High petrol prices, green rebate help steer over 400 to compressed natural gas-powered vehicles
By Christopher Tan
STEP on the gas. More motorists are choosing to do exactly that these days. More than 220 have had their cars converted to run on both compressed natural gas (CNG) and petrol.
About 200 more have bought manufacturer-assembled petrol-CNG passenger cars, also called 'bi-fuel' cars.
Out to save the earth and save some money too, they say high petrol prices plus a generous green tax rebate helped them make the switch.
The trend started late last year, when passenger cars were allowed to be fitted to run on CNG as well as petrol.
Most conversions were done initially by German company
C Melchers GmBH and local firm Scantruck Engineering, both of which started conversions in earnest late last year at their respective workshops in Sungei Kadut and Tuas.
Two other firms have started offering the service - parallel importer Mova Automotive and Thai company SO NGV.
Most of the directly imported bi-fuel cars are Mercedes-Benzes.
Converting a car costs from around $3,000 and involves installing a gas tank, pipings to the engine, and a refuelling intake.
But customers usually recoup their outlay within two years as CNG retails at around 78 cents an equivalent litre. Petrol goes for about $1.90 a litre.
Product manager Lim Sim Leng, 45, owner of a converted Mercedes-Benz Vito van, readily attests to this.
'A tank of CNG costs me $11, and will give me 190 to 200km. Using petrol for the same distance, I would have to spend at least double that,' he said.
A petrol-electric hybrid car like the Toyota Prius would chalk up about 8.4 cents per km, compared with 7 cents for a car running on CNG and 18 cents for a conventional petrol car.
Information technology manager Adrian Koh, 34, noticed a slight power loss in his Chevrolet Optra after it was converted. 'But I don't mind since I don't drive like a race car driver,' he said.
Project manager Ang Kwang Wee, 46, was impressed by his savings. 'I never knew the mileage was so good. I travelled 2,350km last month and my total fuel spending was $227.
'If I had used only petrol, I would have spent over $440.'
He is happy his Toyota Picnic is able to accommodate the gas tank beneath the floor of the boot - which means the car still has decent boot space left.
A big incentive for conversion is the green tax break. New cars which can run on CNG are accorded a rebate equivalent to 40 percentage points of their additional registration fee.
In the case of a car like the Porsche Cayman - which businessman W.K. Chin, 38, is converting - it could work out to a saving of around $30,000 on the purchase price.
It was curiosity which led him to choose gas. 'I wanted to try something new,' he said. He found out about CNG conversions just as he was about to buy his Porsche.
This particular conversion - undertaken by Scantruck - is taking a little longer than usual because the authorities wanted to make sure the gas tank had a capacity of at least 50 litres - to ensure that owners are serious about their 'green' intentions.
To comply, Mr Chin's Porsche had to be installed with two carbon-fibre gas tanks, as a single large steel tank cannot be fitted without a huge weight penalty.
Mr Gilbert von der Aue, sales manager at Melchers, said he expects demand for conversion to go up when gas-refuelling facilities at Singapore Petroleum Company's Jalan Buroh station opens in the new year and Smart Energy's station in Mandai opens in February.
Currently, there is only one CNG kiosk: on Jurong Island.
'With current petrol prices, we expect demand for conversion to be high,' he said.
Banks face financial turmoil despite abundant global liquidity
27 December 2007
PARIS : The international banking sector is grappling with a grave financial crisis at a time when, paradoxically, there is an abundance of ready cash available, notably from emerging market countries.
Big banks since August have slashed the amount of credit they are prepared to offer each other, anxious to avoid lending money to any institution that could be liable to huge losses because of exposure to the crisis in the US housing market.
The sub-prime, or high-risk, sector of the US market has been hit with a wave of foreclosures by homeowners unable to meet higher mortgage payments.
That in turn has undermined the value of billions of dollars' worth of securities backed by sub-prime mortgages and issued by major banks and finance institutions.
But according to Jean-Francois Robin of the French bank Natixis, "it's not that there is a lack of liquidity (in the global financial system), it's that it is not circulating."
If the inter-bank market has seized up, there are in fact funds available.
"The world's money supply is growing at a red-hot pace - 10 to 15 percent a year," said Jean-Herve Lorenzi of the French research group Cercle des Economistes.
Foreign exchange reserves held by emerging market powerhouses such as China and other big commodity exporters - Russia and members of the OPEC oil cartel, for example - are steadily expanding.
