7,050); 36 diamonds on watch bezel
with three mobile diamond jewels
(S$9,050). Available from all authorised
watch retailers/dealers. Call 6734 4986
for details.
The
Officine Panerais Luminor Marina

Tantalium
The Luminor Marina Tantalium is crafted from a metal thats extremely corrosion-resistant and features a movement
of 21,600 alternations per hour. It is also fitted with an Incabloc anti-shock device. From S$18,700 at The Hour Glass
boutique (Ngee Ann City, 6734 2420)
or call Richemont Luxury for details
(6734 4986).
Locmans Tonneau timepieces

So, youve been thinking about it all year,
and its time to act. Locmans titanium
and diamond versions of its Tonneau
range make the perfect accessory to your
wardrobe. Its ultra lightweight satin or
polished titanium case come with black,
white or carbon-fibre dials. Retails at
S$2,588 to S$8,088, from Cortina Watch
boutique (Millenia Walk, 6339 1728).
Daniel Roths Automatic Chronograph
Blancpains Villeret collection

Blancpains Villeret collection is synonymous with classic elegance. The selfwinding wristwatches capture the very
essence of Blancpain and feature a power
reserve of up to 100 hours. From S$8,500
to S$65,000, at Cortina Watch boutique
(Millenia Walk, 6339 1728) or call Swatch
Group (SEA) for details (6275 6388).
10
Somethings Gotta
Give
Akan datang: Feb 19
Hunk factor: Jack
Nicholson, Keanu
Reeves
Babe factor: Diane
Keaton, Frances
McDormand,
Amanda Peet
Whats a year
without a romantic
comedy? Playing
once again a character based on himself,
Nicholson stars as a playboy who suffers a
heart attack while romancing his latest infatuation at her mothers house. No prizes for
guessing a triangle soon takes shape. No
new ground here this is as good as it gets.
Nancy Meyers, who scored a hit with What
Women Want, directs a cast that, between
them, boast five Academy Awards.
Exorcist: The
Beginning
Akan datang:
March 4
Hunk factor: Stellan
Skarsgrd, Gabriel
Mann
The jinx that
plagued The Exorcist
also follows this
US$40 million
prequel. Director
Paul Schrader
(Affliction) was unceremoniously fired by his
producers despite turning in a completed film.
The reason: He didnt splatter enough gore. Talk
about being dispossessed. Father Merrin
(Skarsgrd) is a young priest working in Africa
who comes into contact with a boy possessed by
Pazuzu, the same demon that would later seize
control of Regan in the first film. It appears
Pazuzu has evil plans for world domination. So
who you gonna call?
third instalment of the Harry Potter series. But

what sets this one apart is its director, Mexican
auteur Alfonso Cuaron. Well-known for the
arthouse road movie Y Tu Mama Tambien, the
US$130 million question is: will Cuaron remove
the cloak of purity over Harry Potter and show
him as he really is a mixed-up kid on the
verge of adolescence? Or will he succumb to
commercial pressures like previous director Chris
Columbus? Still, itll be a delight to watch the
whos who of British theatre, like Gambon
(replacing the late Richard Harris as Professor
Dumbledore) and Smith, hamming it up.
Spider-Man 2
Akan datang: July 2
Hunk factor: Toby
Maguire, Alfred
Molina
Babe factor: Kirsten
Dunst
Another summer,
another popcorn
movie. Another
sequel, another
villain rears his ugly
head. This time, Spider-Man engages in arm-toarm or rather, arm-to-several-arms combat
with Dr Octopus, a man who literally cant keep
his hands to himself. Once again, Sam Raimi
directs Maguire (who almost couldnt reprise his
role because he had hurt his back during the
filming of Seabiscuit) and Dunst. Whats notable
is the screenplay by Michael Chabon, who
picked up the 2001 Pulitzer Prize for fiction for
his novel on a comic-book artist.
Troy
Daniel Roths special limited-edition Automatic Chronograph features three

counters on the hand, decorated guilloch dial and by-the-date aperture
placed at 6 oclock. Of every 50 pieces
produced, 20 are in pink gold, 25 in white
gold and five in platinum. From S$43,600
to S$60,000 at The Hour Glass boutique
(Ngee Ann City, 6734 2420). Stock is limited, so pre-ordering is recommended.
Ssf_10n11_S95.pmd
of2004
2003 was a tough year to beat, but upcoming releases

promise a feast for the eyes
Baume & Merciers Linea Variations
THE
EDGE
SINGAPORE
DECEMBER
29,
FILM
Akan datang: May 14

Hunk factor: Brad
Pitt, Orlando Bloom,
Eric Bana
Babe factor: Diane
Kruger, Julie Christie
Shot on location in
the UK, Malta,
Morocco and Mexico,
this US$180 million
epic is the first of two
eagerly awaited period
dramas. Helmed by Wolfgang Petersen (The
Perfect Storm), its the well-known story of
Paris love for Helen (Kruger), the wife of
Menelaus of Sparta and how her abduction
sparks the Trojan War. A film not to be missed
but of course, who in his right mind would?
Harry Potter and the Prisoner of Azkaban

Akan datang: June 4
Hunk factor: Daniel Radcliffe, Rupert Grint,
Robbie Coltrane, Gary Oldman, Alan Rickman,
Michael Gambon
Babe factor: Emma Watson, Maggie Smith
Expect trickery, wizardry and puberty in the
23/12/03, 12:55 AM
Alexander
Akan datang:
November
Hunk factor: Colin
Farrell, Anthony
Hopkins, Jared Leto,
Jonathan Rhys-Meyer
Babe factor:
Angelina Jolie,
Rosario Dawson
Conspiracy theorist
extraordinaire Oliver
Stone travels on his
hobbyhorse back in
time to the Roman period. Knowing his obsessions, this biopic about Alexander the Great
(Farrell) is probably, beneath the toga-anddagger, another metaphor for the America he has
lost. Coincidentally, Australian filmmaker Baz
Luhrman (Moulin Rouge) is also putting together
his version of the Macedonians life. But in
deference to Stone, Luhrman is releasing his
E
work in 2005.
Felix Cheong is stocking up on popcorn in eager
anticipation. He suggests you do the same.
2003
29,
FROM PAGE 4
Evason Hua Hin Resort
DECEMBER
Hua Hin, Thailand
THE
EDGE
SINGAPORE
Call it posh Robinson Crusoe or chic Flintstones, the rustic sophistication

that is the trademark of Six Senses Hotels, Resorts & Spas is more endearing
in a sleepy beach town just three hours drive from Bangkok. Our fav: The 40
butler-served pool villas. Dont just hole up in the villa you havent been
to a Six Senses Resort if you havent checked into the holistic spa.
The alfresco spa pavilions can lull you into spending more time there and
the visiting practitioners are always worth an appointment. The Six Senses
magic can be experienced at meetings (the 185-room resort has six function
rooms with capacity for up to 250 delegates). How about a chair massage
during coffee break and healthful spa cuisine to fortify the tummy? Serious
bonding over a round of golf is possible in Hua Hin the six fairways, including Jack Nicklauss masterpiece at the Springfield Royal Club in Cha-Am,
are no more than 35 minutes drive from the resort.
Published room rates start from 5,750 baht a night. Meeting packages from
840 baht per person. www.sixsenses.com/evason-huahin.
Bangkok Marriott Resort & Spa

