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The Business Times, Thursday, December 12, 2013
S’pore Power boosts
annual capex for
next 5 years to $1.2b
By RONNIE LIM
[email protected]
[SINGAPORE] Singapore
Power (SP) will be spending
about $1.2 billion annually
over the next five years on
infrastructure to “sustain
and ensure” world-class reliability of power and gas
supplies here, said its CEO,
Wong Kim Yin.
The $1.2 billion figure is
higher than what it spent
annually in the last five
years as SP needs to increase its capital expenditure as work ramps up for
mega transmission projects
like the $2 billion next-generation power network to
handle the higher volumes
of electricity generated and
transmitted here, he said.
“Furthermore, the $2 billion figure to build the ultra-deep tunnels, for instance, does not include the
cost of the transmission cables,” he told BT, referring
to the extra-high voltage
power transmission tunnels which will run 16.5 km
east-west and 18.5 km
north-south of the mainland.
But this capex is necessary to ensure Singapore’s
electricity network continues to perform well, he
stressed.
For example, SP noted
in its just-released 2012/13
annual report that average
electricity interruptions
here today – as measured
by the System Average Interruption Duration Index –
was 0.42 of a minute per
customer per year, or significantly down from the 30
minutes in 1991 and 1992.
“Put in another way,
this means that in a year,
the average electricity consumer here today experiences just a 25-second interruption,” he said.
Another measure, the
System Average Interruption Frequency Index, also
showed that “the average
electricity consumer here
would experience an interruption only once in 115
years”, said the SP report.
“Benchmarked against
other global cities like Tokyo, Singapore came out
tops,” said Mr Wong.
But reliability issues
aside, Mr Wong added that
SP is also focused on trying
to put a lid on rising costs,
including capital and labour costs.
He explained that electricity charges here are
heavily dependent on fuel
costs paid by the gencos,
with this accounting for almost 21 cents/kWh, or 80
per cent, of today’s average
household electricity tariff
of 26 cents/kWh.
Network cost accounts
for around five cents/kWh,
or one-fifth of the tariff.
But as a result of greater
system efficiency, SP has
managed to reduce its grid
Manpower issues concern
S’poreans most: feedback
Mr Wong: Higher capex
needed to ensure network
continues to perform well
or network charges by
about 30 per cent over the
last decade, he said.
“This shows that we haven’t been extravagant in
our spending and have delivered quality for our customers.
“It is important that as
we embark on our new capital projects, the same principles must stand behind
them,” stressed Mr Wong,
adding that as SP grows its
mega projects, capital and
labour productivity have to
be priorities.
On the strength of its
track record and healthy
balance sheet, SP has managed to secure funding for
its mega projects from the
capital market – that is
through borrowings, banks
and bonds.
“This means that we are
able to tap cheap funding
and that we are funding
key national infrastructure
here using money from investors based in New York,
Japan, etc . . . and this is
the key difference between
Singapore Power and other
Asian utilities,” he said.
Sustained chatter on
discussion channels
also about transport,
population matters
By FELDA CHAY
[email protected]
[SINGAPORE] Manpower issues were on the top of the
minds of Singaporeans,
with government feedback
arm Reach receiving the
most number of comments
about Singapore’s foreign
worker policies, and the
dominance of foreigners in
industries such as banking
and IT.
Some were worried that
small and medium-sized enterprises (SMEs) here
would struggle to cope with
the government’s move to
further tighten the Employment Pass (EP) framework,
which was made known
earlier this year during the
Budget. Others, however,
wanted to see even more
tightening of the EP criteria
so that Singapore can further reduce its reliance on
foreign manpower, and pay
more attention to grooming
local talent.
During the Budget debate, Acting Manpower
Minister Tan Chuan-Jin
said that further adjust-
ments will be made to the
EP framework to tighten eligibility requirements for EP
holders. These adjustments
were announced in September by the Ministry of Manpower (MOM) under what it
called the Fair Consideration Framework (FCF),
which said that the qualifying monthly salary for new
EP applicants will be raised
to $3,300 from $3,000
from 2014 onwards.
Companies will also
have to prove that they
have tried to hire Singaporeans first before they are
allowed to apply for an EP
to recruit a foreigner. This
affects firms with more
than 25 employees which
are hiring for posts that pay
less than $12,000 a month.
Many contributors to
Reach had voiced frustrations over the unfair hiring
practices of some companies which they said favoured foreigners, and
questioned the dominance
of foreigners in industries
such as banking and IT.
