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Retail investors more cautious about overseas property deals

SINGAPORE: Two recent charges against local real estate firms promoting overseas residential investments have put the spotlight back on such risky purchases.

A complaint was filed against property agency Square Yards Singapore last month for failing to provide a written note to an investor telling him about the risks involved in a foreign purchase, according to a media release by the Centre for Estate Agents (CEA) filed on Jan 19.

The company was fined S$ 7,500 and will not be able to sell or promote any overseas property for six months from March of this year.

Just in the month prior, CEA announced that a local agent from SQFT Global Properties Singapore was given a S$ 6,000 penalty when she misrepresented one of the ventures in Auckland, New Zealand. SQFT also had to pay S$ 10,000 in damages.

SQFT declined to be interviewed, while a representative from Square Yards could not be reached. 

CEA said it received 20 verifiable complaints related to foreign property purchases from 2012 to 2016. The complaints logged include inaccurate advertisements, the involvement of unregistered agents, misrepresentation of information and failure on the part of the property agent to provide a written advisory to the buyer on the risks involved in a foreign property purchase.

However, the agency said that these cases make up a small part of all the deals that have turned sour, as they are unable to assist investors who signed contracts with the developers directly. 

Mr Chan Mun Kit, the deputy executive director of the CEA, said that estate agents have to put in more effort to make sure retail investors know about all the risks involved.

The companies have to do their own due diligence before making any promises, he said, and “the property agents and agencies need to (check) on the background of the developer, making sure that the property title is valid.

“(Also, look at) the tenure of the property, and … the claims that the foreign developer may have promised to the purchasers,” he added. 

The Consumer Association of Singapore received six complaints in 2016 regarding overseas property transactions as well, although the organisation does not handle such disputes. It noted down 16 of such allegations in 2015 and eight in 2014.

HOMEWORK FOR INVESTORS

Nonetheless, retail investors have to read the fine print and study the risks involved before they put their money down, especially if they are unfamiliar with the city that the house is located in, Mr Chan said.

Since every country’s laws and culture are different from Singapore’s, foreigners could be subjected to additional taxes or there could be minimum buy-in sum, for example.

Additionally, the initial down payment may appear low but progressive payments may add up to a heavy commitment, while foreign exchange rate risks may affect the overall financial commitment in the long run.

Mr Chan added that amenities in the area may also seem closer then they really are and that one should also talk to the land and planning authorities for the land use surrounding the property, as planning perimeters for development sites may change over time.

And with the introduction of the Total Debt Servicing Ratio, or TDSR, framework in June 2013, loans taken from local financial institutions (FIs) to refinance a property abroad are covered under the scheme. The framework does not apply to loans taken from overseas FIs.

Investors that have been misled should first find out which country’s laws the contract is under, and if they need to seek local or foreign legal help, said Mr Kenneth Szeto, a real estate lawyer and partner at Colin Ng & Partners LLP.

“The investor should probably speak to the agent helping them, whether it’s the developer’s agent or their own agent. If they can’t resolve it with the agent then they might need to take the dispute to the country where the developer is based and speak to the lawyers there in that country,” Mr Szeto said.

OVERSEAS INVESTMENTS POPULAR AMONG SINGAPOREANS

Nonetheless, such unsuccessful investments are a minority among the foreign property deals marketed in Singapore.

In fact, according to real estate firm Cushman & Wakefield and Real Capital Analytics, Singaporeans’ appetite for homes offshore is the second highest among Asian investors.

Singaporeans invested US$ 3.5 billion in residential properties overseas in 2016, making up 16 per cent of all overseas property investments.

Analysts pointed out that this could be due to the possibly larger yields in other countries.

Mr Stephen Ho, the regional director of international project marketing in Asia at CBRE, said that Singaporeans are searching for locations that will give a higher return and “in Singapore it is probably slightly limited.”

He added that more Singaporean families are sending their children to study abroad, so buying a place overseas rather than renting one during their stay make more sense to some of them.

The strength of the Singapore dollar and current housing policies have also pushed Singaporeans to look outside of the country, Ms Christine Li, the director of research for Cushman & Wakefield, said.

