Source : Straits Times - 14 Apr 2009
THE Government will not step in to guarantee loan extensions for property developers, said National Development Minister Mah Bow Tan yesterday.
He told Parliament that banks are still lending to developers and better placed to assess risks than the Government.
‘Besides bank loans, a number of developers have also managed to raise capital through other means such as rights issues or private placement,’ he said.
The minister was responding to a question from Ms Lee Bee Wah (Ang Mo Kio GRC) who asked if the authorities would consider assisting builders by bearing some of the banks’ lending risks for loan extensions. Recent financial reports have warned that local property developers may face problems refinancing debt because of tight credit markets.
While Mr Mah acknowledged that banks had become more cautious in approving loans to firms, he maintained that ‘these are commercial decisions that the banks themselves have to take, based on their assessment of the risks as well as the relationships they maintain with their customers’.
Data from the Monetary Authority of Singapore shows that total loans to the building and construction industry - mostly to developers - saw a 22 per cent hike in the 12 months to this February. While this growth has tapered off recently, total loans to the sector are still at a high of $50 billion, noted Mr Mah.
Help measures for the sector announced during the Budget include property tax deferment on land approved for development for up to two years, and 40 per cent property tax rebates for commercial and industrial properties.
Mr Mah said the Government will continue to monitor the situation closely. ‘If necessary, we are prepared to introduce further measures to help developers through the current downturn.’
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