Bangkok, Thailand
You forget about the annoying tuk tuks once you step inside this oasis across
the Chao Phraya River. In fact, the air is so sweet you could forget youre in
Bangkok if the Thai staff didnt welcome you with a warm Sawadee. This Bill
Bensley-designed tropical garden is so settling even a short walk from the
lobby to the six-room Mandara Spa calms frayed nerves (the legendary Thai
coffee body scrub and Mandara massage will soothe all woes). This 413room resort may effortlessly pull off a convention for 500 delegates (with
catering and banqueting capacity for 800 guests) you would never feel
youre sharing precious private space with the rest of the world. To truly
escape it all, the hilly 18-hole Alpine Golf & Sports Club, a Johnnie Walker
Classic 2000s venue, is less than an hours drive away.
Published room rates start from US$210 a night. Meeting packages from US$19
per person. www.marriott.com/BKKTH.
A session at the six-room Mandara Spa will soothe all woes
Palazzo Versace Hotel

Gold Coast, Australia
The first thing that strikes you at the worlds only Versace hotel isnt the
omnipresent Medusa emblems. Its the spiffy porters clad in fitting black tees
and pants. Admittedly, its glamorous to rub shoulders with the Rolling Stones,
Prince Albert of Monaco and Cris Judd, and you would feel like a star even
when youre padding around the room in a Versace bathrobe. Glitterati and
gilded splendour aside, Vie restaurant serves the best food (Asian, Australian
and Italian) this side of town, the six-room Salus Per Aquum Spa is staffed by
knowledgeable therapists and when it comes to hosting a convention or party
with pizzazz, leave it to the Versace folks. The truly intrepid, however, should
take on any of the 27 fairways along the coastal strip and most definitely the
Arnold Palmer-designed Pines Golf Course.
Published room rates start from A$340 a night; includes buffet breakfast for
two. Meeting packages from A$50 per person. www.palazzoversace.com.au.
The Andaman
Langkawi, Malaysia
Sunsets in Langkawi are a big deal and they must be among the most stunning in Malaysia. Surely you can spend an eternity watching the fireball descending into the sea, but the smartest thing to do is to arrange for a sunset
spa retreat at Andamans Jamu Nature Spa perched just above the rainforest
metres from the Andaman Sea (we recommend everything on the spa menu).
The 187-room sea-front hotel truly has it all, whether you desire a stroll on a
stretch of private beach, a trek through the primeval rainforest, a round of
golf in inspiring environs or a relaxing spa retreat. Convention facilities can
accommodate 800 delegates if work has to be brought to paradise.
Published room rates start from RM1,000 a night. Meeting packages from RM90
E
per person. www.ghmhotels.com/theandaman.
Ssf_10n11_S95.pmd
11
23/12/03, 12:55 AM
HIGHLIGHT
CEOs wish list for 2004

PG42
THE PROPERTY EDGE

THEEDGE SINGAPORE | THE WEEK OF DECEMBER 29, 2003 JANUARY 11, 2004
Mixed fortunes seen

in coming year
Retail is the bright spot and residential is picking up, but theres more pain ahead for the office
and industrial sectors
| BY CECILIA CHOW |
ll signs are pointing towards a sustained economic recovery next year

amid improved market sentiment,
a more bullish economic forecast and
a more buoyant stock market, but of
course with the standard disclaimer of barring
unforeseen circumstances and external shocks.
Although consultants expect to see an overall recovery in the property market, the general prognosis is this: The retail sector will continue to be the one bright spot while residential is expected to see a pick-up in activity. As
for the office sector, more pain is in the offing
while theres still no light at the end of the tunnel for the industrial sector. In other words,
its going to be a year of mixed fortunes.
Residential poised for an upturn

Given that its sentiment-driven, the residential market has traditionally been one of the
drivers of recovery. Spurred by the recent
spate of positive economic numbers, its expected to see a pick-up in sales as early as the
first quarter of next year, says Teresa Khoo,
head of research at Jones Lang LaSalle.
The mass-market segment, dominated by
HDB upgraders, is usually the first to see a
recovery in sales before the higher end of the
market picks up. But the concern is that the
limited supply of new 99-year leasehold properties in the near future could hamper a supply-led recovery, observes Nicholas Mak, associate director of Chesterton International.
Next year, one can look forward to seeing
the launch of several 99-year leasehold sites
located near MRT stations that were purchased
this year through the government land sales
Scc_41n42_S95.pmd
41
programme. These include MCL Lands Bukit

Ho Swee, CapitaLands Jellicoe Road and Wing
Tais Kovan Road sites.
The luxury end of the property market saw
relatively muted sales this year, with the exception of CapitaLands The Imperial and The
Botanic on Lloyd. Some of the high-end properties were marketed in Jakarta through road
shows although they have not been launched
in Singapore yet.
Some of the launch-ready, high-end properties whose launches were held back this
year, for example, Wing Tais VisionCrest (the
former Cockpit Hotel site) and MCL Lands
The Metz, both located in the prime Orchard
Road belt, are likely to be launched next year.
Hence, it is anticipated that there will be
increased activity in the high-end market as
well next year. Indonesians have traditionally
been a key market for the luxury end of the
property market, although the number of
transactions has decreased since the Asian financial crisis of 1997-98.
Next year is election year in Indonesia
and we expect to see more movement of funds
[to Singapore], says Dennis Yeo, managing
director of Colliers International.
As at the end of the third quarter, new
home sales hovered at 4,000 units. While
Khoo of Jones Lang LaSalle expects 2003 sales
to come in at below 5,000 units, Yeo of Colliers is more optimistic and makes a forecast
of 5,000 to 5,500 units. He expects 2004 sales
to be back to the annual average of 7,000
units, an improvement of 20% to 30% over
this years. Mak of Chesterton forecasts sales
of 5,100 to 5,700 units for this year and 5,200
to 6,000 units for next year.
Property prices are expected to stabilise at
the present levels until the middle of the year,