“I think in recent years, particularly in the past three, four years, it is more policy-driven because of the push factors… (such as the) Additional Buyer’s Stamp Duty and the Total Debt Servicing Ratio,” Li said.

She added that some of the popular destinations include the United States, United Kingdom, Australia, and Japan, although those with a larger threshold for risk also look at Malaysia and the Philippines. 

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Vivian Balakrishnan to attend ASEAN Foreign Ministers' Retreat

SINGAPORE: Minister for Foreign Affairs Dr Vivian Balakrishnan will attend the ASEAN Foreign Ministers’ Retreat in Boracay, Philippines from Feb 20 to 21, the Ministry of Foreign Affairs said in a news release on Sunday (Feb 19).

The Foreign Ministers will discuss ways to strengthen ASEAN Centrality and unity in line with the ASEAN Community Vision 2025 as ASEAN celebrates its 50th anniversary this year. They will also exchange views on ASEAN’s external relations as well as regional and international issues. 

This is the first in a series of ministerial-level meetings that the Philippines will be hosting as Chair of ASEAN in 2017. 

Dr Balakrishnan will be accompanied by officials from the Ministry of Foreign Affairs.  

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Britain, China pledge to promote free trade

SHANGHAI: China and Britain have pledged to promote free trade and cooperate on building a open world economy, fanning efforts to shore up what the two governments have called a “golden era” in their relationship, the Xinhua news agency reported on Friday.

China is one of the countries Britain hopes to sign a free trade agreement with once it leaves the European Union, and London and Beijing have been keen to show that Britain’s withdrawal from the bloc will not affect ties.

The pledges on trade and cooperation were made during a Thursday meeting by Chinese Foreign Minister Wang Yi and his British counterpart Boris Johnson on the sidelines of a meeting of the Group of 20 largest industrialised countries held in Germany’s western city of Bonn.

The two countries have in recent months announced closer cooperation in areas such as financial services as the British government prepares to negotiate the country’s EU divorce.

Wang said that both nations would promote flagship cooperation on projects such as the Hinkley Point nuclear power station in Britain, and would look to strengthen their partnership on issues such as trade through close high-level exchanges, Xinhua said.

Johnson said that Britain will strengthen strategic cooperation with China on international affairs, the report added.

British Prime Minister Theresa May has been invited by China to attend a major summit on the “One Belt, One Road” initiative to build a new Silk Road, diplomatic sources have told Reuters.

(Reporting by Brenda Goh; Editing by Ben Blanchard & SImon Cameron-Moore)

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Singapore economy grows 2% in 2016, helped by strong Q4

SINGAPORE: Singapore’s economy expanded 2 per cent last year, propped up by a strong showing in the fourth quarter as manufacturing output surged, according to data released by the Ministry of Trade and Industry (MTI) on Friday (Feb 17).

The full-year GDP figure picked up pace slightly from 2015’s 1.9 per cent, which was Singapore’s weakest annual rate of growth since 2009. It was higher than the earlier estimate of 1.8 per cent growth and surpassed the Government’s forecast for 2016 growth to be between 1 and 1.5 per cent this year.

Year on year, gross domestic product (GDP) grew 2.9 per cent over the October to December period, beating the earlier estimate of 1.8 per cent growth and was much faster than the 1.2 per cent growth in the third quarter.

On a quarter-on-quarter seasonally adjusted basis, the economy expanded 12.3 per cent. This was even higher than the 9.1 per cent initially expected and marked a turnaround from the 0.4 per cent contraction in the July to September period, meaning that Singapore averted a technical recession defined as two straight quarters of declines in economic output.

Economic growth in the final quarter of 2016 was largely propped up by a surge in activities in the manufacturing sector, which grew by 11.5 per cent year-on-year on the back of robust growth in the electronics and biomedical manufacturing clusters.

2017 GDP GROWTH FORECAST AT 1% TO 3%

MTI has maintained the GDP growth forecast for 2017 at a modest pace of 1 to 3 per cent, noting that global growth is projected to pick up slightly this year. In particular, growth in the US and key ASEAN economies is expected to improve, even as growth in China continues to moderate, the report said.