In such countries, along with Japan and Norway, sovereign wealth funds have been created to find fruitful investment outlets for the reserves that have built up over the years.
The funds, which are said to total more than US$2.8 trillion, have lately come to the rescue of some of the biggest names in global finance.
The US investment bank Merrill Lynch is to be re-capitalised thanks to a US$5.0 billion injection by investment company Temasek.
Morgan Stanley has been reinvigorated by the participation of the China Investment Corporation, also in the amount of US$5.0 billion, while another US behemoth, Citigroup, has received a US$7.5 billion lifeline from the Abu Dhabi sovereign fund.
Swiss banking giant UBS, which has been especially hard hit by the sub-prime meltdown, raised 11 billion dollars from another Singapore fund.
But sovereign funds are not the only entities sitting on piles of cash.
US billionaire investor Warren Buffett announced Tuesday he was buying a 60 percent stake in Marmon Holdings Incorporated, an industrial group owned by one of America's richest families, for US$4.5 billion.
Buffett's investment firm, Berkshire Hathaway Incorporated, will acquire the remaining 40 percent of Marmon over five to six years at a price to be based on the group's future performance, the two sides said.
Marmon, which has been owned by Chicago's Pritzker family since 1953, is a manufacturing and services group with more than 125 units and whose products range from railroad tank cars to electrical wires and cables.
In addition, said Robin of Natixis, "there's lots more liquidity" held by insurers and pension funds, which manage savings worth hundreds of billions of dollars.
"They have taken their capital out of risky assets," such as stocks and bonds linked to real estate, he said.
"And they have lots of money to invest in the coming months, which should help the markets get back on their feet." - AFP/ch
Morgan Stanley seeks pot of gold in workers' dorms
$153m deal comes at a time when shortage, building boom boost returns
By KALPANA RASHIWALA
December 27, 2007
(SINGAPORE) Morgan Stanley has expanded its Singapore real estate investment portfolio to include an unusual asset class - foreign workers' dormitories.
An entity understood to be linked to the US bank recently bought three dormitories from JTC Corp for $153 million and is said to have teamed up with a local party to purchase more such properties from the private sector, sources say.
'It may seem an unglamorous property type but the yields can be very attractive and Morgan Stanley has clearly sensed a business opportunity in an area that other foreign funds and property investment groups may not have spotted yet,' a source says.
Morgan Stanley is said to be targeting dormitories whose tenants include blue-chip companies that lease space in these facilities for their foreign workers.
DTZ Debenham Tie Leung executive director Ong Choon Fah notes that foreign institutional investors have been diversifying their property investments in Asia, including Singapore, over the years.
'Traditionally, most institutional investors go for income-generating commercial properties like offices and retail, as well as industrial (specifically logistics and warehousing). And then serviced apartments started featuring in their portfolios. In Asia, these investors have started to look at non-traditional assets that offer higher yields as well as (residential) property development, because of yield compression for the traditional asset classes they used to focus on.
'Yields on these segments have fallen as more and more investments chase limited assets. You now have superannuation funds from Australia, Reits, and sovereign wealth funds, private equity...,' Mrs Ong says.
She suggests that student housing is another sector that foreign funds may target. 'Studies have shown this to be quite a stable source of income. In places like the US and Europe, anything with P&L (income flow) can be Reited or be attractive to institutional investors - like senior housing, nursing homes, self-storage facilities, even prisons,' Mrs Ong notes.
The three dormitories that Morgan Stanley has purchased from JTC are Kian Teck Dormitory in Jurong, Tampines Dormitory and Woodlands Dormitory. Kian Teck Dormitory has 411 units with two types of units - one that can house six to 12 persons per unit, and another for seven to 14 persons per unit. Morgan Stanley unit Avery Strategic Investments bagged the properties following a public tender that closed earlier this year. It was the highest of eight bidders for the dormitories. The sale was completed in the fourth quarter.
There are currently over 20 other major dormitories for housing foreign workers in Singapore. Dormitory rentals have been on the rise, especially in the past 12 months. 'There's a shortage of dorms islandwide mainly because of the construction boom. That's why some property investors are starting to look at these facilities,' an industry observer says.
Some industry watchers suggest that property yields for dormitory investors could be around 20 per cent or even higher. 'It depends to a large extent on the length of the balance lease term on the land - the shorter the remaining lease, the higher the return a potential investor will seek. There's a whole range of land leases for dormitories in the market - freehold, 60 years, 30 years and some even as short as 3 + 3 years,' an industry observer explains.
