Fwd: Durian Starting to Rot !!
- Are all of the Singapore Government's projects written in red ink and fated as
loss-makers? As usual its the tax payers who end up footing the bill.
On top of losses running from daily operational costs, the project also
exceeded original budget of SGD400 mio by a staggering SGD200 mio. Perhaps its
time the Singapore government acknowledged that along with honesty, honour and
intergrity, arts and culture are some of the intangibles that money cannot buy.
MAY 29, 2003 THU
Thorny times for Esplanade tenants
IT'S like treading on a very spiky durian. That's how one tenant at the
Esplanade Mall describes the pain from poor business there.
When it opened late last year, it was in one of the most visited locations in
Some 400,000 to 500,000 people passed through the mall during an open house
The three-storey mall, part of the $600 million Esplanade - Theatres on the Bay
mega arts project, was intended to complement the arts centre with more than 30
food and beverage, service and retail outlets.
But these days, the retail tenants say they would be lucky to see any crowds at
It occupies about 110,000 sq ft, with about 30 tenants. The anchor tenant is
The National Library Board's library@esplanade.
It's been slightly more than six months since the opening, and with the initial
buzz and novelty dying down, tenants there are no longer smiling.
Nine out of 10 tenants we spoke to said business has gone from bad to worse,
even before the onset of the US-Iraq war or the Sars virus outbreak.
Most of them blamed the cancellation of performances, lack of advertising and
promotions activities and lack of strong anchor tenants to draw the crowd.
Chinese Tea House, which opened last September, said it has been making losses
from Day One.
Director Eric Chua, 49, revealed that it spent about $60,000 renovating the
It is paying rent of about $6,000 for the 400 sq ft unit.
Said Mr Chua: 'Business didn't start off well in the first place. And it's
getting worse from month to month. This place is so quiet that I even have
customers telling me it's not easy doing business here.'
The tenants were given a 15 per cent rental rebate for April, which Esplanade
said it will review from month to month.
But that's small consolation, said Mr Chua. 'I believe that as long as you can
bring in the crowds, it doesn't matter even if we don't get the rebate.
'I think the landlord should think of more activities to promote the place.'
The Esplanade management said it attracts about a million visitors a month now
and planned activities to attract people there. (See report on next page.)
But Mr Chua feels the mall suffers from an image problem - locals think the
place is too upmarket, too arty and too expensive.
He added: 'Furthermore, there weren't many performances to start off with in
the first place.
'And this place is so far to walk from the City Hall MRT station. We need more
events to bring in the crowd.'
Sagesse, which sells hand-made items from around the world, also feels more
promotional activities should be organised.
Said its spokesman, Ms Felicia Teo: 'Business here has been very slow. After
all, this is not a shopping mall and I don't know how long we can survive if it
continues like this. We don't have much of a walk-in crowd. Most of our
customers now are regulars.'
It is paying about $4,000 for a 280 sq ft unit.
Performance nights aside, the crowd is scanty, with few venturing to this area
unless they are heading to one of the restaurants or the library.
And the restaurants are usually quite empty, even during lunch hours.
Pranzo Pasta Cafe, which opened in November, has cut its staff from 10 to five.
Manager Oliver Woo said: 'Now, because of performances being cancelled, Sars
and the US-Iraq war, our business has dropped by more than 50 per cent since
'We see more diners only if there are performances. If not, it'll be a slow
MAKE IT A SHOPPING DESTINATION Mr Shaik Shidek, manager of Senses, suggested
positioning the arts hub as a shopping place too.
The restaurant has found the going tough since it opened last year.
He said: 'The cancellation of shows has affected business to a certain extent.
The management here should make it into a shopping destination too.
'And on our side, we have to come up with special promotions, otherwise I don't
think we'll be able survive for long.'
Marketing manager Alvin Lee, 34, agreed. Mr Lee, who visited the Esplanade for
the first time this week, said: 'Personally, there isn't any compelling reason
nor enough shops here for me to want to visit again. It'll be different if
there's a cinema or big book store.
'And if you don't drive, it's too far from the MRT station.'
Regulatory Rigor May Hurt
Switzerland's Private BanksTop Financial Center Loses Edge as Rich
Switch to Rivals Offering Looser Controls
By FIONA FLECK
SPECIAL TO THE WALL STREET JOURNAL
BASEL, Switzerland -- Swiss bankers are losing their home-field advantage -- and aren't too happy about it.
As a wave of regulations brings Swiss private banking more in line with global standards, Switzerland's bankers -- who have long enjoyed advantages over their neighbors -- are seeing their core business of portfolio asset management for the world's ultrarich flow away to Singapore and other less strictly regulated rivals.
Regulatory pressure on offshore financial centers specializing in cross-border asset management has been stepped up significantly in recent years. This has been spurred by the war on global terrorism, corporate-accounting scandals and high-profile money-laundering cases. But as Swiss regulators are catching up with rival centers, some bankers argue the Swiss are even surpassing their rivals in terms of regulatory rigor and are damaging Switzerland's banking sector.
"The burden of regulation on Swiss banks was for a long time lighter than that on U.K. or U.S. banks," said Michel Derobert, secretary-general of the Swiss Private Bankers Association. "But this comparative advantage seems to be fading as rules are becoming more formal in Switzerland, too."