However, uncertainties and downside risks in the global economy remain. Apart from political risks such as Brexit, there are signs of a rise in anti-globalisation sentiments and if protectionist approaches become the norm, global trade will be adversely affected leading to knock-on effects on economic growth worldwide. MTI said.

In addition, if monetary conditions tighten further in China and result in a steeper-than-intended pullback in credit, investment spending and hence growth in China could slow down more sharply than expected, the report added.

Against this backdrop, externally oriented sectors such as manufacturing as well as transportation and storage are likely to provide support to growth in the Singapore economy this year. However, the outlook for the construction sector has weakened as fewer contracts were awarded in the last two years amid sluggish private sector demand. Other sectors like marine and offshore, retail and food services are also likely to continue to face headwinds, MTI said. 

Mr Loh Khum Yean, Permanent Secretary for Trade and Industry, said the better-than-expected performance of the manufacturing sector in the fourth quarter was a surprise and expects this turnaround in factory output to continue into 2017.

However, Mr Loh noted that the outlook of the rest of the manufacturing and services appears mixed, with sub-segments such as marine and offshore likely to face continued challenges. Given the “mixed and varied picture”, the MTI expects next year’s GDP growth to be “broadly similar” to 2016.

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UOB Q4 net profit down 6.4% at S$739 million

SINGAPORE: United Overseas Bank (UOB) reported a 6.2 per cent fall in quarterly net profit, while net interest margin, a key gauge of profitability, weakened.

The results came after DBS Group posted its lowest quarterly profit in two years as provisions for soured loans to the country’s oil services industry surged, and joined OCBC in forecasting more pain for that sector.

Net profit for UOB, the smallest of Singapore’s three listed banks, came in at S$ 739 million in the three months ended December, versus S$ 788 million a year earlier, in line with an average forecast of S$ 730 million from six analysts polled by Reuters.

“Against the subdued growth environment of 2016, we delivered a steady income stream, supported by our diverse fee and lending businesses,” Wee Ee Cheong, UOB’s CEO, said in a statement.

The bank’s full-year total income was stable at S$ 8.06 billion.

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Ex-Indonesian president launches Twitter tirade before Jakarta election

JAKARTA: Former Indonesian president Susilo Bambang Yudhoyono on Tuesday accused political “actors” of sabotaging his son’s chances in this week’s fiercely contested election for Jakarta governor, and threatened legal action against those he thinks responsible.

Yudhoyono’s son Agus is running against two rivals in the contest for Jakarta, a key political battleground in the run-up to a 2019 presidential election in the world’s third-largest democracy.

The elder Yudhoyono was responding to allegations by a former chief of the anti-corruption agency, Antasari Azhar, that the ex-president had put pressure on him to drop investigations against his relatives.

“In destroying SBY’s name, the goal of Antasari and the actors behind him, has been so Agus-Sylvi lose in tomorrow’s election,” the former president said on Twitter, referring to himself by his initials and to his son’s ticket with running mate Sylviana Murni.

Azhar, who was jailed in 2010 for murder on what he told Reuters were trumped-up charges, was recently granted a presidential pardon and an early release from prison

Yudhoyono alleged the pardon was politically motivated and aimed at “attacking and discrediting” him. He has previously alleged his phone was wiretapped by government agencies, and asked for an explanation from his successor Joko Widodo.

A spokesman for Widodo denied Azhar’s pardon had anything to do with politics or the Jakarta governor election.

“The president’s decision to grant the pardon was in keeping with the law and based on input from the Supreme Court,” said Johan Budi.

The race to lead Jakarta has been marred by bitter feuding between Yudhoyono’s camp and the incumbent, Basuki Tjahaja Purnama. Purnama is backed by President Widodo’s party and has been the target of massive protests led by Islamist hardliners who claim he insulted the Koran.

Many blamed Yudhoyono for fanning religious tensions through these rallies, but he has denied any involvement.

The third contender is Anies Baswedan, a former education minister.

(Additional reporting by Jakarta bureau; Editing by Mark Trevelyan)

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Singapore's tourism numbers hit historic high in 2016

SINGAPORE: Singapore’s tourism sector thrived last year despite challenging economic conditions, with both visitor arrivals and tourism receipts exceeding forecasts to hit historical highs, according to figures released by the Singapore Tourism Board (STB) on Tuesday (Feb 14).