The FCF was therefore welcomed by many, although
some also pointed to “loopholes” which they said employers could exploit – such
as offering low salaries that
would be unattractive to
Singaporeans, so that jobs
Volcker Rule finally passed after
‘long and arduous process’
But rule to curb Wall
Street risk taking has
exploitable grey areas
[WASHINGTON] At two metres, Paul A Volcker struck
an imposing figure as chairman of the Federal Reserve
during the economically turbulent 1980s. But the banking rule named after him,
approved on Tuesday, may
not have the same sway
over an unwieldy global financial system.
Five years after the financial crisis, US regulators on Tuesday ushered in
a new era of oversight
aimed at reining in Wall
Street risk taking, voting to
prevent big banks from
trading for their own benefit.
In many ways, just getting the rule done was an
important milestone in the
authorities’ efforts to overhaul the financial system.
For starters, the rule was
particularly taxing to write.
It had to distinguish between trading that banks
are allowed to do – to serve
their customers and offset
their own risks – from the
prohibited trading done
solely for their own profit.
At the same time, the
regulators had to contend
with a spirited lobbying effort by the banks, which argued that the rule was too
severe and could end up
constricting the flow of capital through the economy.
Mr Volcker, not one for
public niceties, sounded
Mr Volcker: Sounds somewhat satisfied with the final rule after a spirited lobbying
effort by the banks, which argued that the rule was too severe. THE STRAITS TIMES FILE PHOTO
somewhat satisfied with
the final rule. “In a long
and arduous process,” he
said in a statement released on Tuesday, “the
agencies have dealt comprehensively with thousands
of particular conceptual
and practical questions
raised by affected bankers,
by legions of lobbyists, by
other interested parties
and by the general public.”
But the Volcker Rule’s biggest tests may be just
around the corner.
The rule has plenty of potential grey areas that
banks may be able to exploit. As a result, regulators
will have to remain vigi-
lant, and understand highly
complex trading books, if
they are to properly enforce
the rule.
Janet Yellen, who is
poised to become the chairwoman of the Federal Reserve, recognised this challenge.
“Supervisors are going
to bear a very important responsibility to make sure
the rule really works as intended,” she said at the Fed
board meeting to approve
the rule.
The regulators will have
to learn Wall Street’s ways.
Traders who make bets for
the bank’s own gain, for instance, have often worked
alongside traders who
serve customers. As a result, it may be extremely difficult for examiners to decipher which trades are for
clients and which are not.
“You could have a trading blotter that contains
thousands of trades a day,
and figuring out what goes
with what could be difficult,” said Matt Dunn, a director at Deloitte & Touche.
Still, the rule’s supporters argue that it will benefit
the financial system in crucial ways.
In particular, they contend that the Volcker Rule
will help prevent banks
from building up outsize positions in securities and de-
rivatives that could become
the source of debilitating
losses when markets are
swooning. In 2008, banks
suffered gigantic hits on
bonds and other instruments that they, in theory,
held to meet customer demand.
Of course, the Volcker
Rule still allows banks to
stockpile assets for clients,
known as market-making,
but the regulation requires
the banks to tie the size of
such inventories to demonstrable levels of near-term
customer demand.
As a result, proponents
of the rule believe that inventories of stocks, bonds
and derivatives are likely to
be leaner, reducing the
probability that they will be
the source of large losses.
In fact, in recent years, as
banks have prepared for
the Volcker Rule and adopted other post-crisis regulations, Wall Street’s inventories have shrunk considerably.
Supporters of the Volcker Rule hope that it will
help improve the culture of
Wall Street. A bank that
gets a large share of its profits from short-term trading
gains may take on excessive risks, offering the prospect of lush pay to its traders. One way the rule gets
at culture is to prescribe
how traders are paid.
The rule says that trader
compensation cannot reward “prohibited proprietary trading”. In theory,
such a change would remove some of the incentives to carry out proprietary trading. – NYT
China, advanced economies to lead 2014 growth
ADB: In Q3, S Korea and
India strengthened while
HK and Taiwan slowed
By ANTHONY ROWLEY
in Tokyo
IN a reversal of roles, Asia’s developing economies will be piggy-backing on renewed vitality in
advanced economies in 2014, as
they have done for much of this
year, the Asian Development Bank
said in a report published yesterday.
The exception is China, which
should perform strongly enough in
2014, thanks largely to infrastructure investments which will raise
its own growth rate and that of
East Asia as a whole by 0.1 per
cent, the report suggested.
