weekend
the business times
www.businesstimes.com.sg | August 14 -15, 2010 | S$1.00 | MICA (P) 124/08/2009 |
The Raffles Conversation
FORTIS CHAIRMAN
MALVINDER MOHAN SINGH | 8-9
media darling
Sands’ Skypark coming to TV
The National Geographic documentary is
one of about 30 that has been made on the
integrated resort since it was announced in
2005. | 2
higher takings
Listed firms do as well as expected
FOR the 281 that have reported Q2 earnings
for the three months ended June, combined
net profit comes to $7.45 billion, up 39.3 per
cent from a year ago. | 3
official sanction
NYC to welcome casino gambling
GENTING New York set to instal 4,525 video
slot machines at Aqueduct racetrack in
Queens after promising to pay the
US$380 million licensing fee upfront. | 4
key milestone
Gear up for biggest S’pore show
TONIGHT, the country will finally see the
fruits of its labour when an expected 1.5
billion people worldwide tune in to watch
the opening ceremony of the Youth
Olympic Games. | 5
LIVING
Unique products from
Singapore-based websites
L2-3
|
BT CORPORATE GOLF
Gearing up for the
second round | 18
|
WEALTH
Betting on
medium caps | 33
When the mind drifts,
who’ll do your sums?
Fearing that their mental capacity may desert them one day, some use new law to plan ahead
By Joyce Hooi
[email protected]
Singapore
F
OR Naresh Mahtani’s retired
uncle in Spain, a nasty fall last
year set off a cruel, downhill
spiral.
As the 73-year-old Singaporean lay unconscious in hospital with blood
clots in his brain, the nightmare wrapped
its tendrils around his extended family as
well.
His wife and nephews spent months battling hydra-like bureaucracy in the Spanish
hospital and cajoling Singapore banks.
Even as his medical bills mounted, they
could not act for him.
“When he was in the hospital, it was very
difficult to give instructions to the bank,
even for payment of the medical fees, or for
other relatives to give instruction for his
medical treatment,” said Mr Mahtani, who
flew to Spain with his brother to visit his uncle.
“The fact was, we had no authority to
give instructions to the banks and insurance companies; we were the nephews. So
they would start asking questions like ‘Oh,
you are the nephew. What about his brothers and sisters?’ ”
This year, Mr Mahtani’s uncle got the
rare second chance to make sure the nightmare would not repeat itself, by taking out a
ARTHUR LEE
MR MAHTANI
Could not instruct the bank and hospital for
his uncle’s urgent medical treatment abroad
since his uncle had not appointed any donee
Lasting Power of Attorney (LPA) under the
Mental Capacity Act, after he recovered.
The fledgling Act, which took effect in
March this year, allows individuals to
pre-empt the loss of mental capacity by appointing one or more proxies – or donees –
to make decisions on their behalf should
the unthinkable ever happen.
To date, more than 100 individuals – or
donors – have registered LPAs. The average
age of donors in Singapore is 63, and 90 per
cent of donors have made their family members their donees.
If the donor loses his mental capacity, a
donee has to show a bank certain documents, which include his own identity card
or passport and a medical certificate confirming the donor’s mental incapacity, before the mechanism is set in motion.
“Once the documents are verified, the
appointed person would be able to operate
the relevant banking accounts,” said Dennis Tan, OCBC Bank’s head of branch and
premier banking.
According to Mr Tan, no further credit facilities will be granted against the donor’s
bank account.
The LPA, accessible in its simplicity,
steers the public away from the legal drama
of the courts.
For standard applications, donors fill out
a form of about a dozen or so pages – mostly by ticking off boxes – and seal the deal
with a $50 fee to the Office of the Public
Guardian.
Donors with more complex assets and
specifications, however, fill out a different
form – Form 2, as opposed to Form 1 – with
the help of a lawyer, for a registration fee of
$200.
Continued on Page 6
>>
Genting S’pore hits new high as ‘sell’ calls turn to ‘buy’
Shares surge 14% after sterling Q2 results while
former naysayers suddenly change their tune
By Grace Leong
[email protected]
Singapore
GENTING Singapore shares surged to a
new high yesterday after its second-quarter
earnings – boosted by robust contributions
from its flagship Resorts World Sentosa
(RWS) integrated resort (IR) – trumped market forecasts, sparking a flurry of “buy” calls
from research houses.
The mainboard-listed casino operator’s
stock closed yesterday at $1.46, up 14.1 per
cent, or 18 cents a share. More than 682.8
million shares changed hands.
