TR EMERITUS

From our Correspondent DBS and OCBC banks from Singapore have issued a strong denial of a report released by NGO EarthRights International alleging that Burma's military junta deposited billions of dollars with them. Both said in separate statements made yesterday that there was no truth in the report 'ERI's report is categorically untrue and without basis,' a DBS spokesman said in the brief statement. A spokesman from OCBC also rejected the report. By using an outdated exchange rate, the junta declares a fraction of the revenues to the State budget, enabling it to siphon the rest off. The junta calculates revenue at just 6 kyat to the dollar when the de facto rate is closer to 1,000. According to a confidential International Monetary Fund (IMF) report obtained by ERI, revenue "contributed less than 1 percent of total budget revenue in 2007/08, but would have contributed about 57 percent if valued at the market exchange rate." The report says these rates allow the regime to list a mere $29 million of the Yadana earnings, leaving around $4.8 billion unaccounted for, which ERI believes to be lodged in the Singapore banks. ERI’s Matthew Smith said that the information about offshore accounts in Singapore comes “from confidential and reliable sources,” but could not go into more detail. “We expect the Singapore government and banks to do the right thing based on Singaporean law relating to money laundering, which prohibits any such transactions and requires banks to report these,” he added. ERI said that the gas revenue windfall insulates the country's military rulers from the impact of international sanctions, which were tightened after the August 11 verdict returning Aung San Suu Kyi to house arrest. “As long as the regime has access to such vast revenue it has little incentive to reform or change,” Smith said. “The elites are hiding billions of dollars of the people's revenue in Singapore, while the country needlessly suffers under the lowest social spending in Asia.” As well as long-standing rumors about Burma’s resource revenue being stashed in Singapore, the ill-gotten gains of elites in North Korea and Zimbabwe are also thought to be held in the city-state. US financial giant Merrill Lynch estimates a third of Singapore's 60,000-odd millionaires are Indonesian, whereby Jakarta's wealthy beneficiaries of corruption and cronyism have moved their holdings away from the anti-corruption efforts undertaken by President Yudhoyono. Singapore has come under increasing criticisms from the international community about its cosy relationships with the junta's key leaders who frequently jet into Singapore for medical treatment. In the last few years, Singapore has become one of the largest foreign investors in Burma with business interests in property, hotel, tourism and education. Singapore leaders appear to be unperturbed by the Burmese military junta's dismal human rights record. In the recent trial of Aung San Suu Kyi, Singapore's Foreign Ministry heap praise on the regime's head General Than Shwe for "reducing" the length of her sentence. References: 1. EarthRights International 2. Reuters 3. The Irrawaddy 4. Straits Times  Read More →

By Eugene Yeo and Jeremy Koh Besides political considerations, it is in the economic interest of the government to keep HDB prices on the high side. Who will be so silly to kill the goose which lays golden eggs? Increased profits from sale of new flats Since the prices of new HDB flats are pegged to that of the resale flats in the vicinity, it naturally follows that rising prices of resale flats will enable HDB to price their new flats higher, thereby earning more profits from the sale. It was announced lately that BBR Holdings has secured a S$104.2-million contract from the Housing & Development Board (HDB) to build seven blocks of flats in Yishun Neighbourhood 4. The work comprises 864 homes, a Child Care Centre, a roof garden, communal amenities and site works, as well as contingency works. (Channel News Asia, 17 August 2009) Financial Consultant Mr Leong Sze Hian calculated that HDB may make a profit of more than $170,000 for each flat sold upon completion: "Since there will be 864 HDB flats, the average cost per flat, inclusive of communal amenities, site works and contingency works, is about $120,602 ($104.2 million divided by 864 flats). With the latest HDB new 4-room flats at Punggol (Punggol Residences BTO) selling at an average price of $293,000 (price range of $264,000 to $322,000 divided by 2), does it mean that the HDB stands to make a profit of about $172,398 per flat, or a profit margin of about 143 per cent?" [Source: Hardwarezone] The cost of building HDB flats remain a mystery known only to the government. Ominously, HDB