post

Funding sources search for new projects requires innovative thinking

Click on Funding sources search for new projects requires innovative thinking
for the source.
Author: Ravi Philemon

A business faces three major issues when selecting appropriate funding sources for a new project:

  1. Can the finance be raised from internal resources or will new finance have to be raised outside the business?
  2. If finance needs to be raised externally, should it be debt or equity?
  3. If external debt or equity is to be used, where should it be raised from and in which form?

By: Phoenix Lee/

Can the necessary funding sources be provided internally?

In answering this question the company needs to consider several issues:

  • How much cash is currently held? The company needs to consider the amount held in current cash balances and short-term investments, and how much of this will be needed to support existing operations. If spare cash exists, this is the most obvious funding source for the new project.
  • If the required cash cannot be provided in this way then the company should consider its future cash flow. A cash budget can be prepared, but it is probably too detailed at this stage. A cash flow statement as shown in Example 1 would probably be more practical.
  • If the company’s projected cash flow is not sufficient to fund the new project then it could consider tightening its control of working capital to improve its cash position.

funding sourcesPressurising debtors for early settlement, running down stock levels and lengthening the payment period to creditors could increase cash resources. Note however, there are dangers in such tactics. For example, lost customer/supplier goodwill and production stoppages due to running out of stock etc.

If the necessary funding sources cannot be provided internally then the company has to consider raising finance externally.

The debt or equity decision
Here a company needs to consider how much it should borrow. This is a very important decision and several companies have experienced major problems with this decision in recent years. Issues to be considered include:

  • The cost of funding sources. Debt finance is usually cheaper than equity finance. This is because debt finance is safer from a lender’s point of view. Interest has to be paid before dividend. In the event of liquidation, debt finance is paid off before equity. This makes debt a safer investment than equity and hence debt investors demand a lower rate of return than equity investors. Debt interest is also corporation tax deductible (unlike equity dividends) making it even cheaper to a taxpaying company. Arrangement costs are usually lower on debt finance than equity finance and once again, unlike equity arrangement costs, they are also tax deductible.
  • The current capital gearing of the business. Although debt is attractive due to its cheap cost, its disadvantage is that interest has to be paid. If too much is borrowed then the company may not be able to meet interest and principal payments and liquidation may follow. The level of a company’s borrowings is usually measured by the capital gearing ratio (the ratio of debt finance to equity finance) and companies must ensure this does not become too high. Comparisons with other companies in the industry or with the company’s recent history are useful here.
  • Security available. Many lenders will require assets to be pledged as security against loans. Good quality assets such as land and buildings provide security for borrowing – intangible assets such as capitalised research and development expenditure usually do not. In the absence of good asset security, further borrowing may not be an option.
  • Business risk. Business risk refers to the volatility of operating profit. Companies with highly volatile operating profit should avoid high levels of borrowing as they may find themselves in a position where operating profit falls and they cannot meet the interest bill. High-risk ventures are normally financed by equity finance, as there is no legal obligation to pay equity dividend.
  • Operating gearing. Operating gearing refers to the proportion of a company’s operating costs that are fixed as opposed to variable. The higher the proportion of fixed costs, the higher the operating gearing. Companies with high operating gearing tend to have volatile operating profits. This is because fixed costs remain the same, no matter the volume of sales. Thus, if sales increase, operating profit increases by a larger percentage. But if sales volume falls, operating profit falls by a larger percentage. Generally, it is a high-risk policy to combine high financial gearing with high operating gearing. High operating gearing is common in many service industries where many operating costs are fixed.
  • Dilution of earnings per share (EPS). Large issues of equity could lead to the dilution of EPS if profits from new investments are not immediate. This may upset shareholders and lead to falling share prices.
  • Voting control. A large issue of shares to new investors could alter the voting control of a business. If the founding owners hold over 50% of the equity they may be reluctant to sell new shares to outside investors as their voting control at the AGM may be lost.
  • The current state of equity markets. In a period of falling share prices many companies will be reluctant to sell new shares. They feel the price received will be too low. This will dilute the wealth of the existing owners. Note this does not apply to rights issues where shares are sold to the existing owners of the company. New issues of shares on the UK stock exchanges have been rare over the last few years due to the bear market. At the time of writing there is some evidence that the bear market is coming to an end.