Genting Singapore’s stellar stock performance before the weekend was a sharp
turnaround from the situation several
months ago, when its stock was the brunt of
short-selling, thanks to a spate of “sell” calls
by many research houses including UBS,
which had said revenues from Resorts
World Sentosa may disappoint. (Short-sellers typically borrow stock to sell in hopes of
making a profit later by buying it back
cheaper.)
Initial naysayers Nomura Research and
Citi Investment Research also issued “sell”
calls on Genting because of uncertainty
over how much money the resort would
make once operations are underway.
Nomura, in its January report, described
the market as having “unrealistic expectations” with regard to the amount people
might spend in casinos and said it saw “significant downside risk” to Genting’s shares.
Citi said it was negative on the stock as
Genting’s valuation is in “bubble” territory.
But in recent months, more research
houses have started turning bullish on
Genting.
UBS in May upgraded the counter from
“sell” to “neutral”, saying mass-market gam-
blers may well be more important than VIP
gamblers, and that if this turns out to be the
case, Genting will benefit.
Still, Genting Singapore’s unexpectedly
strong second-quarter results have some industry analysts wondering if they’ve underestimated the company’s growth potential.
Aaron Fischer, a casinos analyst at CLSA
Ltd in Hong Kong, said: “We still do not believe the market is pricing in the gaming industry potential and superior management
execution.”
“We expect strong earnings growth in
2010 and 2011 as the resort adds more hotel
rooms and Universal Studios ramps up,” he
said.
Continued on Page 4
>>
6 top stories
THE BUSINESS TIMES WEEKEND SATURDAY/SUNDAY, AUGUST 14-15, 2010
Banyan Tree to loosen Thai connection
Thai political woes play a part in company’s Q2 net loss of $9.21m
By Nisha Ramchandani
[email protected]
Singapore
FILE PHOTO
MR HO
Company to focus on unlocking value of its investments, as opposed to
a fire-sale.
BANYAN Tree Holdings may be
best known for its resorts in Thailand but that could change in the
coming years.
With the unstable political situation in Thailand continually
taking a toll on its bottom line,
Banyan Tree is actively seeking
to diversify its portfolio by divesting some of its assets in Thailand
and growing its presence in other
promising markets.
“The frequent political events
in Thailand have prompted us to
accelerate our plans to rebalance
our asset portfolio in order to reduce our exposure to some countries and increase in others, particularly China,” said Ho Kwon
Ping, executive chairman of Banyan Tree.
The group has already started
to implement this strategy, hav-
ing announced on Aug 10 that it
had sold its Dusit Laguna Phuket
hotel and will reap a profit (before tax) of $68.4 million from the
divestment.
Including Dusit Laguna
Phuket, about 79 per cent of Banyan Tree’s total assets on its balance sheet are based in Thailand.
A more comfortable target to
work towards would be 40-50 per
cent, Mr Ho explained at a briefing yesterday.
However, Mr Ho also underlined that in divesting its Thai assets, Banyan Tree would focus on
unlocking the value of its investments as opposed to a
“fire-sale”.
For the second quarter ended
June 30, Banyan Tree posted a
net loss of $9.21 million, more
than double the $4.24 million
loss a year ago.
Revenue was up marginally
by 2 per cent year-on-year at
$60.74 million, as travel was de-
terred by the situation in Thailand as well as other events such
as the Fifa World Cup and the closure of airports in April as a result
of the volcanic ash cloud across
European airspace.
Loss per share for the quarter
came to 1.21 cents, up from 0.56
of a cent previously.
For the first six months ended
June 30, net loss came to $3.87
million, against a net profit of
about $1 million for H109, while
revenue was 6 per cent higher at
$156.97 million.
In an update on its Banyan
Tree China Hospitality Fund, the
group expects the first close of
the fund in September with
about one billion yuan (S$200.3
million).
“This China Fund will invest
and develop hospitality-related
projects in various destinations
within China,” the group said.
In the stock market yesterday,
shares in Banyan Tree shed one
cent to close at 84.5 cents.
When the mind drifts, who’ll do your sums?
<< Continued from Page 1
It is here, in the gulf between
Form 1 and Form 2, that the complications of being rich come into play.
While Singapore’s senior-citizen population is getting larger,
its uber-rich denizens are getting
wealthier as well. This year, the
top 40 richest people in Singapore added 17 per cent to their
collective heft, making it US$45.7
billion.
