Real News‎ > ‎2014‎ > ‎June 2014‎ > ‎

30th June 2014

Singapore Economy

Tighter squeeze on foreign labour

Source: Straits Times 

Companies already grappling with the manpower crunch and escalating labour costs will take yet another hit tomorrow when the latest round of foreign worker levy hikes kick in. While the labour-intensive construction, food and beverage, hospitality and retail sectors will bear the brunt of the rise again, firms say they have had time to factor in higher costs, given that the increase was announced last year.

JTC nudging SMEs towards increased productivity

New premises will force them to rethink processes

Source: Business Times / Top Stories

[SINGAPORE] The new breed of industrial buildings rolled out by JTC Corporation may well give small and medium-sized enterprises (SMEs) - used to doing everything themselves - cause to think about how to run their businesses.

"If you look at MNCs, they tend to specialise and outsource things that are non-core. But this may not be the case for our SMEs," says JTC CEO Png Cheong Boon.

"For example, a food manufacturer tends to have its own delivery trucks and warehouse. Therefore, it ends up having to provide services such as delivery and warehousing on top of its core manufacturing and it doesn't enjoy the economies of scale that come along with outsourcing such services to a specialised operator.

"We encourage companies operating in our space to redesign their processes and consider outsourcing. In that sense, we are trying to use our innovative spaces to support and in some ways accelerate the transformation of our industries."

The future JTC Food Hub in Senoko, for instance, will feature shared integrated cold-room warehouse facilities operated by a third-party logistics service provider, who will in turn offer a full suite of logistics services to tenants.

This is a challenge for business owners in that they have to relook existing assets or employees, and it requires them to review their business models, acknowledges Mr Png.

"Our sense is that when companies looking for more space are faced with this kind of growth opportunity, and resources are tight, they tend to be more open to figuring new things out," he said.

The Food Hub (due to be completed by 2017) is not the first of the innovative spaces to be rolled out by JTC, which has in recent years stepped up the development of its built facilities.

The high-rise multi-tenanted Surface Engineering Hub in Tanjong Kling, for instance, clusters companies to generate economies of scale, synergies and partnership opportunities between the companies. In addition, the firms are able to leverage the centralised wastewater treatment plant, which helps reduce operating costs over time.

"JTC no longer builds 'plain vanilla factories' as this is a segment well served by private developers. Instead, we are stepping up efforts to plug the market gap by building the next-generation industrial facilities with innovative and productivity-enabling features - which the private sector may not be able to provide," said Mr Png.

As part of JTC' s plans to roll out 16 innovative spaces, the agency is also looking at ways to transform and upgrade the furniture and furniture-related industry, as well as concepts on the drawing board that include plans for a poultry processing plant, a chemicals hub and, in the longer term, a multi-user shipyard.

In the meantime, JTC is also stepping up its engagement and discussions with various trade associations.

"Now, we are working more with trade and industry associations to see what are their issues on the ground, what are their land and space needs, and whether there is something JTC can do to help or facilitate," said Mr Png.

"And because associations are more aware of what we are doing and what we can do, they are also a lot more forthcoming in sharing their requirements with us."

-By Mindy Tan

Global Economy & Global Real Estate

Robust growth seen for M'sian economy this year

Source: Business Times / Malaysia

[KUALA LUMPUR] Malaysia's economy is expected to maintain growth this year barring a slide in domestic consumer sentiment or a drop in external demand, The Star reported.

The unexpected 6.2 per cent year-on-year gross domestic product (GDP) rise in the first quarter was the highest since the fourth quarter of 2012. Much of the expansion was due to rising exports and resilient domestic demand.

Several economists have even revised their growth forecast upwards for 2014 with Alliance Research chief economist Manokaran Mottain projecting a 5.3 per cent year-on-year rise in GDP while UBS Investment Bank's senior Asean economist Edward Teather expects a 5.5 per cent rise. Both had earlier projected growth of 5 per cent, The Star report said.

However, the longer term outlook of the economy is still uncertain. A January working paper on potential growth in emerging Asia by the International Monetary Fund's senior Asia Pacific economist Rahul Anand and team shows that the Malaysian economy (as well as Indonesia, Philippines, Thailand, and Vietnam) is still performing below its potential.

-From Kuala Lumpur, Malaysia

US institutional property investors looking to sell

Source: Business Times / World 

[NEW YORK] A year ago, buying foreclosed homes to rent out was the sure-thing trade for investment firms backed by money from private equity companies, hedge funds and pension systems. But with the supply of cheap foreclosed homes dwindling, some early investors are looking to cash out a bit by flipping homes to competitors.

The Waypoint Real Estate Group, one of the first companies to raise money from private investors to buy foreclosed homes, is quietly shopping as many as 2,000 houses in California that it acquired in the last few years in several private investment funds, said three people who had been briefed on the matter but were not authorised to discuss it.

The homes, which are largely rented, are being shown to other companies backed by investor money that have also scooped up distressed houses in states including Arizona, California, Florida, Georgia, Illinois and Nevada.

Waypoint is considering selling about half of its 4,000 homes. Some of the biggest institutional investors in the market for foreclosed homes - companies such as the Blackstone Group, American Homes 4 Rent and American Residential Properties - have slowed their pace of acquisitions in response to an increase in home prices and a dearth of foreclosed homes that do not require significant renovation.

-From New York, US

US sub-prime home loans no longer a dirty word

They are emerging again under much more careful control

Source: Business Times / World

[CALABASAS, California] Martin and Cindy Arroyo knew they were not ideal candidates for a home loan.

She had gone through a foreclosure after losing her job, and he was finishing his MBA and had not yet found his current job. But they had managed to put together a down payment of more than US$550,000, or three-quarters of the asking price for a four-bedroom house in Los Gatos, and thought they would find a bank willing to lend the rest. They didn't.

So the Arroyos found an alternative: a sub-prime mortgage.

Despite the notoriety that sub-prime loans gained as a prime cause of the financial crisis, they are re-emerging, under much more careful control, as one answer to the tight lending standards that have shut out millions of would-be homeowners.

-From California, US

'Worrying signs' of bubble in real estate, credit boom

Source: Straits Times