After consideration of the above points the company will be in a position to decide between the use of debt or equity as funding sources. The last major decision is what type of funding sources should be used and where should it be raised?

Equity finance
A detailed consideration of the different sources of equity finance is beyond the scope of this article and students are recommended to consult their textbooks or manuals for more detailed coverage. However, here are a few general points on equity funding sources:

  • For companies who already have shares in issue rights, issues are mandatory under company law. This means that any new shares have to be offered to existing shareholders in proportion to their existing holdings. This is to protect existing shareholders from the company selling shares to new investors at a low price and diluting the wealth of existing shareholders. This requirement may be overcome if existing shareholders are prepared to vote to ‘waive their pre-emption rights’.
  • The current status of the company is important. Companies listed on the London International Stock Exchange or quoted on the Alternative Investment Market (AIM), can raise new equity finance by selling new shares on these markets by way of rights issues, offers for sale or placing. Other companies who lack access to the stock exchange find it more difficult to raise equity finance and may need to turn to venture capitalists if they require equity finance.

Debt finance
Debt finance comes in many different forms. Students will find detailed descriptions in their textbooks and manuals. The major considerations in raising new debt finance are detailed below.

The duration of the loan
Generally, short-term borrowing (loans for less than one year) is cheaper than longer-term borrowing (loans for more than one year). This is because many lenders equate time with risk. The longer they lend for, the more risk is involved as more things can go wrong. Hence they charge a higher interest rate on longer-term lending than on short-term lending. However, short-term borrowing has a major disadvantage – renewal risk. Short-term loans have to be regularly renewed and the company carries the risk that lenders may refuse to extend further credit. This risk is at its highest on overdraft borrowing where the bank can call in the overdraft ‘on demand’. With long-term borrowing, as long as the borrower does not breach the debt covenants involved, the finance is assured for the duration of the loan.

In choosing between short-term and long-term borrowing, the firm should consider the textbook rule of thumb for prudent financing: ‘finance short-term investments with short-term funds and long-term investments with long-term funds’. Simply, this means use cheap short-term borrowing where it is safe to do so (investments that are short-term in nature and hence renewal risk is not a problem) but use long-term finance for long-lived investments.

The post Funding sources search for new projects requires innovative thinking appeared first on iCompareLoan Resources.

post

Office rents decline in Central Region to 3.1% in 2019

Click on Office rents decline in Central Region to 3.1% in 2019
for the source.
Author: Ravi Philemon

In Q4 2019, the decline in URA’s Office Rental Index for the Central Region accelerated to 3.2% QOQ, after falling 0.6% in Q3 2019, bringing the full year 2019 office rents decline in the Central Region to 3.1%

Office market decreased by 0.5% in 4th Quarter 2019, compared with the 3.9% decrease in the previous quarter said URA in its release of its latest statistics.

Prices and Rental in the Office Market

office rents decline

Full year 2019 office rents decline in the Central Region is 3.1%

Rentals of office space decreased by 3.2% in 4th Quarter 2019, compared with the 0.6% decrease in the previous quarter. For the whole of 2019, prices of office space decreased by 0.6%, compared with the increase of 5.7% in 2018; while rentals of office space decreased by 3.1%, compared with the increase of 7.4% in 2018.

Supply in the Pipeline in the Office Market

As at the end of 4th Quarter 2019, there was a total supply of about 753,000 sq m GFA of office space in the pipeline, compared with the 738,000 sq m GFA of office space in the pipeline in the previous quarter.

Stock and Vacancy in the Office Market

The amount of occupied office space increased by 30,000 sq m (nett) in 4th Quarter 2019, compared with the increase of 71,000 sq m (nett) in the previous quarter. The stock of office space increased by 29,000 sq m (nett) in 4th Quarter 2019, compared with the decrease of 4,000 sq m (nett) in the previous quarter. As a result, the island-wide vacancy rate of office space declined to 10.5% as at the end of 4th Quarter 2019, from 10.6% as at the end of the previous quarter.

Commenting on the full year 2019 office rents decline in the Central Region to 3.1%, Colliers International noted:

“Price declines were more subdued, with the URA’s Office Price Index for the Central Region declining by 0.5% QOQ in Q4 2019, slowing down from the sharp 3.9% decrease in Q3 2019. In 2019, office prices in the Central Region fell 0.6%, compared with the increase of 5.7% in 2018.