only said that the flats are subisidized, but it never had never claimed that they are sold at cost price to Singaporeans. Regardless of the real figures, the profit-margin of HDB is likely to increase in view of the record prices set by new and resale flats this year. Property taxes and resale levies These are indirect ways in which the government acquire additional revenue from rising prices of HDB flats. All types of properties in Singapore, including HDB flats, factories and offices are subject to tax. The amount of property tax payable a year is a 4% of the annual value of the property which is the estimated yearly rent the property can fetch if it were rented out. If the flat is the seller’s first subsidised flat or a flat bought under the CPF Housing Grant Scheme, he is eligible to sell his flat to a buyer of his choice subject to HDB’s approval. He will have to pay a resale levy if he buys or takes over the ownership of another subsidised flat or an Executive Condominium sold by a Developer, or an Executive Condominium with outstanding 5-year minimum occupation period. He need not pay the resale levy if the Executive Condominium project is launched after 20 Nov 2007. The payment of the resale levy is based on the prevailing rules, policies and procedures as determined by HDB from time to time. Where HDB is appointed by the seller and/or buyer to act in the resale, HDB’s conveyancing fees shall be calculated in accordance with the Housing and Development (Conveyancing Fees) Rules. Needless to say, in a property boom when there are active transactions going on, HDB will see more "business" and therefore earn more from the resale levies and conveyancing fees. Attracting foreign investors The prices of HDB flats provide a support base to that of the private property sector. Prices of new flats are linked intricably to that of resale flats which in turn will have an impact on that of mass market homes. Rising prices of HDB flats will exert an upward pressure on the prices of condominiums in the suburbs giving developers the excuse and incentive to mark up their prices at launch since it is inconceivable that prices of private projects will fall below that of public housing. This in turn will pop up prices in the central and prime districts of Singapore creating a mini-property boom which will make it attractive for wealthy foreigners to invest in Singapore's property. A vibrant and active property market will increase the government's revenue through higher stamp duties which are levied on every property purchased. Conclusion HDB flats are cash cows of the government which enjoys a total monopoly over the public housing market in Singapore. In the absence of any competitor, it is free to set and manipulate the prices as it wish. Though the government can easily bring down the prices of HDB flats, it is in their economic and political interest to continue to leave the prices entirely to market forces. Unlike in 1996 when the property market was allowed to crash suddenly without warning, the government will be more calibrated in its approach this time to pre-empt wild fluctuations in the prices due to the potential repercussions. According to London-headquartered Royal Institution of Chartered Surveyors (Rics), which represents and regulates property professionals and surveyors, Singapore’s residential market rebound may fizzle out by 2010 due to economic uncertainty and the spectre of higher unemployment. (read article: http://temasekreview.com/?p=12848) Should this scenario occur, the prices of HDB flats will probably stagnate and decline by a little, but will still remain above the levels of 2007. Home-buyers who are waiting for the prices to drop or crash will be disappointed. Given the narrowing gap between the prices of HDB resale flats and that of mass market condominiums, it may be more prudent and worthwhile for those who can afford forking out an additional $100K or so to buy a private property instead.  Read More →

From our Correspondent EarthRights International (ERI) released two authoritative reports yesterday alleging that Burma's military regime has transferred billions of dollars from the Yadana gas project into two banks operating in Singapore. Citing “confidential and reliable” sources, ERI named the Overseas Chinese Banking Corporation (OCBC) and DBS Group (DBS) as the offshore repositories of Yadana gas pipeline revenues. OCBC is Singapore’s longest established local bank and according to ERI holds the majority of the revenue, while DBS is Singapore’s largest bank in terms of assets. US$4.8 billion (S$6.9 billion) had been transferred since 2000 from the Yadana project, in which US energy giant Chevron, France's Total and Thailand's PTTEP took part. ERI