Niklaus Baumann, president of the Swiss Private Bankers Association, in June told members at the group's annual gathering in Basel that "regulators have never played such an important role for our sector."
Indeed, the association's 50-page annual report for 2002 is titled "The Regulations Flood" and reads like a directory of new domestic and international laws and decrees that are currently in the pipeline. These include: U.S.-qualified intermediary rules for Swiss banks investing in U.S. securities with the first audits this year; an impending European Union savings-tax directive; a new money-laundering decree of the Swiss Federal Banking Commission this summer; Basel II rules on capital adequacy; new accounting rules for local and foreign banks licensed to do business in Switzerland; two sets of Swiss corporate-governance directives; and new rules on corruption and financial analysts.
Swiss banking regulators say the new rules are vital to ensure that Switzerland stays in line with international standards. "Of course, the banks whine about these regulations," said Tanja Kocher, spokeswoman for the Swiss federal banking commission in Berne. "We're not regulations bullies. We're just doing what is necessary to keep the Swiss financial center clean and in line with international standards."
But some Swiss bankers say these new rules have gone too far.
Some regulations "are absolutely necessary, such as anything to do with money laundering," said Mr. Baumann, a managing partner at private bank Baumann & Cie. "Some are political, like the EU savings-tax directive. But some are pointless and superfluous, concocted by pedantic bureaucrats." He gave as an example a new Swiss directive on loan interest that he said was irrelevant to private bankers because they don't as a rule lend money.
Mr. Baumann said implementation of these regulations meant hiring additional legal and information-technology staff -- something small, boutique banks such as Baumann & Cie. can hardly afford. Fixed costs at his bank rose by about 12% over the past three years, which he attributed to the "flood of regulations."
Switzerland is still the world's largest offshore banking center, managing $1.2 trillion (1.065 trillion) in cross-border client assets, estimated to be between one-quarter and one-third of the world's offshore or cross-border wealth. But according to an IBM Business Consulting survey published in May, bankers in Europe expect Singapore to oust Luxembourg from its current second place by 2005 and become "the key challenger to Switzerland."
Luxembourg, as well as the tiny principality and offshore financial center of Liechtenstein -- sandwiched between Switzerland and Austria -- say they are both suffering from a wave of regulations, but like their colleagues in Switzerland, banks there accept this as the price of doing business.
Swiss bankers fear their wealthiest clients, with tens of millions of dollars or more, will transfer their assets to Singapore to avoid withholding taxes under the Swiss-EU savings-tax agreement, starting in 2005. Singapore isn't party to an agreement on levying withholding tax on its EU citizens' offshore savings if they can't show that these are tax declared.
Price of Leadership
The smooth-sailing days of Swiss private banking, when clients flocked over the border to prevent their often-undeclared savings from being decimated by political turmoil and economic crises at home, are over. But while bankers complain about stricter rules, they also accept that regulatory rigor is the price of doing clean business.
Hans-Peter Bauer, the head of compliance at UBS, the largest Swiss bank, said: "When you are heading in the right direction and you are convinced you are doing the right thing, then you should do it and not always look at the competition. Switzerland has proven that it can have stronger rules and still be a leader."
Other financial centers are feeling the regulatory pinch, too. United Kingdom fund managers recently expressed concern that nonglobal banks in the U.S. won't have to implement Basel II rules. And the U.K.'s financial-service regulator, FSA, published a report June 23 by independent consultancy Europe Economics that concluded the costs for complying with the FSA regulatory regime had risen over the past 18 months for financial companies and that proposed ways of reducing those costs. It found that out of 42 companies surveyed, half found the FSA costs added up to 2% to nonregulatory operating costs, while 14 companies found these costs had risen by between 2% and 10%. Five companies said costs had gone up between 10% and 20%.
Meanwhile, a comparative study of antimoney-laundering laws in Switzerland, the U.K., the U.S. and Singapore published in June found discrepancies among these jurisdictions and concluded that the international community could fight dirty money effectively only once these discrepancies are ironed out.
The study was compiled by Marc Pieth, a law professor at the University of Basel and chairman of the antibribery committee at the Organization for Economic Cooperation and Development. The report used information by law firms in the four centers on their antimoney-laundering laws. It criticized Switzerland for focusing too much on early identification of suspicious clients but not catching criminals, while criticizing the U.K. and U.S. for being more intent on catching criminals than cracking down on money laundering.
The study concluded that though Singapore had recently tightened regulations in line with the Financial Action Taskforce, an intergovernmental body that fights money laundering, these had "obvious flaws" compared with "the world standard." Mr. Pieth criticized Singapore for being one of the few financial centers that still allows clients to hold anonymous numbered accounts. This means a lawyer acting as a frontman can open an account on behalf of a criminal without revealing the identity of the beneficial owner to the bank.
Switzerland did away with anonymous numbered accounts after the 1977 Chiasso money-laundering scandal. Liechtenstein recently abolished anonymous numbered accounts.
Updated August 5, 2003
Want to chat instantly with your online friends? Get the FREE Yahoo! Messenger