Overall, 2019 had been a strong year for investment sales in office or mixed office developments, rising 62% YOY to SGD7.6 billion on heightened investor interest. Over the next few years, we remain optimistic for continuing strong capital market volumes on a favorable interest rate outlook and demand-supply dynamics.

Islandwide vacancy of office properties tracked by the URA stood at 10.5% as of end-2019, improving 0.1 ppt from 10.6% in Q3 2019 and 1.5 ppt from 12.0% in Q4 2018. Based on URA statistics, islandwide office net absorption remained strong at 1.67 million sq ft for the full year 2019, compared to 1.85 million sqft in 2018.

We estimate the healthy net absorption in 2018 and 2019 were driven mainly by the technology and flexible workspace sectors.”

Ms Tricia Song, Head of Research for Singapore at Colliers International, commenting on the full year 2019 office rents decline said:

“Based on Colliers’ research, average CBD Premium and Grade A gross effective rents stood at SGD10.09 psf per month in Q4 2019, flat QOQ, slowing down from earlier quarters. Overall, 2019 was a year of two halves: H1 2019 saw a steady 5.4% rental growth on the back of strong net absorption led by the flexible workspace and technology sectors, while H2 2019 witnessed lower net demand from weaker economic growth, rising vacancy and slowing rental momentum as tenants show increasing resistance to rising rents.

In 2020, we expect the demand driver to be the technology sector, which is still growing, while flexible workspace operators could consolidate after building up a significant presence in the past three years. The MAS’ issuance of up to five digital licenses in Singapore should also contribute to net absorption, though impact now is unclear.

Meanwhile, Grade A and Premium CBD office vacancy is expected to continue to trend below the 10-year historical average of 6% until 2022 given tight CBD Grade A office supply of 3% of stock per annum over 2020–2021 versus 6% for the last 10 years.”

As the full year 2019 office rents decline, prices of retail space increased by 1.8% in 4th Quarter 2019, compared with the increase of 1.1% in the previous quarter.

Rentals of retail space increased by 2.3% in 4th Quarter 2019, following the same increase of 2.3% in the previous quarter. For the whole of 2019, prices of retail space increased by 1.3%, compared with the increase of 0.6% in 2018; while rentals of retail space increased by 2.9%, compared with the decline of 1.0% in 2018.

Supply in the Pipeline

As at the end of 4th Quarter 2019, there was a total supply of 333,000 sq m GFA of retail space from projects in the pipeline, compared with the 288,000 sq m GFA of retail space in the pipeline in the previous quarter.

Stock and Vacancy

The amount of occupied retail space increased by 26,000 sq m (nett) in 4th Quarter 2019, compared with the increase of 29,000 sq m (nett) in the previous quarter. The stock of retail space increased by 29,000 sq m (nett) in 4th Quarter 2019, compared with the increase of 16,000 sq m (nett) in the previous quarter. As the changes in occupied retail space and stock of retail space were similar, the island-wide vacancy rate of retail space remained at 7.5% as at the end of 4th Quarter 2019, same as the end of the previous quarter.

Prices and Rentals of private homes according to 4th Quarter 2019 real estate statistics

Prices of private residential properties increased by 0.5% in 4th Quarter 2019, compared with the 1.3% increase in the previous quarter. For the whole of 2019, prices of private residential properties increased by 2.7%, compared with the 7.9% increase in 2018.

Prices of landed properties increased by 3.6% in 4th Quarter 2019, compared with 1.0% increase in the previous quarter. Prices of non-landed properties decreased by 0.3% in 4th Quarter 2019, compared with the 1.3% increase in the previous quarter. For the whole of 2019, prices of landed properties rose by 5.7% while those of non-landed properties rose by 1.9%.

The post Office rents decline in Central Region to 3.1% in 2019 appeared first on iCompareLoan Resources.

post

Private home prices rose at slower pace in Q4 2019

Click on Private home prices rose at slower pace in Q4 2019
for the source.
Author: Ravi Philemon

Private home prices rose at slower pace in Q4 2019, rising by 0.5% compared to the 1.3% increase in the previous quarter. This was slightly higher than the initial forecast of a 0.3% growth in the flash estimates which were released earlier this month.