In a supplement to its Asian Development Outlook Update for
2013, the ADB said that growth momentum is likely to continue picking up in the US and Japan over the
coming year, while the euro area
will continue to drag on overall industrialised nation performance.
Data on gross domestic product
(GDP) through the third quarter
suggests that the major industrial
economies are on track to meet the
0.9 per cent growth rate forecast
for 2013, the ADB said.
The bank retained its growth
forecast for US GDP in 2013 at 1.7
per cent but adjusted its 2014 projection for US growth upward to
2.6 per cent, while warning that fiscal policy in the US “remains a
risk”.
The euro area, meanwhile, “appears to have turned the corner,
pulling out of recession as a whole
in the second quarter of 2013, but
the outlook remains fragile”.
For Japan, the ADB has scaled
down its growth forecast for 2013
by 0.2 per cent to 1.7 per cent.
“Calls for fiscal consolidation mean
that Japan’s growth in 2014 will
have to rely on sources outside of
the public sector (and) weakening
external demand is a concern.”
In the case of China, the ADB
has raised its forecast for 2013 by
0.1 per cent to 7.7 per cent in 2013
and to 7.5 per cent in 2014, thanks
mainly to public investment in infrastructure.
“Elsewhere in East Asia, (South)
Korea posted in the third quarter
its strongest growth since the first
quarter of 2011 thanks to robust
private consumption and machinery investment.
“In contrast, growth slowed in
the third quarter in Taiwan and
Hong Kong as slower export
growth and internal factors
dragged on these two economies.”
South-east Asia’s growth forecast is tempered for 2013 and next
year, the ADB said. “Typhoon damage will moderate rapid growth in
the Philippines before major reconstruction gets under way, and the
political turmoil in Thailand is expected to undermine its growth.”
South Asia, on the other hand,
“is on track to meet growth expectations of 4.7 per cent in 2013 and
5.5 per cent in 2014”.
“After bottoming out in the first
fiscal quarter, India’s economy
seems to have recovered on the
back of rebounding exports and
higher industrial and agricultural
output,” it said.
Dr Khor: ‘We will
continue to reach out to
various segments of the
population . . .’
can still eventually go to foreigners.
Apart from manpower,
transport and population
matters also captured the
attention of Singaporeans.
Discussion channels saw
sustained chatter over the
high Certificate of Entitlement (COE) prices, and general public transport woes.
Many also voiced unhappiness over the Population
White Paper’s estimate of a
6.9 million population by
2030.
Overall, Reach received
more than 43,000 feedback
inputs up to November this
year. Of these, 4,300 were
related to manpower issues
while the topics of transport, and population and
immigration,
received
2,900 and 2,800 inputs, respectively. Reach gathers
feedback online and
through face-to-face conversations, dialogues, forums
and focus group discussions.
Said Amy Khor, Senior
Minister of State for Health
and Manpower and Reach
Chairman: “The public’s
feedback, views and suggestions through Reach, as
well as those raised at OSC
(Our Singapore Conversation) sessions and through
various government agencies, have contributed to significant policy changes announced over the course of
the year.
“In the coming year,
Reach will keep the conversation going between the
Government, the community and the people as we embark on a new chapter in
the Singapore story. We
will continue to reach out to
various segments of the
population to get their
views on various policies
and national issues. We
will do so via our
face-to-face dialogues and
forums, as well as via our
online platforms.”
RIOTING IN LITTLE INDIA
Three more Indian
nationals charged
They face rioting charges
and are accused of
arson attack on bus
By MALMINDERJIT SINGH
[email protected]
[SINGAPORE] Three more Indian nationals were charged in court yesterday for
their involvement in last Sunday’s riot in
Little India, taking the total number of suspects in the dock so far to 27.
The trio – aged 22, 24 and 36 years –
were among the eight arrested on Tuesday
morning.
Of the remaining five, one has been released on bail. The other four were found
to have not been involved in the riot and
have been released from custody.
In court yesterday, the three were
charged with rioting, just as the first batch
of 24 Indian nationals were on Tuesday.
However, unlike the two dozen who
were accused of lobbing chunks of concrete at police officers at the scene, yesterday’s trio were accused of mounting an arson attack on the bus – the vehicle at the
centre of the fatal traffic accident on Race
Course Road, which was said to have
sparked off the riot.