SINGAPOREANS are by now accustomed to reports of rising prices, but that does little to change the fact that inflation is increasingly becoming one of the key issues the country has to tackle in the new year.
Christmas Eve brought more news on the inflation front, with consumer prices rising at their fastest pace in 25 years in November due to higher food and transport costs. Last month's consumer price index (CPI) surged 4.2 per cent compared with a year ago. It was also 0.6 of a percentage point higher than the 3.6 per cent recorded in October, which was itself a 16-year high. The November figure came in higher than market estimates, with analysts in a Bloomberg poll forecasting a median rise of 3.8 per cent for the CPI.
November's inflation figure has confirmed that October's CPI was not just a one-off spike. Economists are now bracing themselves for even steeper increases in the CPI, and the 5 per cent mark is seen as within touching distance. The latest CPI figure has added more urgency to the need for government action to stem price pressures. The government has sketched out how it is likely to tackle rising prices. At the recent People's Action Party (PAP) annual convention, Prime Minister Lee Hsien Loong said that the government is unlikely to impose controls on food or utility prices in response to rising inflation, but will continue to use other ways to help Singaporeans cope with the cost of living.
It is now widely expected that the Monetary Authority of Singapore (MAS) will let the Singapore dollar strengthen further, and a stronger local currency can help counter costlier imports. In terms of fiscal policies, the government has announced that it would hold back some projects, to help cool the building sector. But the consensus is growing that the government needs to go beyond monetary and fiscal measures. A number of suggestions have already been put forward.
One proposal is for the government to restore some of the CPF employer contribution cuts as a way to cool labour demand, which in turn will moderate growth and demand, and help ease inflationary pressures. Another is to more closely target the offsets for the two percentage point increase in the Goods and Services Tax. This is because when the 2 per cent GST hike was pushed through, the government had not reckoned on food and energy prices shooting up the way they have done.
Other suggestions include more utility bill rebates and lower conservancy charges for the lower-income families to offset higher food costs.
Hopefully, as many views as possible will be heard and debated. Cost pressures look set to become a key theme in policy making in the coming few months, and could well define next year's Budget too.
4 comments:
More drivers making the switch to GAS
High petrol prices, green rebate help steer over 400 to compressed natural gas-powered vehicles
By Christopher Tan
STEP on the gas. More motorists are choosing to do exactly that these days.
More than 220 have had their cars converted to run on both compressed natural gas (CNG) and petrol.
About 200 more have bought manufacturer-assembled petrol-CNG passenger cars, also called 'bi-fuel' cars.
Out to save the earth and save some money too, they say high petrol prices plus a generous green tax rebate helped them make the switch.
The trend started late last year, when passenger cars were allowed to be fitted to run on CNG as well as petrol.
Most conversions were done initially by German company
C Melchers GmBH and local firm Scantruck Engineering, both of which started conversions in earnest late last year at their respective workshops in Sungei Kadut and Tuas.
Two other firms have started offering the service - parallel importer Mova Automotive and Thai company SO NGV.
Most of the directly imported bi-fuel cars are Mercedes-Benzes.
Converting a car costs from around $3,000 and involves installing a gas tank, pipings to the engine, and a refuelling intake.
But customers usually recoup their outlay within two years as CNG retails at around 78 cents an equivalent litre. Petrol goes for about $1.90 a litre.
Product manager Lim Sim Leng, 45, owner of a converted Mercedes-Benz Vito van, readily attests to this.
'A tank of CNG costs me $11, and will give me 190 to 200km. Using petrol for the same distance, I would have to spend at least double that,' he said.
A petrol-electric hybrid car like the Toyota Prius would chalk up about 8.4 cents per km, compared with 7 cents for a car running on CNG and 18 cents for a conventional petrol car.
Information technology manager Adrian Koh, 34, noticed a slight power loss in his Chevrolet Optra after it was converted. 'But I don't mind since I don't drive like a race car driver,' he said.
Project manager Ang Kwang Wee, 46, was impressed by his savings. 'I never knew the mileage was so good. I travelled 2,350km last month and my total fuel spending was $227.
'If I had used only petrol, I would have spent over $440.'
He is happy his Toyota Picnic is able to accommodate the gas tank beneath the floor of the boot - which means the car still has decent boot space left.
A big incentive for conversion is the green tax break. New cars which can run on CNG are accorded a rebate equivalent to 40 percentage points of their additional registration fee.