Private home prices rose

Private home prices rose at slower pace in Q4 2019

Looking at the statistics for the three regions, we could perhaps infer that the difference between the actual figures and flash estimates may be due to better prices achieved in the Core Central Region in both the primary and resale markets in the last two to three weeks of the year. (CCR prices fell at a slower pace of 2.8% in the actual data vs. 3.7% decline in the flash estimates, which tracked transactions in the first 10 weeks of the quarter.)

With Q4’s numbers out, the private residential price index is now 2.6% above the most recent peak in Q3 2018 – marginally above the level prior to the cooling measures (introduced in July 2018) – and 0.6% below the all-time peak in Q3 2013.

For the whole of 2019, private home prices rose 2.7%, representing the third straight year of increase. However, the pace of price growth has eased substantially  from the 7.9% increase in 2018.

Noting that private home prices rose at slower pace in Q4 2019, Colliers International said, “to this end, we believe the government has successfully brought the housing market to a soft landing via the July 2018 measures. Based on our observation, there is no over exuberance in the market and buyers remain very price sensitive, which will rein in developers’ ability to hike prices sharply.”

Even as the private home prices rose at slower pace in Q4 2019, developers sold 9,912 private residential units, 12.7% more than the 8,795 units in the previous year

Take-up
Developers sold 2,443 new homes (excluding Exec Condos) in Q4 2019 – down by 25.5% quarter-on-quarter (QOQ) (3,281 in Q3 2019) and up 33.1% year-on-year (YOY) (1,836 in Q4 2018).

For the whole of 2019, developers sold 9,912 private residential units, 12.7% more than the 8,795 units in the previous year, reflecting the acceptance of the cooling measures in July 2018 and the resilient genuine demand.

Meanwhile, secondary (resale and subsale) transactions stood at 2,435 units in Q4, a 1.9% decline from the 2,482 units in Q3 2019 but 20.3% higher YOY (from 2,024 in Q4 2018). For full year 2019, there were 9,238 secondary transactions, 30.8% lower than 2018’s 13,344 units.

The July 2018 measures appeared to have impacted the secondary market more than primary sales, as the increased availability of new attractive projects from developers diverted demand from the secondary market.

Core Central Region (CCR)
According to URA’s data, prices in the CCR declined 2.8% (vs 3.7% in flash) from the previous quarter, after rising 2.0% QOQ in Q3 2019 and 2.3% in Q2 2019. This brought CCR home prices to fall 1.7% in the full year, after rising 6.7% in 2018. CCR home prices are 2.7% below the recent peak in Q3 2018 and 5.0% below the all-time peak in Q1 2013.

Q4 2019 saw the most developer/new sales in the CCR since 2014. As of caveats downloaded on 22 January 2020, in Q4 2019, 397 new sales in CCR were clocked, the highest quarterly figure since Q4 2014’s 441.

For 2019, we estimate 18 projects with a total 3,045 available units were launched in the CCR and the take-up rate (of the total available units) was 20%. The slower take-up rate could be due to the larger ticket size of the units, notwithstanding most are also launched at benchmark prices in their vicinities.

A closer look at the transactions during the quarter suggests that the decrease in Q4 non-landed CCR prices could be due to projects that have been completed earlier but still have inventory:
• Marina One Residences (completed in 2017) saw 49 units sold in Q4 2019, at a median price of SGD2,242 psf compared to 30 units in Q3 2019 at a median price of SGD2,503 psf.
• South Beach Residences (completed in 2016) saw 10 units sold in Q4 2019, at a median price of SGD3,166 psf compared to 10 units in Q3 2019 at a median price of SGD3,349 psf.

Rest of Central Region (RCR)
Home values in RCR declined 1.3% QOQ (vs 1.4% in flash) in Q4, after rising 1.3% in Q3. This brought RCR home prices to still increase by 2.8% in 2019, a slowdown from the 7.4% growth in 2018. RCR home prices are now 1.4% below the peak of 155.6 seen in Q2 2013.

We believe the decline is due to the high base achieved in new launches in Q3 2019 for new launches such as Avenue South Residence, One Pearl Bank, Meyer Mansion, The Antares, Uptown@Farrer, and View at Kismis.

We estimate 19 projects with a total 5,131 available units were launched in RCR in 2019 and the take-up rate by end-2019 was 29%.

Outside Central Region (OCR)
In Q4 2019 and 2019, OCR private home prices rose the most among the market segments and remained at an all-time high. Non-landed home values in OCR increased 2.8% QOQ (vs 2.9% in flash) in Q4, following the 0.8% increase in Q3 2019. This brings full year 2019 growth to 4.2%, a slowdown from the 9.4% in 2018.