with any meaningful increase in prices possible only after the pick-up in demand has
proven to be sustainable, says Khoo of Jones
Lang LaSalle.
As to the level of price hikes expected, this
is where consultants differ they expect the
increases to range from as low as 1% to 2% to
a high of 5% to 8% by the end of next year.
The oversupply dating back to the miniproperty boom at end-1999, reduced purchasing power among home buyers and a generally more cautious demand for new homes are
some issues of concern for the residential sector. At the end of the day, everything hinges
on a more sustained local and US economic
recovery. Id like to think that next year is the
year for real recovery, says Yeo of Colliers.
Office market twin fears

The office market is not likely to experience
any across-the-board recovery in the short- to
medium-term. And until office demand rebounds on the back of a sustained recovery on
both the domestic and global economic fronts,
rentals are expected to stay at depressed levels, says Khoo of Jones Lang LaSalle.
As at end-November, Grade-A office rents
at prime Raffles Place have dropped to S$4.33
psf per month, the lowest rate in more than a
decade, according to the latest Cushman &
Wakefield monthly office report. Its also a
21.2% drop from November last year. Occupancy rate of Grade-A offices stood at 86.1%.
Next year, around 1.8 million sq ft of new
supply is expected to come onstream in Raffles Place alone. No 3 Church Street, whose
temporary occupation permit was delayed,
will add 300,000 sq ft to the market while
12/22/03, 9:12 PM
CapitaLands One George Street (the former

Pidemco Centre) will bring 550,000 sq ft and
1 Marina Boulevard at the New Downtown
another 500,000 sq ft.
The main concern is supply as we have a
fairly huge supply coming up next year and
the bulk of it is coming from Raffles Place,
says Donald Han, managing director of Cushman & Wakefield. Rents [there] are likely to
come under pressure.
Tenants that moved out of the Central Business District (CBD) are likely to move back in
to take advantage of rents that have reached
all-time lows. And that trend has been observed in the last six to 12 months.
A number of large-scale consolidations are
expected as groups take the opportunity of a
weak property market to secure a long-term
solution. It will be a tenants market, says
Jonathan Hannam, managing director of
FPDSavills, and we expect to see some fantastic incentives offered to lure tenants into
some of the new developments that are already under construction.
The Big Event

For much of the past two years, the most
widely speculated launch has been that of the
upcoming Business and Financial Centre
(BFC) in the heart of the New Downtown. The
Ministry of National Development recently
announced that as the economy has started
to recover, and in view that the BFC development serves longer-term needs, the government has decided to release the site in the first
half of 2004.
The BFC is scheduled to be available for
tender submission next May and is an imCONTINUES ON PAGE 42
| DECEMBER 29, 2003
CITY & COUNTRY
CEOs wish list for 2004
Jack Chua,
president of ERA
Singapore, one of
the largest
property agents
in Singapore
In the year ahead, I
look forward to a
more upbeat
economy with increased employment, a
steady increase in the volume of property
transactions, as well as a more buoyant
market sentiment to boost the sale of new
project launches by the various developers.
Compiled by Cecilia Chow

ERA
Goh Kok Huat,

CEO of Ascendas
REIT, the first
industrial REIT in
Singapore
My wish is to see
[that] the economy
does grow at 5% to
5.4% because real estate depends, at
the macro-economic level, on robustness
in the Singapore economy. As long as
the economy is robust, we will continue
to see demand in real estate.
As for A-REIT, my personal wish is to
continue to enhance returns for unit
Loh Lik Peng,

owner of boutique
hotel 1929
Well, I hope that the
business
environment for
hotels and the tourist
sector in general sees
a big improvement and that hotel rates
see some strong recovery from what has
been a bad year. Signs are already there
of an improvement, so I am optimistic.
PICTURES: CHU JUCK SENG AND NG SOR LUAN/THE EDGE SINGAPORE
Giovanni Angelini,
chief executive
and managing
director, ShangriLa Hotels &
Resorts
My wish for 2004 is
for the economy to
holders, which is topmost on [my] mind.

We dont want to just hit our forecast.
We have to continue to grow the vehicle
in a fashion that benefits our
shareholders.
continue to grow and for us to see the

European and North American longhaul markets strengthen in particular. I
would also like to see the hospitality
industry working together in a more
integrated way to raise tourism even
higher on the agenda worldwide. One
of the lessons from SARS was the
importance of hotels, airlines, tourism
boards and tour operators working
jointly together for maximum
effectiveness and impact. My final
wish is that the hospitality industry
focuses more than ever before on its
staff, who play an integral part in
positioning the hotel industry at the
forefront of highly personalised
service.
Henning Thoresen,
director, Landseer
Property Services,
a specialised
expatriate
relocation services
company
With a decline in {the
number of] incoming [expatriates], my
No 1 wish is that we see more
international companies establish
themselves here, and those already here,
[would] again start expanding. That
2004 will be SARS- and terrorist-free so
the world economy [will improve].
My top three wishes for the property

market are: that it will pick up and
hopefully, [there will be] some price
recovery towards the second half of
2004. That the economic recovery can
be sustained, and that there will not be
another major outbreak of SARS or any
other epidemic. And, a lower fixed stamp
duty for residential property transactions.
SHANGRI-LA
Willy Shee,
managing director
of CB Richard Ellis,
the largest global
property consulting
firm in terms of
portfolio size
Vivienne Tan,
general manager
of investment
properties,
Centrepoint
Properties and
president of The
Association of
Shopping Centre
Management
That [Singapore] consumers become more
discerning and make wise choices
[because] if they are more knowledgeable
about the products they are buying, they
will make their demands known and
retailers will move up the value chain to
serve their needs. If all they want is
cheap or sales, then this is what
they will get. After all, the consumer is
king. [And] that Singapore develops more
of its own retail brands, and not rely
[solely] on international brands.
CB RICHARD ELLIS
Chia Ngiang Hong,

group general
manager of City
Developments,
one of the largest
property
developers in
Singapore
First, that the Singapore economy will
recover strongly and [see GDP] growth at
5% as projected, and that the
unemployment situation will stabilise and
improve in the short term. Second, that
purchasers confidence will return with
gusto, and interest rates remain stable.
And third, that the government will work

in tandem with the private sector towards
a steady and healthy property market.
It has been a challenging year for many