In the case of a car like the Porsche Cayman - which businessman W.K. Chin, 38, is converting - it could work out to a saving of around $30,000 on the purchase price.
It was curiosity which led him to choose gas. 'I wanted to try something new,' he said. He found out about CNG conversions just as he was about to buy his Porsche.
This particular conversion - undertaken by Scantruck - is taking a little longer than usual because the authorities wanted to make sure the gas tank had a capacity of at least 50 litres - to ensure that owners are serious about their 'green' intentions.
To comply, Mr Chin's Porsche had to be installed with two carbon-fibre gas tanks, as a single large steel tank cannot be fitted without a huge weight penalty.
Mr Gilbert von der Aue, sales manager at Melchers, said he expects demand for conversion to go up when gas-refuelling facilities at Singapore Petroleum Company's Jalan Buroh station opens in the new year and Smart Energy's station in Mandai opens in February.
Currently, there is only one CNG kiosk: on Jurong Island.
'With current petrol prices, we expect demand for conversion to be high,' he said.
Banks face financial turmoil despite abundant global liquidity
27 December 2007
PARIS : The international banking sector is grappling with a grave financial crisis at a time when, paradoxically, there is an abundance of ready cash available, notably from emerging market countries.
Big banks since August have slashed the amount of credit they are prepared to offer each other, anxious to avoid lending money to any institution that could be liable to huge losses because of exposure to the crisis in the US housing market.
The sub-prime, or high-risk, sector of the US market has been hit with a wave of foreclosures by homeowners unable to meet higher mortgage payments.
That in turn has undermined the value of billions of dollars' worth of securities backed by sub-prime mortgages and issued by major banks and finance institutions.
But according to Jean-Francois Robin of the French bank Natixis, "it's not that there is a lack of liquidity (in the global financial system), it's that it is not circulating."
If the inter-bank market has seized up, there are in fact funds available.
"The world's money supply is growing at a red-hot pace - 10 to 15 percent a year," said Jean-Herve Lorenzi of the French research group Cercle des Economistes.
Foreign exchange reserves held by emerging market powerhouses such as China and other big commodity exporters - Russia and members of the OPEC oil cartel, for example - are steadily expanding.
In such countries, along with Japan and Norway, sovereign wealth funds have been created to find fruitful investment outlets for the reserves that have built up over the years.
The funds, which are said to total more than US$2.8 trillion, have lately come to the rescue of some of the biggest names in global finance.
The US investment bank Merrill Lynch is to be re-capitalised thanks to a US$5.0 billion injection by investment company Temasek.
Morgan Stanley has been reinvigorated by the participation of the China Investment Corporation, also in the amount of US$5.0 billion, while another US behemoth, Citigroup, has received a US$7.5 billion lifeline from the Abu Dhabi sovereign fund.
Swiss banking giant UBS, which has been especially hard hit by the sub-prime meltdown, raised 11 billion dollars from another Singapore fund.
But sovereign funds are not the only entities sitting on piles of cash.
US billionaire investor Warren Buffett announced Tuesday he was buying a 60 percent stake in Marmon Holdings Incorporated, an industrial group owned by one of America's richest families, for US$4.5 billion.
Buffett's investment firm, Berkshire Hathaway Incorporated, will acquire the remaining 40 percent of Marmon over five to six years at a price to be based on the group's future performance, the two sides said.
Marmon, which has been owned by Chicago's Pritzker family since 1953, is a manufacturing and services group with more than 125 units and whose products range from railroad tank cars to electrical wires and cables.
In addition, said Robin of Natixis, "there's lots more liquidity" held by insurers and pension funds, which manage savings worth hundreds of billions of dollars.
"They have taken their capital out of risky assets," such as stocks and bonds linked to real estate, he said.
"And they have lots of money to invest in the coming months, which should help the markets get back on their feet." - AFP/ch
Morgan Stanley seeks pot of gold in workers' dorms
$153m deal comes at a time when shortage, building boom boost returns
By KALPANA RASHIWALA
December 27, 2007
(SINGAPORE) Morgan Stanley has expanded its Singapore real estate investment portfolio to include an unusual asset class - foreign workers' dormitories.
An entity understood to be linked to the US bank recently bought three dormitories from JTC Corp for $153 million and is said to have teamed up with a local party to purchase more such properties from the private sector, sources say.
'It may seem an unglamorous property type but the yields can be very attractive and Morgan Stanley has clearly sensed a business opportunity in an area that other foreign funds and property investment groups may not have spotted yet,' a source says.