We believe the growth in OCR prices in Q4 was mainly due to the good reception of Sengkang Grand Residences, as well as steady progressive take-up at earlier launches. Meanwhile, some earlier launches such as Treasure at Tampines and Florence Residences continued their progressive take-up.
We estimate 13 new projects with a total of 7,782 available units were launched in the OCR in 2019, and the take-up was a decent 32% by end-2019.

Supply pipeline, vacancy, unsold inventory
In Q4 2019, 2,298 private homes obtained Temporary Occupation Permit (TOP), bringing full year completions to 7,527 units, 17.4% lower than 9,112 units completed in 2018. We expect 2020 completions to come in at just 6,294 units. 2019-2020 completions will be significantly below the 10-year historical average of 12,948 units.

In 2021, completions will likely rise to 10,579 private homes, and further to 15,037 units in 2022, and 17,004 units in 2023, due to the bumper en bloc transactions from 2016 to mid-2018.

For the non-landed segment, as demand outstrips available completed supply, the vacancy rate declined a further 0.7 ppt to 5.7% in Q3, from 6.4% in Q3. The peak vacancy was 10.4% in Q2 2016.

Unsold inventory eased to 30,162 units by end-2019, compared to 31,948 units in Q3 2019. Assuming the take-up of 10,000 units a year, it will take three years to clear.

Rentals
The overall private residential rental index unexpectedly declined 1.0% in Q4 2019 after rising 0.1% QOQ in Q3. This brings full year 2019 rental increase to 1.4%, faster than the 0.6% increase in 2018. Overall rents are still 11.6% below the peak in Q3 2013.

We expect rents to continue to improve by 5% in 2020, as completions will be significantly below the 10-year historical annual average of 12,948 units and vacancy continues to tighten below the historical average of 8%.”

Ms Tricia Song, Head of Research for Singapore at Colliers International noting that private home prices rose at slower pace in Q4 2019 said:

“To ensure the property market remains healthy, we believe the government will keep the existing property curbs in place, with little chance of unwinding any measures, barring a severe economic downturn.

We are of the view that the property market is sustainable and home sales should be fairly resilient in 2020, owing to several factors: improved economic outlook (Oxford Economics projects that the Singapore economy could grow by 1.4% in 2020); stabilising global growth; favourable interest rate environment; genuine demand for homes; tight labour market; and relatively healthy household balance sheet.

For the whole of 2020, we project that developers could sell about 9,800 new homes (excl. ECs), relatively similar to the number of units transacted in 2019. Meanwhile, we expect private home prices could grow by 3% in 2020, tracking the recovery in economic growth.

We estimate that there would be 44 new private residential project launches (excl. ECs) in 2020, fewer than the 50 (excl. ECs) launched in 2019. Of the 44 launches this year, about 45% of them are in prime locations in the Core Central Region (CCR). With fewer launches in 2020, we would expect buyers to dip into earlier launches for more diverse choices and homes that would fit their budget.”

The post Private home prices rose at slower pace in Q4 2019 appeared first on iCompareLoan Resources.

post

Local home loan market does not discriminate unfairly unlike other markets

Click on Local home loan market does not discriminate unfairly unlike other markets
for the source.
Author: Ravi Philemon

Unlike other overseas markets which may discriminate unfairly according to ethnicity or even education, the local home loan market acts more fairly

By: Hitesh Khan/

A new Northwestern University analysis finds that racial disparities in the United States mortgage market suggest that discrimination in loan denial and cost has not declined much over the previous 30 to 40 years, yet discrimination in the housing market has decreased during the same time period.

The report showed:

  • Black and Hispanic borrowers more likely to be rejected when they apply for a loan; more likely to receive a high-cost mortgage
  • Housing discrimination leads to persistent neighborhood segregation
  • Discrimination in mortgage market makes it more difficult for minority households to build wealth through housing

Northwestern researchers examined how discrimination in housing and mortgage lending against blacks, Latinos and Asians has changed over the last 40 years by performing a meta-analysis of existing studies since the late 1970s to the present.