Singaporeans. There was the Iraq War
and the consequent fallout on the
economy, a new deadly virus called
Severe Acute Respiratory Syndrome, the
highest unemployment rate in 17 years,
and one of the most severe recessions in
Singapores history.
As 2003 comes to an end, and a
new year unfolds, its not surprising that
most of the wishes of those in the
property business revolve around a
sustainable economic recovery, an
improvement on the employment front,
and more positive market sentiment. The
Edge Singapore polled eight top
executives who are leaders in their
individual sectors in the property maket.
Khoo expects the residential segment

to pick up from the first quarter
Mak says the dearth of new HDB

properties could hamper recovery
Han says rents in Raffles Place are

likely to come under pressure
Yeo sees a greater flow of funds from

Indonesia next year
Hannam believes auspicious May 18

will be picked for the BFC launch
All eyes on BFC sales launch

FROM PAGE 41
portant and strategic project to the government. Although the launch has been widely
anticipated, the immediate effect will be to
erode confidence in the commercial sector,
says Hannam of FPDSavills. The exact date
for the launch has not been announced yet.
I am betting on May 18 a very auspicious
date, says Hannam.
The biggest concern right now is the likely
price tag and reserve price of the BFC. You cant
sell it too cheap even though it has a potential
gross floor area of 4.7 million sq ft, explains
Han of Cushman & Wakefield. Then again, if
you dont reduce the price and if people are not
expecting a lower reserve price for [the BFC],
then no one will bid because rentals are at one
of the lowest points in the last 10 years.
Given that the BFC is four times larger than
the City Developments site next to it and given
the current depressed office market, consultants are speculating that the BFC is likely to
Scc_41n42_S95.pmd
42
be sold at below the S$227 psf per plot ratio

(ppr) that City Developments bid for its site
last year.
Most consultants expect the price to be
around S$200 psf ppr or less. If the BFC were
to be sold at S$200 psf ppr, you [wont] need
a nuclear scientist to tell you that you can
build a Grade-A building for S$600 psf, says
Yeo of Colliers International.
And this would have an immediate ripple
effect on the value of buildings and land in
the existing financial district. The impact on
valuation would be a downward revision,
says Han of Cushman & Wakefield.
Will we see an office REIT next year?

The BFC will also have a major impact on the
future of the office REIT (real estate investment trust) market. On average, office yields
are currently at 3% to 3.5%. Meanwhile, foreign investors are looking for yields of around
7% to 8%, which is what the SGX-listed
CapitaMall Trust and Ascendas REIT are delivering. With office rents falling, the only way
for yields to be at an attractive 7% to 8% is
for developers to revise the value of their properties downward, which many are not prepared to do.
But with the BFC coming into the picture,
values of office buildings in the CBD are likely
to be forced down. At the end of the day,
someone will make a bid for it [the BFC]
either a Temasek-linked company, or several
Temasek-linked companies bidding together,
says Han of Cushman & Wakefield. A good
support [price] in that area will be S$200 psf
ppr. But anything below that could systematically have a negative impact on the values
of buildings and land in the financial district.
Another obstacle to the forming of an office REIT is that historically in Singapore, unlike in Australia and the US, the lease period
here is typically for two or three years with
an option to extend for a further two to three
12/22/03, 9:13 PM
years. And given that most office buildings

are multi-tenanted, it also means that tenancies are fragmented with different expiring
dates. Such a tenancy structure will [create]
problems for REITs because in order for REITs
to happen, you need a stable rental income,
says Yeo of Colliers.
One way of overcoming this problem
would be if a developer were to underwrite
both the rent and the tenancies for a certain
number of years. Then, if the rental falls below the one fixed, the developer or vendor
will top it up. Similarly, if a lease expires and
the tenant does not want to renew or extend
it, the developer will underwrite it. Although
complicated, it is a way of assuring investors
a certain yield for a fixed number of years,
adds Yeo of Colliers.
As to who will be the first to launch an
office REIT, CapitaLand, Keppel Land and
even Mapletree are possible candidates. I
| DECEMBER 29, 2003
CITY & COUNTRY
The Housing and Development Board (HDB)

allows banks to give out housing loans for
HDB flats for the first time, leading to
mortgage wars waged by banks trying to
outdo one another with attractive loan
schemes and incentives.
City Developments obtains provisional
permission to build 355,424 sq ft of office
space, 21,743 sq ft of shop space and 676
apartments on its 98,000 sq ft Marina
Boulevard site.
Plaza Singapura sees major changes in its
tenancy, with Courts leaving its 53,000 sq ft
premises for a smaller space in Centrepoint.
French hypermarket Carrefour moves in,
leasing 70,000 sq ft of space on basement one
and level one.
The government announces the resumption of
industrial land sales after a two-year
suspension. It releases two sites totalling
5.5ha on the confirmed list and four sites
totalling 16.6ha on the reserve list.
| BY JEAN ANGUS |
he year 2003 was a challenging one

for the Singapore property market,
with all sectors hit by the war in
Iraq, the Severe Acute Respiratory
Syndrome outbreak and the economic downturn. Only the retail sector
remained resilient, with rents and occu-
Residential
Parkview Condo collective sale
February
Clarke Quay announces the planned
refurbishment of its riverfront shopping and
entertainment strip of the same name. The
development has a remaining lease of 96 years
and will be revamped for between S$50
million to S$100 million. Landlord CapitaLand
plans to increase total net lettable area to
232,640 sq ft, of which 60% to 70% will be
allocated for food and beverage outlets.
Proposed additions include four art cinemas, a
river-taxi stop and a sunken food piazza.
A joint-venture vehicle by United Overseas
Land and Low Keng Huat buys two freehold
Kim Tian Road sites Kings Flats and
Queens Flats for S$92 million after seven
years of negotiations. The combined site has
an area of 82,400 sq ft, which works out to
S$340 psf per plot ratio.
March
The government increases the borrowing limit
for real estate investment trusts (REITs) from
25% to 35% of total holdings. The new
gearing limit can be exceeded if the REITs
borrowings or the REIT itself is awarded at
least a single A rating by credit rating firms
like Standard & Poors.
JTC Corp halves the rental security deposit for
short-term tenancies and temporary
occupation licences. It also allows tenants to
renew leases for up to 10 years without any
additional capital outlay.
MCL Land bags the Tiong Bahru One site with its
bid of S$72.78 million. The tender drew 11 other
bids. The 99-year leasehold site can be
developed into a 200-unit condominium project.
April
The HDB withdraws a 97,279 sq ft mixed-use
site in Sengkang West Avenue from the reserve
list after residents call for more amenities in the
area. The site, which is designated for 40:60
Listed City Developments and CapitaLand joined forces in August to buy Parkview
Condominium for S$165 million or S$286 psf per plot ratio. The 407,387 sq ft site is
the largest-ever collective-sale plot to be sold in Singapore. City Developments and
CapitaLand have an equal stake in the deal and plan to redevelop the site. Parkview
Condo has 178 units in three blocks of three-storey and six blocks of four-storey
buildings. Under the 1998 URA Master Plan, the site is zoned for medium-density
residential use with a maximum plot ratio of 1.6 and a height restriction of 12
storeys. More details have yet to be released by the developers but estimated costs
of redevelopment are S$320 million.
Industrial
44
CapitaLands S$470.3 million purchase of three