Visitor arrivals grew 7.7 per cent to 16.4 million in 2016, driven by absolute growth in key markets where STB had been intensifying marketing efforts, the agency said during its press briefing on Tuesday. For instance, there were 36 per cent more visitors from China, while Indonesia and India saw 6 per cent and 8 per cent growth respectively. 

Meanwhile, tourism receipts rose 13.9 per cent to S$ 24.8 billion on the back of food and beverage, shopping and accommodation spending, the agency said. 

STB has also been promoting Singapore as a destination for business tourism, supporting more than 410 business events last year – 15 per cent more than the year before.

These events contributed 343,000 to visitor arrivals and generated approximately S$ 611 million in tourism receipts, it added. 

STB’s chief executive, Lionel Yeo, said the agency was “heartened” by the strong tourism sector performance in 2016.

“Despite challenges such as a weaker economic performance in some of Singapore’s top source markets and a Zika virus outbreak, Singapore has managed to attract more quality visitors to contribute to economic growth.”

The statutory board has implemented a slew of measures in the past two years to raise tourist numbers, including a S$ 20 million global campaign to attract more visitors in 2015, as well as restructuring to improve the productivity of the hotel and travel agent industries. 

STB also supported a total of 52 technology-related projects through funds to help industry stakeholders improve their operations.  

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Singapore Rifle Association sues parent body for losses caused by armoury flooding

SINGAPORE: A flood in the armoury of the National Shooting Centre in 2014 had damaged more than 185,000 rounds of ammunition belonging to the Singapore Rifle Association (SRA).

It also dampened relations between the SRA and its parent body, the Singapore Shooting Association (SSA), culminating in the SRA’s expulsion from the SSA in December last year.

On Tuesday (Feb 14), the High Court heard the first of at least three lawsuits brought by the SRA against the SSA and its president Michael Vaz.

The SRA is suing the national shooting authority over S$ 455,678 in losses it allegedly suffered as a result of two floods in December 2014 and May 2015 “caused by SSA’s negligence”.

The SRA maintains that the cause of the first flood, on Christmas eve, was a blocked drain filled with earth fill material, which caused the water to flow into the basement armoury through its open windows.

It was SSA’s duty, as the party which holds the lease of the premises, to maintain the drainage infrastructure, argued lawyer Wendell Wong who represents SRA. “SRA is an innocent party and has no control over the areas outside of the armoury”, Mr Wong said.

The flood damaged 185,000 rounds of ammunition, which were submerged under water for more than 24 hours, making them unsafe for use.

SRA’s operations manager Marcus Kung testified that if the gun power inside a bullet is wet, the “explosion” from pulling the trigger “will not result in the bullet being propelled from the barrel completely”. If the shooter failed to realise this before firing the next round, it would result in a “chamber explosion”, he said.

The cause of the second flood, which happened on May 3, 2015, was caused by a blockage of the pipe connecting two sections of the drain which was chocked by debris, claimed SRA.

No damage to the armoury was caused by the second flood, Mr Kung said, because he had used plastic pellets to raise the boxes of ammunition off the floor.

Mr Wong said the S$ 455,678 in losses SRA claims it suffered include the cost of damaged ammunition, cost of disposal of damaged ammunition, losses of SRA’s members and cleaning and replacement of damaged items.

On its part, SSA will argue that SRA was “contributorily negligent”, and had refused to seal the windows to the armoury “in full knowledge that the armoury was located in the basement and prone to the ingress of water in the event of a flood”.

SRA also argued that the “windows issue” was a matter of security.

Mr Wong said the sealing of the windows for security reasons had been raised by the police in 2014. SRA had sought SSA’s approval to seal the windows in 2015, but was “not allowed to”, Mr Wong said, explaining that the SSA had been “under instructions” by Sport Singapore not to carry out any construction works until after the 2015 SEA Games.

Sport Singapore is the national sports governing body. It had last February ordered the closure of the National Shooting Centre run by the SRA due to irregularities in gun licensing which were found during an audit of its armoury. Police seized more than 70 weapons from the armoury.