The three men were informed in court
in Tamil yesterday that they were being accused “together with at least five other unknown subjects” for an offence of mischief
against the bus. Court documents said that
the “missiles” they hurled at the windscreen and/or windows of the bus included a dustbin, a wooden stick, pieces of concrete, bottles, and a metal drain cover.
As on Tuesday, a representative of the
Law Society of Singapore informed the
court that the three accused could choose
to seek legal assistance through the Criminal Legal Aid Scheme (CLAS).
The three men’s cases will come up for
mention on Dec 18, a day after the other
24 reappear in court.
Law Minister K Shanmugam met about
40 foreign workers yesterday at Kranji
Lodge 1 dormitory and assured them that
they had nothing to fear if they had done
nothing wrong, Channel NewsAsia reported.
He was also reported to have said after
the dialogue that many workers were feeling ashamed about what had happened on
Sunday night, and that they were, understandably, worried about their future in
Singapore.
The minister also touched on an inaccurate report made by India’s Sun TV Network, saying he was glad that the editor
had apologised, and that the error should
not have happened in the first place.
“I think there are other erroneous statements made by others, and we will refer to
them in due course,” he was quoted as saying.
Separately yesterday, the police, together with the Liquor Licensing Board, informed alcohol retailers in Little India by
letter that their liquor licences would be
suspended from 6am this Saturday until
5.59am next Monday. The notice warned
these retailers that they stood to lose their
liquor licence if they violated the suspension.
The letter said the suspension of the
sale of alcohol was aimed at stabilising the
situation and enabling the police to assess
their next step in consultation with various
stakeholders.
The police will install 26 CCTVs in the
vicinity of Race Course Road and Buffalo
Road. Installation work began on Tuesday, in an exercise designed to “enhance
security measures and deter potential perpetrators”.
KL industrial production in
October better than expected
By S JAYASANKARAN
in Kuala Lumpur
MALAYSIA’S industrial production posted a better
than expected showing in
October, growing 1.7 per
cent year on year as opposed to the street’s 0.8 per
cent forecast, and mirroring the month’s 9.8 per
cent surge in exports.
But economists warned
that the key challenge next
year would be inflation.
The government has raised
fuel prices 10 per cent immediately after the May general election and will hike
electricity tariffs on Jan 1
by almost 15 per cent.
The Bank of America-Merrill Lynch thinks
that fuel prices will be increased again next year.
That’s why its economist
Chua Hak Bin raised his inflation assessment of Malaysia. “We are raising our average inflation forecast to
3.6 per cent (from 3.2 per
cent previously) in 2014
and to 4.5 per cent (from
3.6) in 2015, because of the
electricity tariff hikes,”
Mr Chua said in a report released yesterday.
The even greater jump
in 2014 is because the econ-
omists are factoring a 6 per
cent goods and services tax
that the government intends to implement in April
next year. “The GST will impact inflation by about 1.4
percentage
points,”
Mr Chua estimated.
The numbers underline
the challenge facing the government of Prime Minister
Najib Razak. Mr Najib
could conceivably increase
giveaways to the poor: Petronas is likely to generate
substantial savings from
the hike in energy tariffs
and so could increase its
dividends to the government.
Barclays thinks that
with Malaysia’s continuing
growth momentum with its
implied threat of inflation,
the central bank would
tighten monetary policy by
raising interest rates by 25
basis points early next
year.
Merrill’s Mr Chua thinks
so as well but expects a rate
hike later in the year.
“BNM will next meet on
Jan 29, 2014,” he noted in
his report yesterday. “We
expect BNM to stay on hold
at the January meeting, but
are pencilling in a 25 basis
point hike in the second
half of 2014 to 3.25 per
cent given our expectation
of a pick-up in inflation
pressures.”
For all that, Malaysia
continued to chart a growth
trajectory. Industrial production in October was led
by manufacturing (3.3 per
cent) and electricity (4.8
per cent). Mining continued
to contract (minus 3.6 per
cent) for a third consecutive
month although Barclays
said that the drag was less
steep (minus 4.3 per cent in
September).
The pick-up in both industrial production and exports served to confirm the
fact that Malaysia was starting to benefit from firmer
global demand, including
for electronics. “We expect
the manufacturing and export recovery to continue,”
Mr Chua said.
Merrill forecast gross domestic product growth of
4.6 per cent this year and
5 per cent next year. Said
Mr Chua: “Strengthening
exports would offset fiscal
consolidation, supporting
growth in 2014. Private consumer spending and investment will likely remain
healthy, even as public
spending eases.”