malls accounted for 74% of en-bloc sales in the
third quarter of last year. All three malls are in
suburban areas: Lot 1 is the main shopping mall
for residents of Choa Chu Kang, Bukit Panjang
Plaza serves residents of Bukit Panjang estate
while Rivervale Mall is a small 82,000 sq ft centre in Sengkang New Town. The purchase prices
were S$243.8 million, S$161.3 million and S$65.2
million, respectively. The malls are on 99-year
leases and will be incorporated into a S$500 million trust called CapitaRetail Singapore, which issued five-year senior and junior bonds to fund
the acquisitions.
Listed real estate investment trust CapitaMall
Trust (CMT) took up junior bonds worth S$60 million with a view to incorporating the malls into CMT
if they achieve higher yields in future.
The John Hancock Tower (left) and Rivervale Mall
Metros securitisation of Ngee Ann City stake for S$538 million

The largest single securitisation carried out as at Dec 10 is that of Metro Holdings 27% stake in Ngee Ann City. Metro sold its stake for S$538 million to
German insurance giant Ergo Tru Asia, which was involved in last years
biggest property deal the
S$505 million securitisation of
the Capital Square office development.
The S$538 million price
translates into S$1,342 psf
based on the total lettable area
of 401,000 sq ft that Metro
owns. Five-year senior and
junior bonds worth S$332 million and S$228.25 million, respectively, were issued to
fund the acquisition. Metro
struck a deal with Ergo after
anchor tenant Japanese department store Takashimaya,
which owns 73% of the development together with Ngee
Ann Kongsi, said it would not
buy Metro out.
Scc_44t46_S95.pmd
Lot 1 Shoppers Mall, Bukit Panjang Plaza

and Rivervale Mall
Biggest deal of the year
A-REITs buying spree

Singapores first listed industrial property trust,
Ascendas REIT (A-REIT), went on a buying spree
to take advantage of lower capital values, snapping up Ghim Li Building for S$13.5 million, Ultro
Building (S$18 million), Infineon Technologies
headquarters (S$50.9 million) and Osim Building
(S$35 million). It also picked up Trivec Building
for S$32 million, IDS Logistics corporate headquarters for S$50 million and TT International
Tradepark, a logistics building, for S$92 million.
All the purchases involved sale-and-leaseback
agreements. Property yields for the buildings
range from 8.2% to
8.91%, which are
yield-accretive for AREIT shareholders.
A-REIT CEO Goh
Kok Huat told The
Edge Singapore in an
interview that he
expects to pick up
more properties this
year to add to the
The Osim Building
trusts portfolio.
Marco Polo buys Sea View Hotel site

Marco Polo Developments
jumped back into the property investment fray after a
four-year absence with its
S$255 million purchase of
Sea View Hotel in Katong.
The hotel, which sits on a
326,230 sq ft plot, could be
redeveloped into a 1,000unit condominium, subject
to shareholder and planning
approvals, and if Marco Polo
buys the nearby Rose Gar- The Sea View Hotel site measures 326,000 sq ft
den, an apartment block
owned by China Airlines, a nursery and a strip of road.
If these plots are amalgamated with the hotel, the total land area will be
640,000 sq ft. Consultants say Marco Polo could pay up to S$235 million for the
extra land. Marco Polo managing director David Lawrence told reporters that
the breakeven cost for a condo built on the site would be between S$600 and
S$625 psf, and could fetch an average S$750 psf.
After this purchase, Marco Polo proceeded to snap up Singapore Press Holdings landmark Times House site on Kim Seng Road for S$118.8 million.
ASCENDAS
Clarke Quays riverfront centre will be revamped
pancies holding their own as values in

the office and industrial segments took
a nosedive.
Some developers and investors, however, took advantage of low prices to top
up their land banks and make other purchases. The Edge Singapore looks back
at some of the landmark property deals
E
in 2003.
CAPITALAND
deals of 2003
January
Office floor at John Hancock Tower

The sale of an entire floor in John Hancock Tower
in October prompted much talk because of its S$790
psf price a 10-year low for freehold office space
in Raffles Place. The buyers, related to the late hotelier Teo Lay Swee, bought the 10,129 sq ft 14th
floor from listed developer Tuan Sing. The floor is
almost fully leased, save for a 2,700 sq ft space.
Tuan Sing reportedly bought the floor along with
several other floors at the peak of the property market in 1996, paying about S$1,895 psf then. Based
on the sale price of about S$8 million, current net
yield on the floor taking into account the vacant
space is about 4.7%. The Teos purchase was the
first significant office transaction last year
.
12/22/03, 9:15 PM
Milestones
in the property calendar
Commercial
Landmark property
CITY & COUNTRY
THE BIG,
the bold and the sought-after
| BY JEAN ANGUS |
1
2
CAPITALAND
Biggest project: Lakeshore

Far East Organization (FEO)s 848-unit Lakeshore condominium in Boon Lay Way is the
largest development to be launched this year
in terms of number of units. The 99-year leasehold condo is priced at an average S$480 psf
and has two- to four-bedroom apartments and
maisonettes ranging from 860 to 1,450 sq ft. It
has a healthy living theme and FEO is looking into offering in-unit features such as distilled water dispensers and filters, air purifiers,
anti-bacteria and anti-virus air-conditioning
systems and ultra-violet lighted rooftop water
tanks. Facilities include foot reflexology paths,
hot and cold spa pools and sports courts. Of
the 232 units launched in the first phase, 179
have been sold as at Dec 7.
Riverside living: The Pier at Robertson