“We find declines in most forms of discrimination, especially the more extreme forms like falsely claiming an advertised unit is no longer available,” said Lincoln Quillian, lead author of the study and professor of sociology in the Weinberg College of Arts and Sciences at Northwestern. “There is less reduction and considerable persisting discrimination in more subtle differences in treatment between whites and minorities.

“For example, in about 10% audits in which a white and an African-American auditor were sent to apply for the same unit after 2005, the white auditor was recommended more units than the African-American auditor. These trends hold in both the large HUD (Housing and Urban Development)-sponsored housing audits, which others have examined with similar findings to us, and in smaller correspondence studies.”

In the mortgage market the researchers found that racial gaps in loan denial have declined only slightly, and racial gaps in mortgage cost have not declined at all, suggesting persistent racial discrimination. Black and Hispanic borrowers are more likely to be rejected when they apply for a loan and are more likely to receive a high-cost mortgage.

“It was distressing to find no evidence of reduced discrimination in the mortgage market over the last 35 years,” said Quillian, also a faculty fellow with the University’s Institute for Policy Research. “Discrimination in the mortgage market makes it more difficult for minority households to build wealth through housing, contributing to racial wealth gaps. Discrimination in the housing market increases housing insecurity for minority households and contributes to persistent neighborhood segregation. These results help account for why black home ownership has not increased over the last 35 years.”

The reduction in the most exclusionary forms of housing discrimination suggests that in most cases discrimination will not block persistent efforts by black or Hispanic households to move into white or affluent neighborhoods.

“We believe that more subtle forms of discrimination will steer households with weaker neighborhood preferences toward own-race neighborhoods, helping to maintain residential segregation,” Quillian said.

In sum, the researchers say, the results suggest that anti-discrimination enforcement in the housing and mortgage markets should continue, and efforts should be increased to ensure that all home seekers receive equal treatment regardless of their race or ethnic background.

local home loan market

iCompareLoan’s Home Loan Report (TM)

Mr Paul Ho, chief mortgage officer at iCompareLoan, said “unlike in the US, there is no such unfair discrimination in the local home loan market.”

The local home loan market is largely depend on the borrower’s capacity to pay and less on other factors. Although on the surface it may seem like women are unfairly discriminated, it could actually be that women do not refinance home loan as regularly as men do, thereby end up paying more home loan interest cost.

In the local home loan market, women’s TDSR tends to be less and may impact their ability to refinance

A large percentage of women in Singapore are employed, which means that a significant percentage of them enjoy the freedom to borrow money, obtain loans, or be part of any exclusive loan programs. Such freedom to borrow includes loan programs and financial assistance from independent and private financial organisations – and these are not just limited to credit cards but also extends to mortgage loans, even automotive financial assistance.

Mortgage statistics suggests that women are still lagging behind men when it comes to purchasing property. Statistics show that more than half of property buyers are men, with 57 percent of mortgage applicants being male and the remaining 43 percent of applicants being female.

Mortgage consultants have offered that this statistic could be due to a number of factors, such as the difference between the spending power of single men and single women. Another factor could be that women generally tend to invest more conservatively, as compared to men.

The Ministry of Manpower (MOM) in an occasional paper titled “Singapore’s Adjusted Gender Pay Gap” said that Singapore’s adjusted gender pay gap (GPG) at 6.0% is significantly lower than the unadjusted GPG of 16.3%. With the pay gap between men and women being lower than many other countries including the United States of America and Canada, women should be able to get access to the same quantum of home loans that men are eligible for. Whether you are a men or a women, it is best to speak to a mortgage broker, who can point you to the best home loans in town.

In the local home loan market, whatever gender you are, so long as you have a job and credit record, getting a home loan or whatever loan you want is not really a problem and so should not affect women’s ability to obtain home loans.

The post Local home loan market does not discriminate unfairly unlike other markets appeared first on iCompareLoan Resources.

post

Women’s ability to obtain home loans is not affected by Gender Pay Gap

Click on Women’s ability to obtain home loans is not affected by Gender Pay Gap
for the source.
Author: Ravi Philemon

Women’s ability to obtain home loans is not hindered by their lower earning capacity

By: Hitesh Khan/

Women's ability to obtain home loans

Women’s ability to obtain home loans not affected by GPG

The Ministry of Manpower (MOM) in an occasional paper titled “Singapore’s Adjusted Gender Pay Gap” said that Singapore’s adjusted gender pay gap (GPG) at 6.0% is significantly lower than the unadjusted GPG of 16.3%. In the paper released on Jan 10, MOM added that after taking into account factors such as industry, occupation, age, and education Singapore’s adjusted GPG has also narrowed over time, down from 8.8% in 2002, and is lower compared to other developed countries, such as the United States (8%) and Canada (~8%).