added that it had informed the banks as well as the Singapore Government of its findings last week. Both banks rejected the claims and said they were 'categorically untrue' when contacted by the state media. The reports link oil giants Total and Chevron to forced labor, killings, high-level corruption, and authoritarianism in Burma. For te first time, ERI reveals that the military junta, which has longed enjoyed cosy ties with the Singapore government is hiding multi-billion dollar revenues from natural gas sales in two offshore banks in Singapore. Based primarily on over two years of research, the first report, entitled Total Impact: The Human Rights, Environmental, and Financial Impacts of Total and Chevron’s Yadana Gas Project in Military-Ruled Burma (Myanmar) explains that Total and Chevron’s Yadana gas project has generated US$4.83 billion dollars for the Burmese regime. The 110-page report explains how the regime would have excluded at least US$4.80 billion dollars of that revenue from the country’s national budget. "Yadana" which means "treasure" in Burmese, is a large-scale gas project to transport gas from the Andaman Sea across Burma's Tenasserim region to Thailand passing through a dense jungle in southern Burma. From the project's beginning in 1994, the Burmese army or Tatmadaw, has been tasked with providing security for the companies and pipelines. According to evidence collected by ERI, it accused the Tatmadaw of committing widespread systematic human rights abuse against the local people who are mostly ethnic Mons and Karens. Documented abuses include extrajudicial killings, torture, and other forms of ill-treatment; widespread use of forced labor and violations of rights to freedom and property. Revenue from the Yadana Project is instrumental in keeping the Burmese military junta afloat despite the economic sanctions imposed by the West. About USD$4.80 billion from the Yadana Project was not accounted for in Burma's national development and may be siphoned off into the pockets of the military rulers instead of contributing to Burma's economic development. ERI claimed that according to "confidential and reliable" sources, the "missing" portion of the gas revenue is located in Singapore's DBS and OCBC banks. These transactions are facilitated by Burma's state-owned Foreign Trade Bank. Singapore is one of the largest foreign investors in Burma and has constantly refrained from criticizing its dismal human rights records. A few weeks ago, Senior Minister Goh Chok Tong commented that jailed Burmese opposition leader Aung San Suu Kyi is "part of the problem" in Burma which triggered massive furore among Burmese activists and exiles. MM Lee Kuan Yew sits on Total international advisory panel. He attended its Council meeting in June this year during a visit to the United Kingdom. Singapore has become a favorite destination for Burmese generals and tycoons over the years. Many of them reportedly seek medical treatment at Singapore's hospitals including the head of state General Than Shwe. Among the Burmese tycoons currently residing in Singapore is Tay Za whose company is a target of U.S. sanctions. Tay Za's son, Htet studies at the United World College where he is often spotted be dropped off in a chauffeur-driven Lamborghini. Singapore has always advocated "engaging" the military junta in Burma as against economic sanctions. Last year, Singapore named an orchid after the Burmese Prime Minister General Thein Sein who came on a state visit. References: 1. Earth International 2. Prime Minister's Office, Singapore 3. Total International Advisory 4. The Irrawady (Thailand) 5. The Age (Australia) linking oil giants Total and Chevron to forced labor, killings, high-level corruption and authoritarianism in military-ruled Burma (Myanmar). For the first time, ERI reveals that the military regime is hiding multi-billion dollar revenues from natural gas sales in two offshore banks in Singapore. Based primarily on over two years of research, the first report, entitled Total Impact: The Human Rights, Environmental, and Financial Impacts of Total and Chevron’s Yadana Gas Project in Military-Ruled Burma (Myanmar) explains that Total and Chevron’s Yadana gas project has generated US$4.83 billion dollars for the Burmese regime. The 110-page report explains how the regime would have excluded at least US$4.80 billion dollars of that revenue from the country’s national budget.The two reports link oil giants Total and Chevron to forced labor, killings, high-level corruption and authoritarianism in military-ruled Burma (Myanmar). For the first time, ERI reveals that the military regime is hiding multi-billion dollar revenues from natural gas sales in two offshore banks in Singapore  Read More →