Situated on the banks of the Singapore River,
The Pier at Robertson offers investors a rare
chance to own freehold waterfront property in
the city. The 201-unit development is located
close to the Mohamed Sultan entertainment
strip and is targeted at young, upwardly mobile professionals. Units range from 657 sq ft
for a studio to 4,400 sq ft for a penthouse. City
Developments is marketing the project as a
SOHO or small-office-home-office. The average
price is S$900 psf. About 101 of the 120 units
launched so far have been sold, with mainly
smaller units left.
City proximity: The Icon

Touted as the first development to introduce
loft living with double-volume ceiling, loft
master bedroom and full-height glass windows, FEOs 99-year leasehold The Icon at
Tanjong Pagar is located a five-minute walk
away from the Tanjong Pagar MRT station.
The development, which at 46 storeys is the
tallest private residential development in Singapore, is targeted at yuppies and dual-income-no-kids couples looking for a centrallylocated apartment. Priced at an average of
S$650 psf, The Icon comprises 646 one-, twoand three-bedroom units. Facilities include
sky gardens and spas, a clubhouse with a
gym and theatrettes. About 555 units have
been sold.
Scc_44t46_S95.pmd
45
commercial:residential development could fetch

about S$56.6 million to S$65 million or S$200
to S$230 psf per plot ratio.
The Draft Master Plan for the northeast region
contains proposals for 123,000 new homes in
Sengkang and Punggol. A 20ha riverine park
will be developed in Sengkang while
Serangoon Town Centre will be developed into
a sub-regional commercial centre.
Applications for HDB resale flats plunge 63%
in the first quarter to a five-year low but the
overall price index rises 1.5% due to increased
demand for smaller flats, which accounted for
over 70% of total transactions.
May
he residential property market has had

a challenging year. Even as news of the
Iraq war began to affect the property
market, the announcement that a killer
flu-like virus had struck several countries, including Singapore, sent the market
reeling. Developers delayed launches, rescheduled relaunches, closed showrooms and
bided their time as the number of visitors to
show flats dwindled in line with the overall
drop in demand.
One of the first properties to be launched after the furore over the Severe Acute Respiratory
Syndrome outbreak died down in the second
quarter was City Developments The Pier at
Robertson. Situated off Mohamed Sultan Road
on the banks of the Kallang River, the 201-unit
freehold development tested the waters at S$900
psf and spurred other developers to resume their
launches in anticipation of pent-up demand.
Since then, the market has experienced a
slight improvement and sales are likely to hit
the 4,000 to 4,500-unit estimate of property
consultants. There has been a spate of
launches, including properties that are outstanding for various reasons size, theme,
price or marketing strategy. The Edge Singapore takes a look at some of the notable properties launched or relaunched this year.
3
2
FROM PAGE 44
1. Imperial offers residents a panoramic view of

the city
2. The garden-concept Botanic on Lloyd is about
50% sold to date
3. The developer of The Trevose lured purchasers
with a free car or renovation voucher
Near-sellout: Grandeur 8
NTUC Choice Homes and Chip Eng Leongs
Grandeur 8 was the best-selling property in the
third quarter of this year, with about 95% (550
units) of the project sold within two weeks of
the launch at an average price of S$475 psf.
The 99-year leasehold development with 579
units is located in Ang Mo Kio Central, close to
the Ang Mo Kio MRT station. It is targeted at
the mass market and comprises eight tower
blocks with a full range of condominium facilities. Unit sizes range from 1,109 sq ft for a
two-bedroom unit to 2,314 sq ft for a penthouse. The strong buying interest was partly
due to the fact that it had been some seven or
eight years since any private condominium
project was launched in Ang Mo Kio.
Rooms with a view: The Imperial

Bucking the trend of slow sales during the Hungry Ghost month was CapitaLands The Imperial, a high-end apartment development on Jalan
Rumbia with panoramic views of Fort Canning
Park and the surrounding cityscape. The project,
which sits on the elevated site of the former Imperial Hotel, attracted well-heeled foreign and
local investors with its freehold status, spacious
unit sizes and good location just a few minutes
drive from the Central Business District. Priced
at an average S$880 psf, the development has
187 units, of which 160 have already been taken
up. Sizes range from 1,700 sq ft for a two-bedroom unit to 2,100 sq ft for a four-bedroom one.
Garden homes: The Botanic on Lloyd

Another CapitaLand project that has generated
much interest is The Botanic on Lloyd, an exclusive freehold development with six townhouses and 60 apartments, off Killiney Road. At
an average of S$1,030 psf, buyers can choose
from three- or four-bedroom apartments measuring from 1,500 sq ft to 3,500 sq ft. The
townhouses measure 4,400 sq ft and come with
five bedrooms and two private car-park lots. The
development is landscaped to resemble a small
botanic garden with plants from different climates. Twenty of the apartments were snapped
up even before the project was officially
launched. The Botanic is about 50% sold to date.
Safari concept: Savannah CondoPark

Launched in 2002 and relaunched this year,
Savannah CondoPark is City Developments
mass-market condominium project with a safari theme. The 648-unit development on Simei
Street 1 is landscaped with hidden caves, waterfalls, a volcano pool and bronze life-size
animal sculptures. It also features eco-home
concepts such as energy-saving air-condition-
ing units in every apartment and solar-powered clubhouse rooms and water heaters. Two, three-, four-bedroom and penthouse units are
available at an average of S$470 psf. So far,
128 of the 303 units launched have been sold.
Savannah CondoPark is City Developments
second major project in the Simei area it is
also developing the 598-unit Changi Rise condominium nearby.
Alternative marketing: Lincoln Modern

Boutique developer Simon Cheong of SC Global attracted more attention than he bargained
for when news broke that his Lincoln Modern development was being openly marketed
to the gay community a first for a developer in Singapore. SC Global and Fridae, an
online community for homosexuals in Asia,
jointly organised a tea party for gay and lesbian singles and couples on Nov 23 at the exclusive 30-storey project in the Newton area.
Designed by Chan Soo Khian of SCDA Architects and marketed by Colliers International,
Lincoln Modern features a six-metre high loft
space in the units living areas. About 33 units
are left in the 56-unit project which is selling
at an average of S$1,100 psf.
Futuristic development: The Linear