The GPG is a common measure for gender income inequality, by computing the difference between the median incomes of men and women. The adjusted GPG, however, compares the incomes of men and women with similar characteristics such as industry, occupation, age, and education. It is therefore a better measure of whether men and women are paid equally for doing similar work. It also provides insight into the factors that contribute to the pay gap, which facilitates informed decision-making within the Government to reduce it.

The paper concluded that occupational segregation is a key contributor to the unadjusted gender pay gap. It said that the employment rate among women rose strongly over the past decade, and more women are now in PMET occupations. However, men continue to be over-represented in higher paying occupations and women tend to be in lower paying ones. This is “occupational segregation” and a key contributor to unadjusted GPG.

In explaining the causes of occupational segregation and initiatives to reduce it, MOM said, “occupational segregation tends to occur due to inherent gender differences.”

“For example, men and women generally have differing personality traits and skills, psychological attributes, and choices of field of study. As the median wages in male-dominated occupations have been growing faster than those in female-dominated occupations, occupational segregation’s significance in the unadjusted GPG has also grown over time.

“Occupational segregation can persist when women are deterred from studying in “traditionally male-dominated” fields or joining the workforce in such sectors. To dispel notions of “traditionally male jobs”, organisations in such sectors have started mentorship drives, networking, and career talks for women. This also enables the sector to tap on a wider pool of talent. For instance, more women are increasingly being recognised for their work in the technology sector, such as through the Singapore Computer Society’s (SCS) various awards, honorary fellowships and special interest groups. The Association of Information Security Professionals makes concerted efforts to conduct career talks at girls-only schools to attract young women to join the cybersecurity industry.

Occupational segregation can also occur due to differing value placed on workplace flexibility, i.e. women preferring jobs that offer more flexibility. In these instances, the Government supports companies to implement flexible work arrangements (FWAs) through initiatives like the Work-Life Grant. These allow men and women to meet both work aspirations and family/childcare responsibilities in the occupation of their choice.”

The Ministry said that several factors contribute to the adjusted gender pay gap, and that women still earn less than men after adjustment. This could it said, be due to factors that the model is unable to measure, such as the length of work experience and job preferences that impact wages. Due to social norms regarding gender roles within families, women typically play the primary role in caregiving such as caring for children and the elderly.

The paper said that this may have reduced their time and experience at work, leading to lags in career progression and hence earnings. The Government’s support for more shared care-giving responsibilities between men and women – such as through shared parental leave, and promotion of family-friendly workplace practices (e.g. Tripartite Standards on FWAs and Unpaid Leave for Unexpected Care Needs) – aims to reduce the effects of such social norms.

Women’s ability to obtain home loans is not hindered as loaning here dependent on borrower’s capacity, not gender

As women earn lower wages than men, there may exist some disparity between the male and female genders in terms of treatment and judgment in whatever aspects. But loaning here is largely depend on the borrower’s capacity to pay and not on gender. It could also be that women do not refinance home loan as regularly as men do, thereby end up paying more home loan interest cost.

A large percentage of women in Singapore are employed, which means that a significant percentage of them enjoy the freedom to borrow money, obtain loans, or be part of any exclusive loan programs. Such freedom to borrow includes loan programs and financial assistance from independent and private financial organisations – and these are not just limited to credit cards but also extends to mortgage loans, even automotive financial assistance.

Women’s ability to obtain home loans is not the reason why women home purchasers lag behind men

Mortgage statistics suggests that women are still lagging behind men when it comes to purchasing property. Statistics show that more than half of property buyers are men, with 57 percent of mortgage applicants being male and the remaining 43 percent of applicants being female.

Mortgage consultants have offered that this statistic could be due to a number of factors, such as the difference between the spending power of single men and single women. Another factor could be that women generally tend to invest more conservatively, as compared to men.

In Singapore, whatever gender you are, so long as you have a job and credit record, getting a home loan or whatever loan you want is not really a problem and so should not affect women’s ability to obtain home loans.