In preparing for the vagaries
of life like dementia, the rich will
encounter one of the few situations where they will have it
tougher than everyone else.
They will have to see how the
LPA fits in with their existing arsenal of tools, which includes professional trustees.
Lim Mee Len, wife of John
Chuang, chief executive officer of
Petra Foods Ltd, made the news
this month when she transferred
her shares in Aerodrome International Ltd to two trust entities, for
personal estate planning purposes.
A trust deed can also be drafted with the eventuality of losing
mental capacity in view.
“When a person sets up a
trust, he is transferring his assets
to the trustee, to hold for the beneficiaries. With an LPA, the assets
are still his, and he appoints an attorney to look after them for
him,” said Edmund Leow, a prin-
cipal for Baker & McKenzie.
Wong & Leow’s tax and wealth
management practice.
While the question of ownership appears to be a technical
one, it is crucial – especially
where tax and third-party claims
are concerned.
“In many countries, if the
trust is correctly structured, the
assets will no longer be his, and
the settlor can’t be taxed on the
assets anymore in the future. Under the LPA, the assets are still
his and if the assets generate income, he will be taxed,” said Mr
Leow.
The same would apply if a disgruntled ex-wife were to heave into view and sue for the assets.
“Under the LPA, the assets are
still vulnerable to that claim because the assets are still that individual’s,” said Mr Leow.
An LPA can be customised to
exclude certain assets from the
authority of a donee.
The tangled web of blood and
money might also be all the more
reason for professionals to get involved.
“There may be a benefit in
having an independent trustee as
opposed to a close family friend
or family member who may be
swayed by emotion or family interest,” said Andrew Hudson, an
associate director of Equity
Trust.
In 2008, money and family
came to a head in court when
OCBC Bank refused to close the
MR HARVEY-SAMUEL
Decide for yourself while you can:
who will administer to your needs
and who will control your funds?
$8.9 million accounts of Nellie
Hwang – then 92 – after doubts
arose about her mental capacity
to give valid instructions.
Madam Hwang, who had
been diagnosed with dementia,
had been accompanied by her
adopted daughter to the bank,
wanting to close her account.
The High Court ruled in favour of
OCBC earlier this year, praising it
for protecting Madam Hwang’s
interests and trying to act only on
an actual mandate from a customer.
Impartiality is not cheap, however. Discretionary trusts run up
tabs starting from $4,000 a year.
Where the LPA shines is in the
squishier aspects of life like the
donor’s choice of hospital or
nursing home, that the sharp edges of a trust cannot fulfil.
Mr Leow’s colleague, senior
associate Simon Michaels, noted:
“LPAs are a little bit like wills insofar as it generally makes sense for
everybody to have them. LPAs
can also be used to safeguard personal welfare, which may not be
achievable through a trust.”
Guy Harvey-Samuel, a member of the Public Guardian
Board, believes that the issue of
wealth is beside the point for an
LPA.
“The decisions that will need
to be made should you lose the
mental capacity to act for yourself are fundamentally the same
whoever you are: who will administer to your needs and who will
control your funds?” he said.
“Surely it is sensible for you to
make that decision now rather
than leave it potentially to someone you don’t know and have
never met later?”
The larger questions that even
the everyman might have to contemplate lie in the Code of Practice that accompanies the new
Act.
In Section 6.5.5. of the Code,
decision-makers, including the
donee, need to consult people
like the donor’s family.
“What if family members
don’t agree and there are objections?” said Wendell Wong, director of Drew & Napier’s litigation
and dispute resolution department.
As with most of existing common law, the complexities of the
“best interests” with which the
donee is tasked also exist in this
Act.
“What constitutes the ‘best interests’ of the person can be a
highly contentious and debatable issue for all concerned,” said
Mr Wong.
And while the Act is concerned with the affairs of a living
person, the implications may
continue after the donor passes
away.
“If a person has made a will
and willed certain things or assets to certain beneficiaries and
these assets are no longer around
after the demise of the person,
typically you’d ask what happened to that particular property
or jewellery,” said Mr Wong.
For all the questions that will
have to be tackled, the Mental Capacity Act is a revolutionary departure from the Mental Disorders and Treatment Act that
kicks in only after someone has
lost his mental capacity.
“It is definitely advantageous
because it allows someone, while
he’s still mentally sound and able
to make decisions, to take out certain applications in accordance
with his wishes,” said Drew & Napier’s Mr Wong.