One of the most unique developments to come
on the market this year is Amara Holdings The
Linear on Upper Bukit Timah Road. Designed
by renowned Japanese architect Kenzo Tange
of Kenzo Tange Associates, the 999-year development with 221 units is a single elongated
six-storey block that exploits the constraints of
the site to its advantage. The projects range in
size from 750 sq ft to over 2,000 sq ft. The
average price is S$600 psf . Over 50 units have
been taken up since the launch.
Big carrots: The Trevose

While it has long been a practice of developers
to entice buyers with freebies, the sweeteners
given by a developer this year were nothing
short of eye-opening. City Developments offered buyers of The Trevose located next to
the Raffles Town Club a free Lexus IS200
worth S$138,888 if they bought a three-bedroom or bigger apartment, and a S$100,000
renovation voucher for smaller units. Buyers
can take a direct price discount instead of the
car or voucher. The attractive freebies, however, have not succeeded in helping the developer move its remaining units. Only two of the
37 units left have been sold. The 99-year leasehold development has 142 units carrying price
tags from S$900,000 to S$1.6 million, which
translates to an average price of S$640 psf. E
12/22/03, 9:16 PM
The Urban Redevelopment Authority (URA)

announces that commercial buildings will now
be able to allocate space for civic and
community use. Under the new scheme,
landlords can add retail space and pay a
development charge at a rate set for civic and
community institutions. Early-bird shopping
malls taking advantage of the new ruling are
Bishan Junction 8 and Tampines Mall.
The government suspends the sale of
confirmedlist industrial sites in its land sales
programme for 1H2003.
June
The government delays the launch of the
Business and Financial Centre (BFC) to
1H2004 to ease the glut in the office rental
market.
The Ministry of National Development
announces a new home office scheme
allowing home owners to start up small-scale
businesses from their HDB flats. Some one
million homes are eligible for the scheme.
The URA announces a one-year trial for mobile
food and beverage vans to operate at five
designated car parks: Orchard Road, Queen
Street, Kallang Road, North Bridge Road and
Angullia Park. Thirty-three licences are made
available at between S$190 and S$280 each.
July
Sentosa Leisure Group and Temasek Polytechnic
announce the setting up of a tourism school on
Sentosa island. The school will occupy four
former British army barracks built in 1880. The
development is estimated to cost S$15 million.
The Hotel 81 group buys the former Asia Radio
Building on Bencoolen Street for S$28 million
or S$131,455 per room.
JTC Corp records a fall in demand for industrial
space in 2Q2003, with only technopreneur
and stack-up factory space registering positive
net allocation.
August
Marco Polo Developments buys Sea View
Hotel for S$255 million or S$370 psf per plot
ratio. The land will be re-zoned for residential
use, with no development charge payable.
Marco Polo is also considering the purchase of
nearby Rose Garden to build a 640,000 sq ft
condo with 500 units.
The Grand Copthorne Waterfront hotel adds
18,000 sq ft to its existing 47,000 sq ft of
convention space, making it the third largest
convention venue in Singapore.
JTC Corp officially opens Banyan LogisPark, a
S$45 million 80ha chemicals logistics park on
Jurong island. The park will support 72
chemical and petrochemical companies and
aims to be the logistics centre for the
international petrochemical industry.
The government announces a 3% cut in the
CPF contribution rate, causing uncertainty in
the market as prospective first-time home
buyers and upgraders put off purchases. Highend property buyers remain unfazed.
September
Cathay Organization completes the purchase
of Mount Emily Hotel, a 60-room budget
| DECEMBER 29, 2003
CITY & COUNTRY
FROM PAGE 45
Two or three more

REITs expected
hotel, for S$8.5 million or S$141,383 per

room. The hotel is likely to be redeveloped into
a residential development, subject to a
development charge of S$60,000.
Mall owners will now be able to extend their
facades outwards by 4m, reducing the road
buffer for pedestrian access to 7.6m. The
move, the URA says, is to inject more variety
into the Orchard Road streetscape and
enhance accessibility.
The former British High Commissioners
residence is sold to Oei Siu Hoa for S$25.5
million or S$647 psf, the highest psf rate paid
for such a site since 2000. The 39,383 sq ft
Good Class Bungalow will be carved out from
a larger 63,300 sq ft site purchased by tycoon
Peter Kwee in 2001.
The Cathay Building, originally slated for a

retail-and-office development, will be turned
into a retail-and-residential project instead.
There will be five levels of retail space and an
eight-hall cineplex. There will also be 80 highend apartment units.
Boutique hotelier Loh Lik Peng buys the 56-room
Majestic Hotel a conservation property similar
to his flagship Hotel 1929 in Chinatown for
S$7.2 million or S$128,571 per room.
Metro announces it will close its 85,000 sq ft
store at Marina Square, which is due for a
S$100 million revamp. The makeover is
expected to be completed by 2006.
ASCENDAS
October
Techview is one of Ascendas hi-tech industrial properties in the Kaki Bukit industrial hub. The trend is to cluster companies in the same industry together.
November
Pontiac Land announces a S$150 million deal
to develop a small luxury hotel on 30 acres of
land on Sentosa. Hotelier Robert Burns,
founder of Regent International Hotels, is
appointed adviser.
HDB relaxes subletting rules to help its shop
and factory tenants ride out the downturn.
Tenants can now sublet their premises,
transfer the tenancy or take on new partners
without satisfying the three-year minimum
occupation period.
JTC Corp announces that its Biopolis at onenorth will receive its first major private sector
tenant Novartis Institute for Tropical
Diseases by April next year. NITD will take
up over 50,000 sq ft in Chromos, one of
Biopolis multi-tenanted blocks.
The government announces a change in the
way it computes the development charge (DC)
payable on land. The changes involve revising
the definition for development baseline to
exclude Master Plans 1958 and 1980. This
means developers will have to pay a DC when
the plot ratio for a site is higher in future MPs
than in MP 2003.
December
Sentosa Coves first batch of 22 residential
land parcels garners 130 bids from individuals,
contractors and developers. Top bidders
include the Ho Bee Group, Wah Khia
Development and Hai Leck Development.
CapitaLand acquires its 33rd shopping mall in
Asia with the purchase of the five-storey S$80
million La Park Mizue mall in the Mizue area of
Tokyos Edogawa. The mall has a projected net
yield of over 6%.
Marco Polo Developments buys Singapore
Press Holdings landmark Times House site for
S$118 million or S$450 psf of potential gross
floor area, including an estimated development
charge of S$23 million.
The government announces its land sales
programme for next year. It continues the
suspension on the sale of confirmed-list sites,
but includes nine residential, two white sites
and three commercial-and-residential sites on
the reserve list, under which a site will be
released for tender only if a minimum
acceptable bid has been secured. The
controversial BFC white site will also be
released in May after a delay of over a year.
Compiled by Jean Angus
Scc_44t46_S95.pmd
46
FROM PAGE 42
think CapitaLand is going to try and pull it