This sparked another legal tussle between SRA and Mr Vaz. 

The trial involving damages from the flooding continues.

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US, S Korea agree to explore all options on N.Korea – Blue House

SEOUL: South Korea and the United States agreed to explore all possible options to rein in North Korean provocations during a phone call between U.S. National Security Advisor Michael Flynn and his South Korean counterpart Kim Kwan-jin, South Korea’s presidential Blue House said.

Flynn had requested the call with Kim after North Korea test-fired a ballistic missile early on Sunday, the Blue House said in a statement.

(Reporting by Ju-min Park; Editing by Tony Munroe)

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Singapore Airlines places US$14b wide-body Boeing order

SINGAPORE/PARIS: Singapore Airlines (SIA) announced a provisional order worth US$ 13.8 billion at list prices to buy 39 Boeing wide-body planes on Thursday (Feb 9) as it battles Gulf carriers, dealing a blow to Airbus in the key market for big twinjets.

SIA signed a letter of intent with Boeing for 20 777-9s and 19 787-10s to tap additional passenger growth and to modernise its fleet over the next decade. Additional options for the two aircraft types could take the deal to as many as 51 aircraft.

The preliminary order is a boost for Boeing as it seeks to restore momentum for the newest version of its long-haul 777, which after a strong debut has not had a firm order in 20 months.

It is also expected to shore up export-related US jobs at a time when domestic manufacturing employment is a sensitive political issue under US President Donald Trump.

“The carrier is a demanding customer and its fleet decisions usually define market trends in the intermediate term,” said Jefferies analyst Howard Rubel in a note.

Airlines typically get discounts on jet orders and Rubel estimated the deal’s net value to be closer to US$ 6.5 billion or about a tenth of the US planemaker’s annual volume.

“While the deal may have been highly competitive, it is business in part of the market that strengthens Boeing’s positioning,” he said.

The agreement, however, leaves a question mark over Airbus proposals to develop a larger 400-seat version of its A350 passenger jet to compete with the 406-seat Boeing 777-9.

Singapore’s flagship carrier had been seen as a key potential launch customer for the proposed jet, but the European planemaker last year postponed a decision on whether to launch the new project amid pressure on demand for wide-body jets.

The fact that Airbus was not yet ready to make a definitive offer to supply the new plane, relying instead on the 366-seat A350-1000, may have been a handicap in the contest for Singapore’s business, an industry source said.

“Our priority is to certify and assure entry to service of the A350-1000,” an Airbus spokesman said, adding the two main existing models represented a “good platform” for airline needs.

LAUNCH CUSTOMER

SIA’s significant orders and recent moves to extend some of its fuel-hedging contracts to as long as five years show it is positioning itself for the next phase of growth, said Shukor Yusof, an analyst at Malaysian aviation consultancy Endau Analytics.

“What’s working for them is that they have very deep pockets and they are putting some of that money to replace fleet and also looking at new destinations,” Yusof said.

SIA has been under pressure as demand weakens for long-haul travel amid tough competition from Middle East network carriers.

SIA said this would be the airline’s first order for the newest 777 variant that is currently under development. SIA is already the launch customer for the 787-10, which is also currently in development, having placed an initial order in 2013 for 30 aircraft for delivery from the 2018/19 financial year.

The airline operates a varied fleet with more than 50 current-generation 777s in service, while subsidiaries SilkAir, Scoot and SIA Cargo also operate other Boeing planes. Thursday’s preliminary order was SIA’s biggest Boeing deal by value.

It also operates other Airbus aircraft including the smaller A350-900 model and the four-engined A380, the world’s largest airliner, some of which could be replaced by 777-9s.

The growth of the big twinjet is driven by advances in the largest engines, sparking a parallel battle between Boeing ally General Electric and Airbus supplier Rolls-Royce.

GE is the sole supplier of engines on the 777 and Rolls-Royce won the US$ 1.7 billion order from SIA to power the 19 Boeing Dreamliner aircraft.

(Reporting by Anshuman Daga in SINGAPORE and Tim Hepher in PARIS; Additional reporting by Shalini Nagarajan in BENGALURU; Editing by Keith Weir and Mark Potter)

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