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IT has scored some stunning successes in developing countries such as Bangladesh, China and Indonesia. Microcredit, which gives small loans to the poor, has helped them and the illiterate escape the poverty cycle. It gives them much-needed access to credit to set up their own businesses. The Asia-Pacific Regional Microcredit Summit ends today. Can microcredit work in first-world Singapore? How microcredit works MICROCREDIT, also called poverty lending, provides small loans to the very poor. These loans can start from as little as US$20 ($27) to US$100 for first-time borrowers, and are usually used to start small businesses. In most cases, no collateral is needed. However, money tend to be directed at a group - ranging from five people to a whole village - in which members are accountable for one another. So, when someone in the group defaults his repayment, the whole group will have problems getting further loans. Under peer pressure to repay, borrowers default less. Loans made by Grameen Bank, a Bangladeshi bank which pioneered microcredit, have a repayment rate of 98 per cent. The 25-year-old bank has 7.5 million borrowers in its home country. It earned US$15.85 million in 2005, and its founder Muhammad Yunus won the Nobel Peace Prize in 2006, for 'efforts to create economic and social development from below'. YES, it can work here... GIVE small loans to Singaporeans to set up hawker and pasar malam stalls, Mr Ang Mong Seng had said The Member of Parliament for Hong Kah GRC had suggested that the microcredit system be adopted in Singapore during the Budget debate in February. Give or lend money to the enterprising poor at low interest, so they can start simple businesses and be self-reliant, he had said. He noted then that the Government gave $100 to $200 a month to the poor through Community Development Councils. But a bigger amount of $800 to $1,000 could be offered instead for them to start a business, he argued. Mr Ang told The New Paper that there are ways the Government can help microcredit programmes succeed here. First, it can subsidise the loans. However, he said Singapore should first test the viability of any microcredit programme by allowing experienced lenders such as Grameen Bank to run them without state help. Second, the Government can set up low-rental marketplaces to provide microcredit borrowers with a cheap way to start a business. United Overseas Bank economist Suan Teck Kin said microcredit can be used to help the poor start low-tech businesses, such as producing handicraft work, from home. Ms Wong Chia Lee, a Singaporean independent consultant who has been working with microbanks in South-east Asia for the past 10 years, pointed out that religious and other self-help groups here could well be the closely-knit communities needed for microcredit to work. These groups could be given loans in a way that makes their members accountable to one another - the same way microcredit loans are administered in other countries. NO, it won't work here... THE costs of running a business in Singapore are too high, financial experts said. Mr Ben Fok, CEO of Grandtag Financial Consultancy, said: 'Our costs of living and services is one of the highest in Asia. 'That will make it harder to find a successful microcredit model.' Agreeing, Mr Suan Teck Kin of United Overseas Bank singled out rental costs as one of the biggest obstacles for someone looking to set up a small business. Another problem, consultant Wong Chia Lee pointed out, is the high level of regulation in Singapore. In the microcredit programmes that she has helped set up in East Timor, people can immediately start using the money to sell kueh (cakes) or cosmetics door-to-door, or to sell vegetables on the streets. 'But the first thing someone in Singapore has to think of is the need to get a licence,' she said. Ms Wong also said Singaporeans are not as entrepreneurial as people in some of the neighbouring countries. 'For microcredit to be successful,' she said, 'the borrowers need to have an idea of what they are going to do with the money first. 'But in Singapore, we virtually have entrepreneurship genetically engineered out of us.' She recalled how a community support group asked for her advice on obtaining credit a few years ago. When she met the group, she realised they did not have any idea what they wanted to do once they had the money. This was in stark contrast to the microcredit borrowers she has worked with in the Philippines, Indonesia, and East Timor, who knew exactly what kind of businesses they wanted to do.

Business Times - 09 Jan 2008 Honda, Mitsubishi make big gains THE Toyota juggernaut continued its reign as the market leader in 2007, but it was Honda and Mitsubishi which made the biggest impact. The latter two marques ended the year by advancing one position up the ranking among members of the Motor Traders Association of Singapore (MTA). Toyota - Japan's biggest carmaker and soon, the world's - accounted for total passenger car sales of 17,121 units last year, including luxury division Lexus. Toyota finished with 15,411 units while Lexus did 1,710 cars. The former was saddled with an ageing model line-up (although Toyota should come back with a bang this year with the new Corolla Altis), while Lexus volume was hurt by the absence of the ES series. The ES was a core Lexus model with a very strong following here before supply of the popular mid-sized saloon stopped in end-2006. It is currently produced only as a left-hand-drive car, and thus cannot be offered in the local market. Otherwise, Lexus sales could easily be 40 per cent higher. A highly competitive market, where main competitors like BMW and Mercedes-Benz had facelifts and a full model change in 2007, also hurt the Japanese luxury marque. Based on an estimated total of 82,094 car registrations by MTA members, the market share for Toyo-ta/Lexus was 21 per cent, which means one out of every five new cars bought was a Toyota or Lexus. This ratio has slipped from a year ago, though. Then, Singapore's No 1 marque accounted for one out of four new cars. But Honda and Mitsubishi had no such problems. Honda moved up one notch in the MTA rankings to become Singapore's second most popular marque with a record 12,205 units, displacing Nissan's 9,608 and relegating it to No 3 overall. This means that from 2006 to 2007, Honda and Nissan switched places in the MTA pecking order. Mitsubishi also had a good year with 8,169 units to take up the No 4 position among MTA members. The Japanese brand also did a switcheroo with Hyundai and its 5,389 units, advancing up one position, while the Korean carmaker retreated one position to No 5. However, Hyundai recorded a great year of taxi sales and if these cabs had been added, it would have revealed a final tally of 8,080 units. MTA's estimated total of 82,094 registrations in 2007 is a 16.8 per cent drop from the 98,729 registrations in 2006. This is due to two factors - the fall in the total number of new cars registered in Singapore, and the sharp rise in market share of parallel importers, or those who are not authorised dealers. A total of about 107,000 new cars were registered last year, compared with around 117,000 the previous year, or an 8.5 per cent reduction.