The post Women’s ability to obtain home loans is not affected by Gender Pay Gap appeared first on iCompareLoan Resources.

post

Different loans in market are meant to help unique needs of businesses

Click on Different loans in market are meant to help unique needs of businesses
for the source.
Author: Ravi Philemon

If you are a business owner or possibly even looking to be one, it is important to understand that there are different loans out there that are meant to help you fund your company.

By: Hitesh Khan/

Besides banks, there are other financial institutions that are more than willing to offer different loans for small or medium business owners.

different loansThese different loans for businesses are very similar to personal loans because of the fact they must be repaid in full by a certain amount of time, whether this be some sort of a repayment plan or a large lump sum payment.

The money being borrowed can be used for a number different reasons. For example, you can use this money to purchase new equipment that is needed, purchasing additional inventory or materials, hiring employees, covering for operational expenses, or even to pay staff salaries.

But as with all loans, it is very important that the borrower takes this money very seriously and plans out first how the funds will be used. Many new company owners make the mistake of borrowing a lot more money than they need because they did not plan ahead of time.

This will make it very difficult to make the payments, especially when such different loans come with a high interest rate.

For example, think about how you are going to use the funds borrowed:

  • Are you looking to start your business and get things going?
  • Do you have a business but are now looking to expand?
  • Do you just need a little help with this months payroll?
  • Have you considered other financing to cover the funds you need?

These are just some of the questions you should ask yourself before taking on this type of different loans. Remember you do not want to forget about certain risks that come along with owning your own business.

Once you have decided you want to take on this loan you must come up with a business plan to present to the lender. You must come with a business plan and data sheets that are easy enough for the loan officer to understand your field of work.

The loan officer will need to be convinced that you will be able to take on this loan and pay it back with ease. If you can achieve this, then there should be no problem getting this type of loan to help your business. But be mindful that over half of entrepreneurs are expecting to increase their revenues by 50 per cent in 2019, yet many are facing an uphill battle when it comes to funding their business expansion.

Singapore SMEs starting to be affected by trade tensions

An SME Development Survey by DP Info in November 2017 said a major sticking point for entrepreneurs in Singapore is cashflow management, It said that an increasing number of firms struggling with delays in client payments.

The survey found about 35 per cent of SMEs saying they had finance-related issues – 13 percentage points more than a year earlier and the highest since the survey began tracking the issue in 2011. And among these 35 per cent, the proportion experiencing delays in payments from customers skyrocketed from 14 per cent in 2016 to 81 per cent last year.

A separate Spring Singapore poll conducted in Dec 2017 showed that 64 per cent of SMEs said they were facing some form of delay in receiving payments from customers.

Mr Paul Ho, chief mortgage consultant at iCompareLoan said, “businesses need to borrow when they do not need money.”

He added: “When your business is struggling and you need additional funding to tide over a tough patch, then you will find that your access to funding is completely cut off and end up with very expensive funding.”

SME loans – with low success rate, it is important to work with trusted hands

It may be wise to plan 6 to 12 months ahead for any potential funding needs. Even if you do not need funding now, you may want to quickly refinance your home loans for any potential equity and stand-by cash even if you do not need it now.

Remember, banks assess your credit and affordability at the point of application, so you should apply when your status is good, not when you have further deteriorated. At that time, no banks will lend you. You should also read about more about the different loan types. If your business is profitable and you only need short term funding, but your access to bank’s working capital is temporarily cut off, then you should consider personal loans as a source.

As you know, a loan is based on a simple idea: someone gives you money and you promise to pay it back, usually with interest. Loans are so common that you probably are familiar with the mechanics, but nevertheless it makes sense to review the basics. The success or failure of your business can hinge on the question of if you did borrow funds when you were in the black. You may want to borrow funds which are just enough that your company can reach its potential, but not so much that you have severe difficulty paying it back.

It can be a mistake to pour too much money into your business at the beginning. A fair number of small businesses fail in the first year, so raising and spending a pile of money for an untested business idea can lead to much grief – especially if you’re personally on the hook for borrowed funds. Consider starting as small and cheaply as possible.

You have many options when looking a loan for your business. For small ventures, responsible borrowing means considering if friends and family members are willing to help. For sophisticated or mid-sized businesses, banks, cooperatives, and savings and loans may be willing to lend you money.

The post Different loans in market are meant to help unique needs of businesses appeared first on iCompareLoan Resources.