off, says Yeo of Colliers.
Overhang of industrial space

Although manufacturing activity has picked
up, the overall industrial property market
is expected to remain relatively subdued, especially in the earlier part of next year, predicts Khoo of Jones Lang LaSalle. This is
in view of the general oversupply of industrial space and the lag effect between the
economic and property market cycles, she
says. And with demand for industrial space
expected to remain muted, rentals and capital values are likely to stay depressed.
The government still owns the bulk
of industrial land, largely through JTC
Corp. Consequently, most consultants
say its hard to see the industrial sector
bottoming out in 2004 or even in 2005
as the government sees industrial land
cost as a business cost that has to stay
low in order for Singapore to remain
competitive.
Within the industrial sector, there are
different segments, ranging from the traditional JTC flatted factories and tech
parks, science parks, logistics parks and
the up-and-coming one-north at the
other end. A good quality, relatively new
conventional JTC-style industrial space on an
upper floor can now be rented for only S$1
psf per month while the suburban tech parks
can still command a 20% premium, says Yeo
of Colliers.
The business and hi-tech parks, which are
offering office-type space, are likely to continue seeing competition for tenants from
CBD offices. And there has been a shift in
operations back to the CBD area in the last
six to 12 months. But there are also crossmovements to the business parks and tech
to the business parks and tech parks, adds
Han of Cushman & Wakefield.
The one bright spot has been in the warehouse and logistics sector, which enjoys high
occupancy levels of 92% to 95% compared with
the average 88% to 89% for standard industrial
space. For Singapore, we follow closely the logistics sector as this is linked to the US recovery, says Hannam of FPDSavills, and there
has been a sharp jump in demand for space.
With the idea of clustering companies in a

similar industry together, as in the case of onenorth, the blurring of lines between office and
industrial space will become even more pronounced. At one-north, there is a cluster of
research and development biomedical companies at the Biopolis, and of information
communication and media companies at the
Fusionpolis. Such facilities are necessary to
attract the kind of companies and the kind of
industries that we want in Singapore, says
Yeo of Colliers. So one-north is very much
like the BFC because were changing the economic structure and introducing the types of
manufacturing and services that are going to
drive the economy in the future.
Investors are now only

interested in yield, with
capital gain discounted.
We expect to see more
structured transactions
and a greater use of REITs
Hannam
Retail likely to shine again
The retail sector is by far the most resilient,
and has been the one bright spot in the property market for the last two years. And it is
likely to shine again next year as the supply
situation remains tight and rents are expected
to remain stable in both the prime Orchard
Road malls and the prime suburban malls.
Tourism is expected to improve and that
should bode well for Orchard Road malls.
However, yields for investors may drop
as purchase prices reach new highs, observes
Hannam of FPDSavills. Metro Holdings had
securitised its 27% stake in Ngee Ann City
for S$538 million this year, which was the biggest deal of the year in terms of dollar value.
Hannam is also confident that the Serangoon white site tender will happen next year,
and will attract interest from both domestic
as well as foreign players. He predicts that it
could possibly provide Singapore with its
first free-standing US-style suburban mall.
12/22/03, 9:16 PM
No change in yields seen

Next year, yields are not expected to vary
significantly from current levels. As such, net
yields for prime properties are estimated by
Jones Lang LaSalle to fall within the following ranges: 3% to 3.5% for offices; 5.5% to
6.5% for retail; around 3% for apartments
and condominiums; and 2.75% to 3.25% for
conventional industrial space.
Increasingly, REITs such as the CapitaMall
Trust (CMT), and the industrial-based Ascendas REIT (A-REIT) are used as benchmarks for
the kind of yields people expect from retail and
industrial property investments, respectively.
Whats interesting to note is that although
the conventional industrial space sees a yield
of only 2.7% to 3.25%, the A-REIT is
showing a yield of 8% because its not
bogged down by the high land cost of
freehold or long leasehold land typical in
other sectors as its properties are mostly
on 60-year leasehold JTC land. Although
the A-REIT was first launched with a portfolio dominated by multi-tenanted properties with short-term leases of two to
three years, it balanced its portfolio by
buying properties with single occupiers
and longer lock-in leases. Such purchases
with a buy-and-leaseback agreement include the Osim Building, Ultro, Ghim Li,
IDS Logistics and Trivec buildings.
Most consultants expect to see the launch
of more REITs, asset securitisation deals and
more innovative deals involving the capital
market. This is something that has taken
place in Australia and the US over the last
10 years and will change the way property is
transacted, says Hannam of FPDSavills. Investors are now only interested in yield with
capital gain discounted. We expect to see
more structured transactions and a greater
use of REITs.
What REITs can Singaporeans look forward
to next year? Most consultants see two or three
more REITs in the pipeline. Centrepoint is
widely expected to launch its own shopping
mall REIT, says Mak of Chesterton International. CapitaLand is likely to come up with
either an office REIT or an industrial REIT, or
both. And Keppel Land is also widely expected
to launch an office REIT next year, while
Mapletree may go for a REIT with a mix of
E
office and industrial space, says Mak.

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The Edge wishes all our readers Merry Christmas

Mixed fortunes seen

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BEHIND THE STORIES

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Cautious optimism in 2004

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the speculative runs in certain stocks. The

The Edge Singapore: Looking back at 2003,

fter a gruelling three-year slump

Our panel of experts consisted of Hugh

Tan: I suppose like all other fund managers, I

We were most pleased

margin. Volatility in stock market returns

Tan: Next year should be another positive

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THEEDGE SINGAPORE | DECEMBER 29, 2003 5

The potential for

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Chua: Based on my analysis, I reckon that

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| DECEMBER 29, 2003

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Next year is likely to

Asian stock markets, suggest there is more

CHU JUCK SENG/THE EDGE SINGAPORE

Mobius: The potential for another positive

are more than intact. The question is whether

Tan: I believe the Fed desires, rather than

CHU JUCK SENG/THE EDGE SINGAPORE

Many pundits are expecting the US Federal

Chua: The interest rate picture in the US is a

Faber: The gravy is out of equity markets.