Morgan Stanley is said to be targeting dormitories whose tenants include blue-chip companies that lease space in these facilities for their foreign workers.
DTZ Debenham Tie Leung executive director Ong Choon Fah notes that foreign institutional investors have been diversifying their property investments in Asia, including Singapore, over the years.
'Traditionally, most institutional investors go for income-generating commercial properties like offices and retail, as well as industrial (specifically logistics and warehousing). And then serviced apartments started featuring in their portfolios. In Asia, these investors have started to look at non-traditional assets that offer higher yields as well as (residential) property development, because of yield compression for the traditional asset classes they used to focus on.
'Yields on these segments have fallen as more and more investments chase limited assets. You now have superannuation funds from Australia, Reits, and sovereign wealth funds, private equity...,' Mrs Ong says.
She suggests that student housing is another sector that foreign funds may target. 'Studies have shown this to be quite a stable source of income. In places like the US and Europe, anything with P&L (income flow) can be Reited or be attractive to institutional investors - like senior housing, nursing homes, self-storage facilities, even prisons,' Mrs Ong notes.
The three dormitories that Morgan Stanley has purchased from JTC are Kian Teck Dormitory in Jurong, Tampines Dormitory and Woodlands Dormitory. Kian Teck Dormitory has 411 units with two types of units - one that can house six to 12 persons per unit, and another for seven to 14 persons per unit. Morgan Stanley unit Avery Strategic Investments bagged the properties following a public tender that closed earlier this year. It was the highest of eight bidders for the dormitories. The sale was completed in the fourth quarter.
There are currently over 20 other major dormitories for housing foreign workers in Singapore. Dormitory rentals have been on the rise, especially in the past 12 months. 'There's a shortage of dorms islandwide mainly because of the construction boom. That's why some property investors are starting to look at these facilities,' an industry observer says.
Some industry watchers suggest that property yields for dormitory investors could be around 20 per cent or even higher. 'It depends to a large extent on the length of the balance lease term on the land - the shorter the remaining lease, the higher the return a potential investor will seek. There's a whole range of land leases for dormitories in the market - freehold, 60 years, 30 years and some even as short as 3 + 3 years,' an industry observer explains.
Inflation a big issue to tackle next year
December 27, 2007
SINGAPOREANS are by now accustomed to reports of rising prices, but that does little to change the fact that inflation is increasingly becoming one of the key issues the country has to tackle in the new year.
Christmas Eve brought more news on the inflation front, with consumer prices rising at their fastest pace in 25 years in November due to higher food and transport costs. Last month's consumer price index (CPI) surged 4.2 per cent compared with a year ago. It was also 0.6 of a percentage point higher than the 3.6 per cent recorded in October, which was itself a 16-year high. The November figure came in higher than market estimates, with analysts in a Bloomberg poll forecasting a median rise of 3.8 per cent for the CPI.
November's inflation figure has confirmed that October's CPI was not just a one-off spike. Economists are now bracing themselves for even steeper increases in the CPI, and the 5 per cent mark is seen as within touching distance. The latest CPI figure has added more urgency to the need for government action to stem price pressures. The government has sketched out how it is likely to tackle rising prices. At the recent People's Action Party (PAP) annual convention, Prime Minister Lee Hsien Loong said that the government is unlikely to impose controls on food or utility prices in response to rising inflation, but will continue to use other ways to help Singaporeans cope with the cost of living.
It is now widely expected that the Monetary Authority of Singapore (MAS) will let the Singapore dollar strengthen further, and a stronger local currency can help counter costlier imports. In terms of fiscal policies, the government has announced that it would hold back some projects, to help cool the building sector. But the consensus is growing that the government needs to go beyond monetary and fiscal measures. A number of suggestions have already been put forward.
One proposal is for the government to restore some of the CPF employer contribution cuts as a way to cool labour demand, which in turn will moderate growth and demand, and help ease inflationary pressures. Another is to more closely target the offsets for the two percentage point increase in the Goods and Services Tax. This is because when the 2 per cent GST hike was pushed through, the government had not reckoned on food and energy prices shooting up the way they have done.
Other suggestions include more utility bill rebates and lower conservancy charges for the lower-income families to offset higher food costs.
Hopefully, as many views as possible will be heard and debated. Cost pressures look set to become a key theme in policy making in the coming few months, and could well define next year's Budget too.
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